<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
December 19, 1996
Mobil Corporation
-----------------
(Exact name of registrant as specified in its charter)
Delaware 1-7555 13-2850309
- ------------------------------------------- ----------- ------------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
3225 Gallows Road
Fairfax, Virginia 22037-0001
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (703) 846-3000
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No Change
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
------------------------------------
Description of the Certificates
Mobil Corporation, (the "Registrant") registered issuances of up to
$650,000,000 principal amount of Pass Through Certificates on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, as
amended (the "Act"), by a Registration Statement on Form S-3 (Registration File
No. 333-13457) (as amended, the "Registration Statement"). Pursuant to the
Registration Statement, Mobil Corporation Pass Through Trust 1996-A (the
"Trust") issued $231,900,000 in principal amount at maturity of its Pass Through
Certificates, Series 1996-A (the "Certificates"), on December 19, 1996. This
Current Report on Form 8-K is being filed to satisfy an undertaking to file
copies of certain agreements executed in connection with the issuance of the
Certificates, the forms of which were filed as Exhibits to the Registration
Statement.
The Certificates were issued pursuant to a Pass Through Trust
Agreement dated as of October 4, 1996 among the Registrants and State Street
Bank and Trust Company, as trustee (the "Pass Through Trustee") and a Pass
Through Trust Supplement (together, the "Trust Agreement") (attached hereto as
Exhibit 4.1) dated as of December 19, 1996, among Mobil Corporation, Mobil
- -----------
Marine Finance Company I Inc, Mobil Marine Finance Company II Inc. and the Pass
Through Trustee. The Certificates initially evidence, in the aggregate, 100% of
the undivided beneficial ownership interests in the Trust.
The assets of the Trust consist primarily of four secured notes (the
"Secured Notes") issued on a nonrecourse basis by four owner trusts pursuant to
four separate leveraged lease transactions to finance not more than 80% of the
cost of four double-hulled very large crude carriers, each of which will be
acquired by one of the owner trusts from an affiliate of Mobil Corporation or
the builder thereof and chartered to one of the charterers.
Interest distributions on the Certificates are based on the principal
balance thereof, initially $231,900,000, and the interest rate thereof, 6.97%.
On December 11, 1996, the Registrant filed pursuant to Rule 424(b)(3)
-----------------
a Preliminary Prospectus Supplement and on December 16, 1996, the Registrant
-----------------
filed pursuant to Rule 424(b)(2) a Prospectus Supplement relating to the
issuance of the Certificates.
2
<PAGE>
EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
- ---------- -----------
1.1 Underwriting Agreement, dated December 12, 1996, among Mobil
Corporation, Mobil Marine Finance Company I Inc., Mobil Marine
Finance Company II Inc. and Morgan Stanley & Co. Incorporated.
4.1 Pass Through Trust Supplement dated as of December 19, 1996 among
Mobil Corporation, Mobil Marine Finance Company I Inc., Mobil
Marine Finance Company II Inc. and State Street Bank and Trust
Company.
4.2 Indenture dated as of November 22, 1996 among Samoco Raven Trust
and State Street Bank and Trust Company.
4.3 Indenture dated as of November 22, 1996 among Dumoco Eagle Trust
and State Street Bank and Trust Company.
4.4 Indenture dated as of November 22, 1996 among Samoco 1233 Trust
and State Street Bank and Trust Company.
4.5 Indenture dated as of November 22, 1996 among Samoco 1234 Trust
and State Street Bank and Trust Company.
99.1 Charter of VLCC M/V RAVEN dated as of December 19, 1996 among
Samoco Raven Trust and Mobil Marine Finance Company I Inc.
99.2 Charter of VLCC M/V EAGLE dated as of November 22, 1996 among
Dumoco Eagle Trust and Mobil Marine Finance Company II Inc.
99.3 Charter of Hull No. 1233 dated as of November 22, 1996 among
Samoco 1233 Trust and Mobil Marine Finance Company I Inc.
99.4 Charter of Hull No. 1234 dated as of November 22, 1996 among
Samoco 1234 Trust and Mobil Marine Finance Company I Inc.
99.5 Participation Agreement dated as of December 19, 1996 among Mobil
Marine Finance Company I Inc., Samoco L.L.C., Samoco Raven Trust,
Deutsche Morgan Grenfell (Cayman) Limited, and State Street Bank
and Trust Company.
3
<PAGE>
Exhibit No. Description
99.6 Participation Agreement dated as of December 19, 1996 among
Mobil Marine Finance Company I Inc., Dumoco L.L.C., Dumoco Eagle
Trust, Deutsche Morgan Grenfell (Cayman) Limited, and State
Street Bank and Trust Company.
99.7 Participation Agreement dated as of December 19, 1996 among
Mobil Marine Finance Company I Inc., Samoco L.L.C., Samoco 1233
Trust, Deutsche Morgan Grenfell (Cayman) Limited, and State
Street Bank and Trust Company.
99.8 Participation Agreement dated as of December 19, 1996 among
Mobil Marine Finance Company I Inc., Samoco L.L.C., Samoco 1234
Trust, Deutsche Morgan Grenfell (Cayman) Limited, and State
Street Bank and Trust Company.
99.9 Mobil Raven Guaranty dated as of December 19, 1996 among Mobil
Corporation, Deutsche Morgan Grenfell (Cayman) Limited, State
Street Bank and Trust Company, Samoco L.L.C. and Samoco Raven
Trust.
99.10 Mobil Eagle Guaranty dated as of December 19, 1996 among Mobil
Corporation, Deutsche Morgan Grenfell (Cayman) Limited, State
Street Bank and Trust Company, Dumoco L.L.C. and Dumoco Eagle
Trust.
99.11 Mobil 1233 Guaranty dated as of December 19, 1996 among Mobil
Corporation, Deutsche Morgan Grenfell (Cayman) Limited, State
Street Bank and Trust Company, Samoco L.L.C. and Samoco 1234
Trust.
99.12 Mobil 1234 Guaranty dated as of December 19, 1996 among Mobil
Corporation, Deutsche Morgan Grenfell (Cayman) Limited, State
Street Bank and Trust Company, Samoco L.L.C. and Samoco 1234
Trust.
99.13 Appendix of Definitions re: Samoco Raven Trust.
99.14 Appendix of Definitions re: Dumoco Eagle Trust.
99.15 Appendix of Definitions re: Samoco 1233 Trust.
99.16 Appendix of Definitions re: Samoco 1234 Trust.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly authorized.
MOBIL CORPORATION
By: /s/ Patricia A. Stevenson
---------------------------------
Name: Patricia A. Stevenson
Title: Sr. Assistant Secretary
Dated: January 3, 1997
<PAGE>
EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
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1.1 Underwriting Agreement, dated December
12, 1996, among Mobil Corporation, Mobil
Marine Finance Company I Inc., Mobil
Marine Finance Company II Inc. and Morgan
Stanley & Co. Incorporated.
4.1 Pass Through Trust Supplement dated as of
December 19, 1996 among Mobil
Corporation, Mobil Marine Finance Company
I Inc, Mobil Marine Finance Company II
Inc. and State Street Bank and Trust
Company.
4.2 Indenture dated as of November 22, 1996
among Samoco Raven Trust and State Street
Bank and Trust Company.
4.3 Indenture dated as of November 22, 1996
among Dumoco Eagle Trust and State Street
Bank and Trust Company.
4.4 Indenture dated as of November 22, 1996
among Samoco 1233 Trust and State Street
Bank and Trust Company.
4.5 Indenture dated as of November 22, 1996
among Samoco 1234 Trust and State Street
Bank and Trust Company.
99.1 Charter of VLCC M/V RAVEN dated as of
December 19, 1996 among Samoco Raven
Trust and Mobil Marine Finance Company I
Inc.
99.2 Charter of VLCC M/V EAGLE dated as of
November 22, 1996 and among Dumoco
Eagle Trust and Mobil Marine Finance
Company II Inc.
99.3 Charter of Hull No. 1233 dated as of
November 22, 1996 among Samoco 1233 Trust
and Mobil Marine Finance Company I Inc.
99.4 Charter of Hull No. 1234 dated as of
November 22, 1996 among Samoco 1234 Trust
and Mobil Marine Finance Company I Inc.
99.5 Participation Agreement dated as of
December 19, 1996 among Mobil Marine
Finance Company I Inc., Samoco L.L.C.,
Samoco Raven Trust, Deutsche Morgan
Grenfell (Cayman) Limited, and State
Street Bank and Trust Company.
<PAGE>
99.6 Participation Agreement dated as of
December 19, 1996 among Mobil Marine
Finance Company I Inc., Dumoco L.L.C.,
Dumoco Eagle Trust, Deutsche Morgan
Grenfell (Cayman) Limited, and State
Street Bank and Trust Company.
99.7 Participation Agreement dated as of
December 19, 1996 among Mobil Marine
Finance Company I Inc., Samoco L.L.C.,
Samoco 1233 Trust, Deutsche Morgan
Grenfell (Cayman) Limited, and State
Street Bank and Trust Company.
99.8 Participation Agreement dated as of
December 19, 1996 among Mobil Marine
Finance Company I Inc., Samoco L.L.C.,
Samoco 1234 Trust, Deutsche Morgan
Grenfell (Cayman) Limited, and State
Street Bank and Trust Company.
99.9 Mobil Raven Guaranty dated as of December
19, 1996 among Mobil Corporation,
Deutsche Morgan Grenfell (Cayman)
Limited, State Street Bank and Trust
Company, Samoco L.L.C. and Samoco Raven
Trust.
99.10 Mobil Eagle Guaranty dated as of December
19, 1996 among Mobil Corporation,
Deutsche Morgan Grenfell (Cayman)
Limited, State Street Bank and Trust
Company, Dumoco L.L.C. and Dumoco Eagle
Trust.
99.11 Mobil 1233 Guaranty dated as of December
19, 1996 among Mobil Corporation,
Deutsche Morgan Grenfell (Cayman)
Limited, State Street Bank and Trust
Company, Samoco L.L.C. and Samoco 1234
Trust.
99.12 Mobil 1234 Guaranty dated as of December
19, 1996 among Mobil Corporation,
Deutsche Morgan Grenfell (Cayman)
Limited, State Street Bank and Trust
Company, Samoco L.L.C. and Samoco 1234
Trust.
99.13 Appendix of Definitions re: Samoco Raven
Trust.
99.14 Appendix of Definitions re: Dumoco Eagle
Trust.
99.15 Appendix of Definitions re: Samoco 1233
Trust.
99.16 Appendix of Definitions re: Samoco 1234
Trust.
<PAGE>
EXHIBIT 1.1
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Execution Copy
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MOBIL CORPORATION
1996-A PASS THROUGH TRUST
PASS THROUGH CERTIFICATES
SERIES 1996-A
UNDERWRITING AGREEMENT
Dated: December 12, 1996
<PAGE>
December 12, 1996
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Ladies and Gentlemen:
Mobil Marine Finance Company I Inc., a Delaware corporation, and Mobil
Marine Finance Company II Inc., a Delaware corporation (together with Mobil
Marine Finance Company I Inc., the "Companies" and individually a "Company"), in
connection with the financing or refinancing of the debt portion of four
leveraged lease transactions (each with respect to a separate very large crude
carrier ("VLCC")) in which the Companies, as charterers, propose that State
Street Bank and Trust Company, as trustee (the "Pass Through Trustee"), will
issue and sell to you its Pass Through Certificates, Series 1996-A, in the
aggregate stated principal amount (including full accretion) and with the
interest rate and final distribution date set forth on Schedule A hereto (the
"Offered Certificates") on the terms and conditions stated herein. The Offered
Certificates will be issued under the Pass Through Trust Agreement dated as of
October 4, 1996 (the "Basic Agreement"), among Mobil Corporation, a Delaware
corporation (the "Guarantor"), the Companies and the Pass Through Trustee and
the other parties described therein, as supplemented by the Pass Through Trust
Supplement No. 1996-A, dated as of December 19, 1996 (the "Trust Supplement"),
among the Guarantor, the Companies and the Pass Through Trustee (the Basic
Agreement as supplemented by the Trust Supplement being referred to herein as
the "Designated Agreement"). Capitalized terms used herein without definition
shall have the respective meanings ascribed to such terms in the Designated
Agreement or in each of the four Trust Indenture, Assignment of Charter and Head
Lease and Security Agreements, dated as of December 19, 1996, each between the
related Owner Trust and the Indenture Trustee (each, an "Indenture").
The Guarantor, the Companies and certain other subsidiaries of the
Guarantor have filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (File No. 333-13457),
relating to certain pass through certificates, including the Offered
Certificates, and the offering thereof from time to time in accordance with Rule
415 of the Securities Act of 1933, as amended, and the rules and regulations of
the Commission thereunder (collectively, the "Securities Act"). The
registration statement as amended at the date hereof, including the exhibits
thereto and the documents incorporated by reference therein, is herein referred
to as the "Registration Statement." The Registration Statement includes a basic
prospectus referred to below which, as supplemented from time to time, will be
used in connection with all offerings of such pass through certificates. A
prospectus supplement or supplements reflecting the terms of the Offered
Certificates, the terms of the offering thereof and other matters relating to
the Offered Certificates has been prepared and has been or will be filed (or
mailed for filing) together with the basic prospectus referred to below pursuant
to Rule 424 under the Securities Act (such prospectus supplement, in the form
first filed on or after the date hereof pursuant to Rule 424, is herein
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2
referred to as the "Prospectus Supplement" and any such prospectus supplement in
the form or forms filed prior to the Prospectus Supplement is herein referred to
as a "Preliminary Prospectus Supplement"). The basic prospectus included in the
Registration Statement and relating to all offerings of pass through
certificates under the Registration Statement, as supplemented by the Prospectus
Supplement, is herein called the "Prospectus," except that, if such basic
prospectus is amended on or prior to the date on which the Prospectus Supplement
is first filed (or mailed for filing) pursuant to Rule 424, the term
"Prospectus" shall refer to such basic prospectus as so amended and as
supplemented by the Prospectus Supplement, in either case including the
documents filed by the Guarantor with the Commission pursuant to the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Exchange Act"), that are incorporated
by reference therein. Any reference herein to the terms "amendment" or
"supplement" with respect to the Registration Statement, to the Prospectus, any
Preliminary Prospectus Supplement or to any preliminary prospectus shall be
deemed to refer to and include any documents filed with the Commission under the
Exchange Act after the date hereof, the date the Prospectus is filed (or mailed
for filing) with the Commission, or the date of such Preliminary Prospectus
Supplement or preliminary prospectus, as the case may be, and incorporated
therein by reference pursuant to Item 12 of Form S-3 under the Securities Act.
I.
The Guarantor and the Companies represent and warrant to, and agree with,
you that:
(a) The Guarantor and the Companies meet the requirements for use of
Form S-3 under the Securities Act; the Registration Statement has become
effective; (i) on the original effective date of the Registration
Statement, on the effective date of the most recent post-effective
amendment thereto, if any, and on the date of the filing by the Guarantor
of any annual report on Form 10-K after the original effective date of the
Registration Statement, the Registration Statement and any amendments and
supplements thereto complied in all material respects with the requirements
of the Securities Act and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and (ii) on the
date hereof and at all times subsequent thereto up to the Closing Date
referred to below, neither the Prospectus nor any amendment or supplement
thereto will include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except that neither the Guarantor nor either Company makes any
representation or warranty as to statements or omissions made in reliance
upon and in conformity with information furnished in writing to the
Guarantor and the Companies by or on behalf of you expressly for use in the
Registration Statement or the Prospectus or to statements or omissions in
that part of the Registration Statement which shall constitute the
Statement of Eligibility under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), on Form T-1 of the Pass Through Trustee.
<PAGE>
3
(b) The documents incorporated by reference in the Prospectus pursuant
to Item 12 of Form S-3 under the Securities Act, at the time they were or
hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the Exchange Act.
(c) The Guarantor and the Companies have been informed by Ernst &
Young LLP ("E&Y"), who have reported upon the audited consolidated
financial statements and the financial statement schedules, if any,
included or incorporated by reference in the Registration Statement, that
E&Y are independent public accountants as required by the Securities Act.
(d) This Agreement has been duly authorized, executed and delivered by
the Guarantor and each Company.
(e) The consolidated financial statements included or incorporated by
reference in the Registration Statement present fairly the consolidated
financial position of the Guarantor and its subsidiaries as of the dates
indicated and the consolidated results of operations and cash flows or
changes in financial position of the Guarantor and its subsidiaries for the
periods specified. Such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved, except as may be
indicated therein. The financial statement schedules, if any, included or
incorporated by reference in the Registration Statement present fairly the
information required to be stated therein. The selected consolidated
financial data included in the Prospectus present fairly the information
shown therein and have been compiled on a basis consistent with that of the
audited consolidated financial statements included or incorporated by
reference in the Registration Statement.
(f) Each of the Guarantor and the Companies is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware with corporate power and authority under such laws to
own, lease and operate its properties and conduct its business as described
in the Prospectus and to perform its obligations under this Agreement, the
Designated Agreement, the Parent Guaranties, the Charters and the other
Operative Documents and the UK Documents to which it is, or is to be, a
party; and the Guarantor and each Company is duly qualified to transact
business as a foreign corporation and is in good standing in each other
jurisdiction in which it owns or leases property of a nature, or transacts
business of a type, that would make such qualification necessary, except to
the extent that the failure to so qualify or be in good standing would not
have a material adverse effect on the Guarantor and its subsidiaries, taken
as a whole or on the power or ability of the Guarantor or either Company,
as the case may be, to perform its obligations under this Agreement, the
Designated Agreement or the Operative Agreements or the UK Documents to
which it is, or is to be, a party or to consummate the transactions
contemplated hereby and thereby (any such material adverse effect, whether
with
<PAGE>
4
respect to the Guarantor or either Company, as applicable, is referred to
herein as a "Material Adverse Effect").
(g) Each subsidiary of the Guarantor (other than the Companies) is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation with corporate power and
authority under such laws to own, lease and operate its properties and
conduct its business as described in the Prospectus, and is duly qualified
to transact business as a foreign corporation and is in good standing in
each other jurisdiction in which it owns or leases property of a nature, or
transacts business of a type, that would make such qualification necessary,
except to the extent that the failure to so qualify or be in good standing
would not have a Material Adverse Effect.
(h) The Designated Agreement, the Participation Agreements, the Parent
Guaranties, the Charters and the other Operative Documents and the UK
Documents to which the Guarantor and/or each Company is, or is to be, a
party, have each been duly authorized by the Guarantor and/or the
applicable Company, as the case may be, and, when duly executed and
delivered by the Guarantor and/or such Company, as the case may be, the
Designated Agreement, the Participation Agreements, and on the respective
Transfer Dates, the Parent Guaranties, the Charters and the other Operative
Documents and, on the date of execution thereof, the UK Documents (if such
documents are entered into), will constitute valid and binding obligations
of the Guarantor and/or the applicable Company, as the case may be, except
as (A) the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally, and by general principles of equity and (B)
the enforceability of the Charters may be limited by applicable law which
may affect the remedies provided therein, which laws, however, do not make
such remedies inadequate for the practical realization of the rights and
benefits intended to be provided thereby. The Basic Agreement as executed
is substantially in the form filed as an exhibit to the Registration
Statement and has been duly qualified under the Trust Indenture Act. The
Offered Certificates, the Secured Notes, the Indentures, the Designated
Agreement, the Participation Agreements, the Parent Guaranties, the
Charters and other Operative Documents and the UK Documents to which the
Guarantor and/or either Company is, or is to be, a party will conform in
all material respects to the descriptions thereof in the Prospectus.
(i) The Offered Certificates, when duly executed, authenticated and
delivered by the Pass Through Trustee in accordance with the terms of the
Designated Agreement and this Agreement will be duly issued under the
Designated Agreement and will constitute valid and binding obligations of
the Pass Through Trustee, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting enforcement of creditors' rights
<PAGE>
5
generally and by general principles of equity; and the holders thereof will
be entitled to the benefits of the Designated Agreement.
(j) The Secured Notes to be issued under each Indenture, when duly
executed and delivered by the related Owner Trust and duly authenticated by
the Indenture Trustee in accordance with the terms of such Indenture, will
be duly issued under such Indenture and will constitute the valid and
binding obligations of such Owner Trust and the holders thereof will be
entitled to the benefits of such Indenture.
(k) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated
therein or contemplated thereby, there has not been any material adverse
change, or any development involving a prospective material adverse change,
in the condition, financial or otherwise, or in the earnings or business
operations of the Guarantor and its subsidiaries, taken as a whole.
(l) The execution and delivery by the Guarantor and/or each Company of
this Agreement, the Designated Agreement, the Participation Agreements, the
Parent Guaranties, the Charters and the other Operative Documents and the
UK Documents to which the Guarantor and/or each Company is, or is to be, a
party, the consummation by the Guarantor and each Company of the
transactions contemplated in this Agreement, the Designated Agreement, the
Participation Agreements, the Parent Guaranties, the Charters and the other
Operative Documents and the UK Documents, and compliance by the Guarantor
and the applicable Company with the terms of this Agreement, the Designated
Agreement, the Participation Agreements, the Parent Guaranties, the
Charters and the other Operative Documents and the UK Documents, do not and
will not result in any violation of the charter or by-laws of the Guarantor
or either Company, and do not and will not conflict with, or result in a
breach of any of the terms or provisions of, or constitute a default under,
or result in the creation or imposition of any lien, charge or encumbrance
(other than Permitted Liens) upon any property or assets of the Guarantor
or either Company under (A) any indenture, mortgage, loan agreement, note,
lease or other agreement or instrument to which the Guarantor or any of its
subsidiaries is a party or by which it may be bound or to which any of its
properties may be subject and which is material to the Guarantor and its
subsidiaries, taken as a whole, or to either Company or (B) any existing
applicable law, rule, regulation, judgment, order or decree of any
government, governmental instrumentality or court, domestic or foreign,
having jurisdiction over either Company, the Guarantor or any of its
subsidiaries or any of their properties other than the securities or Blue
Sky or similar laws of the various states (except, in the case of either
clause (A) or (B), for Permitted Liens and such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect).
<PAGE>
6
(m) No authorization, approval, consent, order or license of or filing
with or notice to any government, governmental instrumentality or court,
domestic or foreign, is required for the valid authorization, issuance,
sale and delivery of the Offered Certificates, the valid authorization,
execution, delivery and performance by the Guarantor or either Company of
this Agreement, the Designated Agreement, the Participation Agreements, the
Parent Guaranties, the Charters and the other Operative Documents and the
UK Documents to which the Guarantor and/or each Company is, or is to be, a
party, or the consummation by the Guarantor or each Company of the
transactions contemplated by this Agreement, the Designated Agreement, the
Participation Agreements, the Parent Guaranties, the Charters and the other
Operative Documents and the UK Documents to which the Guarantor and/or each
Company is, or is to be, a party, except (i) such as are required under the
Securities Act (which approvals have been obtained), the Trust Indenture
Act and the securities or Blue Sky or similar laws of the various states
and (ii) those which if not obtained would not result in a Material Adverse
Effect.
(n) Except as disclosed in the Prospectus, there are no legal or
governmental proceedings pending or, to the knowledge of either Company or
the Guarantor, threatened to which either Company or the Guarantor or any
of its subsidiaries is a party or to which any of the properties of either
Company or the Guarantor or any of its subsidiaries is subject other than
proceedings that if adversely determined would not have a Material Adverse
Effect.
(o) There are no contracts or documents of a character required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described and filed as
required or incorporated by reference therein.
(p) Each of the Companies, the Guarantor and its subsidiaries has all
necessary consents, authorizations, approvals, orders, certificates and
permits of and from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities, all self-
regulatory organizations and all courts and other tribunals, to own, lease,
license and use its properties and assets and to conduct its business in
the manner described in the Prospectus, except to the extent that the
failure to so obtain or file would not have a Material Adverse Effect.
(q) Neither the Guarantor nor either Company is an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act"); and none of the Owner Trusts nor the Pass Through Trust,
after giving effect to the offering and sale of the Offered Certificates
and the application of proceeds thereof as described in the Prospectus,
will be an "investment company" as defined in the Investment Company Act.
<PAGE>
7
(r) Neither the Guarantor nor either Company has taken or will take,
directly or indirectly, any actions prohibited by Rule 10b-6 under the
Exchange Act.
(s) The Guarantor and both Companies have each complied with all
provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws of
Florida), and all regulations promulgated thereunder relating to doing
business with the government of Cuba or with any person or affiliate
located in Cuba.
II.
Subject to the terms and conditions set forth herein, and in reliance
upon the representations and warranties herein contained, the Guarantor and the
Companies agree to cause the Pass Through Trustee to sell to you, and you agree
to purchase from the Pass Through Trustee, at a purchase price of 92.154% of the
principal aggregate stated amount (including full accretion) thereof, the
aggregate principal amount of Offered Certificates (including full accretion)
set forth in Schedule A.
The Guarantor and the Companies are advised by you that you propose to
make a public offering of the Offered Certificates as soon after this Agreement
has been entered into as in your judgment is advisable. The Guarantor and the
Companies are further advised by you that the Offered Certificates are to be
offered to the public initially at 92.154% of their aggregate stated principal
amount (including full accretion) -- the public offering price -- plus accrued
interest and accretion of discount, if any, and to certain dealers selected by
you at concessions not in excess of the concessions set forth in the Prospectus,
and that you may allow, and such dealers may reallow, concessions, not in excess
of the concessions set forth in the Prospectus, to certain other dealers.
As compensation to you for your commitments and obligations hereunder
in respect of the Offered Certificates, including your undertaking to distribute
Offered Certificates, the Guarantor will pay or cause to be paid by the Owner
Trust to you an amount equal to that percentage of the aggregate stated
principal amount (including full accretion) of the Offered Certificates
purchased by you as set forth in Schedule A. Such payment shall be made
simultaneously with the payment by you to the Pass Through Trustee of the
purchase price of the Offered Certificates as specified in Article III hereof.
Payment of such compensation shall be made by Federal funds check or other
immediately available funds.
<PAGE>
8
III.
Delivery of and payment for the Offered Certificates shall be made at
the office of Dewey Ballantine, 1301 Avenue of the Americas, New York, New York,
at 9:00 A.M. (New York time) on December 19, 1996, or such other date, time and
place as may be agreed upon by the Guarantor, the Companies and you (such date
and time of delivery and payment for the Offered Certificates being herein
called the "Closing Date"). Delivery of the Offered Certificates shall be made
to your account at The Depository Trust Company against payment by you of the
purchase price thereof to or upon the order of the Pass Through Trustee by
Federal funds check or other immediately available funds. The Offered
Certificates shall be registered in the name of Cede & Co. or in such other
names, and in such denominations as you may request in writing at least two full
business days in advance of the Closing Date.
The Guarantor and the Companies agree to have the Offered
Certificates, which may be in temporary form, available for inspection, checking
and packaging by you in New York, New York not later than 1:00 P.M. on the
business day prior to the Closing Date.
IV.
Your obligations hereunder are subject to the following conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued under the Securities Act and no
proceedings therefor shall have been instituted or threatened by the
Commission.
(b) You shall have received on the Closing Date an opinion of Dewey
Ballantine, special counsel for the Guarantor and the Companies reasonably
acceptable to you, dated the Closing Date, in form satisfactory to you and
your counsel, to the effect that:
(i) Assuming that the Offered Certificates have been duly
authorized and validly executed, authenticated, issued and delivered
by the Pass Through Trustee pursuant to the Designated Agreement, when
such Offered Certificates have been paid for in accordance with the
terms of this Agreement, such Offered Certificates will (x) be valid
and binding obligations of the Pass Through Trustee enforceable in
accordance with their terms except as may be limited by bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting
creditors' rights generally and by general principles of equity and
(y) be entitled to the benefits of the Designated Agreement;
<PAGE>
9
(ii) The Offered Certificates, the Designated Agreement, the
Participation Agreements, the Indentures, the Secured Notes, the
Parent Guaranties, the Charters and the other Operative Documents and
the UK Documents conform in all material respects as to legal matters
to the descriptions thereof, if any, contained in the Prospectus, and
the description of the Offered Certificates conforms in all material
respects to the rights set forth in the instruments defining the same;
(iii) No authorization, approval, consent, order or license of
or filing with or notice to any government, governmental
instrumentality, regulatory body or authority or court is required for
the valid authorization, issuance and delivery of the Offered
Certificates, the valid authorization, execution, delivery and
performance by the Guarantor and/or each Company of this Agreement,
the Designated Agreement, the Participation Agreements, the Charters,
the Parent Guaranties and the other Operative Documents and the UK
Documents to which the Guarantor and/or each Company is, or is to be,
a party, or the consummation by the Guarantor and/or each Company of
the transactions contemplated by this Agreement, the Designated
Agreement, the Participation Agreements, the Charters, the Parent
Guaranties and the other Operative Documents and the UK Documents to
which the Guarantor and/or each Company is, or is to be, a party,
except (i) such as are required under the Securities Act (which
approvals have been obtained), the Trust Indenture Act and the
securities or Blue Sky laws of the various states (as to which such
counsel need express no opinion) and (ii) those which if not obtained
would not result in a Material Adverse Effect;
(iv) The Registration Statement has become effective under the
Securities Act, the Basic Agreement has been duly qualified under the
Trust Indenture Act and, to the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted
or threatened;
(v) The Registration Statement, the Prospectus and each amendment
thereof or supplement thereto (except for the financial statements and
other financial and statistical data included or incorporated by
reference therein, the documents incorporated by reference in the
Prospectus, and the Statement of Eligibility as to which such counsel
need express no opinion) comply as to form in all material respects
with the requirements of the Securities Act;
(vi) This Agreement has been duly authorized, executed and
delivered by the Guarantor and each Company;
(vii) The Participation Agreements and the Designated Agreement
have each been duly authorized, executed and delivered by the
Guarantor and
<PAGE>
10
each Company and each is a valid and binding obligation of the
Guarantor and each Company enforceable against the Guarantor and each
Company in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting enforcement of creditors' rights generally and by
general principles of equity;
(viii) The Charters, the Parent Guaranties and other Operative
Documents and the UK Documents to which the Guarantor and/or each
Company is, or is to be, a party have been duly authorized and, on the
respective Transfer Dates, the related Charters, the Parent Guaranties
and other Operative Documents to which the Guarantor and/or each
Company is, or is to be, a party, upon due execution and delivery by
the Guarantor and/or the applicable Company, as the case may be, will
each be a valid and binding obligation of the Guarantor and the
applicable Company enforceable against the Guarantor and the
applicable Company in accordance with its respective terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting enforcement of creditors' rights
generally and by general principles of equity and, except, in the case
of each Charter, as limited by applicable laws which may affect the
remedies provided in such Charter, which laws, however, do not in such
counsel's opinion make the remedies provided in such Charter
inadequate for the practical realization of the rights and benefits
provided thereby;
(ix) The statements in the Registration Statement and Prospectus
under the headings "Federal Income Tax Consequences" and "ERISA
Considerations," to the extent that they constitute matters of law or
legal conclusions with respect thereto, have been prepared or reviewed
by such counsel and are correct in all material respects;
(x) Based upon an interpretation of analogous authorities under
currently applicable law, the Pass Through Trust created by the
Designated Agreement will be classified as a grantor trust (and not as
an association taxable as a corporation) for federal income tax
purposes and each Certificate Owner will be treated as the owner of a
pro rata undivided interest in each of the Secured Notes or any other
property held in such Pass Through Trust;
(xi) None of the Trusts is required to be registered under the
Investment Company Act of 1940, as amended;
(xii) Upon consummation of the transactions contemplated by the
Participation Agreements, on the respective Transfer Dates, assuming
due authorization, execution and delivery by the related Owner Trust
and due authentication by the related Indenture Trustee, each Secured
Note will constitute valid and binding obligations of the related
Owner Trust,
<PAGE>
11
enforceable against such Owner Trust in accordance with their terms,
except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors'
rights generally and by general principles of equity; and the holders
of the Secured Notes will be entitled to the benefits of the
respective Indentures; and
(xiii) Assuming due authorization, execution and delivery of the
Designated Agreement by the Pass Through Trustee, the Designated
Agreement constitutes the valid and binding obligation of the Pass
Through Trustee, enforceable in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting enforcement of creditors' rights
generally and by general principles of equity.
and to such further effect with respect to other legal matters relating to
this Agreement, the Participation Agreements, the Designated Agreement and
the Charters, the Parent Guaranties and other Operative Documents and the
UK Documents to which the Guarantor and/or each Company is, or is to be, a
party and the sale of the Offered Certificates hereunder as your counsel
may reasonably request.
Such opinion may state that, except with respect to the matters set
forth in clauses (ii) and (ix) above, such counsel have not verified, and are
not passing upon and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus, or the documents incorporated by reference therein,
and have not made an independent investigation of facts for the purpose of
rendering such opinion. Such opinion shall state, however, that no facts came
to such counsels' attention that caused them to believe that the descriptions of
the Offered Certificates, the Designated Agreement, the Participation
Agreements, the Charters, the Parent Guaranties, the Indentures, the Secured
Notes and the other Operative Documents and the UK Documents set forth under the
headings "Summary," "Outline of the Transaction," "Use of Proceeds," "Diagram of
Payments," "Description of the Pass Through Certificates," "Description of the
Secured Notes," "Description of the Charters," "The Parent Guaranties," "The
Participation Agreements," "The U.K. Financing," "Appendix A: Glossary of
Certain Terms," "Formation of the Trusts," "Description of the Certificates,"
and "Outline of the Leveraged Lease Structure" in the Prospectus or any
amendment or supplement thereto, at the time the Prospectus Supplement was
issued, at the time any such amended or supplemented prospectus was issued or at
the Closing Date, included or includes an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
In addition, such counsel may rely upon the opinions of counsel for
the related Owner Trusts and the related Owner Trustees and counsel for the Pass
Through Trustee and the Indenture Trustee, and may state that their opinion is
limited to matters governed by the
<PAGE>
12
laws of the State of New York, the corporate law of the State of Delaware and
the federal law of the United States, except that such counsel expresses no
opinion as to the securities laws of any state.
(c) You shall have received on the Closing Date an opinion of Ralph N.
Johanson, Jr., Managing Counsel, Corporate Finance and Securities of the
Guarantor, dated the Closing Date, in form satisfactory to you and to your
counsel, to the effect that:
(i) Each of the Guarantor and the Companies is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware with corporate power and authority under such laws
to own, lease and operate its properties and conduct its business as
described in the Prospectus and to perform its obligations under this
Agreement, the Designated Agreement, the Participation Agreements, the
Parent Guaranties, the Charters and the other Operative Documents and
the UK Documents to which the Guarantor and/or each Company is, or is
to be, a party;
(ii) Each of Mobil's Significant Subsidiaries (as defined under
Regulation S-X) has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its
property and to conduct its business as described in the Prospectus;
(iii) Each of the Companies and the Guarantor is duly qualified
to transact business as a foreign corporation and is in good standing
in each other jurisdiction in which it owns or leases property of a
nature, or transacts business of a type, that would make such
qualification necessary, except to the extent that the failure to so
qualify or be in good standing would not have a Material Adverse
Effect;
(iv) Each of the Companies, the Guarantor and the Guarantor's
Significant Subsidiaries (as defined under Regulation S-X) has all
necessary consents, authorizations, approvals, orders, certificates
and permits of and from, and has made all declarations and filings
with, all federal, state, local and other governmental authorities,
all self-regulatory organizations and all courts and other tribunals,
to own, lease, license and use its properties and assets and to
conduct its business in the manner described in the Prospectus, except
to the extent that, with respect to the Guarantor and the Guarantor's
Significant Subsidiaries, the failure to obtain or file would not have
a material adverse effect on the Guarantor and its subsidiaries, taken
as a whole and, with respect to either Company, the failure to obtain
or file would not have a Material Adverse Effect;
<PAGE>
13
(v) No authorization, approval, consent, order or license of or
filing with or notice to any government, governmental instrumentality,
regulatory body or authority or court is required for the valid
authorization, issuance and delivery of the Offered Certificates, the
valid authorization, execution, delivery and performance by the
Guarantor and/or each Company of this Agreement, the Designated
Agreement, the Participation Agreements, the Charters, the Parent
Guaranties or other Operative Documents and the UK Documents to which
the Guarantor and/or each Company is, or is to be, a party, or the
consummation by the Guarantor and/or each Company of the transactions
contemplated by this Agreement, the Designated Agreement, the
Participation Agreements, the Charters, the Parent Guaranties or other
Operative Documents to which the Guarantor and/or each Company is, or
is to be, a party, except (i) such as are required under the
Securities Act (which approvals have been obtained), the Trust
Indenture Act and the securities or Blue Sky laws of the various
states (as to which such counsel need express no opinion) and (ii)
those which if not obtained would not result in a Material Adverse
Effect;
(vi) To the best of such counsel's knowledge, there are no
statutes or regulations, or any pending or threatened legal or
governmental proceedings, required to be described in the Prospectus
that are not described as required, nor any contracts or documents of
a character required to be described or referred to in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described, referred to or
filed as required;
(vii) The descriptions in the Prospectus of the statutes,
regulations, legal or governmental proceedings, contracts and other
documents therein described are accurate in all material respects and
fairly summarize the information required to be shown;
(viii) To such counsel's knowledge, no default exists in the
Guarantor's or either Company's performance or observance of any
material obligation, agreement, covenant or condition contained in any
material contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument that is described or referred to in the
Registration Statement or the Prospectus or filed as an exhibit to the
Registration Statement;
(ix) This Agreement, the Participation Agreements, the Designated
Agreement, and on the respective Transfer Dates, the Charters, the
Parent Guaranties and other Operative Documents and, on the date of
execution thereof, the UK Documents (if such documents are entered
into), to which the Guarantor and/or each Company is, or is to be, a
party have, or will have, each been duly authorized, executed and
delivered by the Guarantor and/or the
<PAGE>
14
applicable Company, as the case may be. The execution and delivery by
the Guarantor and/or the each Company, as the case may be, of this
Agreement, the Designated Agreement, the Participation Agreements, the
Charters, the Parent Guaranties, and the other Operative Documents and
the UK Documents to which the Guarantor and/or each Company is, or is
to be, a party, the issuance and sale of the Offered Certificates, the
consummation by the Guarantor and/or the applicable Company of the
transactions contemplated in this Agreement, the Designated Agreement,
the Participation Agreements, in the Registration Statement and in
such Operative Documents and the UK Documents and compliance by the
Guarantor and/or the applicable Company, as the case may be, with the
terms hereof and thereof do not and will not result in any violation
of the charter or by-laws of the Guarantor or either Company, and do
not and will not conflict with, or result in a breach of any of the
terms or provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance (except
for Permitted Liens) upon any property or assets of the Guarantor or
either Company under (A) any indenture, mortgage, loan agreement,
note, lease or other agreement or instrument known to such counsel, to
which the Guarantor or either Company is a party or by which it may be
bound or to which any of its properties may be subject (except for
such conflicts, breaches or defaults or liens, charges or encumbrances
that would not have a Material Adverse Effect), (B) any existing law,
rule or regulation applicable to the Guarantor or either Company
(other than the securities or Blue Sky laws of the various states, as
to which such counsel need express no opinion), or (C) any judgment,
order or decree of any government, governmental instrumentality or
court, domestic or foreign, known to such counsel having jurisdiction
over the Guarantor or either Company or any of their properties;
(x) The documents incorporated by reference in the Prospectus
(except for the financial statements and other financial data included
or incorporated by reference therein or omitted therefrom, as to which
such counsel need express no opinion), as of the dates they were filed
with the Commission, complied as to form in all material respects with
the requirements of the Exchange Act and the rules and regulations
thereunder; and
(xi) Neither the Guarantor nor either Company is an "investment
company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
Such opinion shall also state that such counsel or lawyers on his
staff have participated in the preparation of the Registration Statement,
the Prospectus and the documents incorporated by reference therein and that
no facts have come to his attention to lead him to believe (A) that the
Registration Statement or any amendment
<PAGE>
15
thereto (except for (i) the financial statements and other financial data
included therein or omitted therefrom, (ii) the Statement of Eligibility
and Qualification of the Pass Through Trustee on Form T-1 and (iii) the
descriptions of the Offered Certificates, the Designated Agreement and the
Operative Documents and the UK Documents set forth under the headings
"Summary," "Outline of the Transaction," "Use of Proceeds," "Diagram of
Payments," "Description of the Pass Through Certificates," "Description of
the Secured Notes," "Description of the Charters," "The Parent Guaranties,"
"The Participation Agreements," "The U.K. Financing," "Appendix A: Glossary
of Certain Terms," "Formation of the Trusts," "Description of the
Certificates," and "Outline of the Leveraged Lease Structure" as to which
such counsel need express no opinion), at the time the Registration
Statement or any such amendment became effective, contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, (B) that the Prospectus or any amendment or supplement thereto
(except for the financial statements and other financial data included
therein or omitted therefrom and the descriptions of the Offered
Certificates, the Designated Agreement and the Operative Documents and the
UK Documents set forth under the headings "Summary," "Outline of the
Transaction," "Use of Proceeds," "Diagram of Payments," "Description of the
Pass Through Certificates," "Description of the Secured Notes,"
"Description of the Charters," "The Parent Guaranties," "The Participation
Agreements," "The U.K. Financing," "Appendix A: Glossary of Certain Terms,"
"Formation of the Trusts," "Description of the Certificates," and "Outline
of the Leveraged Lease Structure" as to which such counsel need express no
opinion), at the time the Prospectus was issued, at the time any such
amended or supplemented prospectus was issued or at the Closing Date,
included or includes an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading or (C) that the documents incorporated by reference in the
Prospectus (except for the financial statements and other financial and
statistical data included therein or omitted therefrom and the Statement of
Eligibility, as to which such counsel need express no opinion), as of the
dates they were filed with the Commission, included an untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(d) You shall have received on the Closing Date an opinion of Bingham,
Dana & Gould LLP, counsel to State Street Bank and Trust Company ("SSB&T"),
individually and as Pass Through Trustee and Indenture Trustee, dated the
Closing Date to the effect that:
(i) SSB&T is a state chartered trust company duly organized and
validly existing in good standing under the laws of the Commonwealth
of Massachusetts and, in its individual capacity or as Pass Through
Trustee or Indenture Trustee, as the case may be, has full corporate
power and authority
<PAGE>
16
to execute, deliver and perform its obligations under the Designated
Agreement, the Offered Certificates, the Participation Agreements and
the other Operative Documents to which it is a party;
(ii) SSB&T, in its individual capacity or as Pass Through Trustee
or as Indenture Trustee, as the case may be, has duly authorized the
Designated Agreement, the Participation Agreements, the Indentures and
the other Operative Documents to which it is a party, and has duly
executed and delivered the Designated Agreement, the Participation
Agreements and the Indentures which constitute, and upon the
respective Transfer Dates the other Operative Documents to which it is
to be a party upon due execution and delivery thereof will constitute,
valid and binding obligations of SSB&T, in its individual capacity or
as Pass Through Trustee or Indenture Trustee, as the case may be,
enforceable against SSB&T, in its individual capacity or as Pass
Through Trustee or Indenture Trustee, as the case may be, in
accordance with their respective terms, except as enforcement thereof
may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting enforcement of creditors' rights generally, and
except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a
proceeding in equity or at law);
(iii) The Offered Certificates have been duly authorized and
validly executed, authenticated, issued and delivered by SSB&T, in its
capacity as Pass Through Trustee, pursuant to the Designated
Agreement, and the Offered Certificates constitute valid and binding
obligations of SSB&T, in its capacity as Pass Through Trustee,
enforceable against SSB&T, as Pass Through Trustee, in accordance with
their respective terms, except as enforcement thereof may be limited
by bankruptcy, insolvency, reorganization or other similar laws
affecting enforcement of creditors' rights generally, and except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law); and the holders of the Offered Certificates are
entitled to the benefits of the Designated Agreement;
(iv) The authorization, execution, delivery and performance by
SSB&T, in its individual capacity or as Pass Through Trustee or
Indenture Trustee, as the case may be, of the Designated Agreement,
the Participation Agreements, the Indentures and the other Operative
Documents to which it is, or is to be, a party and the consummation of
the transactions therein contemplated and compliance with the terms
thereof and issuance of the Offered Certificates under the Designated
Agreement do not and will not result in the violation of the
provisions of the charter documents or by-laws of SSB&T and do not and
will not conflict with, or result in a breach of any terms or
provisions of, or constitute a default under, or result in the
creation
<PAGE>
17
or the imposition of any lien, charge or encumbrance upon any property
or assets of SSB&T under any indenture, mortgage or other agreement or
instrument known to such counsel to which SSB&T is a party or by which
it or any of its property is bound, or any Massachusetts or federal
law, rule or regulation governing SSB&T's banking or trust powers, or
of any judgment, order or decree known to such counsel to be
applicable to SSB&T of any court, regulatory body, administrative
agency, government or governmental body having jurisdiction over SSB&T
or its properties;
(v) No authorization, approval, consent, license or order of,
giving of notice to, registration with, or taking of any other action
in respect of, any federal or state governmental authority or agency
pursuant to any federal or Massachusetts law governing the banking or
trust powers of SSB&T is required for the authorization, execution,
delivery and performance by SSB&T, in its individual capacity or as
Pass Through Trustee or Indenture Trustee, as the case may be, of the
Designated Agreement, the Participation Agreements, the Indentures or
the other Operative Documents to which it is, or is to be, a party or
the consummation of any of the transactions by SSB&T, in its
individual capacity or as Pass Through Trustee or Indenture Trustee,
as the case may be, contemplated thereby or the issuance of the
Offered Certificates under the Designated Agreement (except as shall
have been duly obtained, given or taken); and such authorization,
execution, delivery, performance, consummation and issuance do not
conflict with or result in a breach of the provisions of any such law;
(vi) There are no taxes, fees or other governmental charges
payable under the laws of the Commonwealth of Massachusetts or any
political subdivision of such State in connection with the execution
and delivery by SSB&T, in its individual capacity or as Pass Through
Trustee or Indenture Trustee, as the case may be, of the Designated
Agreement, the Participation Agreements, the Indentures and the other
Operative Documents or in connection with the issuance, execution and
delivery of the Offered Certificates by SSB&T, as Pass Through
Trustee, pursuant to the Designated Agreement;
(vii) The statements in the Registration Statements and in the
Prospectus under the caption "Certain Massachusetts Taxes," to the
extent that they constitute matters of law or legal conclusions with
respect thereto, have been prepared and reviewed by such counsel and
are correct in all material respects; and
(viii) To such counsel's knowledge, there are no proceedings
pending or threatened against or affecting SSB&T in any court or
before any governmental authority, agency, arbitration board or
tribunal which, if
<PAGE>
18
adversely determined, individually or in the aggregate, would
materially and adversely affect the Pass Through Trust or any trust
related to any Indenture or question the right, power and authority of
SSB&T, in its individual capacity or as Pass Through Trustee or
Indenture Trustee, as the case may be, to enter into or perform its
obligations under the Designated Agreement, the Participation
Agreements, the Indentures and the other Operative Documents to which
it is, or is to be, a party or to issue the Offered Certificates.
(e) You shall have received on the Closing Date an opinion of Shearman
& Sterling, your counsel, dated the Closing Date, to the effect that the
opinions delivered pursuant to paragraphs (b), (c) and (d) appear on their
face to be appropriately responsive to the requirements of this Agreement
except, specifying the same, to the extent waived by you and with respect
to the issuance and sale of the Offered Certificates, the Registration
Statement, the Prospectus and other related matters as you may reasonably
require.
(f) There shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations, of the Guarantor and its
subsidiaries, taken as a whole, from that set forth in the Prospectus, that
is material and adverse and that would, in your reasonable judgment after
consultation with the Guarantor, prevent or materially impair the marketing
or enforcement of contracts for sale of the Offered Certificates on the
terms and in the manner contemplated in the Prospectus.
(g) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have been any downgrading, nor
any notice given either publicly or directly to the Guarantor of any
intended or potential downgrading or any review with possible negative
implications, in the rating accorded any of the Guarantor's or either
Company's securities, including the Offered Certificates, by Standard &
Poor's Rating Group or Moody's Investors Service, Inc.
(h) You shall have received on the Closing Date (i) a certificate,
dated the Closing Date and signed by the President, a Vice President, the
Treasurer or the Controller of the Guarantor, to the effect set forth in
paragraph (g) above and to the effect that the representations and
warranties of the Guarantor contained in this Agreement shall be true and
correct as of the Closing Date and that the Guarantor shall have performed
all of its obligations to be performed hereunder on or prior to the Closing
Date and (ii) a certificate, dated the Closing Date and signed by the
President, a Vice President, the Treasurer or the Controller of each
Company, to the effect that the representations and warranties of the
Company contained in this Agreement shall be true and correct as of the
Closing Date and that the Company shall have performed all of its
obligations to be performed hereunder on or prior to the Closing Date.
<PAGE>
19
(i) You shall have received on the date of this Agreement and on the
Closing Date letters from E&Y, dated the date of this Agreement and the
Closing Date, respectively, in the form of Exhibit A hereto with respect to
the financial statements and certain financial information contained in or
incorporated by reference into the Prospectus.
(j) All conditions specified in each of the Participation Agreements
with respect to the Pass Through Trustee's purchase of the Secured Notes on
the Transfer Date shall have been satisfied on the Closing Date; the
representations and warranties of the Guarantor and each Company contained
in each of the Participation Agreements shall be accurate as of the Closing
Date (except to the extent that they relate solely to an earlier date in
which case they shall be accurate as of such earlier date) and you shall
have received a certificate of a Vice President or Treasurer of the
Guarantor and each Company, dated as of the Closing Date, to such effect;
and you shall have received each opinion referred to in Section 4.6 of each
of the Participation Agreements.
(k) The Guarantor and each Company shall have furnished to you and to
your counsel, in form and substance satisfactory to them, such other
documents, certificates and opinions as such counsel may reasonably request
in order to evidence the accuracy and completeness of any of the
representations, warranties or statements, the performance of any covenant
by the Guarantor or each Company theretofore to be performed, or the
compliance with any of the conditions herein contained.
V.
In further consideration of your agreement herein contained, the
Guarantor and each Company covenant as follows:
(a) To furnish you, without charge, one signed copy of the
Registration Statement including exhibits and a conformed copy of the
Registration Statement without exhibits and, during the period mentioned in
paragraph (c) below, as many copies of the Prospectus, any documents
incorporated by reference therein and any supplements and amendments
thereto or to the Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration Statement or the
Prospectus, to furnish you a copy of each such proposed amendment or
supplement, and to file no such proposed amendment or supplement to which
you reasonably object.
(c) If, during such period after the first date of the public offering
of the Offered Certificates as in the opinion of your counsel the
Prospectus is required by
<PAGE>
20
law to be delivered in connection with sales by you or a dealer, any event
shall occur as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Prospectus to
comply with law, forthwith to prepare and furnish, at its own expense, to
you and to the dealers (whose names and addresses you will furnish to the
Guarantor and the Companies) to which Offered Certificates may have been
sold by you and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances when
the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as so amended or supplemented, will comply with law and to
cause such amendments or supplements to be filed promptly with the
Commission.
(d) To endeavor to qualify the Offered Certificates for offer and sale
under the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request, to maintain such qualifications for so long as required
for the distribution of such Offered Securities and to pay all expenses
(including filing fees and reasonable fees and disbursements of counsel) in
connection with such qualification and in connection with (i) the review
(if any) of the offering of the Offered Certificates by the National
Association of Securities Dealers, Inc., (ii) the determination of the
eligibility of the Offered Certificates for investment under the laws of
such jurisdictions as you may designate and (iii) the preparation of any
Blue Sky or Legal Investment Memorandum; provided, however, that neither
the Guarantor nor either Company shall be obligated to file any general
consent to service of process or to qualify as a foreign corporation or as
a dealer in securities in any jurisdiction in which it is not so qualified
or to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject.
(e) To make generally available to the Guarantor's security holders as
soon as practicable an earnings statement covering the twelve-month period
ending twelve months after the end of the Guarantor's fiscal quarter in
which the Closing Date occurs that satisfies the provisions of Section
11(a) of the Securities Act.
(f) Between the date of this Agreement and the Closing Date, neither
the Guarantor nor either Company will without your prior written consent
offer, sell, or enter into any agreement to sell, any public debt
securities registered under the Securities Act (other than the Offered
Certificates) or any debt securities (other than debt securities issued by
Ras Laffan Liquified Natural Gas Company Limited, in respect of which debt
securities the Guarantor will have contingent repayment obligations) which
may be resold in a transaction exempt from the registration requirements of
the Securities Act in reliance on Rule 144A thereunder and which are
marketed through the use of a disclosure document containing substantially
the same
<PAGE>
21
information as a prospectus for similar debt securities registered under
the Securities Act.
(g) The Guarantor, during the period when a prospectus relating to the
Offered Certificates is required to be delivered under the Securities Act,
will file promptly all documents required to be filed with the Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act.
VI.
The Guarantor and each Company, jointly and severally, agree to
indemnify and hold harmless you and each person, if any, who controls you within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities caused by any untrue statement or allegedly untrue statement of a
material fact contained in the Registration Statement, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Guarantor or the
Companies shall have furnished any amendments or supplements thereto) or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or allegedly untrue statement or alleged
omission based upon information relating to you furnished to the Guarantor and
the Companies in writing by you expressly for use therein; provided, however,
that the foregoing indemnity agreement with respect to any Preliminary
Prospectus Supplement shall not inure to the benefit of you, or any person
controlling you, from whom the person asserting any such losses, claims, damages
or liabilities purchased Offered Certificates, if a copy of the Prospectus (as
then amended or supplemented if the Guarantor or the Companies shall have
furnished any amendments or supplements thereto) was not sent or given by or on
behalf of you to such person, if required by law so to have been delivered, at
or prior to the written confirmation of the sale of the Offered Certificates to
such person, and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such losses, claims, damages or liabilities.
You agree to indemnify and hold harmless the Guarantor and the
Companies, each of their directors, each of their officers who sign the
Registration Statement and each person, if any, who controls the Guarantor or
either Company within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Guarantor and the Companies to you, but only with reference to
information relating to you furnished to the Guarantor and the Companies in
writing by you expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto.
In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to
<PAGE>
22
either of the two preceding paragraphs, such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate
firm (in addition to any local counsel) for all such indemnified parties, and
that all such fees and expenses shall be reimbursed as they are incurred. In
the case of any such separate firm for you and such control persons of you ,
such firm shall be designated in writing by you. In the case of any such
separate firm for the Guarantor and the Companies, and such directors, officers
and control persons of the Guarantor and the Companies, such firm shall be
designated in writing by the Guarantor. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.
If the indemnification provided for in the first or second paragraph
of this Article VI is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Guarantor and the Companies on the one hand and you on
the other hand from the offering of the Offered Certificates or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Guarantor and
the Companies on the one hand and of you on the other hand in connection with
the statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Guarantor and the Companies on the one hand
and you on the other hand shall be deemed to be in the
<PAGE>
23
same respective proportions as the net proceeds from the offering of the Offered
Certificates (before deducting expenses) received by the Pass Through Trustee
and the total underwriting commissions received by you, in each case as set
forth in the table and footnotes thereto on the cover of the Prospectus
Supplement, bear to the aggregate public offering price of the Offered
Certificates. The relative fault of the Guarantor and the Companies on the one
hand and you on the other hand shall be determined by reference to, among other
things, whether the untrue or allegedly untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to information
supplied by the Guarantor or the Companies or by you and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Guarantor, the Companies and you agree that it would not be just
and equitable if contribution pursuant to this Article VI were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Article VI, you shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Offered Certificates underwritten by you and distributed to the public were
offered to the public exceeds the amount of any damages that you have otherwise
been required to pay by reason of such untrue or allegedly untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided in this Article VI are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
The indemnity and contribution agreements contained in this Article VI
and the representations and warranties of the Guarantor and the Companies
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of you or any person controlling you or by or on behalf of the
Guarantor or either Company, its officers or directors or any other person
controlling the Guarantor or either Company and (iii) acceptance of and payment
for any of the Offered Certificates.
<PAGE>
24
VII.
This Agreement shall be subject to termination in your absolute
discretion, by notice given to the Guarantor or the Companies, if (a) after the
execution and delivery of this Agreement and prior to the Closing Date (i)
trading generally shall have been suspended or materially limited on or by, as
the case may be, any of the New York Stock Exchange, the American Stock
Exchange, the National Association of Securities Dealers, Inc., the Chicago
Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board
of Trade, (ii) trading of any securities of the Guarantor or either Company
shall have been suspended on any exchange or in any over-the-counter market,
(iii) a general moratorium on commercial banking activities in New York shall
have been declared by either Federal or New York State authorities, or (iv)
there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis that, in your judgment, is
material and adverse and (b) in the case of any of the events specified in
clauses (a)(i) through (iv), such event singly or together with any other such
event would, in your reasonable judgement after consultation with the Guarantor,
prevent or materially impair the marketing, or enforcement of contracts for
sale, of the Offered Certificates on the terms and in the manner contemplated in
the Prospectus.
VIII.
If this Agreement shall be terminated by you, because of any failure
or refusal on the part of the Guarantor or either Company to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Guarantor or either Company shall be unable to perform its
obligations under this Agreement, the Guarantor and each Company, jointly and
severally, will reimburse you for all out-of-pocket expenses (including the fees
and disbursements of your counsel) reasonably incurred by you in connection with
this Agreement or the offering contemplated hereunder.
This Agreement may be signed in two or more counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
<PAGE>
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York.
Very truly yours,
MOBIL MARINE FINANCE
COMPANY I INC.
By: /s/ D.D. Drumheller
--------------------------------
D.D. Drumheller
Vice President and Chief
Financial Officer
MOBIL MARINE FINANCE
COMPANY II INC.
By: /s/ D.D. Drumheller
--------------------------------
D.D. Drumheller
Vice President and Chief
Financial Officer
MOBIL CORPORATION
By: /s/ T.C. Deloach, Jr.
--------------------------------
T.C. Deloach, Jr.
Senior Vice President
and Chief Financial Officer
Accepted as of the date first
above written:
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Bruce Poane
--------------------------------
Bruce Poane
Vice President
<PAGE>
SCHEDULE A
Aggregate
Pass Through Principal Final
Certificate Amount Distribution Underwriting
Designation at Maturity Interest Rate Date Commissions
- -------------- ------------ -------------- ------------ -------------
1996-A $231,900,000 6.97% July 2, 2017 .65%
<PAGE>
EXHIBIT 4.1
This Pass Through Trust Supplement No. 1996-A, dated as of December 19,
1996 (herein called the "Trust Supplement"), among Mobil Corporation, a Delaware
----------------
corporation (the "Guarantor"), Mobil Marine Finance Company I Inc., a Delaware
---------
corporation ("MMFC I") and Mobil Marine Finance Company II Inc., a Delaware
------
corporation ("MMFC II;" MMFC I and MMFC II being collectively called the
-------
"Companies" and individually a "Company"), and State Street Bank and Trust
- ---------- -------
Company (the "Trustee"), to the Pass Through Trust Agreement, dated as of
-------
October 4, 1996, among the Guarantor, the Companies, six other companies named
therein and the Trustee (the "Basic Agreement").
---------------
W I T N E S S E T H:
- - - - - --- - - -
WHEREAS, the Basic Agreement, unlimited as to the aggregate principal
amount of Certificates (unless otherwise specified herein, capitalized terms
used herein without definition having the respective meanings specified
heretofore in the Basic Agreement) which may be issued thereunder, has
heretofore been executed and delivered;
WHEREAS, each Owner Trust, acting at the direction of its respective Owner
Participant, will issue, on a non-recourse basis Secured Notes, among other
things, to finance in part the purchase price of the vessel to be purchased by
such Owner Trust and leased to a Company pursuant to the related Charter;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement as
supplemented by this Trust Supplement (the "Agreement"), the Trustee shall
----------
purchase such Secured Notes issued by each Owner Trust and shall hold such
Secured Notes in trust for the benefit of the Certificateholders;
WHEREAS, all of the conditions and requirements necessary to make this
Trust Supplement, when duly executed and delivered, a valid, binding and legal
instrument in accordance with its terms for the purposes herein expressed, have
been done, performed and fulfilled, and the execution and delivery of this Trust
Supplement in the form and with the terms hereof have been in all respects duly
authorized;
WHEREAS, this Trust Supplement is subject to the provisions of the Trust
Indenture Act of 1939, as amended, and shall, to the extent applicable, be
governed by such provisions;
NOW THEREFORE, in consideration of the premises herein, it is agreed among
the Guarantor, the Companies and the Trustee as follows:
<PAGE>
2
ARTICLE I
DECLARATION OF TRUST
Section 1.01. Declaration of Trust. The Trustee hereby declares the
--------------------
creation of this Trust (the "1996-A Trust") for the benefit of the
------------
Certificateholders, and the initial Certificateholders as the grantors of the
1996-A Trust, by their respective acceptances of the Certificates, join in the
creation of this 1996-A Trust with the Trustee.
ARTICLE II
THE CERTIFICATES
Section 2.01. The Certificates. There is hereby created a series of
----------------
Certificates to be issued under this Agreement to be distinguished and known as
"Pass Through Certificates, Series 1996-A" (hereinafter defined as the "Series
------
1996-A Certificates"). Each Series 1996-A Certificate represents a Fractional
- -------------------
Undivided Interest in the 1996-A Trust created hereby.
The terms and conditions applicable to the Series 1996-A Certificates are
as follows:
(a) The aggregate principal amount at maturity of the Series 1996-A
Certificates that shall be authenticated under the Agreement (except for
Series 1996-A Certificates authenticated and delivered pursuant to Sections
3.3, 3.4 and 3.5 of the Basic Agreement) upon their initial issuance is
$231,900,000.
(b) The Cut-off Date is January 31, 1997.
(c) The Regular Distribution Dates with respect to any payment of
Scheduled Payments means each January 2 and July 2 commencing July 2, 1997,
until payment of all of the Scheduled Payments to be made under the Secured
Notes has been made.
(d) The Special Distribution Dates are as follows: (i) when used with
respect to the redemption or purchase of any Secured Notes, the day (which
shall be a Business Day) on which such redemption or purchase is scheduled
to occur pursuant to the terms of the applicable Indenture and (ii) when
used with respect to a Special Payment other than as described in clause
(i) above, 20 days after the last date on
<PAGE>
3
which the Trustee must give notice pursuant to Section 4.2(c) of the Basic
Agreement (or the next Business Day after such 20/th/ day if such date is
not a Business Day).
(e) (i) The Series 1996-A Certificates shall be in the form
attached hereto as Exhibit A.
---------
(ii) The Series 1996-A Certificates shall be Book-Entry
Certificates and shall be subject to the conditions set forth in the Letter
of Representations among the Guarantor, the Companies, the Trustee and The
Depositary Trust Company, the initial Clearing Agency, attached hereto as
Exhibit B.
---------
(f) The Scheduled Payments of principal shall be as set forth in
Exhibit C hereto.
---------
(g) Each Owner Trust, acting at the direction of the Owner
Participant, will issue on a non-recourse basis, the Secured Notes, the
proceeds of which shall be used, among other things, to finance in part the
purchase price to such Owner Trust of one of the following four double-
hulled very large crude carriers built or being built by Sumitomo Heavy
Industries and registered or to be registered in the Marshall Islands
(collectively the "Vessels");
1. The "M.V. Eagle" delivered in August 1993 (the "Eagle").
-----
2. The "M.V. Raven" delivered in June 1996 (the "Raven").
-----
3. Hull No. 1233 being built under the Construction Contract dated
June 28, 1996 and scheduled to be delivered in the fourth quarter
of 1998 ("Hull No. 1233").
-------------
4. Hull No. 1234 being built under the Construction Contract dated
June 28, 1996 and scheduled to be delivered in the second quarter
of 1999 ("Hull No. 1234").
-------------
The Raven, Hull No. 1233 and Hull No. 1234 are being chartered to MMFC
I and the Eagle is being chartered to MMFC II.
(h) The proceeds of the Series 1996-A Certificates shall be used to
purchase the Secured Notes in the respective principal amounts and at the
purchase prices specified below:
<PAGE>
4
<TABLE>
<CAPTION>
Principal Payable at
Vessel Purchase Price Maturity
------ -------------- ----------------
<S> <C> <C>
Eagle $ 47,800,000.00 Same as Purchase Price
Raven $ 58,500,000.00 Same as Purchase Price
Hull No. 1233 $ 54,622,315.40 $ 62,800,000.00
Hull No. 1234 $ 52,782,810.60 $ 62,800,000.00
--------------- ---------------
$213,705,126.00 $231,900,000.00
</TABLE>
The Secured Notes are not senior or subordinate to any other Secured Notes.
(i) The Series 1996-A Certificates are not subject to any
intercreditor agreement, liquidity or credit facility or similar agreement.
Neither the Guarantor nor any Company may deliver Series 1996-A
Certificates or cash to the Trustee in exchange for Secured Notes.
(j) The related Note Documents are as follows:
(i) Each of the following Indentures:
Trust Indenture, Assignment of Charter and Head Lease and Security
Agreement (DUMOCO Eagle Trust), dated as of December 19, 1996;
Trust Indenture, Assignment of Charter and Head Lease and Security
Agreement (SAMOCO Raven Trust), dated as of December 19, 1996;
Trust Indenture, Assignment of Charter and Head Lease and Security
Agreement (SAMOCO 1233 Trust), dated as of December 19, 1996;
Trust Indenture, Assignment of Charter and Head Lease and Security
Agreement (SAMOCO 1234 Trust), dated as of December 19, 1996;
(ii) Each of the following Secured Notes:
Series 1996 A-1 Secured Non-Recourse Note (SAMOCO Raven Trust), dated
December 19, 1996;
Series 1996 A-2 Secured Non-Recourse Note (DUMOCO Eagle Trust), dated
December 19, 1996;
<PAGE>
5
Series 1996 A-3 Secured Non-Recourse Discount Note (SAMOCO 1233
Trust), dated December 19, 1996;
Series 1996 A-4 Secured Non-Recourse Discount Note (SAMOCO 1234
Trust), dated December 19, 1996;
(iii) Each of the following Charters:
VLCC Charter Party (Eagle), dated as of December 19, 1996;
VLCC Charter Party (Raven), dated as of December 19, 1996;
VLCC Charter Party (Hull No. 1233), dated as of December 19, 1996;
VLCC Charter Party (Hull No. 1234), dated as of December 19, 1996;
(iv) Each of the following Participation Agreements:
Participation Agreement (DUMOCO Eagle Trust), dated as of December 19,
1996;
Participation Agreement (SAMOCO Raven Trust), dated as of December 19,
1996;
Participation Agreement (SAMOCO 1233 Trust), dated as of December 19,
1996;
Participation Agreement (SAMOCO 1234 Trust), dated as of December 19,
1996;
(v) Each of the following Trust Agreements:
Declaration and Agreement of Trust (DUMOCO Eagle Trust), dated
November 22, 1996, as amended and restated December 19 1996;
Declaration and Agreement of Trust (SAMOCO Raven Trust), dated
November 22, 1996, as amended and restated December 19 1996;
Declaration and Agreement of Trust (SAMOCO 1233 Trust), dated November
22, 1996, as amended and restated December 19 1996;
<PAGE>
6
Declaration and Agreement of Trust (SAMOCO 1234 Trust), dated November
22, 1996, as amended and restated December 19 1996;
(vi) Each of the following Guaranties:
Mobil Eagle Guarantee, dated December 19, 1996;
Mobil Raven Guarantee, dated December 19, 1996;
Mobil Hull No. 1233 Guarantee, dated December 19, 1996;
Mobil Hull No. 1234 Guarantee, dated December 19, 1996;
(vii) Each of the following Ship Mortgages and, when delivered,
the Ship Mortgages delivered in connection with Hull No. 1233 and Hull
No. 1234:
Ship Mortgage (Eagle), dated December 19, 1996;
Ship Mortgage (Raven), dated December 19, 1996;
(viii) Each of the following Bills of Sale and, when delivered,
the Bills of Sale delivered in connection with Hull No. 1233 and Hull No.
1234:
Bill of Sale (Eagle), dated December 2, 1996;
Bill of Sale (Raven), dated December 3, 1996;
(ix) Each of the following Construction Contracts:
Construction Contract (Hull No. 1233), dated June 28, 1996;
Construction Contract (Hull No. 1234), dated June 28, 1996;
(x) Each of the following Conditional Sale Agreements between
the U.K. Lessor, as purchaser, and the respective Owner Trust, as
seller:
Conditional Sale Agreement (Eagle), dated December 10, 1996;
Conditional Sale Agreement (Raven), dated December 10, 1996;
Conditional Sale Agreement (Hull No. 1233), dated December 10, 1996;
<PAGE>
7
Conditional Sale Agreement (Hull No. 1234), dated December 10, 1996;
(xi) Each of the following Head Leases between the U.K. Lessor
(as defined in each Indenture) and the respective Owner Trust, as
lessee:
Lease Agreement (Eagle), dated December 10, 1996;
Lease Agreement (Raven), dated December 10, 1996;
Lease Agreement (Hull No. 1233), dated December 10, 1996;
Lease Agreement (Hull No. 1234), dated December 10, 1996;
(xii) Each of the following Lease Support Agreements among the
U.K. Lessor, the respective Charterer and the respective Owner Trust:
Lessee Support Agreement (Eagle), dated December 10, 1996;
Lessee Support Agreement (Raven), dated December 10, 1996;
Lessee Support Agreement (Hull No. 1233), dated December 10, 1996;
Lessee Support Agreement (Hull No. 1234), dated December 10, 1996;
(xiii) Each of the following Lessor's Security Assignments among
the U.K. Lessor, the Indenture Trustee, the related Owner Trust and
the related Owner Participant:
Lessor's Security Assignment (Eagle), dated December 19, 1996;
Lessor's Security Assignment (Raven), dated December 19, 1996;
Lessor's Security Assignment (Hull No. 1233), dated December 19,
1996;
Lessor's Security Assignment (Hull No. 1234), dated December 19,
1996;
(xiv) Each of the following mortgages between the U.K. Lessor, as
mortgagor, and the respective Owner Trust, as mortgagee, and when
delivered, the mortgages delivered in connection with Hull No. 1233
and Hull No. 1234:
Mortgage (Eagle), dated December 10, 1996;
<PAGE>
8
Mortgage (Raven), dated December 10, 1996;
ARTICLE III
DEFINITIONS
Section 3.01. Definitions. For the purposes of the 1996-A Trust the
-----------
following defined terms shall be added to Section 1.1(b) of the Basic Agreement
or shall be amended to read as set forth below, as the case may be:
Accreting Secured Note: Means a Secured Note that in place of paying
----------------------
interest in cash for any period during its term shall have an accretion of
discount for such period. As used in this Agreement the principal amount
of an Accreting Secured Note refers to the accreted value of such Accreting
Secured Note during the period that such Accreting Secured Note is
accreting discount and thereafter the face amount thereof. The Secured
Note issued in respect of Hull No. 1233 is an Accreting Secured Note until
January 2, 1999 and the Secured Note issued in respect of Hull No. 1234 is
an Accreting Secured Note until July 2, 1999.
Guaranty: Means each guaranty of the Guarantor of the obligations of
--------
each Company under the related Charter.
Note Documents: With respect to any Secured Note, means the related
--------------
Indenture, Participation Agreement, Charter, Guaranty and the other
agreements and documents assigned to the Indenture Trustee pursuant to the
related Indenture.
Pool Balance: With respect to any Trust, means as of any date the
------------
aggregate unpaid principal amount (including accretion of discount) of the
Secured Notes held in such Trust on such date plus the amount of the
principal payments on such Secured Notes held by the Trustee and not yet
distributed plus the amount of any moneys held in the related Escrow
Account (other than earnings thereon). The Pool Balance as of any Regular
Distribution Date or Special Distribution Date with respect to such Trust
shall be computed after giving effect to the payment of principal, if any,
of such Secured Notes and distribution thereof to be made on that date and,
in the case of Accreting Secured Notes, the accretion of discount to such
date.
Pool Factor: With respect to any Trust, means as of any date the
-----------
quotient (rounded to the seventh decimal place, with .00000005 being
rounded upwards) computed by dividing (i) the Pool Balance by (ii) the
aggregate principal amount of the Certificates (including accretion of
discount) issued by such Trust. The Pool Factor as of any Regular
Distribution Date or Special Distribution Date with respect
<PAGE>
9
to such Trust shall be computed after giving effect to the payment of
principal, if any, on the Secured Notes held in such Trust and distribution
thereof to be made on that date and, in the case of Accreting Secured
Notes, the accretion of discount to such date.
Property: With respect to any Secured Note means all right, title and
--------
interest of the related Owner Trust to the related Vessel including
contractual rights.
ARTICLE IV
THE TRUSTEE
Section 4.01. The Trustee. The Trustee is hereby directed to execute
-----------
and deliver the Note Purchase Agreements on or prior to the Issuance Date in the
form delivered to the Trustee by the related Company. The Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement or the due execution hereof by the
Guarantor or the Companies, or for or in respect of the recitals and statements
contained herein, all of which recitals and statements are made solely by the
Companies.
Except as herein otherwise provided, no duties, responsibilities or
liabilities are assumed, or shall be construed to be assumed by the Trustee by
reason of this Trust Supplement other than as set forth in the Basic Agreement,
and this Trust Supplement is executed and accepted on behalf of the Trustee,
subject to all the terms and conditions set forth in the Basic Agreement, upon
the effectiveness thereof, as fully to all intents as if the same were herein
set forth at length.
The Trustee represents and warrants that this Trust Supplement has
been and each Note Purchase Agreement has been or will be duly executed and
delivered by one of its officers who is duly authorized to execute and deliver
such document on its behalf.
<PAGE>
10
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01. Assignment of Charter. Neither Company will assign its
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rights under Article 20(c) of any of the Charters to which it is a party unless
the assignee enters into a supplement to this Agreement pursuant to which it
shall agree to fulfill the obligations of such Company hereunder.
Section 5.02. Basic Agreement Ratified. Except and so far as herein
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expressly provided, all of the provisions, terms and conditions of the Basic
Agreement are in all respects ratified and confirmed; and the Basic Agreement
and this Trust Supplement shall be taken, read and construed as one and the same
instrument.
Section 5.03. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE SERIES
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1996-A CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
Section 5.04. Execution and Counterparts. This Trust Supplement may
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be executed in any number of counterparts, each of which shall be an original,
but such counterparts shall together constitute but one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the Guarantor, the Companies and the Trustee have
caused this Trust Supplement to be duly executed by their respective officers
thereto duly authorized, as of the day and year first written above.
MOBIL CORPORATION
By: /s/ R.E. Sliwinski
----------------------
Name: R.E. Sliwinski
Title: Attorney in Fact
MOBIL MARINE FINANCE COMPANY I INC.
By: /s/ R.E. Sliwinski
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Name: R.E. Sliwinski
Title: Authorized Signatory
MOBIL MARINE FINANCE COMPANY II INC.
By: /s/ R.E. Sliwinski
----------------------
Name: R.E. Sliwinski
Title: Authorized Signatory
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By: /s/ Ruth A. Smith
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Name: Ruth A. Smith
Title: Vice President
<PAGE>
EXHIBIT 4.2
EXECUTION COPY
--------------
TRUST INDENTURE, ASSIGNMENT OF CHARTER AND HEAD LEASE
AND SECURITY AGREEMENT
among
SAMOCO RAVEN TRUST,
-------------------
a Delaware Business Trust,
created under the
Trust Agreement dated
as of November 22, 1996, with
the Owner Participant thereto
and
STATE STREET BANK AND TRUST COMPANY
Indenture Trustee
Dated as of December 19, 1996
Leveraged Lease of one Very Large Crude Carrier
<PAGE>
TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions................................................ 5
ARTICLE II
THE SECURED NOTES
SECTION 2.01. Secured Notes.............................................. 5
SECTION 2.02. Payment from Indenture Estate Only......................... 6
SECTION 2.03. Method of Payment.......................................... 7
SECTION 2.04. Note Register.............................................. 8
SECTION 2.05. Registered Owners.......................................... 8
SECTION 2.06. Transfer, Exchange and Replacement of Notes................ 8
SECTION 2.07. New Notes, Payment of Expenses............................. 9
SECTION 2.08. Additional Notes........................................... 10
SECTION 2.09. Termination of Interest in Indenture Estate................ 14
SECTION 2.10. Equally and Ratably Secured................................ 14
ARTICLE III
REDEMPTION AND REFUNDING
SECTION 3.01. Generally.................................................. 14
SECTION 3.02. Mandatory Casualty Redemption.............................. 14
SECTION 3.03. Mandatory Early Termination Redemption..................... 14
SECTION 3.04. Assumption of Obligations of Owner Trust................... 15
SECTION 3.05. Optional Redemption........................................ 17
SECTION 3.06. Owner Trust's and Owner Participant's Option
to Redeem or Purchase Secured Notes........................ 17
SECTION 3.07. Deposited Redemption Moneys................................ 19
SECTION 3.08. Acquisition of Secured Notes............................... 19
SECTION 3.09. Condition to Redemption and Refunding...................... 19
SECTION 3.10. Notice of Certain Redemptions.............................. 19
<PAGE>
ii
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE INDENTURE ESTATE
SECTION 4.01. Distribution of Hire....................................... 20
SECTION 4.02. Certain Distributions...................................... 21
SECTION 4.03. Distribution After Indenture Event of
Default.................................................... 22
SECTION 4.04. Application of Payments on Secured Notes 23
SECTION 4.05. Applications of Payments According
to Applicable Operative
Document Provisions........................................ 24
SECTION 4.06. Amounts Received for Which No Provision
Is Made.................................................... 24
SECTION 4.07. Payment Procedures......................................... 25
SECTION 4.08. Application of Payments Under Parent
Guaranty................................................... 25
ARTICLE V
COVENANTS OF OWNER TRUST AND THE OWNER TRUSTEES;
CERTAIN AGREEMENTS; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 5.01. Covenants of Owner Trust and the
Managing Trustee; Certain
Agreements................................................. 25
SECTION 5.02. Indenture Events of Default................................ 27
SECTION 5.03. Certain Rights............................................. 29
SECTION 5.04. Remedies................................................... 31
SECTION 5.05. Suit; Possession; Title; Sale of
Indenture Estate........................................... 33
SECTION 5.06. Remedies Cumulative........................................ 36
SECTION 5.07. Discontinuance of Proceedings.............................. 37
SECTION 5.08. Waiver of Past Defaults.................................... 37
SECTION 5.09. No Action Contrary to Certain Third
Party Rights............................................... 37
SECTION 5.10. Rights of Holders of Secured Notes......................... 37
SECTION 5.11. Limitation on Suits by Holders............................. 38
<PAGE>
iii
ARTICLE VI
DUTIES OF THE INDENTURE TRUSTEE
SECTION 6.01. Certain Actions............................................ 38
SECTION 6.02. Action Upon Instructions................................... 39
SECTION 6.03. Release of Lien of Indenture............................... 39
SECTION 6.04. Indemnification............................................ 40
SECTION 6.05. No Implied Duties.......................................... 41
SECTION 6.06. Duties to Remove Certain Liens............................. 41
SECTION 6.07. No Action Except Under Operative Documents
or Instructions............................................ 41
SECTION 6.08. Certain Rights of the Owner Trust and the
Owner Participant.......................................... 41
SECTION 6.09. Filing of Financing and Continuation Statements............ 42
SECTION 6.10. Publishing of Notices...................................... 42
SECTION 6.11. Taxes; Withholding; Information Reporting.................. 42
ARTICLE VII
THE INDENTURE TRUSTEE AND THE OWNER TRUSTEE
SECTION 7.01. Acceptance of Trusts and Duties............................ 43
SECTION 7.02. Absence of Duties Except as Specified...................... 43
SECTION 7.03. No Representations or Warranties........................... 44
SECTION 7.04. No Segregation of Moneys; No Interest; Investments......... 44
SECTION 7.05. Reliance; Agents; Advice of Counsel........................ 45
SECTION 7.06. No Compensation from Holders or Indenture Estate........... 45
SECTION 7.07. Right of the Indenture Trustee to Perform Covenants, Etc... 46
SECTION 7.08. Moneys for Payments in Respect of Notes to be
Held in Trust.............................................. 46
SECTION 7.09. Disposition of Moneys Held for Payments of Notes........... 46
ARTICLE VIII
SUCCESSOR TRUSTEES AND ADDITIONAL TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee......................... 47
SECTION 8.02. Resignation of Indenture Trustee; Appointment
of Successor.............................................. 47
SECTION 8.03. Co-Trustees and Separate Trustees......................... 48
<PAGE>
iv
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Indenture Supplements Without Consent of
Holders.................................................... 50
SECTION 9.02. Supplements and Amendments to Operative Documents With
Consent Holders of Notes................................... 51
SECTION 9.03. Execution of Indenture Supplement,
Amendments, Etc............................................ 55
SECTION 9.04. Effect of Indenture Supplement............................. 55
SECTION 9.05. Reference in Secured Notes to Indenture
Supplements................................................ 55
SECTION 9.06. Notices of Indenture Supplements and
Amendments, Etc............................................ 56
SECTION 9.07. Charterer Rights........................................... 56
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture.................................. 56
SECTION 10.02. No Legal Title to Indenture Estate in Holders............. 56
SECTION 10.03. Power of Attorney......................................... 56
SECTION 10.04. Regarding the Owner Trust and the Owner Trustees.......... 57
SECTION 10.05. Notices................................................... 58
SECTION 10.06. Severability of Provisions................................ 58
SECTION 10.07. No Oral Modification or Continuing Waivers................ 58
SECTION 10.08. Successors and Assigns.................................... 58
SECTION 10.09. Headings; Table of Contents............................... 59
SECTION 10.10. Normal Commercial Relations............................... 59
SECTION 10.11. Governing Law............................................. 59
SECTION 10.12. Execution................................................. 59
SECTION 10.13. Security Agreement........................................ 59
SECTION 10.14. Benefits of Indenture..................................... 59
Appendix A Definitions
Schedule 1 Description of Vessel
Exhibit A Form of Secured Note
Exhibit B Maturity Dates, Etc.
Exhibit C Form of Substitution Agreement
Exhibit D Form of Indenture Supplement
Exhibit E Form of Ship Mortgage
<PAGE>
TRUST INDENTURE, ASSIGNMENT OF CHARTER AND HEAD LEASE,
AND SECURITY AGREEMENT
This TRUST INDENTURE, ASSIGNMENT OF CHARTER AND HEAD LEASE, AND SECURITY
AGREEMENT dated as of December 19, 1996 (this "Indenture"), between SAMOCO RAVEN
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TRUST, a trust created pursuant to the Delaware Business Trust Act (the "Owner
-----
Trust") under the Trust Agreement (as hereinafter defined), under which DEUTSCHE
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MORGAN GRENFELL (CAYMAN) LIMITED, a Cayman Islands banking corporation is the
Managing Trustee, (together with its permitted successors and assigns, the
"Managing Trustee"), acting not individually, except as otherwise provided
- -----------------
herein (when acting in such individual capacity, the "Cayman Trust Company"),
--------------------
but solely as trustee for the Owner Trust (the Managing Trustee in such capacity
being, the "Owner Trustee", and STATE STREET BANK AND TRUST COMPANY, a
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Massachusetts trust company (together with its permitted successors and assigns,
the "Indenture Trustee").
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WITNESSETH:
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WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant, the Cayman Trust Company and Wilmington
Trust Company (the "Delaware Trust Company") have heretofore entered into the
Declaration of Agreement of Trust dated as of November 22, 1996 (the "Trust
-----
Agreement"), whereby, among other things, the Cayman Trust Company and the
- ---------
Delaware Trust Company in their respective capacities as Managing Trustee and
Delaware Trustee thereunder have declared a certain trust for the use and
benefit of the Owner Participant, subject, however, to the Lien of this
Indenture, and the Owner Trust is authorized and directed to execute and deliver
this Indenture;
WHEREAS, the Owner Trust desires by this Indenture to provide, among other
things, (i) for the issuance by the Owner Trust to the Pass Through Trustee of
the Series 1996-A-1 Secured Notes, a form of which is set forth in Exhibit A
hereto, upon payment by the Pass Through Trustee of the aggregate principal
amount of such Secured Notes, (ii) for the grant, assignment, mortgage and
pledge by the Owner Trust to the Indenture Trustee, as part of the Indenture
Estate thereunder, among other things, all of the right, title and interest of
the Owner Trust in, to and under, as the case may be, the Vessel (by virtue of
the grant hereunder and the grant under the Ship Mortgage), the Bill of Sale,
the Head Lease, the Conditional Sale Agreement, the Charter and the Parent
Guaranty, and all payments and other amounts received hereunder or thereunder
(other than Excepted
<PAGE>
2
Payments), in accordance with the terms hereof and thereof, as security for,
among other things, the Owner Trust's obligations to the Indenture Trustee, the
Loan Participants and the other Holders and for the benefit and security of the
Loan Participants and such Holders;
WHEREAS, all things have been done to make the Secured Notes, when executed
by the Owner Trust and authenticated, issued and delivered hereunder, the legal,
valid, binding and enforceable obligations of the Owner Trust in accordance with
their terms; and
WHEREAS, all things necessary to make this Indenture the legal, valid,
binding and enforceable obligation of the Owner Trust, for the uses and purposes
herein set forth, in accordance with its terms, have been done and performed and
have happened, and the Indenture Trustee has duly accepted the trust created
hereby and as evidenced thereof has joined in the execution hereof;
NOW, THEREFORE, THIS TRUST INDENTURE, ASSIGNMENT OF CHARTER AND SECURITY
AGREEMENT WITNESSETH that, to secure (i) the prompt payment of the principal of,
Make-Whole Amount, if any, and interest on all Secured Notes from time to time
Outstanding hereunder and of all other amounts payable to the Holders (whether
as Holders or Loan Participants) hereunder, under the Secured Notes and under
the other Operative Documents, (ii) the performance and observance by the Owner
Trust of all of the provisions, covenants and agreements contained in the
Participation Agreement, in the Secured Notes and in the other Operative
Documents for the benefit of the Indenture Trustee or the Holders herein, and
(iii) the performance and observance by the Owner Participant of its covenants
and agreements contained in the Operative Documents (the obligations described
in the above clauses (i), (ii) and (iii), collectively, the "Indenture
---------
Indebtedness"), and for the uses and purposes and subject to the terms and
- ------------
provisions hereof, and in consideration of the premises and of the covenants
herein contained and of the acceptance of the Secured Notes by the Holders
thereof:
GRANTING CLAUSE
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The Owner Trust, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in order to secure the payment and
performance of the Indenture Indebtedness, hereby presently irrevocably
mortgages, hypothecates and pledges unto the Indenture Trustee and creates to
and for the benefit of the Indenture Trustee, a security interest in and
mortgage lien on, and assigns by way of security, all of the right, title and
interest of the Owner Trust in, to and under the following property, rights,
interests, and privileges, now owned or in the future acquired by the Owner
Trust or in which the Owner Trust now has or may in the future acquire any
estate, right, title or interest (which collectively, together with all of the
Indenture Trustee's right, title and interest in and to the Vessel described in
the Ship Mortgage, by virtue of the grant of the Ship Mortgage and the
<PAGE>
3
U.K. Security Assignment, including all property hereafter subjected to the Lien
of this Indenture, the Ship Mortgage or the U.K. Security Assignment by any
Indenture Supplement or any mortgage supplemental hereto or thereto, but
excluding Excepted Payments, shall constitute the "Indenture Estate"), to wit:
----------------
(a) all right, title and interest of the Owner Trust in the Vessel (as
described in Schedule 1 hereto), including, without limitation, any
Component (including any replacement Component) or Modification to the
Vessel which, pursuant to the terms of the Conditional Sale Agreement and
the Charter, are the property of the Owner Trust;
(b) the Bill of Sale and all rights, powers and remedies of the Owner
Trust pursuant thereto, whether arising thereunder or by statute, at law,
in equity or otherwise, subject to the rights of the U.K. Lessor under the
Conditional Sale Agreement;
(c) the Charter, including, without limitation, (i) all amounts of
hire, rent, income insurance proceeds and requisition, indemnity or other
payments of any kind for or with respect to any asset leased or subleased
thereunder, (ii) all rights of the Owner Trust to exercise any election or
option, or to give any notice, consent, waiver or approval under or in
respect of the Charter, or to accept any surrender or enter into any
modification thereof, as the case may be, and (iii) all rights, powers and
remedies of the Owner Trust pursuant to the Charter, whether arising
thereunder or by statute, at law, in equity or otherwise, including,
without limitation, the right to possession of any asset demised
thereunder;
(d) the Conditional Sale Agreement, the Head Lease, the Lessee Support
Agreement and the Lessor's Mortgage, including, without limitation, (i) all
amounts payable to the Owner Trust under any of them, (ii) all right of the
Owner Trust to exercise any election or option, or to give any notice,
consent, waiver or approval under or in respect of any such agreement, or
to accept any surrender or enter into any modification thereof, as the case
may be, and (iii) all rights, powers and remedies of the Owner Trust
pursuant to any such agreement, whether arising thereunder or by statute,
at law, in equity or otherwise;
(e) the Parent Guaranty, including without limitation, (i) all amounts
payable thereunder, (ii) all rights of the Owner Trust to exercise any
election or option, or to give any notice, consent, waiver or approval
under or in respect of the Parent Guaranty, or to accept any surrender or
enter into any modification thereof, as the case may be, and (iii) all
rights, powers and remedies of the Owner Trust pursuant to the Parent
Guaranty, whether arising thereunder or by statute, at law, in equity or
otherwise;
<PAGE>
4
(f) all moneys and securities now or hereafter paid or deposited or
required to be paid or deposited to or with the Indenture Trustee pursuant
to any term of any Operative Document, and held or required to be held by
the Indenture Trustee hereunder;
(g) to the extent assignable, any and all permits, certificates,
approvals and authorizations, however characterized, issued or in any way
furnished in connection with the Vessel, whether necessary or not for the
operation and use of the Vessel;
(h) all the tolls, rents, issues, profits, products, revenues and
other income of the property subjected or required to be subjected to the
Lien of this Indenture, including all payments or proceeds payable to the
Owner Trust upon or after termination of the Charter as the result of the
sale, lease or other disposition thereof, and all estate, right, title and
interest of every nature whatsoever of the Owner Trust in and to the same
and every part thereof; and
(i) all rights or property which may be received upon the exercise of
any remedy or option contained in any of the above-described instruments
and all proceeds in whatever form of all or any part of any of the
foregoing;
EXCLUDING, HOWEVER, from the foregoing grant, and thereby from the
Lien of this Indenture and from the Indenture Estate, any and all Excepted
Payments; and
SUBJECT to the rights of the Owner Trust and the Owner Participant
hereunder, including, without limitation, Section 6.08;
TO HAVE AND TO HOLD the aforesaid property unto the Indenture Trustee,
its successors and assigns, for the benefit and security of the Holders, without
any priority of any one Secured Note over any other, and for the uses and
purposes and subject to the terms and conditions set forth in this Indenture.
This Indenture is a mortgage given to secure the payment of the Indenture
Indebtedness and is also intended to operate as, among other things, a security
agreement and an assignment of Bareboat Hire, leases and rents.
It is expressly agreed that anything contained in this Indenture to
the contrary notwithstanding, the Owner Trust shall remain liable under the
Operative Documents to which it is a party or a third party beneficiary to
perform all of the obligations of the Owner Trust thereunder or by which it is
bound, all in accordance with and pursuant to the terms and provisions of each
thereof and the Holders and, except as expressly provided herein, the Indenture
Trustee shall have no obligation or liability under any Operative Document by
reason of or arising out of this Indenture. None of the Indenture Trustee or
any Holder shall be required or obligated in any manner to perform or fulfill
any obligation of the Owner Trust under or pursuant to any Operative Document
or, except as herein expressly provided,
<PAGE>
5
to make any payment, or to make any inquiry as to the nature or sufficiency of
any payment received by it, or to present or file any claim, or to take any
action to collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time.
Simultaneously with the execution and delivery hereof, the Owner
Trust, as mortgagor, shall execute and deliver the Ship Mortgage, substantially
in the form annexed hereto as Exhibit E, except that the blanks in such form
shall be filled in and such form may be modified as contemplated therein.
Accordingly, the Owner Trust and the Indenture Trustee hereby agree
for themselves and for the benefit and security of the Holders as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Unless otherwise defined herein, for the
-----------
purposes hereof, capitalized terms used herein and not otherwise defined shall
have the meanings assigned to them in Appendix A. References in this Indenture
to Sections, subsections, paragraphs, Schedules, Appendices and Exhibits are to
Sections, subsections and paragraphs in, and Schedules, Appendices and Exhibits
to, this Indenture unless otherwise indicated.
ARTICLE II
THE SECURED NOTES
SECTION 2.01. Secured Notes. (a) Generally. Except for Secured
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Notes issued pursuant to Section 2.06 or 2.08, Secured Notes may be issued only
on the Closing Date. On the Closing Date, the Secured Notes to be issued on
such date pursuant to Section 2.2 of the Participation Agreement shall be duly
executed by the Managing Trustee on behalf of the Owner Trust, duly
authenticated and delivered by the Indenture Trustee and registered in the name
of the Loan Participant to which such Secured Note is being issued. Each
Secured Note shall have attached thereto the Amortization Schedule for such
Secured Note. Receipt by the Indenture Trustee of Secured Notes duly executed
by the Managing Trustee on behalf of the Owner Trust shall constitute
instructions to the Indenture Trustee to authenticate, register and deliver such
Secured Notes on the Closing Date.
<PAGE>
6
(b) Series 1996 A-1 Secured Notes. The Series 1996 A-1 Secured Notes
-----------------------------
shall:
(i) be limited in aggregate principal amount to the amount specified
in Exhibit B hereto (the principal amount of such Secured Note shall be the
face amount thereof as such amount may be reduced from time to time by the
payment of principal installments thereunder);
(ii) be issuable only as registered Secured Notes in denominations of
at least $1,000, or if the remaining principal amount thereof shall be less
than $1,000, such remaining principal amount;
(iii) be dated the Closing Date;
(iv) bear interest on the unpaid principal amount thereof from the
date of such Series 1996 A-1 Secured Notes at the rate specified in Exhibit
B (computed on the basis of a 360-day year consisting of twelve 30-day
months);
(v) provide for payments of interest and otherwise be due and payable
as to principal and interest as specified herein and therein;
(vi) be prepayable only as provided in Article III; and
(vii) be substantially of the tenor and in the form set forth in
Exhibit A.
(c) Execution and Authentication. Each Secured Note shall be signed
----------------------------
on behalf of the Owner Trust by a Responsible Officer of the Managing Trustee,
manually or in facsimile. No Secured Note shall be secured by or entitled to
any benefit under this Indenture, or be valid for any purpose, unless there
appears thereon a certificate of authentication executed by or on behalf of the
Indenture Trustee by the manual signature of a Responsible Officer of the
Indenture Trustee, and such certificate on any Secured Note shall be conclusive
evidence that such Secured Note has been duly authenticated and delivered
hereunder.
SECTION 2.02. Payment from Indenture Estate Only. All payments of
----------------------------------
principal, Make-Whole Amount, if any, and interest to be made by the Owner Trust
and, except as otherwise provided in the Operative Documents, all payments of
any other amounts payable by or on behalf of the Owner Trust under the Secured
Notes and this Indenture, shall be made only from the income and proceeds from
the Indenture Estate, and only to the extent that the Indenture Trustee shall
have received sufficient income or proceeds from the Indenture Estate to make
such payments in accordance with the terms hereof. Each Holder, by its
acceptance of a Secured Note, agrees that it will look solely to the income and
<PAGE>
7
proceeds from the Indenture Estate to the extent available for payment as herein
provided and that (a) none of the Managing Trustee or the Indenture Trustee
(whether in their respective individual or trust capacities) or the Owner Trust
shall be personally liable to such Holder for any amounts payable under the
Secured Notes, nor, except as specifically provided herein or in the other
Operative Documents, for any amounts payable or any liability under this
Indenture and (b) the Owner Participant shall not be liable to the Indenture
Trustee or to any Holder under any circumstances for any reason whatsoever,
except to the extent expressly provided herein or in any other Operative
Document.
SECTION 2.03. Method of Payment. (a) The principal of, and Make-
-----------------
Whole Amount, if any, and interest, on each Secured Note shall be payable in
immediately available funds, the receipt of which has been confirmed by a
Responsible Officer of the Indenture Trustee (which shall be done promptly upon
receipt thereof) on or before 12:00 p.m., New York time, at the place of
receipt, on the due date therefor, to the Indenture Trustee at the corporate
trust office of the Indenture Trustee. Amounts so received by the Indenture
Trustee shall be paid by the Indenture Trustee to each Holder on the due date
therefor without any presentment or surrender of any Secured Note held by such
Holder by whichever of the following methods shall be specified by prior written
notice from such Holder to the Indenture Trustee: (i) by transferring prior to
2:00 p.m., New York City time, on such date such payment to such Holder in
immediately available funds by crediting the amount to be distributed to any
Holder to any account maintained by such Holder with the Indenture Trustee or
(ii) by initiating a wire transfer prior to the time set forth in clause (i) of
this Section 2.03(a) of such amount in immediately available funds to a banking
institution designated in such notice with bank wire transfer facilities for the
account of such Holder, in all cases without any presentment or surrender of any
Secured Note, except that, on the date of the final maturity thereof (whether at
maturity, upon prepayment, acceleration or otherwise), the Holder of each
Secured Note shall surrender such Secured Note promptly after payment; provided
that failure to so present such Secured Note shall not diminish the effect of
full and final payment by the Owner Trust. In the event the Indenture Trustee
shall fail to make any payment as provided in the preceding sentence after its
receipt of funds at the place and on or before the time specified in this
Section 2.03(a), the Indenture Trustee in its individual capacity agrees to
compensate each Holder for loss of use of funds in an amount equal to the
overnight rate for Federal Funds.
(b) Whenever any payment to be made hereunder or pursuant to the terms
of any Secured Note shall be stated to be due on a day which is not a Business
Day, such payment shall be due and payable on the next succeeding Business Day
with the same force and effect as if made on such scheduled date and (provided
such payment is timely made on such succeeding Business Day) no interest shall
accrue on the amount of such payment from and after such scheduled date.
<PAGE>
8
(c) If payment of any installment of principal or interest payable in
accordance with the terms hereof and of the Secured Notes is not paid in full
when due, whether as scheduled or upon acceleration and whether before or after
the maturity date of the Secured Notes, such overdue amount of principal or
interest shall bear (to the extent not prohibited by applicable law) interest,
payable on demand, for each day from and including the date payment thereof was
due to the actual date of payment, at the Overdue Rate.
(d) Subject to Section 6.11, the Holder of any Secured Note shall be
entitled to the principal of, and the Make-Whole Amount, if any, and interest on
such Secured Note free from all rights of set-off or counterclaims of the Owner
Trust, the Indenture Trustee or any prior Holder of such Secured Note. Nothing
set forth in this Section 2.03(d) shall impair the right of the Owner Trust to
receive a return from the Indenture Trustee of any amount unintentionally
overpaid by the Owner Trust in respect of a Secured Note.
SECTION 2.04. Note Register. The Indenture Trustee shall cause to be
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kept at the Indenture Trustee's corporate trust office a register (the "Note
----
Register") for the registration or transfer of the Secured Notes. The Note
- --------
Register shall be maintained by the Indenture Trustee, and the names and
addresses of the registered Holders of the Secured Notes, the transfers of the
Secured Notes and the names and addresses of the transferees of the Secured
Notes shall be entered in the Note Register under such reasonable regulations as
the Indenture Trustee may prescribe. Each Loan Participant shall be provided
reasonable opportunities to inspect the Note Register from time to time.
SECTION 2.05. Registered Owners. The Owner Trust and the Indenture
-----------------
Trustee may deem and treat any registered Holder as the absolute owner of any
Secured Note held by such Holder, as indicated in the Note Register, for the
purpose of receiving payment of all amounts payable with respect to such Secured
Note and for all other purposes, and neither the Owner Trust nor the Indenture
Trustee shall be affected by any notice to the contrary. All such payments so
made shall be valid and effectual to satisfy and discharge the liability of the
Owner Trust upon such Secured Note to the extent of the sum or sums so paid.
SECTION 2.06. Transfer, Exchange and Replacement of Notes. (a)
-------------------------------------------
Secured Notes may be transferred only on the Note Register. Any Secured Note
may be transferred on the Note Register if such Secured Note is surrendered for
cancellation at the corporate trust office of the Indenture Trustee and is
accompanied by an instrument of transfer in form and substance reasonably
satisfactory to the Indenture Trustee, which Secured Note or Secured Notes shall
be cancelled by the Indenture Trustee. A new Secured Note or Secured Notes of
the same series, duly executed by the Owner Trust and registered in the name of
the transferee or transferees in a principal amount or amounts equal to the
principal amount of such transferred Secured Note, shall be duly authenticated
and delivered by the Indenture
<PAGE>
9
Trustee to the transferee or transferees named by the Holder of such transferred
Secured Note in exchange for such transferred Secured Note. Promptly after
registration of the transfer of any Secured Note, the Indenture Trustee shall
give notice thereof to the Charterer and the Owner Trust specifying the name and
address for notices of the transferee or transferees.
(b) Any Secured Note may be exchanged for a new Secured Note if such
Secured Note to be so exchanged is surrendered for cancellation at the corporate
trust office of the Indenture Trustee and is accompanied by the request of the
Holder thereof specifying the denomination of the new Secured Note (which shall
be in denominations of at least $1,000 or, if less, the then unpaid principal
amount thereof) to be issued in exchange therefor. Upon instructions from the
Indenture Trustee, the Owner Trust shall deliver to the Indenture Trustee a new
Secured Note of the same series, duly executed by the Owner Trust and registered
in the name of such Holder in the denominations so requested and in an aggregate
principal amount equal to the aggregate original principal amount of such
Secured Note to be so exchanged, and such new Secured Note shall be duly
authenticated by the Indenture Trustee and delivered by the Indenture Trustee to
such Holder in exchange for such Secured Note to be so exchanged, which Secured
Note shall be cancelled by the Indenture Trustee.
(c) If any Secured Note shall become mutilated or be destroyed, lost
or stolen, upon request of the Holder thereof, a new Secured Note of the same
series, duly executed by the Owner Trust and registered in the name of such
Holder in the same original principal amount as the Secured Note so mutilated,
destroyed, lost or stolen, shall be duly authenticated and delivered by the
Indenture Trustee to such Holder in exchange for such Secured Note, if
mutilated, or in substitution for such Secured Note, if destroyed, lost or
stolen. In the case of a mutilated Secured Note, such Secured Note shall be
surrendered for cancellation at the corporate trust office of the Indenture
Trustee and shall be cancelled by the Indenture Trustee. In the case of a
destroyed, lost or stolen Secured Note, the Holder thereof shall furnish to the
Owner Trust and the Indenture Trustee (i) evidence to their reasonable
satisfaction of the destruction, loss or theft of such Secured Note and
ownership thereof, and (ii) such security or indemnity as may be reasonably
required by them to save them harmless; provided that if the affected Holder is
a Pass Through Trustee, the written agreement of such Holder to indemnify the
Managing Trustee, the Delaware Trustee, the Indenture Trustee and the Owner
Trust (in their respective individual and trust capacities) with respect to such
destroyed, lost or stolen Secured Note, together with written notice of
ownership and destruction, loss or theft thereof, shall satisfy the conditions
of this sentence.
SECTION 2.07. New Notes, Payment of Expenses. (a) Each new Secured
------------------------------
Note issued pursuant to Section 2.06 (a "New Note") upon transfer of, in
--------
exchange for or in substitution for a Secured Note (an "Old Note") shall be
--------
dated as of the date of such Old Note. The Indenture Trustee shall mark on each
New Note (i) the date to which principal
<PAGE>
10
and interest have been paid on the applicable old Note and (ii) all payments and
prepayments of principal made on such Old Note which are allocable to such New
Note. Interest shall be deemed to have been paid on such New Note to the date
to which interest was paid on the applicable Old Note, and all payments and
prepayments of principal required to have been marked on such New Note, as
provided in clause (ii) of the preceding sentence, shall be deemed to have been
made thereon. All New Notes issued pursuant to Section 2.06 in exchange for or
in substitution for or in lieu of Old Notes shall be valid obligations of the
Owner Trustee evidencing the same debt as such Old Notes and shall be entitled
to the benefits and security of this Indenture to the same extent as such Old
Notes. Issuance of any New Note shall not for any purposes be deemed a further
advance of funds to the Owner Trustee and the perfection and priority of the
security interest in the Indenture Estate applicable to such New Note shall for
all purposes be the same as that applicable to the Secured Note replaced by such
New Note.
(b) Upon the issuance of a New Note or New Notes pursuant to Section
2.06, the Owner Trust and/or the Indenture Trustee may require from the party
requesting such New Note or New Notes payment of a sum to reimburse the Owner
Trust and/or the Indenture Trustee for, or to provide funds for, the payment of
any tax or other governmental charge or any other charge or expense paid or
payable with respect to such transfer by the Owner Trust or the Indenture
Trustee, without any right of reimbursement under any Operative Document with
respect to such payments.
SECTION 2.08. Additional Notes. (a) So long as no Charter Event of
----------------
Default or Indenture Event of Default shall have occurred and be continuing,
Additional Notes of one or more series may be issued under and secured by this
Indenture at any time or from time to time, subject to the conditions
hereinafter provided in this Section 2.08, for the purpose of providing funds to
finance (i) a portion of the initial cost of the Vessel if the U.K. Financing is
not concluded and (ii) the cost of any Modifications to the Vessel undertaken
pursuant to Article 13 of the Charter.
(b) Prior to the issuance of any Additional Notes of any series
pursuant to this Section 2.08, the Owner Trust shall have received from the
Owner Participant and delivered to the Indenture Trustee, not less than thirty
(30) days prior to the proposed date of issuance of such Additional Notes, a
request and authorization to issue Additional Notes (a "Request"), which Request
-------
shall include the amount and series of such Additional Notes, the proposed date
of issuance of such Additional Notes and other details with respect thereto
which are not inconsistent with this Section 2.08. Such Additional Notes shall
have a designation so as to distinguish such Additional Notes from the Initial
Secured Notes and Additional Notes of any other series, but otherwise shall be
substantially similar in form to the Initial Secured Notes, with such omissions
therefrom, variations therein and additions thereto as shall be appropriate.
Such Additional Notes shall be denominated and payable in
<PAGE>
11
United States Dollars and shall rank pari passu with all other Secured Notes
issued pursuant to the terms hereof.
(c) The terms, conditions and designations of such Additional Notes
(which shall be consistent with the Request and with the terms of this Indenture
and of the Participation Agreement) shall be set forth in a supplement to this
Indenture in form and substance satisfactory to the Indenture Trustee, which
shall be executed by the Owner Trust and the Indenture Trustee. Such indenture
supplement shall set forth:
(i) after giving effect to the issuance of the Additional Notes
pursuant to clause (a)(i) of this Section 2.08, the aggregate unpaid
principal amount of all Secured Notes Outstanding (which shall not exceed
80% of the initial cost of the Vessel to the Owner Trust);
(ii) after giving effect to the issuance of the Additional Notes
pursuant to clauses (a)(i) and (a)(ii) of this Section 2.08, the aggregate
unpaid principal amount of all Secured Notes Outstanding (including any
other Additional Notes issued under this Section 2.08) (which shall not
exceed 85% of the total Fair Market Sales Value of the Vessel (as
determined pursuant to the Appraisal Procedure) after giving effect to such
Modifications);
(iii) the text of such Additional Notes (which, except for the terms
of payment thereof, shall be of substantially the same effect as the text
of the initial Secured Notes set forth in this Indenture, with such changes
as are consistent with and permitted by this Indenture and which in all
events shall provide that such Additional Notes are never more than pari
passu in priority of payment, in right of security and in all other
respects with the Initial Secured Notes);
(iv) the date of maturity of such Additional Notes (which shall be no
later than the end of the Charter Period);
(v) the date from which, and the date or dates on which, interest is
payable (which shall be Interest Payment Dates);
(vi) the terms for the repayment of the principal amount of such
Additional Notes (each regularly scheduled payment of principal shall be on
an Interest Payment Date);
(vii) the terms, if any, as to prepayment or redemption of such
Additional Notes at the option of the Owner Trust, and as to the premium,
if any, payable on any redemption or prepayment of such Additional Notes;
and
<PAGE>
12
(viii) any other terms and agreements in respect thereof provided or
permitted by this Indenture or necessary to specify the terms and
conditions on which such Additional Notes shall be issued.
(d) Such Additional Notes shall be executed by the Owner Trust as
provided in Section 2.01 and deposited with the Indenture Trustee for
authentication and delivery, but before such Additional Notes shall be
authenticated and delivered by the Indenture Trustee, there shall be delivered
to or deposited with the Indenture Trustee the following:
(i) the Request;
(ii) such supplement to this Indenture, duly executed by the Owner
Trust;
(iii) a supplement to the Charter, duly authorized, executed and
delivered by the Charterer and the Owner Trust, providing for adjustments
to the Assigned Hire required to ensure that payments of Assigned Hire will
be adequate to provide for the payment, when due, of all scheduled payments
of principal of, Make-Whole Amount, if any, and interest on the Secured
Notes, including any other Additional Notes, after giving effect to the
issuance of such Additional Notes, together with such instruments of
conveyance, assignment and transfer, if any, necessary to subject such
supplement to the Charter to the Lien and security interest of this
Indenture and to perfect such Lien and security interest subject to no
Liens other than Permitted Liens, and evidence as to the due recording or
filing of each thereof or of financing or similar statements with respect
thereto;
(iv) such instruments of conveyance, assignment and transfer
(including, without limitation, contractors' waivers) duly executed and
delivered by the respective parties thereto, and such evidence of the due
filing thereof or of financing statements with respect thereto, as may be
required to convey to the Owner Trust all property included in such
Modification, if any, and to subject such property to the Lien of this
Indenture, subject to no Liens except Permitted Liens;
(v) an amendment to the Ship Mortgage so that it will secure the
Additional Notes or an opinion of counsel that such amendment is not
required;
(vi) if the Head Lease is in effect, if necessary, an amendment to the
Head Lease so that the amount set forth on Schedule 7 thereof on each date
will be greater than the scheduled principal amount of the Secured Notes
including such Additional Notes to be Outstanding on such date;
<PAGE>
13
(vii) originals or certified copies of all corporate actions
necessary for the due and valid issue of such Additional Notes, the due and
valid authorization, execution, delivery and performance by the Owner Trust
of the supplement to this Indenture relating thereto, and the due and valid
authorization, execution, delivery and performance by the Charterer and the
Owner Trust of the supplement to the Charter and the creation of the Lien
and security interest thereon referred to above, all of which corporate
actions shall have been duly obtained and shall be in full force and
effect, together with evidence as to the due occurrence of all such
authorization, execution, delivery and performance;
(viii) documentation, duly executed and delivered by the respective
parties thereto whereby the proposed holders of the Additional Notes agree
to be bound by the terms of the Operative Documents (including, without
limitation, representations and covenants corresponding to those contained
in Section 12.2 of the Participation Agreement);
(ix) an Officer's Certificate of the Charterer certifying (a) as to
the cost of such Modification and (b) that all conditions precedent to the
issuance of the Additional Notes contained in this Section 2.08 have been
satisfied unless such conditions have been waived in writing by the
Indenture Trustee and the Owner Trust;
(x) such opinions of counsel as are customary in transactions of this
type, including, without limitation, opinions as to the due authorization,
execution, delivery and enforceability of such supplement to this Indenture
and such Additional Notes and the creation and perfection of the security
interest in such Modification (subject to usual or customary exceptions,
qualifications and assumptions), and such other certificates and other
documents as may be reasonably requested by the Indenture Trustee to
evidence the validity and binding effect of such supplement to this
Indenture and such Additional Notes and compliance with this Section 2.08;
and
(xi) Rating Agency Confirmation with respect to the issuance of such
Additional Notes.
(e) When the documents referred to in Section 2.08(d) shall have been
delivered to or deposited with the Indenture Trustee and when such Additional
Notes described in the Request and the supplement to this Indenture have been
executed by the Owner Trust as required by this Indenture, the Indenture Trustee
shall authenticate and deliver such Additional Notes in the manner described in
such Request, but only upon payment to the Owner Trust of the sum or sums
specified in such Request, whereupon the Owner Trust shall pay such sum or sums
to the Charterer.
<PAGE>
14
SECTION 2.09. Termination of Interest in Indenture Estate. A Holder
-------------------------------------------
shall have no further interest in, or other right with respect to, the Indenture
Estate upon the payment of all principal of, Make-Whole Amount, if any, and
interest on, any Secured Notes held by such Holder and all other sums payable to
such Holder hereunder with respect to any such Secured Notes under the other
Operative Documents and under such Secured Notes.
SECTION 2.10. Equally and Ratably Secured. Except as otherwise
---------------------------
expressly provided in this Indenture, all Secured Notes, including any
Additional Notes, at any time Outstanding under this Indenture shall be equally
and ratably secured by this Indenture without preference, priority or
distinction on account of the series, date, time of issue or maturity of such
Secured Notes. All Additional Notes at any time Outstanding under this
Indenture shall be equally and ratably secured by this Indenture without
preference, priority or distinction on account of the series, date, time of
issue or maturity of such Additional Notes.
ARTICLE III
REDEMPTION AND REFUNDING
SECTION 3.01. Generally. The Secured Notes may not be redeemed or
---------
prepaid except to the extent and in the manner expressly permitted or required
by this Indenture. Except as otherwise expressly provided in this Indenture,
any amount prepaid in partial redemption of the Secured Notes Outstanding shall
be distributed by the Indenture Trustee to all Holders ratably, without priority
of any Holder over any other Holder, in the proportion that the principal amount
of Secured Notes held by such Holder bears to the principal amount of all
Secured Notes then Outstanding.
SECTION 3.02. Mandatory Casualty Redemption. In the event that an
-----------------------------
Event of Loss shall occur with respect to the Vessel, then the Owner Trust shall
redeem, on the date on which Termination Value is paid pursuant to the Charter
(the date of any redemption under this Section 3.02 being herein called a
"Casualty Redemption Date"), the entire unpaid principal amount of the Secured
- -------------------------
Notes Outstanding on such Casualty Redemption Date at a redemption price equal
to 100% of the unpaid principal amount of the Secured Notes, together with any
accrued and unpaid interest thereon to such Casualty Redemption Date and without
the payment of any Make-Whole Amount or other premium.
SECTION 3.03. Mandatory Early Termination Redemption. (a) In the
--------------------------------------
event that the Head Lease is terminated under circumstances where the (x)
Charter is terminated or (y) the Vessel is sold pursuant to the Head Lease and
the purchaser of the Vessel is not substituted as obligor of the Secured Notes
issued thereunder pursuant to Section 3.04, the Owner Trust shall redeem in
whole on the date on which Termination Value is paid pursuant
<PAGE>
15
to the Charter (the date of any redemption under this Section 3.03(a) being
herein called a "Special Termination Redemption Date") the entire unpaid
-----------------------------------
principal amount of the Secured Notes Outstanding on such Special Termination
Redemption Date, at a redemption price equal to 100% of the unpaid principal
amount of the Secured Notes, together with any accrued and unpaid interest
thereon to such Special Termination Redemption Date plus a premium equal to the
Make-Whole Amount, if any.
(b) In the event that the Charter with respect to the Vessel is
terminated pursuant to Article 18 of the Charter, the Owner Trust shall redeem
in whole on the applicable Termination Date (the date if any redemption under
this Section 3.03(b) being herein called a "Termination Redemption Date") the
---------------------------
entire unpaid principal amount of the Secured Notes Outstanding on such
Termination Redemption Date, at a redemption price equal to 100% of such unpaid
principal amount of the Secured Notes, together with any accrued and unpaid
interest thereon to such Termination Redemption Date plus a premium equal to the
Make-Whole Amount, if any, and otherwise without premium.
SECTION 3.04. Assumption of Obligations of Owner Trust. (a) If, in
----------------------------------------
connection with a termination of the Head Lease, the Vessel is sold to another
owner trust (the "Substitute Obligor"), the Substitute Obligor may assume all of
------------------
the rights and obligations of the Owner Trust under this Indenture and the other
Operative Documents to which the Owner Trust is a party (the date of any such
assumption being referred to hereinafter as the "Substitution Date") and the
-----------------
Secured Notes shall not be redeemed pursuant to Section 3.02 if on or prior to
the Substitution Date:
(i) the Indenture Trustee shall have received a certificate executed
by the Charterer, dated the Substitution Date, stating that the Charterer
has paid to the Owner Trust all amounts, if any, required to be paid to the
Owner Trust pursuant to the Trust Agreement and the other Operative
Documents in connection with such assumption and that the Substitute
Obligor has received title to the Vessel, and such substitute owner trust
shall provide to the Indenture Trustee an executed copy of the trust
agreement pursuant to which such substitute owner trust was organized;
(ii) each substitute owner trustee shall have delivered to the
Indenture Trustee the notice required to be delivered pursuant to Section
8.01, together with evidence satisfactory to the Indenture Trustee of such
substitute owner trustee's compliance with Section 10.1 of the Trust
Agreement;
(iii) the Substitute Obligor shall have executed and delivered to the
Indenture Trustee a supplement to this Indenture and the other Operative
Documents, substantially in the form of Exhibit C (the "Substitution Date
-----------------
Agreement"), duly executed by the Substitute Obligor, whereby such
---------
Substitute Obligor shall agree that it is purchasing the Vessel Interest
subject to the mortgage and security interest of this
<PAGE>
16
Indenture (or a mortgage and security interest in the same or substantially
identical terms) on the Vessel Interest in favor of the Indenture Trustee
and assuming the obligations and liabilities of the Owner Trust under the
Indenture, the Secured Notes and each other Operative Document to which the
Owner Trust is a party, as provided in Section 2 of the form of
Substitution Date Agreement attached as Exhibit C;
(iv) the Indenture Trustee shall have received, on or prior to the
Substitution Date, evidence of all filings, recordings and other actions
referred to in the opinion of counsel referred to below;
(v) the Charterer shall have confirmed in writing to the Indenture
Trustee that the Charter remains in full force and effect and the Guarantor
shall have confirmed in writing to the Indenture Trustee that the Parent
Guaranty remains in full force and effect;
(vi) the Substitute Obligor shall have caused to be delivered to the
Indenture Trustee an opinion of counsel to the effect that such assumption
will not have an adverse United States income tax effect on the holders of
the Pass Through Certificates and such holders will be taxed under United
States tax law in the same manner as if such assumption had not occurred;
(vii) the Substitute Obligor shall have caused to be delivered to the
Indenture Trustee opinions of counsel as are customary for transactions of
this type, subject to usual or customary qualifications, exceptions and
assumptions, and shall include opinions, subject to such qualifications,
exceptions and assumptions, to the effect that, after giving effect to the
Substitution Date Agreement:
(A) on the Substitution Date, this Indenture, as supplemented by
the Substitution Date Agreement and the Secured Notes issued
thereunder constitute the legal, valid and binding obligations of the
Substitute Obligor, enforceable against such Substitute Obligor in
accordance with their terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and by
general principles of equity, and except as limited by applicable laws
which may affect the remedies provided for in this Indenture as so
supplemented, which laws, however, do not in the opinion of such
counsel make the remedies provided for in this Indenture inadequate
for the practical realization of the rights and benefits provided for
in this Indenture as so supplemented;
(B) on the Substitution Date, each of the Charter and Parent
Guarantee, constitutes the legal, valid and binding obligations of the
Charterer,
<PAGE>
17
the Substitute Obligor and the Guarantor, as the case may be,
enforceable in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general principles of equity; and
(C) the Lien of this Indenture, including the Ship Mortgage, on
the Vessel, has been accomplished and creates a security interest in
the Indenture Estate and all filings and recordings and other action
necessary or appropriate to perfect the interests of the Indenture
Trustee have been accomplished;
(ix) the Indenture Trustee shall have received Rating Agency
Confirmation with respect to such assumption; and
(x) after giving effect to the substitution no Indenture Event of
Default shall have occurred and be continuing
(b) Upon satisfaction of the conditions and the delivery of such
documents set forth in Section 3.04(a), the Indenture Trustee shall execute and
deliver the Substitution Date Agreement, and automatically and without the
requirement of further action by any Person, effective as of the Substitution
Date, the Owner Trustees and the Owner Trust shall be released from all of its
obligations under this Indenture in respect of the Secured Notes (other than any
obligations or liabilities of either Owner Trustee in its individual capacity
incurred on or prior to the Substitution Date or arising out of or based upon
events occurring on or prior to the Substitution Date, which obligations and
liabilities shall remain the sole responsibility of such Owner Trustee) and such
Substitute Obligor and each successor owner trustee shall immediately and
without further act, be substituted for and assume all of the respective
obligations of the Owner Trust and the Owner Trustees under this Indenture and
the Secured Notes.
SECTION 3.05. Optional Redemption. The Owner Trust may at any time
-------------------
with the prior written consent of the Charterer redeem in whole all Outstanding
Secured Notes at a redemption price equal to 100% of the unpaid principal amount
of the Secured Notes to be redeemed pursuant to this Section 3.05, together with
any accrued and unpaid interest thereon to the date of redemption, plus a
premium equal to the Make-Whole Amount, if any, with respect to the Secured
Notes.
SECTION 3.06. Owner Trust's and Owner Participant's Option to Redeem
------------------------------------------------------
or Purchase Secured Notes. In the event that (a) at any time one or more
- -------------------------
Charter Events of Default shall have occurred and be continuing and such Charter
Event of Default shall have continued for a period of less than 270 days, during
which time the Secured Notes shall not have been accelerated pursuant to Section
5.04, or (b)(i) at any time one or more Charter Events of Default shall have
occurred and be continuing and such Charter Event of Default
<PAGE>
18
shall have continued for a period of 270 days or more during which time the
Secured Notes shall not have been accelerated pursuant to Section 5.04, (ii) the
Indenture Trustee shall have given the Owner Trust or the Owner Participant
notice of the intent to accelerate the Secured Notes pursuant to Section 5.04,
(iii) the Secured Notes shall have been accelerated pursuant to Section 5.04,
the Owner Trust or the Owner Participant may, at its option, give at least 25
days' prior irrevocable notice to the Indenture Trustee that it will redeem (or
purchase in lieu of redemption) all Secured Notes then Outstanding, which
redemption or purchase shall be at a redemption or purchase price equal to 100%
of the unpaid principal amount of such Secured Notes, together with any accrued
and unpaid interest thereon, plus in the case of any redemption or purchase
pursuant to clause (a) above, a premium equal to the Make-Whole Amount, if any,
with respect to such Secured Note, and on or prior to the Business Day preceding
such Redemption Date, the Owner Trust or the Owner Participant will deposit with
the Indenture Trustee an amount sufficient to redeem or purchase at the
applicable Redemption Price all Secured Notes then Outstanding (including, in
the case of a redemption or purchase pursuant to clause (a) above, a good faith
estimate of the premium computed as provided for herein) plus an amount equal to
all other sums then due and payable to each Loan Participant hereunder, and to
pay the Indenture Trustee all amounts then due it hereunder, which funds shall
be held by the Indenture Trustee as provided in Section 7.04. Upon the giving
such notice and the receipt by the Indenture Trustee of such deposit, the
Indenture Trustee shall deem all instructions received from the Owner Trustee or
the Owner Participant as having been given by the Loan Participants of 100% of
the Outstanding principal amount of Secured Notes for all purposes of this
Indenture. If such notice is given, the Owner Trust further agrees that it will
deposit, or cause to be deposited with the Indenture Trustee, on or prior to the
Business Day preceding the applicable Redemption Date, whether or not an
Indenture Event of Default is then continuing, funds sufficient, when added to
the funds already held by the Indenture Trustee for such purpose, to redeem or
purchase at the applicable Redemption Price (including the premium actually
payable in respect thereof computed as provided for herein), on such Redemption
Date all Secured Notes then Outstanding to pay all other sums then due and
payable to each Loan Participant hereunder and to pay the Indenture Trustee all
amounts then due it hereunder. In the event the Owner Trust shall have given
any such notice to purchase or redeem, unless the Owner Trustee shall have
consented thereto, the Indenture Trustee shall not during the period from such
notice to the Redemption Date specified therein institute any new remedy or
proceeding in respect of any new remedy under this Indenture, and the Indenture
Trustee shall, to the extent the same may be accomplished without prejudicing
the rights of the Indenture Trustee hereunder, take such actions and forbear
from taking actions, in each case sufficient to maintain the status quo with
respect to any pending remedies or proceedings in respect thereof being then
pursued hereunder; provided, however, that in no event shall the Indenture
Trustee sell or assign any portion of the Indenture Estate during the period
from such notice to the Redemption Date specified therein. In the event the
Owner Trust shall have given any such notice to purchase or redeem, and the
Owner Trust has deposited with the Indenture Trustee the amounts required to be
deposited pursuant to this Section 3.06, then on the
<PAGE>
19
Redemption Date, each Loan Participant will be deemed to sell, assign, transfer
and convey to the Owner Trust or its designee (without recourse or warranty of
any kind other than of title to the Secured Notes so conveyed) all of the right,
title and interest of such Loan Participant in and to the Secured Notes held by
such Loan Participant. On and after such Redemption Date, the Indenture Trustee
shall no longer treat the former Loan Participants as the "Loan Participants",
except for purposes of the Loan Participants' right to receive their respective
portions of the amounts paid to the Indenture Trustee as aforesaid and all other
amounts due to such Loan Participants under the Operative Documents with respect
to acts, events, circumstances or conditions occurring or existing prior to such
Redemption Date, and on such date the Indenture Trustee shall register the
transfer of ownership of the Secured Notes into the name of the Owner Trust or
its designee. If the Owner Trust elects to purchase the Secured Notes under this
Section 3.06, nothing herein, including the use of the terms "Redemption Date"
and "Redemption Price", shall be deemed to result in a redemption of the Secured
Notes.
SECTION 3.07. Deposited Redemption Moneys. Moneys held by the
---------------------------
Indenture Trustee for redemption of any Secured Note issued hereunder as
provided in this Article III shall be held by the Indenture Trustee as a
separate fund in trust for the account of the respective Holders of the Secured
Notes to be redeemed, shall be invested in accordance with the provisions of
Section 7.04 and shall be delivered to them respectively in accordance with
Section 2.03 on the Redemption Date. Any amounts so held by the Indenture
Trustee shall be deemed paid for purposes of Section 2.09, and promptly after
payment of all amounts of principal of, Make-Whole Amount, if any, and interest
on, and all other amounts due and payable under any such Secured Notes, the
Holders thereof shall deliver such Secured Notes to the Indenture Trustee for
cancellation.
SECTION 3.08. Acquisition of Secured Notes. The Owner Trust
----------------------------
covenants that it will not, directly or indirectly, acquire or make any offer to
acquire any Secured Note except pursuant to the provisions of this Indenture.
SECTION 3.09. Condition to Redemption and Refunding. It shall be a
-------------------------------------
condition to any redemption of Secured Notes effected under this Article III
that all amounts of principal of, Make-Whole Amount, if any, and interest on,
and all other amounts then due and payable under the Secured Notes which are to
be the subject of such redemption as well as all other amounts due and payable
to the Holders of such Secured Notes as are to be the subject of such redemption
shall upon completion of such redemption have been paid as specified therein or
herein.
SECTION 3.10. Notice of Certain Redemptions. In connection with a
-----------------------------
redemption of any of the Secured Notes pursuant to Section 3.02, Section 3.03 or
Section 3.05, the Owner Trust shall give irrevocable notice of such redemption
at least 25 days and not more than 60 days prior to the Redemption Date to each
Loan Participant of
<PAGE>
20
such Secured Notes to be redeemed, at such Loan Participant's address appearing
in the Note Register; provided, however, that if such notice of redemption shall
be given in connection with the early termination of the Charter and the
proposed sale of the Vessel pursuant to Article 18 of the Charter, and if the
Owner Trust does not sell the Vessel on or prior to the Redemption Date, then
such notice of redemption may be revoked by the Owner Trust.
Any such notice of redemption shall state:
(i) the Redemption Date;
(ii) the applicable basis for determining the redemption price
pursuant to Section 3.02, 3.03 or Section 3.05 (the "Redemption Price");
----------------
(iii) that on the Redemption Date, the Redemption Price will become
due and payable upon each such Secured Note, and that, if any such Secured
Notes are then Outstanding, interest on such Secured Notes shall cease to
accrue on and after such Redemption Date;
(iv) whether the notice of redemption may be revoked and under what
circumstances; and
(v) the place or places where such Secured Notes are to be surrendered
for payment of the Redemption Price.
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE INDENTURE ESTATE
SECTION 4.01. Distribution of Hire. (a) Generally. Pursuant to
-------------------- ---------
Article 3(c) of the Charter and subject to Section 5.01(g), prior to an
Indenture Event of Default the Charterer shall pay directly to the Indenture
Trustee and, upon receipt of such amount, the Owner Trust shall pay over to the
Indenture Trustee, that portion of Hire constituting Base Hire, Termination
Value, if any, amounts measured by Termination Value and that portion of
Supplemental Hire payable in respect of premium, if any, and interest on overdue
payments due to the Indenture Trustee or any amounts payable to the Indenture
Trustee pursuant to Section 5.03 (collectively, "Assigned Hire"). Except as
-------------
otherwise provided in Sections 4.01(c) and 4.03, each installment of Assigned
Hire shall be promptly distributed by the Indenture Trustee in accordance with
Section 4.04 on the date such payment is due from the Charterer (or as soon
thereafter as such payment shall be received by the Indenture Trustee) to pay in
full the aggregate amount of the payment or repayment of principal,
<PAGE>
21
interest and other amounts then due under all Secured Notes and such amounts
shall be distributed to the Holders of such Secured Notes ratably, without
priority of one Holder over any other Holder, in the proportion that the amount
of such payment or payments then due under each such Secured Note bears to the
aggregate amount of the payments then due under all such Secured Notes.
(b) Application of Certain Amounts Held by the Indenture Trustee upon
-----------------------------------------------------------------
Certain Defaults. If as a result of any default by the Charterer or the Owner
- ----------------
Participant in the performance of its obligations under any Operative Document,
the Indenture Trustee shall not have received for distribution on any Base Hire
Payment Date (or the Indenture Trustee shall be prevented from distributing on
such date) the full amount then distributable pursuant to Section 4.01(a), the
Indenture Trustee shall, if Section 4.03 is not applicable but subject in any
case to any restrictions contained in Section 4.05, distribute other amounts of
the character referred to in Section 4.05 then held by it or thereafter received
by it to the Holders to the extent necessary to make all distributions then due
pursuant to Section 4.01(a).
(c) Retention of Amounts by the Indenture Trustee. If an Indenture
---------------------------------------------
Event of Default shall have occurred and be continuing, all payments under the
Charter (other than Excepted Payments) or any other Operative Documents will
upon notice to the Charterer become immediately payable by the Charterer to the
Indenture Trustee, and the Indenture Trustee shall withhold any amounts that
would have been otherwise payable directly to the Owner Trust until the earlier
to occur of (i) the first Business Day following the date that is 180 days after
the Indenture Trustee received such amount and (ii) the date that such Indenture
Event of Default is no longer continuing, in which cases described in clauses
(i) and (ii) such amounts shall be distributed to the Owner Trust, unless, prior
thereto, the Secured Notes shall have been declared or otherwise shall have
become immediately due and payable pursuant to Section 5.04 or the Indenture
Trustee shall have given notice to the Owner Trust of its intention to
accelerate the Secured Notes pursuant to the first proviso of Section 5.04 or
the Indenture Trustee (as assignee of the Owner Trust) shall have given notice
of its intent to declare the Charter to be in default in accordance with Article
22 thereof, in which case such amounts shall be distributed by the Indenture
Trustee forthwith in accordance with the terms of Section 4.03.
SECTION 4.02. Certain Distributions. (a) Any payment received by
---------------------
the Indenture Trustee (i) pursuant to Article 14 of the Charter as a result of
the occurrence of an Event of Loss with respect to the Vessel, (ii) upon the
termination or special termination of the Charter with respect to the Vessel
pursuant to Article 18 or 23 of the Charter or (iii) pursuant to Section 3.05,
shall be distributed forthwith in the following order of priority:
first, in the manner provided in clause "first" of Section 4.03;
<PAGE>
22
second, in the manner provided in clause "third" of Section 4.03;
third, in the manner provided in clause "second" of Section 4.03;
fourth, in the manner provided in clause "fourth" of Section 4.03; and
fifth, in the manner provided in clause "fifth" of Section 4.03.
(b) The portion of each payment referred to in this Section 4.02
distributed to a Holder on account of principal or interest on any Secured Note
held by such Holder shall be applied by such Holder in payment of such Secured
Note in accordance with the terms of Section 4.04.
SECTION 4.03. Distribution After Indenture Event of Default. If (a)
---------------------------------------------
an Indenture Event of Default shall have occurred and be continuing, and (b) the
Indenture Trustee (as assignee of the Owner Trust) shall have given notice to
declare the Charter to be in default pursuant to Article 22 thereof, the
Indenture Trustee shall have given notice to the Owner Trust pursuant to the
first proviso of Section 5.04 of its intent to declare the Secured Notes due and
payable or any of the Secured Notes shall have been declared or otherwise shall
have become immediately due and payable pursuant to Section 5.04, then, to the
extent that each such notice or declaration shall not have been rescinded or the
Secured Notes shall remain immediately due and payable, (i) all amounts then
held by the Indenture Trustee pursuant to Section 4.05 or 4.06 (and not excluded
from the operation of this Section 4.03) or then otherwise held by the Indenture
Trustee hereunder or under any Operative Document (other than amounts held for
its own account), and (ii) all payments and amounts thereafter realized by the
Indenture Trustee through the exercise of remedies hereunder or under any of the
agreements assigned or pledged to the Indenture Trustee under this Indenture or
otherwise as trustee under this Indenture (for purposes of this Section 4.03,
all such amounts and payments held or realized being herein called "proceeds"),
--------
other than amounts expressly paid to it for its own account and other than
Excepted Payments, shall be distributed forthwith by the Indenture Trustee in
the following order of priority:
first, so much of such proceeds as shall be required to reimburse the
Indenture Trustee for any unpaid fees for its services under this Indenture
and any unreimbursed tax, expense (including reasonable legal fees) or
other loss incurred by it (in each case to the extent reimbursable under
the Operative Documents) shall be distributed to the Indenture Trustee for
application to itself;
second, so much of the remaining proceeds as shall be required to
reimburse the then existing or prior Holders for amounts paid or advanced
by the Holders pursuant to Section 6.04 (to the extent not previously
reimbursed), shall be distributed to the then existing and prior Holders as
their respective interests may appear, and if
<PAGE>
23
the proceeds remaining are insufficient to pay all such amounts in full,
they shall be distributed ratably, without priority of any recipient over
any other recipient (except as otherwise expressly provided herein), in the
proportion the aggregate amount due each such Person under this clause
"second" bears to the aggregate amount and interest due all such Persons
under this clause "second";
third, so much of the proceeds remaining as shall be required to pay
in full the aggregate unpaid principal amount of each Secured Note then
Outstanding and Make-Whole Amount, if any, and all accrued but unpaid
interest thereon to the date of distribution, shall be distributed to the
Holder of such Secured Note, and if the proceeds remaining are insufficient
to pay all such amounts in full, they shall be distributed to all Holders
ratably, without priority of any Holder over any other Holder (except as
otherwise expressly provided herein), in the proportion that the aggregate
amount due each such Holder under this clause "third" bears to the
aggregate amount due all such Holders under this clause "third";
fourth, so much of the proceeds remaining as shall be required to pay
to each Holder all other amounts payable pursuant to the indemnification
provisions of Section 13 of the Participation Agreement or pursuant to any
other provision of any Operative Document and secured hereunder to such
Holder or to its predecessors and remaining unpaid shall be distributed to
such Holder for distribution to itself and such predecessors, as their
respective interests may appear, and if the proceeds remaining are
insufficient to pay all such amounts in full, they shall be distributed
ratably, without priority of any Holder over any other Holder (except as
otherwise expressly provided herein), in the proportion that the aggregate
amount due each such Holder under this clause "fourth" bears to the
aggregate amount due all such Holders under this clause "fourth"; and
fifth, the balance, if any, of the proceeds remaining shall be
distributed to the Owner Trust for distribution pursuant to the Trust
Agreement.
All amounts distributed to any Holder pursuant to clause "third" of
this Section 4.03 shall be applied by such Holder in payment of the Secured
Notes held by it in accordance with the terms of Section 4.04.
SECTION 4.04. Application of Payments on Secured Notes. Each payment
----------------------------------------
on a Secured Note shall be applied, first, to the payment of accrued interest on
such Secured Note to the date of such payment, second, to the payment of any
principal on such Secured Note then due thereunder, and third, to the payment of
the installments of principal remaining unpaid on such Secured Note in the
inverse order of the installment due date thereof.
<PAGE>
24
SECTION 4.05. Applications of Payments According to Applicable
------------------------------------------------
Operative Document Provisions. (a) Any payments or amounts (other than
- -----------------------------
Excepted Payments) received by the Indenture Trustee, provision for the
application of which is made in any Operative Document, shall be applied
promptly as provided in such Operative Document, unless (i) in the case of
payments or amounts that would be payable to the Charterer upon satisfaction of
any applicable conditions, a Charter Event of Default shall have occurred and be
continuing at the time the Indenture Trustee receives such payment and the
Indenture Trustee has Actual Knowledge of such Charter Event of Default, in
which case the Indenture Trustee shall hold such payments and amounts as cash
collateral security for the obligations of the Charterer under the Operative
Documents and shall invest such payments and amounts in accordance with the
terms of Section 7.04, and, subject to earlier distribution thereof by the
Indenture Trustee under Section 4.03 if the Charter shall have been declared in
default in accordance with Article 22 thereof, or under Section 4.01(b) (subject
to Section 4.05(b)), such payments and amounts, and the proceeds of any
investment thereof, shall be paid by the Indenture Trustee to the Charterer at
such time as any applicable conditions shall have been satisfied and no Charter
Event of Default shall be continuing, and (ii) in the case of any other such
payments and amounts, an Indenture Event of Default shall have occurred and be
continuing at the time the Indenture Trustee receives such payment and the
Indenture Trustee has Actual Knowledge of such Indenture Event of Default, in
which case the Indenture Trustee shall hold such payment as part of the
Indenture Estate, as cash collateral security hereunder for the performance of
the Indenture Indebtedness and on the earlier of the next Business Day on which
no Indenture Event of Default shall have occurred and be continuing or the first
Business Day occurring more than 180 days after the receipt of such payment,
and, subject to any prior application of such payment pursuant to Section
4.01(b) or 4.03, the Indenture Trustee shall apply such payment, and the
proceeds of any investment thereof, to the purpose for which it was made.
(b) Notwithstanding any other provision of this Indenture to the
contrary, and whether or not any such provision refers to this Section 4.05, any
Excepted Payment or other amount expressly provided by the terms of this
Indenture to be paid directly to the Owner Trust or to the Owner Participant
received by the Indenture Trustee shall be paid or distributed immediately by
the Indenture Trustee to the Owner Trust or the Owner Participant, as the case
may be.
SECTION 4.06. Amounts Received for Which No Provision Is Made. (a)
-----------------------------------------------
Any payment received or amounts realized by the Indenture Trustee for which no
provision as to the application thereof is made elsewhere in this Indenture or
any other Operative Document shall be held by the Indenture Trustee as part of
the Indenture Estate in a cash collateral account maintained under Section 7.04,
and (b) all payments received and amounts realized by the Indenture Trustee
under the Charter, including without limitation, Article 14(b) of the Charter,
or otherwise with respect to the Vessel, to the extent received or realized at
any time after payment in full of the principal of and interest on all Secured
<PAGE>
25
Notes issued hereunder, as well as any other amounts remaining as part of or as
proceeds of the Indenture Estate after payment in full of the principal of,
Make-Whole Amount, if any, and interest on all such Secured Notes, shall be
distributed forthwith by the Indenture Trustee in the order of priority set
forth in Section 4.03, omitting clause "third" thereof. The Indenture Trustee
shall give prompt notice to the Owner Trust and each Holder of the receipt of
any moneys by the Indenture Trustee subject to the provisions of this Section
4.06.
SECTION 4.07. Payment Procedures. All amounts which are
------------------
distributable from time to time by the Indenture Trustee to the Owner Trust, the
Owner Participant or any Holder shall be paid by the Indenture Trustee in
immediately available funds promptly after such amounts become immediately
available to it, and the Indenture Trustee shall not be obligated to see to the
application of any such payment made by it. All payments made by the Indenture
Trustee to the Owner Trust or to the Owner Participant shall be made in the
manner and to the address set forth in Schedule 1 to the Participation Agreement
or to such other address as may be specified from time to time by notice to the
Indenture Trustee from the Owner Trust or the Owner Participant.
SECTION 4.08. Application of Payments Under Parent Guaranty. All
---------------------------------------------
payments received by the Indenture Trustee pursuant to the Parent Guaranty shall
be distributed forthwith by the Indenture Trustee in the same order of priority,
and in the same manner, as it would have distributed the payment in respect of
which such payment under the Parent Guaranty was received.
ARTICLE V
COVENANTS OF OWNER TRUST AND THE OWNER TRUSTEES;
CERTAIN AGREEMENTS; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 5.01. Covenants of Owner Trust and the Managing Trustee;
--------------------------------------------------
Certain Agreements. (a) Subject to Section 2.02, the Owner Trust will duly and
- ------------------
punctually perform and observe all covenants and conditions to be performed and
observed by it pursuant to the terms of any Operative Document. Except as
permitted by this Indenture or the terms of any Operative Document, the Owner
Trust will take no action and will cooperate with the Indenture Trustee so as to
permit no action to be taken by others which will release, or which may be
construed as releasing, the Owner Trust or the Charterer from any of its or the
Charterer's, as the case may be, obligations or liabilities under any Operative
Document, or which may result in the termination, amendment or modification, or
impair the validity, of any such Operative Document.
(b) If the Owner Trust has Actual Knowledge of any Indenture Event of
Default, Indenture Default, any failure on the part of the Charterer to make any
payment of
<PAGE>
26
Assigned Hire when due or Event of Loss, the Owner Trust will give prompt
written notice thereof to the Indenture Trustee, the Charterer and the Owner
Participant if such notice shall not already have been given to such party. The
notice shall set forth in reasonable detail the circumstances of such default or
loss known to the Owner Trust.
(c) At any time and from time to time, upon the reasonable request of
the Indenture Trustee, the Owner Trust shall promptly and duly execute and
deliver any and all such further instruments and documents as the Indenture
Trustee may deem necessary or desirable (and as shall be consistent with the
intent, purposes and provisions hereof) to perfect or maintain the Lien of this
Indenture, to perfect a first priority ship mortgage in the Vessel in favor of
the Indenture Trustee upon the termination of the Head Lease or to obtain for
the Indenture Trustee the full benefit of the specific rights and powers herein
granted, conveyed or assigned, or which the Owner Trust may be or may hereafter
be bound to convey or assign to the Indenture Trustee or to facilitate the
performance of the terms of this Indenture, or the filing, registering or
recording of this Indenture, including, without limitation, the execution and
delivery of any financing statement (and any continuation statement with respect
to any such financing statement) or any other similar document specified in such
instructions as may be necessary or desirable to perfect or maintain the Lien of
this Indenture.
(d) The Owner Trust does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants that, except as provided in or
permitted by the other Operative Documents, it will not assign or pledge, so
long as this Indenture shall remain in effect and the Lien of this Indenture
shall not have been released pursuant to Section 6.03 hereof, any of the Owner
Trust's right, title or interest hereby assigned to anyone other than the
Indenture Trustee, and that the Owner Trust will not (other than in respect of
Excepted Payments), except as provided in or permitted by this Indenture or any
other Operative Document, (i) accept any payment from the Charterer, (ii)
terminate or consent to the cancellation or surrender of the Charter or accept
any prepayment of Assigned Hire, or any portion thereof, under the Charter,
(iii) enter into any agreement amending or supplementing any Operative Document,
(iv) execute or grant any waiver or modification of, or consent under, the terms
of any Operative Document, (v) settle or compromise any claim arising under any
Operative Document, or (vi) submit or consent to the submission of any dispute,
difference or other matter arising under or in respect of any Operative Document
to arbitration thereunder.
(e) The Owner Trust does hereby ratify and confirm the Charter, and
does hereby agree the Owner Trust will not, except as provided in or permitted
by this Indenture or the terms of any other Operative Document, take or omit to
take any action, the taking or omission of which might result in an alteration
or impairment of the Charter or any other Operative Document, or of any of the
rights created by the Charter or any Operative Document, or the assignment
hereunder or thereunder, as the case may be.
<PAGE>
27
(f) The Managing Trustee, in its individual capacity and at its own
cost and expense, will promptly take such action as may be necessary to
discharge any Owner Trustee's Lien attributable to it on any of its estate,
right, title or interest in the Trust Estate so pledged or assigned or intended
to be conveyed, pledged or assigned under this Indenture.
(g) Until the release of the security interest in the Indenture Estate
pursuant to Section 6.03, all payments of Assigned Hire shall be made directly
to the Indenture Trustee or in accordance with the Indenture Trustee's
instructions, and the Owner Trust shall give all notices as shall be required to
be given under each Operative Document to direct that such payments be made to
the Indenture Trustee and promptly upon receipt of any such amount, transfer
such amount to the Indenture Trustee for distribution pursuant to this
Indenture; provided, however, that, if an Indenture Event of Default shall have
occurred and is continuing, upon written notice from the Indenture Trustee to
the Charterer, all payments due or to become due under the Charter and the other
Operative Documents to the Owner Trust (other than Excepted Payments) shall be
made directly to the Indenture Trustee or in accordance with the Indenture
Trustee's instructions, and the Owner Trust shall (i) give all notices as shall
be required to be given under each Operative Document to direct that such
payments be made to the Indenture Trustee and (ii) promptly upon receipt of any
and all moneys from time to time received by it constituting part of the
Indenture Estate, transfer such amount to the Indenture Trustee for distribution
pursuant to this Indenture.
(h) An executed counterpart of each amendment or supplement to the
Trust Agreement shall be delivered within 20 Business Days after the execution
thereof to the Indenture Trustee; provided that any amendment or supplement
under which a successor trustee is appointed shall be mailed to the Indenture
Trustee within 10 days after the execution thereof. The Lien of this Indenture
shall not be affected by any amendment or supplement to the Trust Agreement or
by any other action taken under or in respect of the Trust Agreement. Without
the prior written consent of the Indenture Trustee, the Trust Agreement may not
in any event be terminated or revoked by the Owner Participant prior to the
termination of this Indenture. In the case of any appointment of a successor to
any Owner Trustee pursuant to the Trust Agreement or any merger, conversion,
consolidation or transfer of all or substantially all of the corporate trust
business of either Owner Trustee pursuant to the Trust Agreement, the applicable
successor Owner Trustee shall give prompt notice thereof to the Indenture
Trustee.
SECTION 5.02. Indenture Events of Default. An "Indenture Event of
--------------------------- ------------------
Default" means any of the following events (whatever the reason for such
- -------
Indenture Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any
Governmental Rule):
<PAGE>
28
(a) any Charter Event of Default (other than a Charter Event of
Default arising from the failure of the Charterer to make any payment of
Excess Hire or Additional Excess Hire or to make an Excepted Payment unless
the Owner Trust shall elect to make such failure a Charter Event of
Default) shall have occurred and be continuing; or
(b) any payment of principal of, Make-Whole Amount, if any, or
interest on any Secured Note shall not have been made when due and such
default shall continue unremedied for ten Business Days after the same
shall have become due and payable; or
(c) any failure by any of the Owner Trust, the Owner Participant or
the Managing Trustee, in their individual or trust capacities, as the case
may be, to perform or observe in any material respect any covenant or
agreement to be performed or observed by it under this Indenture or any
other Operative Document, (i) which failure shall continue for a period of
30 days after receipt by the Owner Trust, the Owner Participant or the
Managing Trustee of a notice from the Indenture Trustee or the Pass Through
Trustee specifying such failure and requiring it be remedied or (ii) which
failure, if such failure is remediable and the Owner Trust, the Owner
Participant or the Managing Trustee is diligently attempting to remedy such
failure, shall continue for a period of 180 days after such receipt of
written notice thereof; or
(d) any representation or warranty made by the Owner Trust, the Owner
Participant or the Managing Trustee pursuant to Sections 7 or 9, as the
case may be, of the Participation Agreement shall prove to have been
inaccurate in any material respect when made, unless such inaccurate
representation or warranty shall not be material to the recipient at the
time when the notice referred to below shall have been received by the
Owner Trust, the Owner Participant or the Managing Trustee, as the case may
be, or any material adverse impact thereof shall have been cured within 30
days after receipt by the Owner Trust, the Owner Participant or the
Managing Trustee, as the case may be, of a written notice thereof from the
Indenture Trustee; provided that if such material adverse impact is
remediable and the Owner Participant, Owner Trust or the Managing Trustee,
as the case may be, is diligently attempting to remedy such impact, the
Owner Participant, Owner Trust or Managing Trustee shall have 90 days after
such receipt of written notice thereof to remedy such material adverse
impact; or
(e) either of the Owner Trust or the Owner Participant shall commence
a voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to itself or its debts under any bankruptcy,
insolvency, or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver,
<PAGE>
29
liquidator, custodian or other similar official of its or any substantial
part of its property, or shall consent to any such relief or to the
appointment or taking possession by any such official or agency in an
involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall take any
corporate action to authorize any of the foregoing, or an involuntary case
or other proceeding shall be commenced against either of the Owner Trust or
the Owner Participant seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official or
agency of its or any substantial part of its part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 90 days, or if, under the provisions of any law providing
for reorganization or winding-up of corporations which may apply to the
Owner Trust or the Owner Participant, any court of competent jurisdiction
shall assume jurisdiction, custody or control of the Indenture Estate, the
Owner Trust or the Owner Participant or of any substantial part of its
property and such jurisdiction, custody or control shall remain in force
unrelinquished, unstayed or unterminated for a period of 90 days.
SECTION 5.03. Certain Rights. (a) If the Charterer shall fail to
--------------
make any payment of Base Hire under the Charter when the same shall become due,
and if such failure of the Charterer to make such payment of Base Hire shall not
constitute the fourth consecutive such failure or the seventh or subsequent
cumulative such failure, then as long as no Indenture Event of Default (other
than arising from a Charter Event of Default not involving any failure to make
any payments to which the Indenture Trustee or any Loan Participant is entitled
hereunder when due) shall have occurred and be continuing, the Owner Trust or
the Owner Participant may (but need not), without consent or concurrence of the
Indenture Trustee or any Holder, pay, in the manner provided in Section 2.03 for
application in accordance with Section 4.01, to the Indenture Trustee, at any
time prior to the day which is the eleventh day subsequent to the expiration of
the grace period provided for in Article 21(1) of the Charter with respect to
the payment of Base Hire (and the Indenture Trustee and the Holders of the
Secured Notes shall not (without the prior written consent of the Owner Trust)
declare the Charter in default pursuant to Article 22 thereof or exercise any of
the rights, powers or remedies pursuant to Article 22 of the Charter or Section
5.04 hereof prior to the occurrence of such later date), an amount equal to the
full amount of such payment of Base Hire, together with any interest due thereon
on account of the delayed payment thereof to the date of such payment in
accordance with Section 2.03(c) hereof, and such payment by the Owner Trust or
the Owner Participant shall be deemed to cure, as of the date of such payment,
any Indenture Event of Default which arose from such failure of the Charterer
(including any Charter Event of Default arising from the Charterer's failure to
pay interest in respect of such overdue Base Hire for the period commencing on
the date of such payment), but such cure shall not relieve the Charterer of any
of its obligations. If the Charterer shall fail to perform or observe any
covenant, condition or agreement to be performed or observed
<PAGE>
30
by it under the Charter or any other Charter Event of Default shall exist (other
than the failure to pay Base Hire), and if (but only if) the performance or
observance of such covenant, condition or agreement or the cure of such Charter
Event of Default can be effected by the payment of money alone (it being
understood that actions such as the obtaining of insurance can be so effected),
then as long as no other Indenture Event of Default (other than those arising
from a Charter Event of Default) shall have occurred and be continuing, the
Owner Trust or the Owner Participant may (but need not), without consent or
concurrence of the Indenture Trustee or any Holder, pay to the Indenture Trustee
(or to such other person as may be entitled to receive the same), at any time
prior to the day which is the later of (x) the eleventh day subsequent to notice
of such failure or such Charter Event of Default by the Indenture Trustee to the
Owner Trust or the Owner Participant and (y) the eleventh day subsequent to the
expiration of the grace period, if any, provided with respect to such failure or
such Charter Event of Default on the part of the Charterer in Article 21 of the
Charter (and the Indenture Trustee shall not (without the prior written consent
of the Owner Trust) declare the Charter in default pursuant to Article 22
thereof or exercise any of the rights, powers or remedies pursuant to such
Article 22 or Section 5.04 hereof prior to the occurrence of such later date),
all sums necessary to effect the performance or observance of such covenant or
agreement of the Charterer or to cure such Charter Event of Default, together
with any interest due thereon on account of the delayed payment thereof to the
date of such payment, and such payment by the Owner Trust or the Owner
Participant shall be deemed to cure as of the date of such payment any Indenture
Event of Default which arose from such failure of the Charterer or such Charter
Event of Default (including any Charter Event of Default arising from the
Charterer's failure to pay interest in respect of such overdue payment for the
period commencing on the date of such payment), but such cure shall not relieve
the Charterer of any of its obligations.
(b) To the extent of any payment made by the Owner Participant or the
Owner Trust pursuant to Section 5.03(a), the Owner Participant or the Owner
Trust, as the case may be, shall be subrogated to the rights of the Holders
hereunder to receive from the Indenture Trustee the payment of Assigned Hire or
other amount for which such payment was made by the Owner Participant or the
Owner Trust, as the case may be, and the Owner Participant or the Owner Trust,
as the case may be, shall be entitled to receive such payment from the Indenture
Trustee upon receipt thereof by the Indenture Trustee; provided, however, that
no such amount shall be paid to the Owner Participant or the Owner Trust, as the
case may be, unless all principal of and interest on the Secured Notes then due
and payable and any other amounts then due and payable under the Secured Notes
and this Indenture shall have been paid in full and no Indenture Default shall
have occurred and be continuing.
(c) Neither the Owner Trust nor the Owner Participant, upon exercising
cure rights under Section 5.03(a) or rights under Section 6.08(a)(iii) or under
Article 22(a) of the Charter, shall obtain any Lien on any part of the Indenture
Estate or Trust Estate on account of such payment for the costs and expenses
incurred in connection therewith, nor
<PAGE>
31
shall any claims of the Owner Trust or the Owner Participant against the
Charterer for the repayment thereof impair the prior right and security interest
of the Indenture Trustee in and to the Indenture Estate or otherwise related to
the Indenture Estate.
(d) If there shall occur an Indenture Event of Default pursuant to
Section 5.02(a) arising as a result of a failure by the Charterer to make any
payment of Assigned Hire when due, the Indenture Trustee shall so notify the
Owner Trust in writing promptly upon such occurrence.
SECTION 5.04. Remedies. (a) If an Indenture Event of Default shall
--------
have occurred and be continuing and so long as the same shall be unremedied,
then and in every such case the Indenture Trustee, subject to Sections 5.03,
5.04(d), 5.05, 5.09 and 6.08, may exercise any or all of the rights and powers
and pursue any and all of the remedies herein provided or available under
applicable law; provided, however, the Indenture Trustee must give the Owner
Trust at least ten Business Days' (or five Business Days in the case of
acceleration of the Secured Notes other than an automatic acceleration of the
Secured Notes as provided in Section 5.04(c)) prior written notice of its
intention to exercise remedies pursuant to this Section 5.04 (it being
understood that such notice may be given concurrently with any notice of default
given hereunder or under the Charter and prior to the expiration of any
applicable grace periods). Subject to the provisions in this Indenture, upon
the occurrence and during the continuance of an Indenture Event of Default, the
Indenture Trustee may exercise, subject to Sections 5.03(a), 5.05, 5.09 and
6.08, all rights and remedies of the Owner Trust to the exclusion of the Owner
Trust under the Charter (other than those rights and remedies to the extent
relating to Excepted Payments), including, without limitation, the right to take
possession of all or any part of the Indenture Estate and exclude the Owner
Trust and all Persons (including the Charterer, but excluding the U.K. Lessor to
the extent of the U.K. Lessor's rights under the Conditional Sale Agreement)
claiming under the Owner Trust wholly or partly therefrom. In addition to and
without limiting the foregoing, the Indenture Trustee, upon at least 25 days'
prior written notice to the Owner Participant and the Owner Trust, may invoke
and exercise the power of sale and sell any or all of the Indenture Estate in
the manner required by law at public auction, or in any other manner which shall
be in accordance with applicable law, or, in lieu of sale pursuant to the power
of sale, the Indenture Estate may be foreclosed, and the Indenture Trustee has
and may exercise all rights and remedies of a secured party under the Uniform
Commercial Code as in effect in any applicable jurisdiction; provided that (i)
notwithstanding any provision herein to the contrary, the Indenture Trustee
shall not sell, assign, transfer or deliver any of the Indenture Estate or take
possession of the Indenture Estate unless the Secured Notes shall have been
accelerated pursuant to Section 5.04(b) or 5.04(c) and (ii) if an Indenture
Event of Default has occurred and is continuing solely by virtue of one or more
Charter Events of Default (at a time when no other Indenture Events of Default
shall have occurred and be continuing), the Indenture Trustee shall not exercise
foreclosure remedies under this Indenture without declaring the Charter to be in
default and exercising one or
<PAGE>
32
more material remedies seeking to terminate the Charter, unless exercising such
remedies under the Charter shall be prohibited by law, governmental authority or
court order, in which case the Indenture Trustee shall not exercise foreclosure
remedies under the Indenture until the later of (i) the expiration of a period
of sixty (60) days from the commencement of such prohibition and (ii) the
expiration of an additional period commencing on the day immediately following
the expiration of such 60-day period and ending on the earlier of (x) the 180th
day after the relevant stay or prohibition is imposed, (y) the occurrence of any
additional Indenture Event of Default during such additional period and (z)
rejection of the Charter; provided that such extended period will not apply
unless, on the 60th day following the date upon which such stay or prohibition
becomes effective, all Indenture Events of Default theretofore existing have
been cured (except to the extent arising from the bankruptcy or similar
proceeding giving rise to the applicable stay or similar prohibition) and to the
extent the Owner Trust, as Owner under the Charter, exercises its right to cure
any Charter defaults or Charter Events of Default during such 180-day period,
the exercise of such rights will not limit the cure rights otherwise available
to the Owner under Section 5.03(a). The Indenture Trustee shall notify the
Owner Trust, the Owner Participant and the Charterer as soon as is reasonably
practicable after its commencement of the exercise of any remedy pursuant to
this Section 5.04.
(b) If an Indenture Event of Default (other than an Indenture Event of
Default specified in Section 5.02(e) or an Indenture Event of Default of the
type specified in Section 5.02(a) which arises as a result of any Charter Event
of Default as is specified in Article 21(7) of the Charter) shall have occurred
and be continuing, then, subject to Sections 5.03, 6.02 and 6.08, the Indenture
Trustee may at any time, by five days' written notice to the Owner Trust,
declare all (but not less than all) of the Secured Notes Outstanding to be due
and payable. Upon such declaration, the unpaid principal of all Secured Notes
then Outstanding, together with accrued but unpaid interest thereon, and any
other amounts due thereunder, shall immediately become due and payable without
presentment, demand, protest or notice, all of which are hereby waived.
(c) If an Indenture Event of Default of the type specified in Section
5.02(e), or an Indenture Event of Default of the type specified in Section
5.02(a) which arises as a result of any Charter Event of Default specified in
Article 21(7) of the Charter shall have occurred and be continuing, the
principal of all Secured Notes then Outstanding, together with accrued but
unpaid interest thereon and any other amounts due thereunder, shall become and
be due and payable automatically, without declaration, notice, demand, or any
other action on the part of the Indenture Trustee or any Holder, all of which
are hereby waived. Each of Section 5.04(b) and this Section 5.04(c), however,
is subject to the condition that, if at any time after the principal of the
Secured Notes shall have become due and payable upon a declared or automatic
acceleration thereof as provided herein, and before any judgment or decree for
the payment of the money so due, or any portion thereof, shall be entered, all
overdue payments of interest upon the Secured Notes, the Make-Whole
<PAGE>
33
Amount, if any, and all other amounts payable under the Secured Notes (except
the principal of the Secured Notes which by such acceleration shall have become
payable) shall have been duly paid, and every other Indenture Event of Default
with respect to any covenant or provision of this Indenture shall have been
cured, then in every such case a Majority in Interest of Holders of Notes, by
written instrument filed with the Indenture Trustee, may (but shall not be
obligated to) rescind and annul such declared or automatic acceleration and its
consequences; but no such rescission or annulment shall extend to or affect any
subsequent Event of Default or impair any right consequent thereon.
(d) Notwithstanding any provision in any document or instruction that
purports to require the Indenture Trustee to acquire title to any or all of the
Indenture Estate upon foreclosure, or pursuant to instructions, the Indenture
Trustee shall not be obligated to acquire any such title unless: (i) the
Indenture Trustee is provided with such security or indemnity as it shall deem
satisfactory to it, (ii) such acquisition of title complies with all applicable
Operative Documents, laws, rules and regulations, which shall be evidenced by an
opinion of counsel to such effect in form and substance satisfactory to the
Indenture Trustee and (iii) the Indenture Trustee shall have obtained such
executed certificates, instruments or other documents, in accordance with its
reasonable inquiries or requests.
SECTION 5.05. Suit; Possession; Title; Sale of Indenture Estate.
-------------------------------------------------
(a) The Owner Trust agrees that, if an Indenture Event of Default shall have
occurred and be continuing and the Indenture Trustee shall be entitled to
exercise remedies hereunder as provided in Section 5.04, the Indenture Trustee
may take possession of all or any part of the Indenture Estate and may exclude
the Owner Trust, and all Persons claiming under the Owner Trust, wholly or
partly therefrom; provided, however, that at least ten Business Days' prior
notice of such taking of possession shall be given to the Owner Trust. If an
Indenture Event of Default shall have occurred and be continuing and the
Indenture Trustee shall be entitled to exercise remedies hereunder as provided
in Section 5.04, at the request of the Indenture Trustee, the Owner Trust shall
promptly execute and deliver to the Indenture Trustee such instruments of title
and other documents as the Indenture Trustee may deem necessary or advisable to
enable the Indenture Trustee or any agent or representative designated by the
Indenture Trustee, at such time or times and place or places as the Indenture
Trustee may specify, to obtain possession of all or any part of the Indenture
Estate to which the Indenture Trustee shall at the time be entitled hereunder.
If the Owner Trust shall for any reason fail to execute and deliver such
instruments and documents after such request by the Indenture Trustee, the
Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee
the right to immediate possession of any property comprising a portion of the
Indenture Estate and requiring the Owner Trust to execute and deliver such
instruments and documents to the Indenture Trustee, or (ii) pursue all or part
of such property wherever it may be found, and the Indenture Trustee may enter
any of the premises where such property or any portion thereof may be or is
supposed to be and search for such
<PAGE>
34
property. All expenses of obtaining such judgment or of pursuing, searching for
and taking such property shall, until paid, be secured by the Lien of this
Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may
make, from time to time and at the expense of the Indenture Estate, such
expenditures for maintenance, insurance, repairs, replacements, alterations,
additions and improvements to and of the Indenture Estate as it may deem proper.
In each such case, the Indenture Trustee shall have the right to maintain, use,
operate, store, lease, control or manage the Indenture Estate and to exercise
all rights and power of the Owner Trust relating to the Indenture Estate as the
Indenture Trustee shall deem to be in the best interest of the Holders. The
Indenture Trustee shall be entitled to collect and receive directly all tolls,
rents (including Hire), revenue, issues, income, products and profits of the
Indenture Estate and every part thereof, other than Excepted Payments. Such
tolls, rents (including Hire), revenues, issues, income, products and profits
shall be applied (i) to pay the expenses of the use, operation, storage,
leasing, control, management or disposition of the Indenture Estate, (ii) to pay
the expense of all maintenance, repairs, replacements, alterations, additions
and improvements, (iii) to make all payments which the Indenture Trustee may be
required or may elect to make, if any, for taxes, assessments, insurance or
other proper charges upon the Indenture Estate or any portion thereof, including
without limitation the employment of engineers and accountants to examine,
inspect and make reports upon the properties and books and records of the Owner
Trust, and (iv) to pay amounts owing in respect of the Secured Notes in
accordance with the provisions thereof and hereof and to make all other payments
which the Indenture Trustee may be required or authorized to make under any
provision of this Indenture, as well as just and reasonable compensation for the
services of the Indenture Trustee and of all Persons properly engaged and
employed by the Indenture Trustee.
(c) The Indenture Trustee or any Holder may be a purchaser of the
Indenture Estate or any portion thereof or any interest therein at any sale
thereof, whether pursuant to foreclosure or power of sale or otherwise. The
Indenture Trustee may apply against the purchase price therefor the amount then
due to it hereunder or under any of the Secured Notes secured hereby and any
Holder may apply against the purchase price therefor the amount then due to it
hereunder or under the Secured Notes held by such Holder, to the extent of such
portion of the purchase price as it would have received had it been entitled to
share in any distribution thereof. The Indenture Trustee or any Holder or any
nominee of any such Holder shall acquire, upon any such purchase, good title to
the property so purchased, free of the Lien of this Indenture and, to the extent
permitted by applicable law, free of all rights of redemption in the Owner Trust
in respect of the property so purchased.
(d) Any sale or other conveyance of any of the Indenture Estate by the
Indenture Trustee made pursuant to the terms of this Indenture or the Charter
shall bind the Holders, Owner Trust and the Owner Participant and shall be
effective to transfer or convey all right, title and interest of the Indenture
Trustee, the Owner Trust, the Holders and the
<PAGE>
35
Owner Participant in and to such Indenture Estate or portion thereof, as the
case may be. No purchaser or other grantee shall be required to inquire as to
the authorization, necessity, expediency or regularity of such sale or
conveyance, or as to the application of any sale or other proceeds with respect
thereto by the Indenture Trustee. In the event of any such sale, the Owner
Trust shall execute any and all such bills of sale and other documents, and
perform and do all other acts and things requested by the Indenture Trustee in
order to permit continuation of such sale and to effectuate the transfer or
conveyance referred to in the first sentence of this Section 5.05(d). The Owner
Trust shall ratify and confirm any such sale or sales by executing and
delivering to the Indenture Trustee or to such purchaser or purchasers all
instruments as may reasonably be requested for such purpose. Any such sale or
sales made hereunder shall operate to divest all the estate, right, title,
interest, claim and demand whatsoever, whether at law or in equity, of the Owner
Trust in and to the properties and rights so sold, and shall be a perpetual bar
both at law and in equity against the Owner Trust and against any and all
persons claiming or who may claim the same, or any part thereof from, through or
under the Owner Trust. Upon any sale or other disposition of the Indenture
Estate by the Indenture Trustee, the Indenture Trustee will promptly account in
writing, in reasonable detail, to the Owner Trust for the amount of such sale,
the costs and expenses incurred in connection therewith and any surplus
proceeds.
(e) The Indenture Trustee shall, as a matter of right, be entitled to
the appointment of a receiver (who may be the Indenture Trustee or any successor
or nominee thereof), at any time after an Indenture Event of Default either
before or after declaring due and payable the principal of all Secured Notes
then Outstanding, together with accrued but unpaid interest thereon and any
other amounts due thereunder, for all or any portion of the Indenture Estate,
whether such receivership be incidental to a proposed sale of the Indenture
Estate or the taking of possession thereof or otherwise, and the Owner Trust
hereby consents to the appointment of such a receiver, and agrees that it will
not oppose any such appointment. Any receiver appointed for all or any portion
of the Indenture Estate shall be entitled in addition to any powers available
under applicable law, to exercise all the rights and powers of the Indenture
Trustee with respect to the Indenture Estate.
(f) To the extent now or at any time hereafter enforceable under
applicable law, the Owner Trust covenants that it will not at any time insist
upon or plead, or in any manner whatsoever claim or take any benefit or
advantage of any stay, extension, moratorium, any exemption from execution or
sale or other similar law or from any law now or hereafter in force providing
for the valuation or appraisement of the Indenture Estate or any part thereof,
prior to any sale or sales thereof to be made pursuant to any provision herein
contained, or prior to any applicable decree, judgment or order of any court of
competent jurisdiction; nor, after such sale or sales, claim or exercise any
right under any statute now or hereafter made or enacted by any state or any
right to have a portion of the Indenture Estate or the security for the Secured
Notes marshalled or otherwise redeem the property so sold or any part thereof,
and hereby expressly waives for itself and on behalf of
<PAGE>
36
each and every Person, except decree or judgment creditors of the Owner Trust
acquiring any interest in or title to the Indenture Estate or any part thereof
subsequent to the date of this Indenture, all benefit and advantage of any such
law or laws, and covenants that it will not invoke or use any such law or laws,
but will suffer and permit the execution of every such power as though no such
law or laws had been made or enacted. Nothing in this Section 5.05(f) shall be
deemed to be a waiver by the Owner Trust of its rights under Section 5.03
hereof.
The Indenture Trustee may maintain such a pleading, or, in any manner
whatsoever, claim or take any benefit or advantage of or from any law now or
hereafter in force even if it does not possess any of the Secured Notes or does
not produce any of them in the proceeding. A delay or omission by the Indenture
Trustee or any Holder in exercising any right or remedy accruing upon an
Indenture Event of Default under this Indenture shall not impair the right or
remedy or constitute a waiver of or acquiescence in such Indenture Event of
Default.
(g) The Indenture Trustee may adjourn from time to time any sale to be
made under or by virtue of this Indenture for such sale or for such adjourned
sale or sales, and, except as otherwise provided by any applicable provision of
law, the Indenture Trustee, without further notice or publication, may make such
sale at the time and place to which the same shall be so adjourned.
(h) Any recovery of any judgment by the Indenture Trustee under the
Secured Notes and any levy of any execution under any such judgment upon the
Indenture Estate shall not affect in any manner or to any extent the security
title and security interest conveyed hereby upon the Indenture Estate or any
part thereof, or any conveyances, powers, rights and remedies of the Indenture
Trustee hereunder, but such conveyances, powers, rights and remedies shall
continue unimpaired as before.
(i) Notwithstanding anything contained herein, so long as any Pass
Through Trustee is a registered Holder, the Indenture Trustee is not authorized
or empowered to acquire title to all or any portion of the Indenture Estate or
take any action with respect to all or any portion of the Indenture Estate so
acquired by it if such acquisition or action would cause the related Pass
Through Trust to fail to qualify as a "grantor trust" for federal income tax
purposes.
SECTION 5.06. Remedies Cumulative. Each and every right, power and
-------------------
remedy provided the Indenture Trustee specifically or otherwise in this
Indenture shall be cumulative and shall be in addition to every right, power and
remedy herein specifically provided or now or hereafter existing at law, in
equity or otherwise. Each and every such right, power and remedy may be
exercised from time to time and as often and in such order as may be deemed
expedient by the Indenture Trustee, and the exercise or the beginning of
<PAGE>
37
the exercise of any such right, power or remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any other right,
power or remedy. No delay or omission by the Indenture Trustee in the exercise
of any right or power or in the pursuit of any remedy shall impair any such
right, power or remedy, or be construed to be a waiver of any Indenture Event of
Default or to be an acquiescence therein.
SECTION 5.07. Discontinuance of Proceedings. In case the Indenture
-----------------------------
Trustee shall have instituted any proceeding to enforce any right, power or
remedy under this Indenture by foreclosure, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee, then and in every such
case the Owner Trust, the Indenture Trustee and the Charterer shall, subject to
any determination in such proceeding, be restored to their former positions and
rights hereunder with respect to the Indenture Estate, and all right, powers and
remedies of the Indenture Trustee shall continue as if no such proceeding had
been instituted.
SECTION 5.08. Waiver of Past Defaults. Upon written instruction of a
-----------------------
Majority in Interest of Holders of Notes, the Indenture Trustee shall waive any
Indenture Event of Default specified in such instruction and its consequences
and, upon any such waiver, such Indenture Event of Default shall cease to exist
for every purpose of this Indenture; provided, however, that no such waiver
shall extend to any subsequent or other Indenture Event of Default or impair any
right or consequence thereof; and provided further, however, that in the absence
of the written instruction of the Holders of all Secured Notes then Outstanding,
the Indenture Trustee shall not waive any Indenture Event of Default arising
from a default (i) in the payment of the principal of or interest on, or other
amounts due under, any Secured Note then Outstanding, or (ii) in respect of a
covenant or provision hereof which, pursuant to the terms of Article IX, cannot
be modified or amended without the consent of each Holder of a Secured Note then
Outstanding.
SECTION 5.09. No Action Contrary to Certain Third Party Rights.
------------------------------------------------
Notwithstanding any other provision of any Operative Document, unless a Charter
Event of Default shall have occurred and be continuing and the Charter shall
have been declared to be in default pursuant to Article 22 thereof, the
Indenture Trustee shall not take or cause to be taken any action contrary to the
Charterer's rights under the Charter, including without limitation the rights of
the Charterer under Article 7 thereof.
SECTION 5.10. Rights of Holders of Secured Notes. Notwithstanding
----------------------------------
any provision herein (including Section 5.11) to the contrary, the Holder of a
Secured Note shall have the absolute and unconditional right to receive payment
from the Indenture Estate of the principal of and interest on such Secured Note
on the dates and as specified in such Secured Note, and to institute suit
against the Owner Trust for the enforcement of any such payment,
<PAGE>
38
subject to Section 2.02, and such right shall not be impaired without the
consent of such Holder.
SECTION 5.11. Limitation on Suits by Holders. A Holder may pursue a
------------------------------
remedy under this Indenture or under a Secured Note only if:
(i) the Holder gives to the Indenture Trustee written notice of a
continuing Indenture Event of Default under this Indenture;
(ii) the Holders of at least 25 percent (25%) of the Outstanding
principal amount of the Secured Notes instruct the Indenture Trustee to
pursue the remedy;
(iii) such Holder or Holders offer to the Indenture Trustee indemnity
satisfactory to the Indenture Trustee against any loss, liability or
expense to be, or which may be, incurred by the Indenture Trustee in
pursuing the remedy;
(iv) the Indenture Trustee does not comply with the request within 60
days after receipt of the instructions and the offer of indemnity; and
(v) during such 60-day period, a Majority in Interest of Holders do
not give the Indenture Trustee an instruction inconsistent with the
request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
ARTICLE VI
DUTIES OF THE INDENTURE TRUSTEE
SECTION 6.01. Certain Actions. If the Indenture Trustee shall have
---------------
Actual Knowledge of any Indenture Event of Default or any Indenture Default or
any failure on the part of the Charterer to make any payment of Assigned Hire
when due or any Event of Loss or other material fact relating to the Indenture
Estate, the Indenture Trustee shall (a) give prompt telephonic notice (promptly
confirmed in writing) to the Owner Trust, the Owner Participant and the
Charterer and (b) within 90 days after obtaining such Actual Knowledge, mail to
each Holder notice of any such Indenture Event of Default unless, in each case,
such Indenture Event of Default has been remedied before the giving of such
notice and the Indenture Trustee has Actual Knowledge of such remedy; provided,
however, that the failure by the Indenture Trustee to provide such notice shall
not invalidate any actions subsequently taken by the Indenture Trustee in
connection with such Indenture Event of Default. Except in the case of a
default in the payment of the principal or interest on any Secured Note, the
<PAGE>
39
Indenture Trustee shall be protected in withholding the notice required under
clause (b) above if and so long as Responsible Officers of the Indenture Trustee
in good faith determine that withholding such notice is in the interest of the
Holders.
SECTION 6.02. Action Upon Instructions. (a) The Indenture Trustee
------------------------
shall, upon the written instruction at any time and from time to time of a
Majority in Interest of Holders of Notes, give such notice, consent or direction
or exercise such right, remedy or power hereunder or under the Charter or any
other agreement constituting part of the Indenture Estate as shall be specified
in such instruction; provided, however, that nothing set forth in this Section
6.02(a) shall entitle the Holders to cause the Indenture Trustee to give any
notice or exercise any right, power or remedy that is not elsewhere authorized
by, or is otherwise restricted or prohibited by, this Indenture. If the
Indenture Trustee shall not have received instructions as above provided within
20 days after mailing of the notice pursuant to Section 6.01 to the Holders, the
Indenture Trustee may take such action, or refrain from taking such action, but
shall be under no duty to take or refrain from taking any action, with respect
to such Indenture Event of Default, Event of Loss or fact as it shall determine
to be advisable and in the best interest of the Holders. If the Indenture
Trustee receives any instructions after the expiration of the aforementioned 20-
day period, the Indenture Trustee shall use its best efforts to conform any
action being taken to comply with those instructions.
(b) The Indenture Trustee shall not consent to the assignment by the
Charterer of all or any material portion of its right, title and interest in, to
and under the Charter, except (i) with respect to an assignment permitted under
Section 20(c) of the Charter or (ii) upon the written instruction at any time
and from time to time of a Majority in Interest of Holders of Notes. Nothing
set forth herein shall be construed to permit such assignment without the
consent of the Owner Trust or to adversely affect any right of the Owner Trust.
SECTION 6.03. Release of Lien of Indenture. (a) Release of
---------------------------- ----------
Indenture Estate. Upon satisfaction of the conditions for termination of this
- ----------------
Indenture set forth in Section 10.01, the Indenture Trustee, upon the written
request of the Owner Trust, shall execute and deliver to, or as directed by, the
Owner Trust, all appropriate instruments (in due form for recording or filing)
releasing the Indenture Estate from the Lien of this Indenture, the Ship
Mortgage and the U.K. Security Assignment, and the Indenture Trustee shall pay
all moneys or other properties or proceeds held by it under this Indenture to
the Owner Trust and shall give notice to the Charterer of such payment. The
cost and expense associated with any action taken by the Indenture Trustee
pursuant to the provisions of this Section 6.03(a) shall be borne by the
Charterer.
(b) Release of the Vessel upon Transfer. Upon any transfer by the
-----------------------------------
Owner Trust of the Vessel pursuant to Article 18 or 23 of the Charter or any
retention by the Owner Trust of the Vessel pursuant to Article 18 of the Charter
and receipt by the Indenture Trustee
<PAGE>
40
of all amounts of Hire therefor that constituted a part of the Indenture Estate
due and payable by the Charterer and the concurrent redemption of Secured Notes
as set forth in Sections 3.02, 3.03 and 4.02 and the payment of any other
amounts then due and owing hereunder, the Indenture Trustee, upon the written
request of the Owner Trust, shall execute and deliver to, or as directed by, the
Owner Trust, all appropriate instruments (in due form for recording or filing),
releasing the Vessel and all other property relating thereto and then
constituting a portion of the Indenture Estate, as the case may be, from the
Lien of this Indenture and the Ship Mortgage. The cost and expense associated
with any action taken by the Indenture Trustee pursuant to the provisions of
this Section 6.03(b) shall be borne by the Charterer.
(c) Release of Lien upon Full Payment of Secured Notes. Upon payment
--------------------------------------------------
in full of the principal of and interest on and all other amounts due and
payable under the Secured Notes, and all other amounts due and payable to any
Holder or the Indenture Trustee hereunder or under any other Operative Document,
the Indenture Trustee, upon the written request of the Owner Trust, shall
execute and deliver to, or as directed by, the Owner Trust, all appropriate
instruments (in due form for recording or filing) releasing the Vessel and all
other property relating thereto and then constituting a portion of the Indenture
Estate from the Lien of this Indenture, the Ship Mortgage and the U.K. Security
Assignment. The cost and expense associated with any action taken by the
Indenture Trustee pursuant to the provisions of this Section 6.03(c) shall be
borne by the Charterer.
SECTION 6.04. Indemnification. The Indenture Trustee shall not be
---------------
required to take any action or refrain from taking any action instructed to be
taken or refrained from being taken pursuant to Section 6.02 or under Article V
unless the Indenture Trustee shall have been indemnified to the Indenture
Trustee's reasonable satisfaction against any liability (including, without
limitation, environmental liability), cost or expense (including, without
limitation, the reasonable fees and expenses of counsel) which may be incurred
in connection therewith, other than any such liability, cost or expense which
results from the willful misconduct or gross negligence of the Indenture Trustee
and for the failure of the Indenture Trustee to exercise ordinary care in
distributing funds in accordance with the terms of the Operative Documents.
Except with respect to actions required by the first sentence of Section 6.01
hereof, the Indenture Trustee shall be under no obligation to take any action
under this Indenture and nothing contained in this Indenture shall require the
Indenture Trustee to expend or risk the Indenture Trustee's own funds or
otherwise incur any financial liability or any other liability (including,
without limitation, environmental liability) in the performance of any of the
Indenture Trustee's duties hereunder or in the exercise of any of the Indenture
Trustee's rights or powers if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it. The Indenture Trustee shall not be
required to take any action under Section 6.02 or Article V, nor shall any other
provision of this Indenture be deemed to impose a duty on the Indenture Trustee
to take any action, if such Indenture Trustee shall have reasonably determined
or been advised in writing by its counsel that such action is
<PAGE>
41
contrary to the terms hereof or of any other Operative Document, or is contrary
to applicable law.
SECTION 6.05. No Implied Duties. No implied duties or obligations of
-----------------
the Indenture Trustee shall be read into this Indenture.
SECTION 6.06. Duties to Remove Certain Liens. The Indenture Trustee,
------------------------------
in its individual capacity, shall comply with Section 12.4(a) of the
Participation Agreement.
SECTION 6.07. No Action Except Under Operative Documents or
---------------------------------------------
Instructions. The Owner Trust and the Indenture Trustee agree that they will
- ------------
not use, operate, store, lease, control, manage, sell, dispose of or otherwise
deal with the Vessel or any other part of the Indenture Estate, except (a) in
accordance with the terms of the Charter or the other Operative Documents or the
U.K. Documents or (b) in accordance with the powers granted to, or the authority
conferred upon, the Owner Trust and the Indenture Trustee pursuant to the
express terms of this Indenture and the Trust Agreement.
SECTION 6.08. Certain Rights of the Owner Trust and the Owner
-----------------------------------------------
Participant. Notwithstanding any provision in this Indenture to the contrary:
- -----------
(a) each of the Owner Trust and the Owner Participant shall have the
right, to the exclusion of the Indenture Trustee, whether or not an
Indenture Event of Default is continuing and whether or not the Indenture
Trustee has foreclosed on the Lien of the Indenture, (i) to receive
Excepted Payments, (ii) to demand, collect, sue for or waive any notice of
default with respect to Excepted Payments, (iii) prior to the foreclosure
of the Lien of the Indenture and subject to Section 5.03(c), to declare the
Charter in default in respect of Expected Payments and (iv) to enforce the
payment of Excepted Payments due and payable to it by appropriate judicial
proceedings and to exercise other remedies as provided under any Operative
Document to the extent and with respect to any portion of the Indenture
Estate which shall have been released pursuant to the terms of this
Indenture; provided that the rights referred to in this Section
6.08(a)(iii) and (iv) shall not be deemed to include the exercise of any
remedies provided for in Article 22 of the Charter other than the right to
proceed by appropriate court action or actions, either at law or in equity,
to enforce performance by the Charterer of the applicable covenants or to
recover damages for breach thereof;
(b) at all times prior to the foreclosure of the Lien of the
Indenture, whether or not an Indenture Event of Default is continuing, each
of the Owner Trust and the Owner Participant shall have the right, but not
to the exclusion of the Indenture Trustee, (i) to receive from the
Charterer all notices, financial statements, certificates, opinions of
counsel and other documents and information which the
<PAGE>
42
Charterer is permitted or required to give or furnish to the Owner Trust or
the Owner Participant pursuant to the terms of any Operative Document, (ii)
to retain all rights with respect to liability insurance which Article 16
of the Charter specifically confers upon the Owner Trust or the Owner
Participant, or other insurance under Article 16 of the Charter purchased
for the benefit of the Owner Trust or the Owner Participant (subject,
however to the provisions of the definition of "Excepted Payments") and
(iii) to exercise inspection rights pursuant to Article 11.6 of the
Participation Agreement and Article 11(b) of the Charter;
(c) so long as no Indenture Event of Default shall have occurred and
be continuing, the Owner Trust shall have the right, to the exclusion of
the Indenture Trustee, to adjust Bareboat Hire other than Assigned Hire;
and
(d) so long as no Indenture Event of Default shall have occurred and
be continuing (subject to Section 9.02), the Owner Trust shall retain (to
the exclusion of the Indenture Trustee) (i) all rights of the "Owner" under
the Charter, other than the Indenture Trustee's right to receive Assigned
Hire and other as set forth in (a), (b) or (c) of this Section 6.08, (ii)
all rights of the "Lessee" under the Head Lease, (iii) all rights of the
"Seller" under the Conditional Sale Agreement and (iv) all rights of the
"Purchaser" under the Construction Contract and the Bill of Sale.
SECTION 6.09. Filing of Financing and Continuation Statements. The
-----------------------------------------------
Indenture Trustee shall, at the expense of the Owner Trust, execute and file any
continuation or similar statement or document delivered to it by the Owner Trust
or the Charterer in a form reasonably satisfactory to the Indenture Trustee and
proper for filing.
SECTION 6.10. Publishing of Notices. The Indenture Trustee will
---------------------
furnish to the Owner Trust and the Owner Participant, promptly upon receipt
thereof, a duplicate or copy of each report, notice, request, demand,
instruction, certificate, financial statement or other instrument furnished to
the Indenture Trustee hereunder or under any other Operative Document.
SECTION 6.11. Taxes; Withholding; Information Reporting. The
-----------------------------------------
Indenture Trustee shall exclude and withhold from each distribution of principal
and interest and other amounts due hereunder or under the Secured Notes any and
all withholding taxes applicable thereto as required by law. The Indenture
Trustee agrees (a) to act as such withholding agent and, in connection
therewith, whenever any present or future taxes or similar charges are required
to be withheld with respect to any amounts payable in respect of the Secured
Notes or otherwise due hereunder, to withhold such taxes or charges and timely
pay the same to the appropriate authority in the name of and on behalf of the
Loan Participants, (b) that it will file any necessary withholding tax returns
or statements when due and (c) that, as promptly as possible after the payment
of such withheld amounts, it will deliver to each Loan
<PAGE>
43
Participant appropriate documentation showing the payment of such withheld
amounts, together with such additional documentary evidence as such Loan
Participants may reasonably request from time to time. The Indenture Trustee
agrees to file any other information reports as it may be required to file under
United States law. No withholding or action with respect thereto shall
constitute or give rise to any Indenture Event of Default or any other claims
against the Owner Participant or the Owner Trust. Any tax withheld by the
Indenture Trustee pursuant to this Section 6.11 shall be deemed for all purposes
of this Indenture and the Secured Notes to have been paid to the Holder with
respect to which such tax was withheld.
ARTICLE VII
THE INDENTURE TRUSTEE AND THE OWNER TRUSTEE
SECTION 7.01. Acceptance of Trusts and Duties. The Indenture Trustee
-------------------------------
accepts the duties hereby created and applicable to it and agrees to perform the
same upon the terms and conditions set forth in this Indenture and the
Participation Agreement. The Indenture Trustee further agrees to receive and
disburse all moneys constituting part of the Indenture Estate in accordance with
the terms hereof. The Indenture Trustee shall not be answerable or accountable
in its individual capacity under any circumstances, except (a) for its willful
misconduct or gross negligence, (b) for its failure to exercise reasonable care
in safeguarding the security held by it pursuant to the terms hereof, (c) in the
case of the inaccuracy of any representations or warranties made by the
Indenture Trustee in its individual capacity and contained in the Participation
Agreement or any other Operative Document or referred to by reference in Section
7.03 hereof, (d) as provided in Sections 2.03 and 6.06, (e) for any Tax based on
or measured by any fees, commissions or compensation received by it for acting
as trustee hereunder or (f) except as otherwise expressly provided herein for
its failure to use reasonable care in disbursing funds in accordance with the
terms hereof.
SECTION 7.02. Absence of Duties Except as Specified. Except in
-------------------------------------
accordance with written instructions pursuant to Section 6.01 or 6.02, and
except as provided in, and without limiting the generality of, Sections 6.04,
6.05, 6.06 and 6.07, the Indenture Trustee shall have no duty (a) to record or
file the Charter, this Indenture, the Ship Mortgage or any other document, or to
maintain any such recording or filing, or to rerecord or refile any such
document, (b) to effect or maintain any such insurance, whether or not the
Charterer shall be in default with respect thereto, (c) to discharge any Lien of
any kind against any part of the Trust Estate or the Indenture Estate, or (d) to
inspect the Vessel at any time, or to ascertain or inquire as to the performance
or observance of any of the Charterer's covenants pursuant to the terms of the
Charter.
<PAGE>
44
SECTION 7.03. No Representations or Warranties. NONE OF THE MANAGING
--------------------------------
TRUSTEE (IN ITS INDIVIDUAL OR TRUST CAPACITY), THE OWNER TRUST OR THE INDENTURE
TRUSTEE (IN ITS INDIVIDUAL OR TRUST CAPACITY) MAKES (a) ANY REPRESENTATION OR
WARRANTY, WHETHER WRITTEN, ORAL, EXPRESS OR IMPLIED, AS TO THE VALUE, COMPLIANCE
WITH SPECIFICATIONS, DURABILITY, OPERATION, CONSTRUCTION, PERFORMANCE, DESIGN OR
CONDITION OF THE VESSEL OR ANY PART THEREOF, THE MERCHANTABILITY THEREOF OR THE
FITNESS THEREOF FOR ANY PARTICULAR PURPOSE, TITLE TO THE VESSEL OR ANY COMPONENT
OF THE VESSEL, THE QUALITY OF THE MATERIALS OR WORKMANSHIP THEREOF OR CONFORMITY
THEREOF TO SPECIFICATIONS, OR THE PRESENCE OR ABSENCE OF ANY LATENT OR OTHER
DEFECTS, WHETHER OR NOT DISCOVERABLE, OR ANY OTHER REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE VESSEL, OR ANY COMPONENT OF
THE VESSEL, or (b) any representation or warranty as to the validity, legality
or enforceability of this Indenture, any of the other Operative Documents or the
Secured Notes, or as to the correctness of any statement contained in any
thereof, except as set forth in Sections 9 and 10 of the Participation Agreement
and Section 7.4 of the Trust Agreement.
SECTION 7.04. No Segregation of Moneys; No Interest; Investments.
--------------------------------------------------
Any moneys paid to or retained by the Indenture Trustee pursuant to any
provision hereof and not then required to be distributed to the Holders, the
Charterer or the Owner Trust shall be deposited in a separate, interest bearing
cash collateral account; provided that any payments received or applied
hereunder by the Indenture Trustee shall be accounted for by the Indenture
Trustee so that any portion thereof paid or applied pursuant hereto shall be
identifiable as to the source thereof. Any amounts held by the Indenture
Trustee pursuant to the express terms of this Indenture or any other Operative
Document shall be invested and reinvested by the Indenture Trustee from time to
time in Permitted Investments at the direction of (i) the Charterer if such
amounts would be payable to the Charterer upon satisfaction of any applicable
conditions; or (ii) the Owner Participant in the case of the remaining portion
of such amounts; provided, however, that in the event there shall be continuing
any Indenture Event of Default, such directions may be given exclusively by a
Majority in Interest of Holders of Notes. The Indenture Trustee shall have no
liability for any loss resulting from any investment required to be made
hereunder other than by reason of its own willful misconduct or negligence in
failing to comply with such instructions. Any net income or gain realized as a
result of any such investment or reinvestment shall be held as part of the
Indenture Estate and shall be applied by the Indenture Trustee at the same time,
on the same conditions and in the same manner as the amounts in respect of which
such income or gain was realized are required to be distributed in accordance
with the provisions hereof. Any Permitted Investment may be sold or otherwise
reduced to cash (without regard to maturity) by the Indenture Trustee whenever
necessary to make any
<PAGE>
45
application as required by the terms of this Indenture or of any applicable
Operative Document.
SECTION 7.05. Reliance; Agents; Advice of Counsel. Neither the Owner
-----------------------------------
Trust nor the Indenture Trustee (in their respective individual or trust
capacities for the purposes of this Section 7.05) shall incur any liability to
anyone in acting upon any signature, instrument, notice, resolution, request,
consent, order, certificate, report, opinion, bond or other document or paper
reasonably believed by it to be genuine and believed by it to be signed by the
proper party or parties. Either of the Owner Trust or the Indenture Trustee may
accept a copy of a resolution of the Board of Directors or other governing body
of any party to the Participation Agreement or other Operative Agreement,
certified by the Secretary or any Assistant Secretary thereof as duly adopted
and in full force and effect, as conclusive evidence that such resolution has
been duly adopted and that the same is in full force and effect. As to any fact
or matter relating to the Charterer the manner of ascertainment of which is not
specifically described herein, the Owner Trust and the Indenture Trustee may for
all purposes hereof rely on an Officer's Certificate of the relevant party as to
such fact or matter, and such Officer's Certificate shall constitute full
protection to the Owner Trust or the Indenture Trustee (in their individual or
trust capacities), as the case may be, for any action taken or omitted to be
taken by it in good faith in reliance thereon. The Indenture Trustee shall
assume, and shall be fully protected in assuming, that the Owner Trust is
authorized by the Trust Agreement to enter into this Indenture and to take all
action to be taken by the Owner Trust pursuant to the provisions hereof, and
shall not inquire into the authorization of the Owner Trust with respect
thereto. The Owner Trust shall assume, and shall be fully protected in
assuming, that the Indenture Trustee is authorized to enter into this Indenture
and to take all action to be taken by the Indenture Trustee pursuant to the
provisions hereof, and shall not inquire into the authorization of the Indenture
Trustee with respect thereto. In the administration of the trusts hereunder,
the Indenture Trustee may execute any of the trusts or powers hereof and perform
its powers and duties hereunder directly or through agents or attorneys and at
the expense of the Indenture Estate may consult with counsel, accountants and
other skilled Persons to be selected and retained by it, and the Indenture
Trustee shall not be liable for anything done, suffered or omitted in good faith
by it in accordance with the written advice or written opinion of any such
counsel, accountant or other skilled Person acting within such Person's area of
competence (so long as the Indenture Trustee shall have exercised due care in
selecting such Person).
SECTION 7.06. No Compensation from Holders or Indenture Estate.
------------------------------------------------
Notwithstanding any other provision hereof, the Indenture Trustee shall have no
right against the Holders, the Managing Trustee or the Delaware Trustee, in
their respective individual capacities, the Owner Trust, the Owner Participant
or, except as otherwise provided in Section 4.03, the Indenture Estate for any
fee as compensation for its services hereunder.
<PAGE>
46
SECTION 7.07. Right of the Indenture Trustee to Perform Covenants,
----------------------------------------------------
Etc. If the Owner Trust or the Charterer shall fail to make any payment or
- ---
perform any act required to be made or performed by it hereunder or under any
Operative Document to which it is a party or if the Owner Trust or the Charterer
shall fail to release any Lien affecting the Indenture Estate which it is
required to release by the terms of this Indenture or any other Operative
Document to which it is a party, the Indenture Trustee, after notice to and
demand upon the Owner Trust or the Charterer and affording the Owner Trust and
the Charterer a reasonable opportunity to cure, and without waiving or releasing
any obligation or Charter Event of Default, may (but shall be under no
obligation to) at any time thereafter make such payment or perform such act for
the account of and at the expense of the Indenture Estate, and may enter upon
any property for such purpose and take all such action with respect thereto as,
in the Indenture Trustee's opinion, may be necessary or appropriate therefor.
No such entry shall be deemed an eviction. All sums so paid by the Indenture
Trustee and all costs and expenses (including, without limitation, legal fees
and expenses) so incurred, shall constitute additional indebtedness secured by
this Indenture and shall be paid from the Indenture Estate to the Indenture
Trustee on demand. The Indenture Trustee shall not be liable for any damages
resulting from any such payment or action unless such damages shall be a
consequence of willful misconduct or gross negligence on the part of the
Indenture Trustee.
SECTION 7.08. Moneys for Payments in Respect of Notes to be Held in
-----------------------------------------------------
Trust. In case the Holder of any Secured Note shall fail to present the same
- -----
for payment on any date on which the principal thereof becomes payable, the
Indenture Trustee may set aside in trust the moneys then due thereon uninvested
and shall pay such moneys to any Holder of such Secured Note upon due
presentation for surrender thereof in accordance with the provisions of this
Indenture, subject to the provisions of Section 7.09.
SECTION 7.09. Disposition of Moneys Held for Payments of Notes. Any
------------------------------------------------
money set aside under Section 7.08 and not paid to Holders under Section 7.08
shall be held by the Indenture Trustee in trust until the latest of (a) the date
three years after the date of such setting aside, (b) the date all other Holders
(other than other Holders for which the Indenture Trustee is holding such moneys
pursuant to Section 7.08) of the Secured Notes shall have received full payment
of all principal of and interest and other sums payable to them on such Secured
Notes or the Indenture Trustee shall hold (and shall have notified such Persons
that it holds) in trust an amount sufficient to make full payment thereof when
due, and (c) the date the Owner Trust shall have fully performed and observed
all its covenants and obligations contained in this Indenture with respect to
the Secured Notes; and thereafter shall be paid to the Owner Trust by the
Indenture Trustee, who then shall be released from all further liability with
respect to such moneys, and thereafter the Holders of the Secured Notes in
respect of which such moneys were so paid to the Owner Trust shall have no
rights in respect thereof except to obtain payment of such moneys from the Owner
Trust.
<PAGE>
47
ARTICLE VIII
SUCCESSOR TRUSTEES AND ADDITIONAL TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee. In the case of any
---------------------------------
appointment of a successor to either Owner Trustee pursuant to the Trust
Agreement, or any merger, conversion or consolidation or transfer of
substantially all of the corporate trust business of either Owner Trustee, the
Managing Trustee shall give prompt written notice thereof to the Indenture
Trustee.
SECTION 8.02. Resignation of Indenture Trustee; Appointment of
------------------------------------------------
Successor. (a) The Indenture Trustee or any successor thereto may resign at
- ---------
any time without cause by giving at least thirty (30) days prior written notice
to the Owner Trust, the Owner Participant, the Charterer and each Holder, such
resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee as provided in Section 8.02(b). In addition, a
Majority in Interest of Holders of Notes may at any time remove the Indenture
Trustee without cause by an instrument in writing delivered to the Owner Trust,
the Owner Participant, the Charterer and the Indenture Trustee, such removal to
be effective upon the acceptance of the trusteeship by a successor Indenture
Trustee as provided in Section 8.02(b). In the case of the resignation or
removal of the Indenture Trustee, the Owner Trust may appoint a successor
Indenture Trustee. If a successor Indenture Trustee shall not have been
appointed within thirty (30) days of such notice of resignation or removal, the
Indenture Trustee, the Owner Trust, the Owner Participant, the Charterer or a
Majority in Interest of Holders may apply to any court of competent jurisdiction
to appoint a successor Indenture Trustee qualified under Section 8.02(c) to act
until such time, if any, as a successor shall have been appointed as above
provided in this Section 8.02. The successor Indenture Trustee so appointed by
such court shall immediately and without further act be superseded by any
successor Indenture Trustee appointed as above provided in this Section 8.02.
(b) Any successor Indenture Trustee, however appointed, shall execute
and deliver to the Owner Trust and to the predecessor Indenture Trustee (with a
copy to each Holder) an instrument accepting such appointment, and shall give
the Owner Participant, the Holders and the Charterer written notice of such
acceptance. Upon the execution and delivery of such instrument, such successor
Indenture Trustee, without further act, shall become vested with all the
estates, properties, rights, powers and duties of the predecessor Indenture
Trustee hereunder, with like effect as if originally named the Indenture Trustee
herein. Notwithstanding and without limiting the foregoing, the predecessor
Indenture Trustee, upon the written request of the successor Indenture Trustee,
shall execute and deliver an instrument transferring to such successor Indenture
Trustee, upon the trusts herein expressed applicable to it, all the estates,
properties, rights and powers of such predecessor Indenture Trustee, and such
predecessor Indenture Trustee shall duly assign, transfer, deliver
<PAGE>
48
and pay over to such successor Indenture Trustee all moneys or other property
then held by such predecessor Indenture Trustee hereunder.
(c) There shall at all times be an Indenture Trustee hereunder which
shall be a bank or trust company organized and doing business under the laws of
the United States of America or of any state thereof, authorized under such laws
to exercise corporate trust powers, subject to supervision or examination by
federal or state authority, having a combined capital and surplus of at least
$75,000,000. If such bank or trust company publishes reports of condition at
least annually, pursuant to applicable law or to the requirements of the
aforesaid supervising or examining authority, then for purposes hereof the
combined capital and surplus of such bank or trust company shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published.
(d) Any corporation into which the Indenture Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation to which substantially all the corporate
trust business of the Indenture Trustee may be transferred, shall, subject to
the terms of paragraph (c) of this Section 8.02, be the Indenture Trustee under
this Indenture without further act.
SECTION 8.03. Co-Trustees and Separate Trustees. (a) If, at any
---------------------------------
time, it shall be necessary or prudent in order to conform to any law of any
jurisdiction in which property shall be held subject to the Lien of this
Indenture, the Ship Mortgage and the U.K. Security Assignment, the Indenture
Trustee shall be advised by counsel that it is so necessary or prudent in the
interest of the Holders, or a Majority in Interest of Holders of Notes in
writing shall so request the Indenture Trustee and the Owner Trust, the
Indenture Trustee and the Owner Trust shall execute and deliver all instruments
and agreements necessary or proper either (i) to constitute another bank or
trust company or one or more Persons approved by the Indenture Trustee and the
Owner Trust, either to act as co-trustee or co-trustees of all or any portion of
the Indenture Estate, jointly with the Indenture Trustee originally named herein
or any successor or successors, or to act as separate trustee or trustees of all
or any such portion of the Indenture Estate in each case with such rights,
powers, duties and obligations as may be provided in such supplemental indenture
or such instrument of appointment as the Indenture Trustee or a Majority in
Interest of Holders of Notes may deem necessary or advisable, or (ii) to
clarify, add to or subtract from the rights, powers, duties and obligations
theretofore granted any such additional or separate trustee, subject in each
case to the remaining provisions of this Section 8.03. In the event that the
Owner Trust shall not have joined in the execution of such instruments and
agreements within fifteen (15) days after the receipt of a written request from
the Indenture Trustee to do so, or if an Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee may act under the foregoing
provisions of this Section 8.03 without the concurrence of the Owner Trust; and
the Owner Trust hereby appoints the Indenture Trustee its agent and
<PAGE>
49
attorney-in-fact to act for it under the foregoing provisions of this Section
8.03(a) in either of such contingencies. The Indenture Trustee may, in such
capacity, execute deliver and perform any such supplemental indenture, or any
such instrument, as may be required for the appointment of any such co-
trustee(s) or separate trustee(s) or for the clarification of, addition to or
subtraction from the rights, powers, duties or obligations theretofore granted
to any such co-trustee(s) or separate trustee(s). In case any co-trustee(s) or
separate trustee(s) appointed under this Section 8.03(a) shall die, become
incapable of acting, resign or be removed, all the assets, property, rights,
powers, trusts, duties and obligations of such co-trustee(s) or separate
trustee(s) shall revert to and shall vest in and may be exercised by the
Indenture Trustee, to the extent permitted by law until a successor, additional
or separate trustee is appointed as provided in this Section 8.03(a).
(b) Every co-trustee and separate trustee hereunder, to the extent
permitted by law and except as otherwise expressly provided in any Operative
Document, shall be appointed and act, and the Indenture Trustee and its
successors shall act, subject to the following provisions and conditions:
(i) the Secured Notes shall be authenticated and delivered by the
Indenture Trustee, and all powers, duties, obligations and rights conferred
upon the Indenture Trustee in respect of the receipt, custody, control,
payment and management of moneys, papers or securities, shall be exercised,
solely by the Indenture Trustee;
(ii) all other rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such co-trustee or co-
trustees or separate trustee or trustees jointly, except to the extent that
under any applicable law or in any jurisdiction in which any particular act
or acts are to be performed, the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations shall be exercised and performed by such co-
trustee or co-trustees or separate trustee or trustees; but subject to the
same limitations in any exercise of his, her or its power and authority as
those to which the Indenture Trustee is subject under the terms of this
Indenture;
(iii) notwithstanding anything herein contained to the contrary, no
power given hereby to, or which it is provided hereby may be exercised by,
any such co-trustee or co-trustees or separate trustee or trustees, shall
be exercised hereunder by such additional trustee or trustees except
jointly with, or with consent in writing of, the Indenture Trustee;
(iv) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder;
<PAGE>
50
(v) the powers of any co-trustee(s) or separate trustee(s) appointed
pursuant to this Section 8.03 shall not in any case exceed those of the
Indenture Trustee hereunder; and
(vi) the Owner Trust and the Indenture Trustee, at any time, by an
instrument in writing executed by them jointly, may remove any such
trustee, and in that case, by an instrument in writing executed by them
jointly, may appoint a successor or successors to such co-trustee or co-
trustees or separate trustee or trustees, as the case may be. In the event
that the Owner Trust shall not have joined in the execution of any such
instrument within fifteen (15) days after the receipt of a written request
from the Indenture Trustee to do so, the Indenture Trustee shall have the
power to remove any such co-trustee or separate trustee and to appoint a
successor co-trustee or separate trustee without the concurrence of the
Owner Trust. In the event that the Indenture Trustee alone shall have
appointed a separate trustee or trustees or co-trustee or co-trustees as
above provided in this Section 8.03, it may at any time, by an instrument
in writing, remove any such separate trustee or co-trustee, the successor
to any such separate trustee or co-trustee so removed to be appointed by
the Owner Trust and the Indenture Trustee, or by the Indenture Trustee
alone, as provided in this Section 8.03.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Indenture Supplements Without Consent of Holders. The
------------------------------------------------
Owner Trust and the Indenture Trustee, without the consent of any Holder and at
any time and from time to time, may enter into one or more amendments or
supplements to this Indenture, in form satisfactory to each of the Owner Trust
and Indenture Trust, for any of the following purposes:
(a) to subject to the Lien of this Indenture additional property
constituting part of the Indenture Estate pursuant to a supplement to this
Indenture substantially in the form of Exhibit D to this Indenture;
(b) to correct or amplify the description of any property at any time
subject to the Lien of this Indenture;
(c) to add to the covenants of the Owner Trust for the benefit of the
Holders or to surrender any right or power herein conferred upon the Owner
Trust, the Owner Participant or the Charterer;
<PAGE>
51
(d) to cure any ambiguity, to correct or supplement any provision
herein or in the Secured Notes which may be defective or inconsistent with
any other provisions of this Indenture, provided that such action shall not
adversely affect the interests of any Holder;
(e) to evidence the succession of a new Owner Trustee in accordance
with the Trust Agreement or the succession of a new Indenture Trustee
hereunder or the appointment or removal of any co-trustee or separate
trustee thereunder or hereunder;
(f) to convey, transfer, assign, mortgage or pledge any property to or
with the Indenture Trustee or to make any other provisions with respect to
matters or questions arising hereunder so long as such action shall not
adversely affect the interests of the Loan Participants;
(g) to add to the rights of the Loan Participants;
(h) to include on the Secured Notes any legend as may be required by
law;
(i) to provide for the establishment and issuance of Additional Notes
pursuant to Section 2.08; or
(j) to provide for the substitution of a new owner trust in accordance
with Section 3.04.
SECTION 9.02. Supplements and Amendments to Operative Documents With
------------------------------------------------------
Consent Holders of Notes. (a) Without the consent of a Majority in Interest of
- ------------------------
Holders of Notes, the respective parties to the Charter, the Participation
Agreement, the Trust Agreement, the Head Lease, the Conditional Sale Agreement
and any other Operative Document or U.K. Document included in the Indenture
Estate may not modify, amend or supplement any of such agreements, or give any
consent, waiver, authorization or approval thereunder, for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
thereof or of modifying in any manner the rights of the respective parties
thereunder; provided that, so long as no Indenture Event of Default shall have
occurred and be continuing, such agreements may be modified, amended or
supplemented if the Indenture Trustee determines that any such proposed
modification, amendment or supplement would not adversely affect the interests
of the Holders; provided, however, that the actions specified in Section 9.02(c)
may be taken without the consent of the Indenture Trustee or any Holder.
(b) Except as provided in Section 9.01 or 9.02(c) or 9.02(d), at any
time and from time to time, with the consent of a Majority in Interest of
Holders of Notes and upon the written request of the Owner Trust, the Indenture
Trustee (x) shall execute an
<PAGE>
52
amendment or supplement to this Indenture for the purpose of adding provisions
to, or changing in any manner or eliminating any of the provisions of, this
Indenture, or (y) shall execute an amendment or supplement to, or give a
consent, waiver, authorization or approval, for the purposes of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, the Participation Agreement or (z) shall consent to any amendment or
supplement to, or give a consent, waiver, authorization or approval, for the
purposes of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, any of the other Operative Documents or U.K. Document;
provided, however, that no such amendment or supplement to this Indenture, or
consent, waiver, authorization, approval, amendment or supplement to the
Participation Agreement or any such other Operative Document or U.K. Document
(whether pursuant to subsection (a) or (c) of this Section 9.02, and anything in
such subsections or elsewhere in this Indenture to the contrary notwithstanding)
shall, without the consent of each Holder of a Secured Note then Outstanding:
(i) change the stated maturity of the principal of, or any installment
of interest on, or any mandatory or optional repayment, purchase or
redemption provision with respect to, any Secured Note, or change the
principal amount thereof or any other amount payable in respect thereof or
reduce the Make-Whole Amount, if any, or interest thereon, or impair the
right to institute suit for the enforcement of any such payment or change
mandatory or optional prepayment provisions or change the place of payment
where, or the coin or currency in which, any Secured Note or the interest
thereon is payable;
(ii) permit the creation of any Lien on the Indenture Estate not
otherwise permitted hereunder or deprive any Holder of the benefit of the
Lien of this Indenture upon the Indenture Estate for the security of its
Secured Notes;
(iii) change the percentage of the aggregate principal amount of
Secured Notes Outstanding necessary to modify or amend any provision
hereunder or any other Operative Document or to waive compliance therewith;
(iv) modify the definitions of "Indenture Default," "Indenture Event
of Default," "Majority in Interest of Holders of Notes," "Charter Default"
or "Charter Event of Default";
(v) modify the order of priorities in which distributions are to be
made under Article IV;
(vi) reduce the amount or change the time of any payment of Assigned
Hire under the Charter;
<PAGE>
53
(vii) modify, amend or supplement any of the provisions of this
Section 9.02;
(viii) modify, amend or supplement the Charter or the Parent
Guaranty, or consent to any assignment of the Charter (other than an
assignment pursuant to Article 20 of the Charter), in either case releasing
the Charterer or the Guarantor from its respective obligations in respect
of the payment of Assigned Hire payable pursuant to the Charter, or
changing the absolute and unconditional character of such obligations; or
(ix) materially adversely affect any indemnities in favor of any
Holder as provided pursuant to the terms of any Operative Document, except
as may be consented to by each Person adversely affected thereby.
(c) Notwithstanding anything to the contrary contained in Section
9.02(b) (except as provided in the proviso to Section 9.02(b)), (x) without the
necessity of the consent of any of the Holders or the Indenture Trustee, the
Owner Trust may and (y) in the case of clause (iii) of this Section 9.02(c),
without the consent of any of the Holders, the Indenture Trustee may:
(i) so long as no Indenture Event of Default shall have occurred and
be continuing, modify, amend or supplement the Charter, or give any
consent, waiver, authorization or approval with respect thereto, except
that without compliance with Sections 9.02(a) and 9.02(b), the Owner Trust
shall not modify, amend or supplement, or give any consent, waiver,
authorization or approval for the purposes of adding any provisions to or
changing in any manner or eliminating any of the provisions thereof, or of
modifying in any manner the rights of the respective parties thereunder,
with respect to the following provisions of the Charter as originally
executed: Article 2 (if the result thereof would be to shorten the term of
the Charter to a period shorter than the period ending with the maturity
date of the Secured Notes), Articles 3(a) (except to the extent that such
change or modification relates solely to Excess Hire, Bareboat Market Rate,
Excess Hire Rate, Additional Excess Hire or Additional Excess Hire Rate),
3(b), 3(c), (3(e), 3(f) (3g), 5(b), 9, 14, 15, 16, 17, 18, 21, 22, 23 and
Schedule 2 (except to the extent that such change or modification relates
solely to Excess Hire, Bareboat Market Rate, Excess Hire Rate, Additional
Excess Hire or Additional Excess Hire Rate) and any definition of terms
used in the Charter, to the extent that any modification of such definition
would result in a modification of the Charter not permitted pursuant to
this Section 9.02(c); provided that, subject to the next proviso, in the
event an Indenture Event of Default shall have occurred and be continuing,
the Indenture Trustee shall have all rights of the Owner Trust as Owner
under the Charter to modify, amend or supplement the Charter or give any
consent, waiver, authorization or approval thereunder, for the
<PAGE>
54
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions thereof or of modifying in any manner the
rights of the Owner thereunder; provided further that, without the prior
consent of the Owner Trust, and subject to the Indenture Trustee's rights
to exercise remedies under Article 22 of the Charter without the prior
consent of the Owner Trust, whether or not an Indenture Event of Default
shall have occurred and be continuing, no such action shall be taken with
respect to any of the provisions of Article 1 (if any modification of a
definition contained therein would result in a modification of the Charter
not permitted by this proviso), 3, 11, 14, 15, 16 (except to increase the
amounts or types of insurance the Charterer must provide thereunder at its
expense), 18, 20, 21, 25, 27, 28 and 29 of the Charter, or any other
Section of the Charter (including Section 22 of the Charter) to the extent
such action shall affect the amount or timing of any amounts payable by the
Charterer under the Charter as originally executed (or as subsequently
modified with the consent of the Owner Trust) which, absent the occurrence
and continuance of an Indenture Event of Default, would be distributable to
the Owner Trust or the Owner Participant under Article IV;
(ii) modify, amend or supplement the Trust Agreement, or give any
consent, waiver, authorization or approval with respect thereto, except
that without compliance with Section 9.02(b), the Owner Trust shall not
modify, amend or supplement, or give any consent, waiver, authorization or
approval for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions thereof or of modifying in any
manner the rights of the respective parties thereunder, with respect to the
following provisions of the Trust Agreement as originally executed:
Section 3.2, Section 5.1, Section 9.2, Section 10, Section 11, Section 12.7
and any definition of terms used in the Trust Agreement, to the extent that
any modification of such definition would result in a modification of the
Trust Agreement not permitted pursuant to this Section 9.02(c), and in each
case only to the extent any such action shall adversely impact the
interests of the Holders; and
(iii) modify, amend or supplement the Participation Agreement, or
give any consent, waiver, authorization or approval with respect thereto,
except that without compliance with Section 9.02(a) or Section 9.02(b), the
Owner Trust and the Indenture Trustee shall not modify, amend or
supplement, or give any consent, waiver, authorization or approval for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions thereof or of modifying in any manner the
rights of the respective parties thereunder, with respect to the following
provisions of the Participation Agreement as originally executed: Section
2, Section 4, Section 6, Section 9, Section 11 (other than an amendment to
add to the covenants of the Charterer), Section 12, Section 13 (insofar as
such Section 13 relates to the Indenture Trustee, the Indenture Estate and
the Holders) and, to the extent the Loan Participants would be adversely
affected thereby, Section 14 and Section 15 and
<PAGE>
55
any definition of terms used in the Participation Agreement to the extent
that any modification of such definition would result in a modification of
the Participation Agreement not permitted pursuant to this Section 9.02(c);
and
(iv) modify, amend or supplement any of said agreements in order to
cure any ambiguity, to correct or supplement any provisions thereof which
may be defective or inconsistent with any other provision thereof or of any
provision of this Indenture, or to make any other provision with respect to
matters or questions arising thereunder or under this Indenture which shall
not be inconsistent with the provisions of this Indenture; provided that
the making of any such other provision shall not adversely affect the
interests of the Holders unless such provision corrects a mistake.
SECTION 9.03. Execution of Indenture Supplement, Amendments, Etc. In
--------------------------------------------------
executing or accepting the additional trusts created by any amendment or
supplement to this Indenture, or any amendment, consent, waiver or other
modification permitted by this Article IX or the modifications thereby of the
trusts created by this Indenture, each of the Indenture Trustee and the Owner
Trust shall be entitled to receive, and (subject to Section 7.01 and Section
7.02) shall be fully protected in relying upon, an opinion of independent
counsel stating that the execution of such amendment or supplement to this
Indenture, or of such amendment, consent, waiver or modification, is authorized
or permitted by this Indenture. Either of the Indenture Trustee or the Managing
Trustee may, but shall not be obligated to, enter into any such amendment or
supplement to this Indenture which affects its own rights, duties or immunities
under this Indenture or otherwise. It shall not be necessary for Holders to
approve the particular form of any proposed amendment or supplement to this
Indenture, or any amendment, consent, waiver or other modification of any other
Operative Document or U.K. Document, but it shall be sufficient if such action
shall approve the substance thereof.
SECTION 9.04. Effect of Indenture Supplement. Upon the execution of
------------------------------
any amendment or supplement to this Indenture pursuant to this Article IX, this
Indenture shall be modified in accordance therewith, and such amendment or
supplement shall form a part of this Indenture for all purposes; and every
Holder of a Secured Note theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 9.05. Reference in Secured Notes to Indenture Supplements.
---------------------------------------------------
Secured Notes authenticated and delivered after the execution of any amendment
or supplement pursuant to this Article IX may, and shall if required by the
Indenture Trustee, bear a notation in form approved by the Indenture Trustee as
to any matter provided for in such amendment or supplement. If the amendment or
supplement to this Indenture shall so provide, new Secured Notes so modified as
to conform, in the opinion of the Indenture Trustee and the Owner Trust, to any
such amendment or supplement may be prepared and
<PAGE>
56
executed by the Owner Trust and authenticated and delivered by the Indenture
Trustee in exchange for outstanding Secured Notes.
SECTION 9.06. Notices of Indenture Supplements and Amendments, Etc.
----------------------------------------------------
Promptly after the execution by the Owner Trust and the Indenture Trustee of any
amendment or supplement to this Indenture, or any amendment, consent, waiver or
other modification pursuant to the provisions hereof, the Indenture Trustee
shall send a conformed copy of such instrument to each Holder, the Charterer,
the Owner Trust and the Owner Participant, but the failure of the Indenture
Trustee to send such a conformed copy shall not impair or affect the validity of
such document.
SECTION 9.07. Charterer Rights. Without the consent of the
----------------
Charterer, no amendment or supplement to this Indenture or amendment, waiver or
other modification of any provision of this Indenture shall alter or modify the
provisions of Section 5.09 or this Section 9.07.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture. This Indenture and the
------------------------
trusts created hereby shall terminate, and this Indenture shall be of no further
force or effect, upon the payment in full of the principal of and interest on
and all other amounts due and payable under all Secured Notes and all other
amounts due and payable to any Holder or the Indenture Trustee hereunder or
under any other Operative Document. The foregoing shall not impair any rights
of a Holder in respect of indemnification or other claims which may be available
against any party under the terms of any other Operative Document. Except as
otherwise provided in the preceding sentence, this Indenture and the trusts
created hereby shall continue in full force and effect in accordance with the
terms hereof.
SECTION 10.02. No Legal Title to Indenture Estate in Holders. No
---------------------------------------------
Holder shall have legal title to any part of the Indenture Estate. No transfer,
by operation of law or otherwise, of any Secured Note or other right, title and
interest of any Holder in and to the Indenture Estate or hereunder shall operate
to terminate this Indenture or entitle such Holder or any successor or
transferee of such Holder to an accounting or to the transfer to it of any legal
title to any part of the Indenture Estate.
SECTION 10.03. Power of Attorney. The Owner Trust does hereby
-----------------
constitute the Indenture Trustee its true and lawful attorney-in-fact,
irrevocably and coupled with the interest of the Indenture Trustee created by
this Indenture, so long as any Secured Notes are Outstanding and so long as
there are any other amounts due hereunder, under any
<PAGE>
57
other Operative Documents, or under the Secured Notes, with full power (in the
name of and as attorney-in-fact for the Owner Trust or otherwise) to ask for,
require, demand and receive any and all moneys and claims for moneys, and all
other property, which now or hereafter constitutes part of the Indenture Estate,
to endorse any checks or other instruments or orders in connection therewith and
to file any claims or to take any action, or to institute any proceedings, which
the Indenture Trustee may deem to be necessary or advisable in the premises.
The Owner Trust has directed the Indenture Trustee to make all necessary
conveyances, assignments, transfers and deliveries of the Indenture Estate and
any rights hereunder pursuant to the provisions of this Indenture, and for that
purpose the Indenture Trustee may execute all necessary instruments of
conveyance, assignment and transfer, and may substitute one or more persons with
like power, and the Owner Trust hereby ratifies and confirms all that the
Indenture Trustee, acting as its attorney, or any such substitute, shall
lawfully do by virtue hereof and whether pursuant to the exercise of any
remedies hereunder or otherwise.
SECTION 10.04. Regarding the Owner Trust and the Owner Trustees.
------------------------------------------------
(a) Except as expressly provided herein, all and each of the representations,
warranties, undertakings and agreements herein made on the part of the Owner
Trust are made and intended not as personal representations, warranties,
undertakings and agreements by or for the purpose or with the intention of
binding the Managing Trustee or the Delaware Trustee personally, but are made
and intended for the purpose of binding only the Trust Estate, and this
Indenture is executed and delivered by the Managing Trustee solely in the
exercise of the powers expressly conferred upon it as trustee under the Trust
Agreement; and no personal liability or responsibility is assumed hereunder by,
or at any time shall be enforceable against, the Managing Trustee or any of its
successors in trust on account of any representation, warranty, undertaking or
agreement hereunder of the Owner Trust, either expressed or implied, all such
personal liability, if any, being expressly waived by the Indenture Trustee;
provided, however, that (i) the Indenture Trustee or any Person claiming by,
through or under it, making claim hereunder, may, subject to the terms and
conditions hereof, look to the Trust Estate for satisfaction of such liability
or responsibility and (ii) the Managing Trustee or its successor in trust, as
applicable, shall be personally liable for its own gross negligence and willful
misconduct and for the matters described in clauses (i) through (v) of the last
sentence of Section 7.4 of the Trust Agreement. Subject to the terms and
conditions hereof, each time a successor Managing Trustee is appointed in
accordance with the terms of the Trust Agreement, such successor Managing
Trustee shall, without further act, succeed to all the rights, duties,
immunities and obligations of the predecessor Managing Trustee hereunder and
under the other Operative Documents, and such predecessor Managing Trustee shall
be released from all further duties and obligations hereunder and under the
other Operative Documents, all without the necessity of any consent or approval
by the Indenture Trustee and without in any way altering the terms of this
Indenture or such other Operative Documents or the obligations of the Indenture
Trustee hereunder or thereunder.
<PAGE>
58
(b) As to the aggregate unpaid principal amount of Secured Notes
Outstanding as of any date, the Owner Trust may rely on an Officer's Certificate
of the Indenture Trustee.
SECTION 10.05. Notices. All communications, notices and consents
-------
provided for in this Indenture shall be in writing and shall be given in person
or by courier or by means of telex, telecopy or other wire transmission (with
request for assurance of receipt in a manner typical with respect to
communications of that type), or mailed by first class mail or overnight
courier, addressed: (a) in the case of the Owner Trust, to the Owner Trust in
care of Deutsche Morgan Grenfell (Cayman) Limited, as Managing Trustee,
Elizabethan Square, P.O. Box 1984, George Town, Grand Cayman, Cayman Islands,
British West Indies, Attention: Managing Director (telephone: (809) 949-8000;
telecopier: (809) 949-8178); (b) in the case of the Indenture Trustee, to State
Street Bank and Trust Company, Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department (telephone: (617)
664-5340; telecopier: (617) 664-5371); and, in the case of all other parties, as
set forth in Schedule I to the Participation Agreement or at such other address
as any such Person may from time to time designate by notice duly given in
accordance with the provisions of this Section 10.05 to the other parties hereto
and shall be deemed given when received by (or when proffered to, if receipt is
not accepted) the party to whom it is addressed.
SECTION 10.06. Severability of Provisions. Any provision of this
--------------------------
Indenture which may be determined by competent authority to be invalid or
unenforceable in such jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable any remaining terms and provisions
hereof, and any such invalidity or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
The parties shall negotiate in good faith to replace such provision with an
appropriate legal provision. To the extent permitted by applicable law, the
parties hereto waive any provision thereof that renders any term or provision
hereof invalid or unenforceable in any respect.
SECTION 10.07. No Oral Modification or Continuing Waivers. No term
------------------------------------------
or provision of this Indenture or the Secured Notes may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party or the person against whom enforcement of the change, waiver,
discharge or termination is sought; and any waiver of the terms hereof or of any
Secured Note shall be effective only in the specific instance and for the
specific purpose given.
SECTION 10.08. Successors and Assigns. All covenants and agreements
----------------------
contained herein shall be binding upon each of the parties hereto and their
respective successors and permitted assigns, and inure to the benefit of each of
the parties hereto and their respective successors and permitted assigns, all as
herein provided. Any request,
<PAGE>
59
notice, direction, consent, waiver or other instrument or action by any Holder
shall bind the successors and assigns of such Holder. This Indenture and the
Indenture Estate shall not be affected by any amendment or supplement to the
Trust Agreement or by any other action taken under or in respect of the Trust
Agreement, except as otherwise provided in or permitted by this Indenture. Each
Holder by its acceptance of a Secured Note agrees to be bound by this Indenture
and all provisions of the Operative Documents applicable to it.
SECTION 10.09. Headings; Table of Contents. The division of this
---------------------------
Indenture into Articles, Sections, subsections and paragraphs, the provision of
a table of contents and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation hereof.
SECTION 10.10. Normal Commercial Relations. Notwithstanding anything
---------------------------
contained in this Indenture to the contrary, any of the Owner Participant, the
Indenture Trustee, the Owner Trust, the Managing Trustee, the Delaware Trustee
or any bank or other affiliate of any such Person may conduct any banking or
other financial transactions and have banking or other commercial relationships
with the Charterer, fully to the same extent as if this Indenture were not in
effect.
SECTION 10.11. Governing Law. THIS INDENTURE SHALL BE GOVERNED BY,
-------------
AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 10.12. Execution. This Indenture may be executed in separate
---------
counterparts by the parties thereto, each of which, when so executed and
delivered, shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 10.13. Security Agreement. This Indenture shall constitute a
------------------
security agreement and, in addition to all other rights of the Indenture Trustee
hereunder, the Indenture Trustee shall have for the benefit of the Holders all
of the rights conferred upon secured parties by the UCC and any other similar
legislation as from time to time in effect in any applicable jurisdiction.
SECTION 10.14. Benefits of Indenture. Nothing in this Indenture,
---------------------
whether express or implied, shall be construed to give to any Person other than
the parties hereto, the Holders and (to the extent expressly provided herein)
the Owner Participant any legal or equitable right, remedy or claim under or in
respect of this Indenture or the Secured Notes, and this Indenture shall be held
for the sole and exclusive benefit of the parties hereto, the Holders and, to
the extent expressly provided herein, the Owner Participant.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
SAMOCO RAVEN TRUST,
Owner Trust
By: DEUTSCHE MORGAN GRENFELL
(CAYMAN) LIMITED,
not in its individual capacity, except
as expressly provided herein, but
solely as Managing Trustee
By: /s/ J.H. Gullimare
-----------------------
Name: J.H. Gullimare
Title: Authorized Signatory
STATE STREET BANK AND
TRUST COMPANY,
as Indenture Trustee
By: /s/ Ruth A. Smith
--------------------------
Name: Ruth A. Smith
Title: Vice President
<PAGE>
Appendix A
to Indenture
------------
DEFINITIONS
-----------
See Appendix A filed separately.
APP-1
<PAGE>
DESCRIPTION OF VESSEL
---------------------
That certain double hulled, double bottom, very large crude carrier, know as the
M/V Raven, having a gross registered tonnage of approximately 160,000 tons, a
net registered tonnage of approximately 95,000 tons and a designed deadweight
capacity of approximately 280,000 metric tons, constructed built by Sumitomo
Heavy Industries, Ltd and delivered in June 1996.
SCH-1-1
<PAGE>
Exhibit A
to Indenture
------------
FORM OF
SERIES 1996 A-1 SECURED NON-RECOURSE NOTE
SAMOCO RAVEN TRUST
Maturity Date:
Registered No. New York, New York
Dated:
Principal Amount: $ Interest Rate Per Annum: %
SAMOCO RAVEN TRUST, a trust created pursuant to the Delaware Business
Trust Act (the "Owner Trust"), of which Deutsche Morgan Grenfell (Cayman)
Limited and Wilmington Trust Company are acting not in their respective
individual capacities but solely as Owner Trustees (the "Owner Trustees") under
that certain Declaration of Agreement of Trust, dated as of November 22, 1996,
among the Owner Participant named therein and the Owner Trustees (the "Trust
Agreement"), for value received hereby promise to pay to State Street Bank and
Trust Company, as Pass Through Trustee (the "Pass Through Trustee") under that
certain 1996-A Pass Through Trust (the "Pass Through Trust") created by the Pass
Through Trust Agreement, dated as of December 19, 1996, as supplemented and
amended by that certain Pass Through Trust Supplement, dated as of December 19,
1996 (as supplemented and amended, the "Agreement"), or registered assigns
(collectively, the "Holders"), the principal sum of
______________________________ DOLLARS ($__________) in installments on each
Interest Payment Date defined below as set forth in Schedule I hereof with the
final installment due and payable on the Maturity Date specified above and to
pay interest on the unpaid principal amount of this Secured Note from time to
time from the date hereof until the principal amount hereof shall have been paid
in full at the interest rate set forth above (based on a 360-day year of twelve
30-day months), and (to the extent not prohibited by applicable law) to pay
interest on any overdue principal at the Overdue Rate. Subject to Section
2.03(b) of the Indenture (as defined below), the first payment of accrued and
unpaid interest on the unpaid principal of this Secured Note shall be payable on
____ and thereafter on each _______ and _____ in each year (each such date being
an "Interest Payment Date").
This Secured Note is one of the Secured Notes issued by the Owner
Trust pursuant to the terms of the Trust Indenture, Assignment of Charter and
Head Lease, and Security Agreement, dated as of December 19, 1996 (the
"Indenture"), between the Owner
<PAGE>
Trust and State Street Bank and Trust Company, not in its individual capacity
but solely as Indenture Trustee thereunder, for the Holder of this Secured Note
and the Holders of all other Secured Notes Outstanding thereunder (the
"Indenture Trustee"). Capitalized terms used in this Secured Note and not
otherwise defined shall have the respective meanings assigned to them in the
Indenture.
Each payment of principal and interest shall be due and payable at the
times, places and in the manner as specified herein and in the Indenture.
Each payment on this Secured Note shall be applied, first, to the
payment of accrued interest on this Secured Note to the date of such payment,
second, to the payment of any principal on this Secured Note then due hereunder,
and third, to the payment of the installments of principal remaining unpaid on
this Secured Note in the inverse order of the maturity thereof.
This Secured Note is one of the Owner Trust's Series 1996 A-1 Secured
Notes, which, together with any Additional Notes and any note or notes issued
from time to time in exchange or substitution therefor in accordance with the
terms of the Indenture, are equally and ratably secured by the Indenture, except
as otherwise provided therein. The property of the Owner Trust (excluding
Excepted Payments) included in the Indenture Estate is pledged, assigned or
mortgaged to the Indenture Trustee, to the extent provided in the Indenture, as
security for the payment of the principal of, Make-Whole Amount, if any, and
interest on this Secured Note and all other Secured Notes issued and outstanding
from time to time under the Indenture. Reference is hereby made to the
Indenture for a description of the Indenture Estate, and for a statement of the
rights of the Holder of, and the nature and extent of the security for, this
Secured Note and of the rights of, and the nature and extent of the security
for, the Holders of the other Secured Notes and of certain rights of the Owner
Trust and the Owner Participant, as well as for a statement of the terms and
conditions of the trusts created by the Indenture, to all of which terms and
conditions the Holder agrees by its acceptance of this Secured Note.
This Secured Note is subject to redemption or purchase in whole as
specified in Article III of the Indenture.
In case an Indenture Event of Default shall occur and be continuing,
the unpaid balance of the principal of the Secured Notes, together with all
accrued but unpaid interest, may be declared or may otherwise become due and
payable in the manner and with the effect provided in Article V of the
Indenture.
The Secured Notes are issuable only as registered notes. There shall
be maintained a note register for the purpose of registering transfers and
exchanges of the Secured Notes at the principal corporate trust office of the
Indenture Trustee, or of any successor Indenture Trustee, in the manner provided
in Section 2.05 of the Indenture. The Owner Trust and the Indenture Trustee may
deem and treat the Person in whose name this
EXHA-2
<PAGE>
Secured Note is registered on the Note Register as the absolute owner hereof
(whether or not this Secured Note shall be overdue) for the purpose of receiving
payments of principal, Make Whole Amount, if any, and interest and for all other
purposes, and neither the Owner Trust nor the Indenture Trustee shall be
affected by any notice to the contrary.
All payments of principal, Make-Whole Amount, if any, and interest to
be made by the Owner Trust and, except as otherwise provided in the Operative
Documents, all payments of any other amounts payable by or on behalf of the
Owner Trust under the Secured Notes or under the Indenture, shall be made only
from the income and proceeds from the Indenture Estate, and only to the extent
that the Indenture Trustee shall have received sufficient income and proceeds
from the Indenture Estate to make such payments in accordance with the
Indenture. The Holder, by its acceptance of this Secured Note, agrees that it
will look solely to the income and proceeds from the Indenture Estate to the
extent available for payment as provided in the Indenture, and that none of the
Owner Participant, the Owner Trust, the Managing Trustee, the Delaware Trustee
or the Indenture Trustee (whether in their respective individual or trust
capacities) shall be personally liable to the Indenture Trustee or to the Holder
for any amounts payable under this or any Secured Note, nor, except as
specifically provided in the Indenture or any other Operative Document, for any
amounts payable or any liability under the Indenture.
This Secured Note shall not be valid or become obligatory for any
purpose or be entitled to any security or benefit under the Indenture until the
certificate of authentication hereon shall have been signed by the Indenture
Trustee.
No delay or omission of the Holder to exercise its rights hereunder
shall impair any such right or power or shall be construed to be a waiver of any
Indenture Event of Default or an acquiescence therein. No waiver of any
Indenture Event of Default shall be construed, taken or held to be a waiver of
any other Indenture Event of Default or a waiver, acquiescence in, or consent to
any further or succeeding Indenture Event of Default. The Owner Trust waives
demand, notice and protest in any defense by reason of extension of time for
payment or other indulgence granted by the Holder.
THIS SECURED NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
EXHA-3
<PAGE>
IN WITNESS WHEREOF, the Owner Trust has caused this Secured Note to be
duly executed.
Date:
SAMOCO RAVEN TRUST,
Owner Trust
By: DEUTSCHE MORGAN GRENFELL
(CAYMAN) LIMITED,
not in its individual capacity, except
as expressly provided herein, but
solely as Managing Trustee
By:____________________________
Name:
Title:
EXHA-4
<PAGE>
Certificate of Authentication
-----------------------------
This Secured Note is one of the Series 1996 A-1 Secured Notes due
___________ of SAMOCO RAVEN TRUST, the Owner Trust as described in the within-
mentioned Indenture.
STATE STREET BANK AND
TRUST COMPANY, not in its individual
capacity,
but soley as Indenture Trustee
By:______________________________
Authorized Signatory
EXHA-5
<PAGE>
Schedule I to
Exhibit A to
Indenture
---------
SERIES 1996 A-1 SECURED NON-RECOURSE NOTE
SAMOCO RAVEN TRUST
Payment Aggregate Payment
Interest Payment Date Percentage Amount
- --------------------- ---------- ------
EXHA-6
<PAGE>
Exhibit B-1
to Indenture
------------
SCHEDULE OF PRINCIPAL PAYMENTS ON THE SECURED NOTES
SERIES 1996 A-1 SECURED NOTE
SAMOCO RAVEN TRUST
<TABLE>
<CAPTION>
Payment Aggregate Payment
Regular Distribution Date Percentage Amount
- ------------------------- ---------- ------
<S> <C> <C>
July 2, 1997 0.38622078% $895,646.00
January 2, 1998 0.37366580% 866,531.00
July 2, 1998 0.38668823% 896,730.00
January 2, 1999 0.40016429% 927,981.00
July 2, 1999 0.41410996% 960,321.00
January 2, 2000 0.42854161% 993,788.00
July 2, 2000 0.44347607% 1,028,421.00
January 2, 2001 0.45893144% 1,064,262.00
July 2, 2001 0.47492497% 1,101,351.00
January 2, 2002 0.49147607% 1,139,733.00
July 2, 2002 0.50860414% 1,179,453.00
January 2, 2003 0.52632902% 1,220,557.00
July 2, 2003 0.54467184% 1,263,094.00
January 2, 2004 0.56365330% 1,307,112.00
July 2, 2004 0.58329668% 1,352,665.00
January 2, 2005 0.60362484% 1,399,806.00
July 2, 2005 0.62466106% 1,448,589.00
January 2, 2006 0.64643036% 1,499,072.00
July 2, 2006 0.66895860% 1,551,315.00
January 2, 2007 0.69227167% 1,605,378.00
July 2, 2007 0.71639759% 1,661,326.00
January 2, 2008 0.74136395% 1,719,223.00
July 2, 2008 0.76720052% 1,779,138.00
January 2, 2009 0.79393747% 1,841,141.00
July 2, 2009 0.82160586% 1,905,304.00
January 2, 2010 0.85023890% 1,971,704.00
July 2, 2010 0.87986977% 2,040,418.00
January 2, 2011 0.91053342% 2,111,527.00
July 2, 2011 0.94226520% 2,185,113.00
January 2, 2012 0.97510349% 2,261,265.00
July 2, 2012 1.00908581% 2,340,070.00
January 2, 2013 1.04425226% 2,421,621.00
July 2, 2013 1.08064467% 2,506,015.00
January 2, 2014 1.11830487% 2,593,349.00
July 2, 2014 1.15727771% 2,683,727.00
January 2, 2015 1.19760845% 2,777,254.00
</TABLE>
EXHB-1
<PAGE>
Exhibit B-2
to Indenture
------------
Issuance of Series 1996 A-1 Secured Notes
-----------------------------------------
The issuance of the Series 1996 A-1 Secured Notes issued hereunder shall be
issued to and shall be payable to the Pass Through Trustee under the Pass
Through Trust Agreement with respect to the grantor trust created thereby, in
each case as set forth below:
Mobil Corporation 1996 A Pass Through Trust:
6.97% Certificates due July 2, 2017
EXHB-2
<PAGE>
Exhibit C
to Indenture
------------
FORM OF SUBSTITUTION DATE SUPPLEMENT
SUBSTITUTION DATE AGREEMENT dated as of
(this "Substitution Agreement"), among [ ], a trust created
----------------------
pursuant to (the "Substitute Obligor") under the [Substitute Trust Agreement]
(as defined below), SAMOCO Raven Trust, a trust created pursuant to the Delaware
Business Trust Act (the "Owner Trust") under a Declaration of Agreement of Trust
dated as of November 22, 1996, as amended, among Deutsche Morgan Grenfell
(Cayman) Limited, Wilmington Trust Company and SAMOCO LLC, a Cayman Islands
limited life company, as owner participant, MOBIL MARINE FINANCE COMPANY I INC.,
as Charterer, STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust
company, not in its individual capacity, except as expressly provided in the
Indenture, but solely as Indenture Trustee (the "Indenture Trustee"), and STATE
-----------------
STREET BANK AND TRUST COMPANY, as Pass Through Trustee, who each being duly
sworn did declare and say as follows.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, terms used herein and not otherwise defined shall have the
respective meanings assigned to them in the Indenture;
WHEREAS, the Substitute Obligor was organized pursuant to a
Declaration and Agreement of Trust dated (the
"Substitute Trust Agreement"), among , as
managing trustee (together with its permitted successors and assigns, the
"Managing Trustee"),[ ], as
- -----------------
Delaware trustee (together with its permitted successors and assigns, the
"Delaware Trustee"), each acting not individually, except as otherwise provided
- -----------------
herein (when acting in such individual capacities, the "
Trust Company" and "Delaware Trust Company", respectively), but solely as
- ------------- ----------------------
trustees for the Substitute Obligor (the Managing Trustee and the Delaware
Trustee, collectively in such capacities being, the "Owner Trustees" and each
--------------
individually, an "Owner Trustee"), and , as
-------------
owner participant (the "Owner Participant") as amended and supplemented; and
-----------------
WHEREAS, the Owner Trust desires to sell, and the Substitute Obligor
desires to purchase all of the Owner Trust's beneficial interest in the Vessel
Interest created under the Operative Documents.
WHEREAS, the Indenture provides for the execution and delivery of a
supplement substantially in the form of this Substitution Agreement, which
supplement shall
<PAGE>
provide for certain matters relating to the assumption by the Substitute Obligor
of the obligations of the Owner Trust pursuant to Section 3.04 of the Indenture;
NOW, THEREFORE, the parties hereto agree as follows:
1. As of the date of this Substitution Agreement (the "Substitution
Date"), the Owner Trust hereby irrevocably sells, assigns , transfers and
conveys to the Substitute Obligor all of Owner Trust's right, title and interest
in and to the Vessel Interest.
2. The Substitute Obligor hereby (a) accepts the foregoing
assignment, (b) confirms that it is purchasing the Vessel Interest subject to
the security interest and Lien of the Indenture and ratifies the security
interest and Lien which the Owner Trust granted to the Indenture Trustee
pursuant to the Granting Clause of the Indenture in all of the Owner Trust's
right, title and interest in and to the Indenture Estate and (b) explicitly
agrees that it is acquiring the Vessel Interest, and all property relating
thereto, constituting a portion of the Indenture Estate, subject to such
security interest and Lien, which shall remain in full force and effect until
the Lien of the Indenture on the Vessel is discharged in accordance with the
terms thereof, and the Indenture Trustee acknowledges that the Charter and the
obligations of Owner Trust thereunder as the Charterer have been terminated,
except as specifically provided for therein.
3. Effective as of the Substitution Date, each party hereto agrees
that the Substitute Obligor shall be deemed to be a party to the Indenture, the
Secured Notes and each other Operative Document to which the Owner Trust is a
party, and all references to the Owner Trust in the Indenture, the Secured Notes
and each other Operative Document shall be deemed to be references to the
Substitute Obligor; provided, however, that any obligations or liabilities of
the Managing Trustee or the Delaware Trustee in its individual capacities
incurred on or prior to the Substitution Date or arising out of or based upon
events occurring on or prior to the Substitution Date, shall remain the
responsibility of the Owner Trust.
4. This Substitution Agreement shall be construed as supplemental to
the Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference in this Substitution Agreement.
5. Representations and Warranties of Owner Trust. Owner Trust
---------------------------------------------
hereby represents and warrants to the Substitute Obligor and the Indenture
Trustee as follows:
(a) Organization and Good Standing. Owner Trust is a trust duly
------------------------------
organized, validly existing and in good standing under the Delaware Business
Trust Act.
(b) Power and Authority. Owner Trust has full corporate power and
-------------------
authority to execute, deliver and perform this Substitution Agreement and to
consummate the transactions contemplated hereby.
EXHC-2
<PAGE>
(c) Due Authorization. This Substitution Agreement has been duly
-----------------
authorized, executed and delivered by the Owner Trust, and assuming due
authorization, execution and delivery by the Substitute Obligor and the
Indenture Trustee, constitutes a legal, valid and binding obligation of the
Owner Trust, enforceable against it in accordance with its terms except as such
enforcement may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general applicability
affecting the enforcement of creditors' rights or by general principles of
equity.
(d) Compliance with Law. Neither the execution, delivery or
-------------------
performance by the Owner Trust of this Substitution Agreement nor compliance
with the terms and provisions hereof, conflicts or will conflict with or will
result in a breach or violation of any of the terms, conditions or provisions of
any law including, without limitation, the Securities Act of 1933, as amended,
and any law, governmental rule or regulation applicable to the Owner Trust.
6. Representations and Warranties of Substitute Obligor. The
----------------------------------------------------
Substitute Obligor hereby represents and warrants to the Owner Trust and the
Indenture Trustee as follows:
(a) Organization and Good Standing. The Substitute Obligor is a trust
------------------------------
duly organized and validly existing under the Delaware Business Trust Act.
(b) Power and Authority. The Substitute Obligor has full trust power
-------------------
and authority to execute, deliver and perform this Substitution Agreement and to
consummate the transactions contemplated hereby.
(c) Due Authorization. This Substitution Agreement has been duly
-----------------
authorized, executed and delivered by the Substitute Obligor and, assuming the
due authorization, execution and delivery thereof by the Owner Trust and the
Indenture Trustee, constitutes the legal, valid and binding obligation of the
Substitute Obligor, enforceable against it in accordance with its terms, except
as such enforcement may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general applicability
affecting the enforcement of creditors' rights or by general principles of
equity.
(d) Compliance with Law. Neither the execution, delivery or
-------------------
performance by the Substitute Obligor of this Substitution Agreement nor
compliance with the terms and provisions hereof, conflicts or will conflict with
or will result in a breach or violation of any of the terms, conditions or
provisions of any law, governmental rule or regulation applicable to Substitute
Obligor.
(e) Investment Intent. Substitute Obligor is acquiring the Vessel
-----------------
Interest for its own account for investment and with no present intention of
distributing or reselling such Vessel Interest or any part thereof other than a
transfer to an affiliate of the Substitute Obligor
EXHC-3
<PAGE>
or a transfer to another person in compliance with the provisions of the
Securities Act of 1933, as amended, and the Operative Documents.
7. Counterparts. This Substitution Agreement may be executed in one
------------
or more counterparts, each of which shall be deemed as original, but all of
which together shall constitute one and the same instrument.
8. Successors and Assigns. The terms of this Substitution Agreement
----------------------
shall be binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns.
9. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
10. Amendment. No waiver, modification or amendment of any provision
---------
of this Substitution Agreement shall be effective unless it is in writing and
signed by the party against which it is sought to be enforced.
11. Further Assurances. Each party agrees that from time to time
------------------
after the date hereof, it shall execute and deliver or cause to be executed and
delivered such instruments, documents and papers, and take all such further
action as may be reasonably required in order to consummate fully the purposes
of this Substitution Agreement and to implement the transactions contemplated
hereby.
EXHC-4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Substitution
Agreement to be duly executed and delivered on the day and year first above
written.
SAMOCO RAVEN TRUST,
Owner Trust
By: DEUTSCHE MORGAN GRENFELL
(CAYMAN) LIMITED, not in its individual
capacity, except as expressly provided in the
Indenture, but solely as Managing Trustee of
the Owner Trust
By:__________________________________
Title:
[ ], Substitute
Obligor
By:[ ],
not in its individual capacity, except as
expressly provided herein and in the
Indenture, but solely as Managing Trustee of
the Substitute Obligor
By:__________________________________
Title:
STATE STREET BANK AND TRUST
COMPANY, Indenture Trustee
By:_____________________________________
Title:
MOBIL MARINE FINANCE COMPANY I INC.,
as Charterer
By:_____________________________________
Title:
EXHC-5
<PAGE>
STATE STREET BANK AND TRUST
COMPANY, as Pass Through Trustee
By:_________________________________________
Title:
EXHC-6
<PAGE>
Exhibit D
to Indenture
------------
FORM OF TRUST INDENTURE, ASSIGNMENT OF
CHARTER AND HEAD LEASE AND SECURITY AGREEMENT
SUPPLEMENT NO. ____
This TRUST INDENTURE, ASSIGNMENT OF CHARTER AND HEAD LEASE AND
SECURITY AGREEMENT SUPPLEMENT NO. ____, dated _________________ (this "Indenture
Supplement") between DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED, a Cayman Islands
banking corporation, and WILMINGTON TRUST COMPANY, a Delaware banking
corporation, not in their individual capacities, but solely as Owner Trustees
(the "Owner Trustees") of SAMOCO RAVEN TRUST, a trust created under the
Declaration of Agreement of Trust pursuant to the Delaware Business Trust Act
(the "Owner Trust") and STATE STREET BANK AND TRUST COMPANY, a Massachusetts
-----------
trust company, not in its individual capacity, except as expressly provided
herein, but solely as Indenture Trustee (the "Indenture Trustee").
-----------------
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, terms used herein and not otherwise defined shall have the
respective meanings assigned to them in the Indenture; and
WHEREAS, the Indenture provides for the execution and delivery of one
or more supplements substantially in the form of this Indenture Supplement,
which supplement shall describe the property from time to time included in the
Indenture Estate;
NOW, THEREFORE, THIS INDENTURE SUPPLEMENT WITNESSETH that, to secure
(i) the prompt payment of the principal of, Make-Whole Amount, if any, and
interest on all Secured Notes from time to time Outstanding under the Indenture
and of all other amounts payable to the Holders (whether as Holders or Loan
Participants) thereunder, under the Secured Notes and under the other Operative
Documents, (ii) the performance and observance by the Owner Trust of all of the
provisions, covenants and agreements contained in the Participation Agreement,
in the Secured Notes and in the other Operative Documents for the benefit of the
Indenture Trustee or the Holders therein, and (iii) the performance and
observance by the Owner Participant of its covenants and agreements contained in
the Operative Documents (the obligations described in the above clauses (i),
(ii) and (iii), collectively, the "Indenture Indebtedness"), and for the uses
and purposes and subject to the terms and provisions thereof, and in
consideration of the premises and of the covenants herein contained and of the
acceptance of the Secured Notes by the Holders thereof:
<PAGE>
GRANTING CLAUSE
---------------
The Owner Trust, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to secure the payment
and performance of the Indenture Indebtedness, hereby presently irrevocably
mortgages, hypothecates and pledges unto the Indenture Trustee and creates to
and for the benefit of the Indenture Trustee, a security interest in and
mortgage lien on all of the right, title and interest of the Owner Trust in, to
and under all of the property, rights, interests, and privileges described on
Exhibit I hereto now owned or in the future acquired by the Owner Trust or in
which the Owner Trust now has or may in the future acquire any estate, right,
title or interest (collectively, the "Additional Property"),
TO HAVE AND TO HOLD the aforesaid Additional Property unto the
Indenture Trustee, its successors and assigns, for the benefit and security of
the Holders, without any priority of any Secured Note over any other, and for
the uses and purposes and subject to the terms and provisions set forth in the
Indenture.
This Indenture Supplement shall be construed as supplemental to the
Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference in this Indenture Supplement and is hereby ratified,
approved and confirmed. From and after the date hereof, the Indenture Estate
shall include the Additional Property along with the all other property, rights
and interest granted to the Indenture Trustee under the Granting Clause of the
Indenture and the Additional Property shall be subject to the Lien of the
Indenture.
This Indenture Supplement may be executed by the Owner Trust and the
Indenture Trustee in separate counterparts, each of which, when so executed and
delivered, shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
THIS INDENTURE SUPPLEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
EXHD-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
Supplement to be duly executed, all as of the date first written above.
SAMOCO RAVEN TRUST, as
Owner Trust
By: DEUTSCHE MORGAN GRENFELL
(CAYMAN) LIMITED, not in its individual
capacity, except as expressly provided
herein, but solely as Owner Trustee
By:_______________________________________
Title:
STATE STREET BANK AND TRUST COMPANY,
Indenture Trustee
By:_______________________________________
Title:
EXHD-3
<PAGE>
Exhibit I to
Exhibit D
to Indenture
------------
Description of Additional Property.
EXHD-4
<PAGE>
EXHIBIT E
TO INDENTURE
------------
FORM OF FIRST SHIP MORTGAGE
Dated ______________
by
______________________
Shipowner and Mortgagor
to
______________________
Mortgagee
VLCC ______
<PAGE>
TABLE OF CONTENTS
Page No.
-------
ARTICLE I REPRESENTATIONS OF THE SHIPOWNER.......................... -4-
(1) Organization.................................................. -4-
(2) Documentation................................................. -4-
ARTICLE II COVENANTS OF THE SHIPOWNER................................ -4-
(1) Maintenance of Entity Status.................................. -4-
(2) Liens......................................................... -4-
(3) Maintenance of Mortgage....................................... -5-
ARTICLE III EVENTS OF DEFAULT AND REMEDIES............................ -5-
(1) Event of Default.............................................. -5-
(2) Remedies...................................................... -5-
(3) Conveyance after Sale......................................... -7-
(4) Shipowner Barred.............................................. -7-
(5) Arrest By Third Party......................................... -7-
(6) Powers of the Mortgagee....................................... -8-
(7) Application of Proceeds....................................... -8-
(8) No Exclusivity................................................ -8-
ARTICLE IV SUNDRY PROVISIONS......................................... -8-
(1) Recording..................................................... -8-
(2) Successors and Assigns........................................ -8-
(3) Agents........................................................ -9-
(4) Notices....................................................... -9-
(5) Governing Law................................................. -9-
(6) Termination of U.K. Documents................................. -9-
EXHIBIT 1 Indenture (with attached Appendix A and Exhibits A-E)
EXHIBIT 2 Article 21 of the Charter
EXHE-i
<PAGE>
THIS FIRST SHIP MORTGAGE, made and dated ____________, by (a)
____________________________________ (the "Shipowner"), with an address at
________________________________________________________________, created by the
__________________________ dated as of ______________, as amended and restated
as of _______________ (the "___________"), with the _________________ named
therein, and duly qualified as a _______________ foreign maritime entity, in
favor of (b) _____________________________________________, not in its
individual capacity but solely as Indenture Trustee (the "Mortgagee") under a
Trust Indenture, Assignment of Charter and Head Lease and Security Agreement,
dated as of ____________ (the "Indenture") between the Shipowner and the
Mortgagee.
WHEREAS:
A. The Shipowner is the registered owner of the Republic of
__________________ flag VLCC "_____" (the "Vessel"), Official No. __________, of
______ gross tons and _____ net tons, duly documented in the name of the
Shipowner under the laws and flag of the Republic of _____________ with her home
port at the port of ________.
B. Pursuant to the terms of the Indenture, the Shipowner has issued and sold
to the Pass Through Trustee (as defined in the Indenture) its Series 1996-A
Secured Notes dated _______________ (the "Secured Notes") in the initial
principal amount of U.S.____________. The form of the Indenture (together with
Appendix A, Definitions, and Exhibits A-E (including the form of the Secured
Notes)) is attached hereto as Exhibit 1 and hereby made a part hereof as though
set forth fully herein. The term "Indenture" as used in this Mortgage shall mean
the Indenture and Appendix A (Definitions) and Exhibit A (Form of Secured Notes)
as attached hereto and as each may be amended, supplemented or modified from
time to time.
C. The Shipowner has entered into a demise charter (as the same may be
amended, supplemented or modified from time to time, the "Charter") with
_________________ (the "Charterer") respecting the Vessel pursuant to which the
Charterer has covenanted and agreed with the Shipowner, inter alia, to operate,
maintain, and insure the Vessel. The form of Article 21 of the Charter defining
Charter Events of Default is attached hereto as Exhibit 2 and hereby made a part
hereof as though set forth fully herein.
D. The Shipowner has entered into a ______________________________ (the
"Conditional Sale Agreement") dated _____________ with the financial institution
named therein (the "U.K. Lessor") pursuant to which the U.K. Lessor has been
granted certain rights respecting the Vessel. The U.K. Lessor has demise
chartered the Vessel to the Shipowner pursuant to a U.K. Head Lease dated
______________ (the "Head Lease").
EXHE-1
<PAGE>
E. To secure payment of principal of, interest on, Make-Whole Amount, if
any, and any other amounts which may become due to the Mortgagee or the
holders of Secured Notes pursuant to the terms of the Indenture, the Secured
Notes and the other Operative Documents, the Shipowner has duly authorized the
execution, delivery and recording of this First Ship Mortgage under and
pursuant to the laws of the __________________. Notwithstanding anything
contained herein to the contrary the rights granted to the Indenture Trustee
hereunder are subject and subordinate to the rights of the U.K. Lessor under
the Conditional Sale Agreement and the Head Lease so long as either document
is in full force and effect.
F. Terms used herein and not otherwise defined herein are used as defined
in, or by reference in, the Indenture.
NOW, THEREFORE, THIS MORTGAGE, WITNESSETH:
That in consideration of the premises and other valuable consideration, the
receipt whereof is hereby acknowledged, and in order to secure the payment of
principal of, interest on, Make- Whole Amount, if any, respecting the Secured
Notes, and all other amounts which may become due under the Indenture or
hereunder (collectively, the "Indebtedness hereby secured) and to secure the
performance and observance of and compliance with the covenants, terms and
conditions herein and in the Secured Notes and the Indenture contained, the
Shipowner has granted, conveyed, mortgaged, pledged, assigned, transferred, set
over and confirmed and does by these presents grant, convey, mortgage, pledge,
assign, transfer, set over and confirm unto the Mortgagee, its successors and
assigns, the whole of the Vessel which term shall include all of the boilers,
engines, machinery, bowsprits, masts, spars, sails, rigging, boats, anchors,
cables, apparel, furniture, fitting, equipment and all other appurtenances to
the Vessel appertaining or belonging, whether now owned or hereafter acquired,
whether on board or not, and all additions, improvements and replacements
hereafter made in or to the Vessel, or any part thereof, or in or to the
equipment and appurtenances aforesaid, but excluding any leased equipment;
SUBJECT AND SUBORDINATE to the rights of the U.K. Lessor under the
Conditional Sale Agreement and the Head Lease so long as either document is in
full force and effect;
TO HAVE AND TO HOLD the same unto the Mortgagee, its successors and assigns,
to its and its successors' and assigns' own use and behoof forever;
PROVIDED only, and the condition of these presents is such that if the
Shipowner, or its successors or assigns, shall pay or cause to be paid to the
Mortgagee the Indebtedness hereby secured as and when the same shall become due
and payable in accordance with the terms of this Mortgage, the Secured Notes and
the Indenture, and shall perform, observe and comply with the covenants, terms
and conditions in this Mortgage and
EXHE-2
<PAGE>
in the Secured Notes and the Indenture contained, expressed or implied, to be
performed, observed or complied with, by and on the part of the Shipowner, then
these presents and the rights hereunder shall cease, determine and be void;
otherwise to be and remain in full force and effect.
ARTICLE I
REPRESENTATIONS OF THE SHIPOWNER
(1) Organization. The Shipowner is a trust created under the
------------
_________________________, duly organized and validly existing in good
standing under the laws of the State of Delaware and is duly qualified as a
_______________ foreign maritime entity. _______________________________ is
Managing Trustee of the Shipowner.
(2) Documentation. The Vessel is, and the Shipowner covenants that it will
-------------
remain, duly documented in the name of the Shipowner as owner thereof under the
laws and flag of the _______________________, free and clear of all Liens and
encumbrances except Permitted Liens, which include but are not limited to, the
rights of the U.K. Lessor under the Conditional Sale Agreement and the Head
Lease, so long as either document is in full force and effect.
ARTICLE II
COVENANTS OF THE SHIPOWNER
(1) Maintenance of Entity Status. The Shipowner covenants that it will
----------------------------
remain duly qualified as a _________________ foreign maritime entity.
(2) Liens. Neither the Shipowner, the Charterer or any other charterer,
-----
the master of the Vessel nor any other Person has or shall have any right, power
or authority to create, incur or permit to be placed or imposed upon the Vessel
any Lien whatsoever, other than the Lien of this Mortgage and Permitted Liens.
(3) Maintenance of Mortgage. The Shipowner (or the Charterer under the
-----------------------
Charter) shall, at its expense and at no cost to the Mortgagee, comply with and
satisfy all of the provisions of the laws and flag of the _________________
______________________, in order to establish, record and maintain this Mortgage
as a mortgage thereunder on the Vessel except to the extent provided by the
Indenture.
EXHE-3
<PAGE>
ARTICLE III
EVENTS OF DEFAULT AND REMEDIES
(1) Event of Default. An Indenture Event of Default shall constitute an event
----------------
of default hereunder.
(2) Remedies. If an Indenture Event of Default shall have occurred and be
--------
continuing, subject to the provisions of Article III, Section (2)(g) hereof
and the Indenture, (x) the Mortgagee shall have the rights and remedies
provided in the Indenture, (y) the Mortgagee shall have all of the rights and
remedies provided mortgagees under the laws of the __________________ and, in
addition, (z) the Mortgagee may:
(a) Enforce and exercise all or any of its rights and powers as a first
mortgagee at law, in equity, or in admiralty;
(b) Exercise all the rights and remedies in foreclosure and otherwise given to
mortgagees by the laws of the ____________________________, or by the
applicable laws of any jurisdiction where the Vessel may be found, and
initiate and prosecute such other judicial, extra-judicial, or administrative
proceedings as it may consider appropriate to recover any or all sums due, or
declared due, on the Indebtedness hereby secured out of the Vessel, with the
right to enforce payment of said sum against any assets of the Indenture Estate,
and in connection therewith obtain a decree ordering the sale of the Vessel in
accordance with Section 2(e) of this Article III;
(c) Have a receiver of the Vessel appointed as a matter of right in any suit
hereunder (and any such receiver may have the rights of the Mortgagee set forth
in, or by reference in, this Article III);
(d) Take possession of the Vessel, with or without legal proceedings, at any
place where the Vessel may be found (and the Shipowner, the Charterer or other
Person in possession of the Vessel shall forthwith surrender possession of the
Vessel to the Mortgagee on demand), and the Mortgagee shall have the right, but
shall not be obligated, to manage, insure, maintain, repair, employ, lay up,
hold, charter, lease, operate or otherwise use the Vessel for such period and
under such terms as it may reasonably deem most expedient for its interest,
accounting only for the net profits, if any, arising from such use and charging
against all receipts from such use of the Vessel, all reasonable charges and
expenses in connection with such use;
(e) Sell the Vessel at private sale, on such terms and conditions as it deems
best, free of any claim of the Shipowner and, except as provided by law, any
other Person excluding the U.K. Lessor, upon advance notice of twenty-five (25)
consecutive days published in a newspaper authorized to publish legal notices of
that kind in New York, New York, and by sending notice of such sale no later
than the date of first publication,by
EXHE-4
<PAGE>
telegraph, cable, telecopy or held at such place and at such time as the
Mortgagee by notice may have specified, or may be adjourned by the Mortgagee
from time to time by announcement at the time and place appointed for such sale
or for such adjourned sale, and without further notice or publication the
Mortgagee may make any such sale at the time and place to which the same shall
be so adjourned. Any such sale may be conducted without bringing the Vessel to
the place designated for such sale. The Mortgagee or any holder of a Secured
Note may become the purchaser at any such sale, and shall have the right to
credit on the purchase price any and all sums of money due in respect of the
Secured Notes and any other Indebtedness hereby secured;
(f) Accept a conveyance of title to, and to take without legal process
(and the Shipowner or other Person in possession shall forthwith surrender
possession to the Mortgagee), the whole or any part of the Vessel wherever the
same may be, and to take possession of and hold the same; and
(g) Notwithstanding anything contained herein to the contrary, the
rights and remedies granted to the Mortgagee under this Mortgage or by relevant
law shall not be exercised in such a manner as to interfere with or prejudice
the rights of the U.K. Lessor under the Conditional Sale Agreement or the Head
Lease. Without restricting the generality of the foregoing, so long as the Head
Lease is in full force and effect, the Mortgagee shall not, without the prior
written consent of the U.K. Lessor, exercise any remedy resulting in an in rem
judicial sale of the Vessel.
In addition, so long as the Charter is in effect and no Charter Event of
Default shall have occurred, the Mortgagee shall not, without the prior written
consent of the Charterer exercise any remedy resulting in an in rem judicial
sale of the Vessel.
(3) Conveyance after Sale. Subject to the provisions of Article III,
Section (2)(g) hereof, the Shipowner hereby irrevocably appoints the Mortgagee
the true and lawful attorney of the Shipowner, in its name and stead, to make
all necessary transfers of the whole or any part of the Vessel in connection
with a sale, use or other disposition pursuant to Section 2 of Article III
hereof, and for that purpose to execute all necessary instruments of assignment
and transfer. Nevertheless, the Shipowner shall, if so requested by the
Mortgagee, ratify and confirm any sale, assignment, transfer or delivery by
executing and delivering such proper bill of sale, assignment, conveyance,
instrument of transfer or other instrument as may be designated in such request.
(4) Shipowner Barred. A sale of the Vessel made pursuant hereto whether
under the power of sale hereby granted or any judicial proceedings, shall
operate to divest all right, title and interest of any nature whatsoever of the
Shipowner therein and thereto, and shall bar the Shipowner, its successors and
assigns, and, subject to the provisions of Article III, Section 2(g) hereof, all
Persons claiming by, through or under them. No purchaser shall be bound to
inquire whether notice has been given or whether any Indenture Event of Default
EXHE-5
<PAGE>
or event of proceeds thereof. default hereunder has occurred, or as to the
propriety of the sale, or as to application of the proceeds thereof.
(5) Arrest By Third Party. (a) Subject to the provisions of Article
III, Section (2)(g) hereof and any rights of the Charterer (including under
Article 7 of the Charter), in the event that an Indenture Event of Default shall
have occurred and be continuing and the Vessel shall be arrested or detained by
a marshal or other officer of any court of law, equity or admiralty jurisdiction
in any country of the world or by any government or other authority and shall
not be released from arrest or detention within thirty (30) days from the date
of arrest or detention, the Shipowner hereby authorizes the Mortgagee, in the
name of the Shipowner, to apply for and receive possession of and to take
possession of the Vessel with all of the rights and powers that the Shipowner
might have, possess and exercise in any such event. This authorization is
irrevocable.
(b) Subject to the provisions of Article III, Section (2)(g) hereof and
any rights of the Charterer, in the event that an Indenture Event of Default
(including Article 7 of the Charter), shall have occurred and be continuing, the
Shipowner irrevocably authorizes the Mortgagee or its appointees (with full
power of substitution) to appear in the name of the Shipowner in any court of
any country or nation of the world where a suit is pending against the Vessel
because of or on account of any alleged lien or claim against the Vessel from
which the Vessel shall not have been released in accordance with Article 15 of
the Charter.
(6) Powers of the Mortgagee. Subject to the provisions of Article III,
Section (2)(g) hereof, the Mortgagee is hereby appointed as attorney-in-fact of
the Shipowner, during the continuance of any Indenture Event of Default, and
upon compliance with the terms of the Indenture, in the name of the Shipowner to
demand, collect, receive, compromise and sue for, so far as may be permitted by
law, all freights, hire, earnings, issues, revenues, compensation, income and
profits of the Vessel, and all amounts due from underwriters under any insurance
thereon as payment of losses or as return premiums or otherwise, salvage awards
and recoveries, recoveries in general average or otherwise, and to make, give
and execute in the name of the Shipowner acquittances, receipts, releases or
other discharges for the same, whether under seal or otherwise, and to endorse
and accept in the name of the Shipowner all checks, notes, drafts, warrants,
agreements and all other instruments in writing with respect to the foregoing.
(7) Application of Proceeds. Any monies collected by the Mortgagee
pursuant to any sale of the Vessel or other enforcement of any of its rights
hereunder on account of the occurrence of an Indenture Event of Default shall be
distributed in accordance with the provisions of Section 4.03 of the Indenture.
(8) No Exclusivity. Subject to the provisions of Article III, Section
(2)(g) hereof, no right or remedy herein conferred upon or reserved to the
Mortgagee is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given
EXHE-6
<PAGE>
hereunder or under the The assertion or employment of any right or remedy
hereunder or otherwise shall not prevent the concurrent or subsequent assertion
or employment of any other right or remedy hereunder or otherwise. Indenture or
now or hereafter existing at law, in equity, in admiralty, by statute or
otherwise.
ARTICLE IV
SUNDRY PROVISIONS
(1) Recording. For the purposes of recording this First Ship Mortgage as
---------
required by the __________________________________, as amended, the total
amount of this Mortgage is (i) ______________________________________ and (ii)
interest, Make-Whole Amount, if any, and performance of mortgage covenants.
The discharge amount is the same as the total amount.
(2) Successors and Assigns. All the covenants, promises, stipulations and
----------------------
agreements of the Shipowner contained in this Mortgage shall bind the
Shipowner, its successors and assignees, and shall inure to the benefit of the
Mortgagee, its successors and assigns.
(3) Agents. Wherever and whenever herein any right, power or authority is
------
granted or given to the Mortgagee, such right, power or authority may be
exercised in all cases by the Mortgagee or such agent or agents as it may
appoint; and the authorized acts of such agent or agents when taken shall
constitute the act of the Mortgagee hereunder.
(4) Notices. Any notice or demand or other communication to the Shipowner or
-------
the Mortgagee under this Mortgage shall be made in accordance with Section
10.05 of the Indenture.
(5) Governing Law. The provisions of this Mortgage shall, with respect to its
validity, effect, recordation and enforcement, be governed by and construed in
accordance with the applicable laws of the __________________________.
(6)Termination of U.K. Documents. If the Conditional Sale Agreement and the
-----------------------------
Head Lease shall cease to be in full force and effect, this Mortgage shall be
read and construed as though such documents were not mentioned herein. In
such event, (a) to the extent permitted by applicable law, this Mortgage shall
succeed to the position of a first preferred ship mortgage, and the Mortgagee
shall have all of the rights of a mortgagee of a first preferred ship
mortgage, or (b) at the request of the Mortgagee, the Shipowner shall execute,
deliver and cause to be recorded, at the Shipowner's expense, in favor of the
Indenture Trustee a first preferred ship mortgage containing substantially
similar provisions to those of this Mortgage.
EXHE-7
<PAGE>
IN WITNESS WHEREOF, the Shipowner has caused this Mortgage to be duly
executed by its authorized representative the day and year first above
written.
_____________________________,
not in its individual capacity
but solely as the Managing Trustee
By:_____________________
Name:
Title: Attorney-in-Fact
STATE OF NEW YORK)
)ss.:
COUNTY OF NEW YORK)
On this ____ day of December, 1996, before me personally appeared
________________, known to me, and known to be the person who executed the
foregoing instrument, who, being by me duly sworn, did depose and say that he
resides at _______________________________; that he is Attorney-in-Fact of
__________________________________________________________, not in its
individual capacity but solely as the Managing Trustee of the ______________,
the party described in and which executed the foregoing instrument; that he
signed his name thereto by authority of a power of attorney issued by said
Trust and he further acknowledged such mortgage is the free act and deed of
such Trust.
____________________________
Notary Public
[For use in the ______________________]
EXHE-8
<PAGE>
EXHIBIT 4.3
-----------
EXECUTION COPY
--------------
TRUST INDENTURE, ASSIGNMENT OF CHARTER AND HEAD LEASE
AND SECURITY AGREEMENT
among
DUMOCO EAGLE TRUST,
a Delaware Business Trust,
created under the
Trust Agreement dated
as of November 22, 1996, with
the Owner Participant thereto
and
STATE STREET BANK AND TRUST COMPANY
Indenture Trustee
Dated as of December 19, 1996
Leveraged Lease of one Very Large Crude Carrier
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.................................. 5
ARTICLE II
THE SECURED NOTES
SECTION 2.01. Secured Notes................................ 5
SECTION 2.02. Payment from Indenture Estate Only........... 6
SECTION 2.03. Method of Payment............................ 7
SECTION 2.04. Note Register................................ 8
SECTION 2.05. Registered Owners............................ 8
SECTION 2.06. Transfer, Exchange and Replacement of Notes.. 8
SECTION 2.07. New Notes, Payment of Expenses............... 9
SECTION 2.08. Additional Notes............................. 10
SECTION 2.09. Termination of Interest in Indenture Estate.. 14
SECTION 2.10. Equally and Ratably Secured.................. 14
ARTICLE III
REDEMPTION AND REFUNDING
SECTION 3.01. Generally.................................... 14
SECTION 3.02. Mandatory Casualty Redemption................ 14
SECTION 3.03. Mandatory Early Termination Redemption....... 14
SECTION 3.04. Assumption of Obligations of Owner Trust..... 15
SECTION 3.05. Optional Redemption.......................... 17
SECTION 3.06. Owner Trust's and Owner Participant's
Option to Redeem or
Purchase Secured Notes....................... 17
SECTION 3.07. Deposited Redemption Moneys.................. 19
SECTION 3.08. Acquisition of Secured Notes................. 19
SECTION 3.09. Condition to Redemption and Refunding........ 19
SECTION 3.10. Notice of Certain Redemptions................ 19
<PAGE>
ii
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE INDENTURE ESTATE
SECTION 4.01. Distribution of Hire..................... 20
SECTION 4.02. Certain Distributions.................... 21
SECTION 4.03. Distribution After Indenture Event of
Default.................................. 22
SECTION 4.04. Application of Payments on Secured Notes 23
SECTION 4.05. Applications of Payments According
to Applicable Operative
Document Provisions...................... 24
SECTION 4.06. Amounts Received for Which No Provision
Is Made.................................. 24
SECTION 4.07. Payment Procedures....................... 25
SECTION 4.08. Application of Payments Under Parent
Guaranty................................. 25
ARTICLE V
COVENANTS OF OWNER TRUST AND THE OWNER TRUSTEES;
CERTAIN AGREEMENTS; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 5.01. Covenants of Owner Trust and the
Managing Trustee; Certain
Agreements.............................. 25
SECTION 5.02. Indenture Events of Default............. 27
SECTION 5.03. Certain Rights.......................... 29
SECTION 5.04. Remedies................................ 31
SECTION 5.05. Suit; Possession; Title; Sale of
Indenture Estate........................ 33
SECTION 5.06. Remedies Cumulative..................... 36
SECTION 5.07. Discontinuance of Proceedings........... 37
SECTION 5.08. Waiver of Past Defaults................. 37
SECTION 5.09. No Action Contrary to Certain Third
Party Rights............................ 37
SECTION 5.10. Rights of Holders of Secured Notes...... 37
SECTION 5.11. Limitation on Suits by Holders.......... 38
<PAGE>
iii
ARTICLE VI
DUTIES OF THE INDENTURE TRUSTEE
<TABLE>
<CAPTION>
<S> <C>
SECTION 6.01. Certain Actions.............................................. 38
SECTION 6.02. Action Upon Instructions..................................... 39
SECTION 6.03. Release of Lien of Indenture................................. 39
SECTION 6.04. Indemnification.............................................. 40
SECTION 6.05. No Implied Duties............................................ 41
SECTION 6.06. Duties to Remove Certain Liens............................... 41
SECTION 6.07. No Action Except Under Operative Documents or Instructions... 41
SECTION 6.08. Certain Rights of the Owner Trust and the Owner Participant.. 41
SECTION 6.09. Filing of Financing and Continuation Statements.............. 42
SECTION 6.10. Publishing of Notices........................................ 42
SECTION 6.11. Taxes; Withholding; Information Reporting.................... 42
</TABLE>
ARTICLE VII
THE INDENTURE TRUSTEE AND THE OWNER TRUSTEE
<TABLE>
<CAPTION>
<S> <C>
SECTION 7.01. Acceptance of Trusts and Duties.............................. 43
SECTION 7.02. Absence of Duties Except as Specified........................ 43
SECTION 7.03. No Representations or Warranties............................. 44
SECTION 7.04. No Segregation of Moneys; No Interest; Investments........... 44
SECTION 7.05. Reliance; Agents; Advice of Counsel.......................... 45
SECTION 7.06. No Compensation from Holders or Indenture Estate............. 45
SECTION 7.07. Right of the Indenture Trustee to Perform Covenants, Etc..... 46
SECTION 7.08. Moneys for Payments in Respect of Notes to be Held in Trust.. 46
SECTION 7.09. Disposition of Moneys Held for Payments of Notes............. 46
</TABLE>
ARTICLE VIII
SUCCESSOR TRUSTEES AND ADDITIONAL TRUSTEES
<TABLE>
<CAPTION>
<S> <C>
SECTION 8.01. Notice of Successor Owner Trustee........................... 47
SECTION 8.02. Resignation of Indenture Trustee; Appointment of Successor.. 47
SECTION 8.03. Co-Trustees and Separate Trustees........................... 48
</TABLE>
<PAGE>
iv
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
<TABLE>
<CAPTION>
<S> <C>
SECTION 9.01. Indenture Supplements Without Consent of Holders......................... 50
SECTION 9.02. Supplements and Amendments to Operative Documents With
Consent Holders of Notes................................................. 51
SECTION 9.03. Execution of Indenture Supplement, Amendments, Etc....................... 55
SECTION 9.04. Effect of Indenture Supplement........................................... 55
SECTION 9.05. Reference in Secured Notes to Indenture Supplements...................... 55
SECTION 9.06. Notices of Indenture Supplements and Amendments, Etc..................... 56
SECTION 9.07. Charterer Rights......................................................... 56
</TABLE>
ARTICLE X
MISCELLANEOUS
<TABLE>
<CAPTION>
<S> <C>
SECTION 10.01. Termination of Indenture................................................ 56
SECTION 10.02. No Legal Title to Indenture Estate in Holders........................... 56
SECTION 10.03. Power of Attorney....................................................... 56
SECTION 10.04. Regarding the Owner Trust and the Owner Trustees........................ 57
SECTION 10.05. Notices................................................................. 58
SECTION 10.06. Severability of Provisions.............................................. 58
SECTION 10.07. No Oral Modification or Continuing Waivers.............................. 58
SECTION 10.08. Successors and Assigns.................................................. 58
SECTION 10.09. Headings; Table of Contents............................................. 59
SECTION 10.10. Normal Commercial Relations............................................. 59
SECTION 10.11. Governing Law........................................................... 59
SECTION 10.12. Execution............................................................... 59
SECTION 10.13. Security Agreement...................................................... 59
SECTION 10.14. Benefits of Indenture................................................... 59
</TABLE>
Appendix A Definitions
Schedule 1 Description of Vessel
Exhibit A Form of Secured Note
Exhibit B Maturity Dates, Etc.
Exhibit C Form of Substitution Agreement
Exhibit D Form of Indenture Supplement
Exhibit E Form of Ship Mortgage
<PAGE>
TRUST INDENTURE, ASSIGNMENT OF CHARTER AND HEAD LEASE,
AND SECURITY AGREEMENT
This TRUST INDENTURE, ASSIGNMENT OF CHARTER AND HEAD LEASE, AND SECURITY
AGREEMENT dated as of December 19, 1996 (this "Indenture"), between DUMOCO EAGLE
---------
TRUST, a trust created pursuant to the Delaware Business Trust Act (the "Owner
-----
Trust") under the Trust Agreement (as hereinafter defined), under which DEUTSCHE
- -----
MORGAN GRENFELL (CAYMAN) LIMITED, a Cayman Islands banking corporation is the
Managing Trustee, (together with its permitted successors and assigns, the
"Managing Trustee"), acting not individually, except as otherwise provided
- -----------------
herein (when acting in such individual capacity, the "Cayman Trust Company"),
--------------------
but solely as trustee for the Owner Trust (the Managing Trustee in such capacity
being, the "Owner Trustee", and STATE STREET BANK AND TRUST COMPANY, a
-------------
Massachusetts trust company (together with its permitted successors and assigns,
the "Indenture Trustee").
-----------------
WITNESSETH:
----------
WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant, the Cayman Trust Company and Wilmington
Trust Company (the "Delaware Trust Company") have heretofore entered into the
Declaration of Agreement of Trust dated as of November 22, 1996 (the "Trust
-----
Agreement"), whereby, among other things, the Cayman Trust Company and the
- ---------
Delaware Trust Company in their respective capacities as Managing Trustee and
Delaware Trustee thereunder have declared a certain trust for the use and
benefit of the Owner Participant, subject, however, to the Lien of this
Indenture, and the Owner Trust is authorized and directed to execute and deliver
this Indenture;
WHEREAS, the Owner Trust desires by this Indenture to provide, among other
things, (i) for the issuance by the Owner Trust to the Pass Through Trustee of
the Series 1996-A-2 Secured Notes, a form of which is set forth in Exhibit A
hereto, upon payment by the Pass Through Trustee of the aggregate principal
amount of such Secured Notes, (ii) for the grant, assignment, mortgage and
pledge by the Owner Trust to the Indenture Trustee, as part of the Indenture
Estate thereunder, among other things, all of the right, title and interest of
the Owner Trust in, to and under, as the case may be, the Vessel (by virtue of
the grant hereunder and the grant under the Ship Mortgage), the Bill of Sale,
the Head Lease, the Conditional Sale Agreement, the Charter and the Parent
Guaranty, and all payments and other amounts received hereunder or thereunder
(other than Excepted
<PAGE>
2
Payments), in accordance with the terms hereof and thereof, as security for,
among other things, the Owner Trust's obligations to the Indenture Trustee, the
Loan Participants and the other Holders and for the benefit and security of the
Loan Participants and such Holders;
WHEREAS, all things have been done to make the Secured Notes, when executed
by the Owner Trust and authenticated, issued and delivered hereunder, the legal,
valid, binding and enforceable obligations of the Owner Trust in accordance with
their terms; and
WHEREAS, all things necessary to make this Indenture the legal, valid,
binding and enforceable obligation of the Owner Trust, for the uses and purposes
herein set forth, in accordance with its terms, have been done and performed and
have happened, and the Indenture Trustee has duly accepted the trust created
hereby and as evidenced thereof has joined in the execution hereof;
NOW, THEREFORE, THIS TRUST INDENTURE, ASSIGNMENT OF CHARTER AND SECURITY
AGREEMENT WITNESSETH that, to secure (i) the prompt payment of the principal of,
Make-Whole Amount, if any, and interest on all Secured Notes from time to time
Outstanding hereunder and of all other amounts payable to the Holders (whether
as Holders or Loan Participants) hereunder, under the Secured Notes and under
the other Operative Documents, (ii) the performance and observance by the Owner
Trust of all of the provisions, covenants and agreements contained in the
Participation Agreement, in the Secured Notes and in the other Operative
Documents for the benefit of the Indenture Trustee or the Holders herein, and
(iii) the performance and observance by the Owner Participant of its covenants
and agreements contained in the Operative Documents (the obligations described
in the above clauses (i), (ii) and (iii), collectively, the "Indenture
---------
Indebtedness"), and for the uses and purposes and subject to the terms and
- ------------
provisions hereof, and in consideration of the premises and of the covenants
herein contained and of the acceptance of the Secured Notes by the Holders
thereof:
GRANTING CLAUSE
---------------
The Owner Trust, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in order to secure the payment and
performance of the Indenture Indebtedness, hereby presently irrevocably
mortgages, hypothecates and pledges unto the Indenture Trustee and creates to
and for the benefit of the Indenture Trustee, a security interest in and
mortgage lien on, and assigns by way of security, all of the right, title and
interest of the Owner Trust in, to and under the following property, rights,
interests, and privileges, now owned or in the future acquired by the Owner
Trust or in which the Owner Trust now has or may in the future acquire any
estate, right, title or interest (which collectively, together with all of the
Indenture Trustee's right, title and interest in and to the Vessel described in
the Ship Mortgage, by virtue of the grant of the Ship Mortgage and the
<PAGE>
3
U.K. Security Assignment, including all property hereafter subjected to the Lien
of this Indenture, the Ship Mortgage or the U.K. Security Assignment by any
Indenture Supplement or any mortgage supplemental hereto or thereto, but
excluding Excepted Payments, shall constitute the "Indenture Estate"), to wit:
----------------
(a) all right, title and interest of the Owner Trust in the Vessel (as
described in Schedule 1 hereto), including, without limitation, any
Component (including any replacement Component) or Modification to the
Vessel which, pursuant to the terms of the Conditional Sale Agreement and
the Charter, are the property of the Owner Trust;
(b) the Bill of Sale and all rights, powers and remedies of the Owner
Trust pursuant thereto, whether arising thereunder or by statute, at law,
in equity or otherwise, subject to the rights of the U.K. Lessor under the
Conditional Sale Agreement;
(c) the Charter, including, without limitation, (i) all amounts of
hire, rent, income insurance proceeds and requisition, indemnity or other
payments of any kind for or with respect to any asset leased or subleased
thereunder, (ii) all rights of the Owner Trust to exercise any election or
option, or to give any notice, consent, waiver or approval under or in
respect of the Charter, or to accept any surrender or enter into any
modification thereof, as the case may be, and (iii) all rights, powers and
remedies of the Owner Trust pursuant to the Charter, whether arising
thereunder or by statute, at law, in equity or otherwise, including,
without limitation, the right to possession of any asset demised
thereunder;
(d) the Conditional Sale Agreement, the Head Lease, the Lessee Support
Agreement and the Lessor's Mortgage, including, without limitation, (i) all
amounts payable to the Owner Trust under any of them, (ii) all right of the
Owner Trust to exercise any election or option, or to give any notice,
consent, waiver or approval under or in respect of any such agreement, or
to accept any surrender or enter into any modification thereof, as the case
may be, and (iii) all rights, powers and remedies of the Owner Trust
pursuant to any such agreement, whether arising thereunder or by statute,
at law, in equity or otherwise;
(e) the Parent Guaranty, including without limitation, (i) all amounts
payable thereunder, (ii) all rights of the Owner Trust to exercise any
election or option, or to give any notice, consent, waiver or approval
under or in respect of the Parent Guaranty, or to accept any surrender or
enter into any modification thereof, as the case may be, and (iii) all
rights, powers and remedies of the Owner Trust pursuant to the Parent
Guaranty, whether arising thereunder or by statute, at law, in equity or
otherwise;
<PAGE>
4
(f) all moneys and securities now or hereafter paid or deposited or
required to be paid or deposited to or with the Indenture Trustee pursuant
to any term of any Operative Document, and held or required to be held by
the Indenture Trustee hereunder;
(g) to the extent assignable, any and all permits, certificates,
approvals and authorizations, however characterized, issued or in any way
furnished in connection with the Vessel, whether necessary or not for the
operation and use of the Vessel;
(h) all the tolls, rents, issues, profits, products, revenues and
other income of the property subjected or required to be subjected to the
Lien of this Indenture, including all payments or proceeds payable to the
Owner Trust upon or after termination of the Charter as the result of the
sale, lease or other disposition thereof, and all estate, right, title and
interest of every nature whatsoever of the Owner Trust in and to the same
and every part thereof; and
(i) all rights or property which may be received upon the exercise of
any remedy or option contained in any of the above-described instruments
and all proceeds in whatever form of all or any part of any of the
foregoing;
EXCLUDING, HOWEVER, from the foregoing grant, and thereby from the
Lien of this Indenture and from the Indenture Estate, any and all Excepted
Payments; and
SUBJECT to the rights of the Owner Trust and the Owner Participant
hereunder, including, without limitation, Section 6.08;
TO HAVE AND TO HOLD the aforesaid property unto the Indenture Trustee,
its successors and assigns, for the benefit and security of the Holders, without
any priority of any one Secured Note over any other, and for the uses and
purposes and subject to the terms and conditions set forth in this Indenture.
This Indenture is a mortgage given to secure the payment of the Indenture
Indebtedness and is also intended to operate as, among other things, a security
agreement and an assignment of Bareboat Hire, leases and rents.
It is expressly agreed that anything contained in this Indenture to
the contrary notwithstanding, the Owner Trust shall remain liable under the
Operative Documents to which it is a party or a third party beneficiary to
perform all of the obligations of the Owner Trust thereunder or by which it is
bound, all in accordance with and pursuant to the terms and provisions of each
thereof and the Holders and, except as expressly provided herein, the Indenture
Trustee shall have no obligation or liability under any Operative Document by
reason of or arising out of this Indenture. None of the Indenture Trustee or
any Holder shall be required or obligated in any manner to perform or fulfill
any obligation of the Owner Trust under or pursuant to any Operative Document
or, except as herein expressly provided,
<PAGE>
5
to make any payment, or to make any inquiry as to the nature or sufficiency of
any payment received by it, or to present or file any claim, or to take any
action to collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time.
Simultaneously with the execution and delivery hereof, the Owner
Trust, as mortgagor, shall execute and deliver the Ship Mortgage, substantially
in the form annexed hereto as Exhibit E, except that the blanks in such form
shall be filled in and such form may be modified as contemplated therein.
Accordingly, the Owner Trust and the Indenture Trustee hereby agree
for themselves and for the benefit and security of the Holders as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Unless otherwise defined herein, for the
-----------
purposes hereof, capitalized terms used herein and not otherwise defined shall
have the meanings assigned to them in Appendix A. References in this Indenture
to Sections, subsections, paragraphs, Schedules, Appendices and Exhibits are to
Sections, subsections and paragraphs in, and Schedules, Appendices and Exhibits
to, this Indenture unless otherwise indicated.
ARTICLE II
THE SECURED NOTES
SECTION 2.01. Secured Notes. (a) Generally. Except for Secured
------------- ---------
Notes issued pursuant to Section 2.06 or 2.08, Secured Notes may be issued only
on the Closing Date. On the Closing Date, the Secured Notes to be issued on
such date pursuant to Section 2.2 of the Participation Agreement shall be duly
executed by the Managing Trustee on behalf of the Owner Trust, duly
authenticated and delivered by the Indenture Trustee and registered in the name
of the Loan Participant to which such Secured Note is being issued. Each
Secured Note shall have attached thereto the Amortization Schedule for such
Secured Note. Receipt by the Indenture Trustee of Secured Notes duly executed
by the Managing Trustee on behalf of the Owner Trust shall constitute
instructions to the Indenture Trustee to authenticate, register and deliver such
Secured Notes on the Closing Date.
<PAGE>
6
(b) Series 1996 A-2 Secured Notes. The Series 1996 A-2 Secured Notes
-----------------------------
shall:
(i) be limited in aggregate principal amount to the amount specified
in Exhibit B hereto (the principal amount of such Secured Note shall be the
face amount thereof as such amount may be reduced from time to time by the
payment of principal installments thereunder);
(ii) be issuable only as registered Secured Notes in denominations of
at least $1,000, or if the remaining principal amount thereof shall be less
than $1,000, such remaining principal amount;
(iii) be dated the Closing Date;
(iv) bear interest on the unpaid principal amount thereof from the
date of such Series 1996 A-2 Secured Notes, at the rate specified in
Exhibit B (computed on the basis of a 360-day year consisting of twelve 30-
day months);
(v) provide for payments of interest and otherwise be due and payable
as to principal and interest as specified herein and therein;
(vi) be prepayable only as provided in Article III; and
(vii) be substantially of the tenor and in the form set forth in
Exhibit A.
(c) Execution and Authentication. Each Secured Note shall be signed
----------------------------
on behalf of the Owner Trust by a Responsible Officer of the Managing Trustee,
manually or in facsimile. No Secured Note shall be secured by or entitled to
any benefit under this Indenture, or be valid for any purpose, unless there
appears thereon a certificate of authentication executed by or on behalf of the
Indenture Trustee by the manual signature of a Responsible Officer of the
Indenture Trustee, and such certificate on any Secured Note shall be conclusive
evidence that such Secured Note has been duly authenticated and delivered
hereunder.
SECTION 2.02. Payment from Indenture Estate Only. All payments of
----------------------------------
principal, Make-Whole Amount, if any, and interest to be made by the Owner Trust
and, except as otherwise provided in the Operative Documents, all payments of
any other amounts payable by or on behalf of the Owner Trust under the Secured
Notes and this Indenture, shall be made only from the income and proceeds from
the Indenture Estate, and only to the extent that the Indenture Trustee shall
have received sufficient income or proceeds from the Indenture Estate to make
such payments in accordance with the terms hereof. Each Holder, by its
acceptance of a Secured Note, agrees that it will look solely to the income and
<PAGE>
7
proceeds from the Indenture Estate to the extent available for payment as herein
provided and that (a) none of the Managing Trustee or the Indenture Trustee
(whether in their respective individual or trust capacities) or the Owner Trust
shall be personally liable to such Holder for any amounts payable under the
Secured Notes, nor, except as specifically provided herein or in the other
Operative Documents, for any amounts payable or any liability under this
Indenture and (b) the Owner Participant shall not be liable to the Indenture
Trustee or to any Holder under any circumstances for any reason whatsoever,
except to the extent expressly provided herein or in any other Operative
Document.
SECTION 2.03. Method of Payment. (a) The principal of, and Make-
-----------------
Whole Amount, if any, and interest, on each Secured Note shall be payable in
immediately available funds, the receipt of which has been confirmed by a
Responsible Officer of the Indenture Trustee (which shall be done promptly upon
receipt thereof) on or before 12:00 p.m., New York time, at the place of
receipt, on the due date therefor, to the Indenture Trustee at the corporate
trust office of the Indenture Trustee. Amounts so received by the Indenture
Trustee shall be paid by the Indenture Trustee to each Holder on the due date
therefor without any presentment or surrender of any Secured Note held by such
Holder by whichever of the following methods shall be specified by prior written
notice from such Holder to the Indenture Trustee: (i) by transferring prior to
2:00 p.m., New York City time, on such date such payment to such Holder in
immediately available funds by crediting the amount to be distributed to any
Holder to any account maintained by such Holder with the Indenture Trustee or
(ii) by initiating a wire transfer prior to the time set forth in clause (i) of
this Section 2.03(a) of such amount in immediately available funds to a banking
institution designated in such notice with bank wire transfer facilities for the
account of such Holder, in all cases without any presentment or surrender of any
Secured Note, except that, on the date of the final maturity thereof (whether at
maturity, upon prepayment, acceleration or otherwise), the Holder of each
Secured Note shall surrender such Secured Note promptly after payment; provided
that failure to so present such Secured Note shall not diminish the effect of
full and final payment by the Owner Trust. In the event the Indenture Trustee
shall fail to make any payment as provided in the preceding sentence after its
receipt of funds at the place and on or before the time specified in this
Section 2.03(a), the Indenture Trustee in its individual capacity agrees to
compensate each Holder for loss of use of funds in an amount equal to the
overnight rate for Federal Funds.
(b) Whenever any payment to be made hereunder or pursuant to the terms
of any Secured Note shall be stated to be due on a day which is not a Business
Day, such payment shall be due and payable on the next succeeding Business Day
with the same force and effect as if made on such scheduled date and (provided
such payment is timely made on such succeeding Business Day) no interest shall
accrue on the amount of such payment from and after such scheduled date.
<PAGE>
8
(c) If payment of any installment of principal or interest payable in
accordance with the terms hereof and of the Secured Notes is not paid in full
when due, whether as scheduled or upon acceleration and whether before or after
the maturity date of the Secured Notes, such overdue amount of principal or
interest shall bear (to the extent not prohibited by applicable law) interest,
payable on demand, for each day from and including the date payment thereof was
due to the actual date of payment, at the Overdue Rate.
(d) Subject to Section 6.11, the Holder of any Secured Note shall be
entitled to the principal of, and the Make-Whole Amount, if any, and interest on
such Secured Note free from all rights of set-off or counterclaims of the Owner
Trust, the Indenture Trustee or any prior Holder of such Secured Note. Nothing
set forth in this Section 2.03(d) shall impair the right of the Owner Trust to
receive a return from the Indenture Trustee of any amount unintentionally
overpaid by the Owner Trust in respect of a Secured Note.
SECTION 2.04. Note Register. The Indenture Trustee shall cause to be
-------------
kept at the Indenture Trustee's corporate trust office a register (the "Note
----
Register") for the registration or transfer of the Secured Notes. The Note
- --------
Register shall be maintained by the Indenture Trustee, and the names and
addresses of the registered Holders of the Secured Notes, the transfers of the
Secured Notes and the names and addresses of the transferees of the Secured
Notes shall be entered in the Note Register under such reasonable regulations as
the Indenture Trustee may prescribe. Each Loan Participant shall be provided
reasonable opportunities to inspect the Note Register from time to time.
SECTION 2.05. Registered Owners. The Owner Trust and the Indenture
-----------------
Trustee may deem and treat any registered Holder as the absolute owner of any
Secured Note held by such Holder, as indicated in the Note Register, for the
purpose of receiving payment of all amounts payable with respect to such Secured
Note and for all other purposes, and neither the Owner Trust nor the Indenture
Trustee shall be affected by any notice to the contrary. All such payments so
made shall be valid and effectual to satisfy and discharge the liability of the
Owner Trust upon such Secured Note to the extent of the sum or sums so paid.
SECTION 2.06. Transfer, Exchange and Replacement of Notes. (a)
-------------------------------------------
Secured Notes may be transferred only on the Note Register. Any Secured Note
may be transferred on the Note Register if such Secured Note is surrendered for
cancellation at the corporate trust office of the Indenture Trustee and is
accompanied by an instrument of transfer in form and substance reasonably
satisfactory to the Indenture Trustee, which Secured Note or Secured Notes shall
be cancelled by the Indenture Trustee. A new Secured Note or Secured Notes of
the same series, duly executed by the Owner Trust and registered in the name of
the transferee or transferees in a principal amount or amounts equal to the
principal amount of such transferred Secured Note, shall be duly authenticated
and delivered by the Indenture
<PAGE>
9
Trustee to the transferee or transferees named by the Holder of such transferred
Secured Note in exchange for such transferred Secured Note. Promptly after
registration of the transfer of any Secured Note, the Indenture Trustee shall
give notice thereof to the Charterer and the Owner Trust specifying the name and
address for notices of the transferee or transferees.
(b) Any Secured Note may be exchanged for a new Secured Note if such
Secured Note to be so exchanged is surrendered for cancellation at the corporate
trust office of the Indenture Trustee and is accompanied by the request of the
Holder thereof specifying the denomination of the new Secured Note (which shall
be in denominations of at least $1,000 or, if less, the then unpaid principal
amount thereof) to be issued in exchange therefor. Upon instructions from the
Indenture Trustee, the Owner Trust shall deliver to the Indenture Trustee a new
Secured Note of the same series, duly executed by the Owner Trust and registered
in the name of such Holder in the denominations so requested and in an aggregate
principal amount equal to the aggregate original principal amount of such
Secured Note to be so exchanged, and such new Secured Note shall be duly
authenticated by the Indenture Trustee and delivered by the Indenture Trustee to
such Holder in exchange for such Secured Note to be so exchanged, which Secured
Note shall be cancelled by the Indenture Trustee.
(c) If any Secured Note shall become mutilated or be destroyed, lost
or stolen, upon request of the Holder thereof, a new Secured Note of the same
series, duly executed by the Owner Trust and registered in the name of such
Holder in the same original principal amount as the Secured Note so mutilated,
destroyed, lost or stolen, shall be duly authenticated and delivered by the
Indenture Trustee to such Holder in exchange for such Secured Note, if
mutilated, or in substitution for such Secured Note, if destroyed, lost or
stolen. In the case of a mutilated Secured Note, such Secured Note shall be
surrendered for cancellation at the corporate trust office of the Indenture
Trustee and shall be cancelled by the Indenture Trustee. In the case of a
destroyed, lost or stolen Secured Note, the Holder thereof shall furnish to the
Owner Trust and the Indenture Trustee (i) evidence to their reasonable
satisfaction of the destruction, loss or theft of such Secured Note and
ownership thereof, and (ii) such security or indemnity as may be reasonably
required by them to save them harmless; provided that if the affected Holder is
a Pass Through Trustee, the written agreement of such Holder to indemnify the
Managing Trustee, the Delaware Trustee, the Indenture Trustee and the Owner
Trust (in their respective individual and trust capacities) with respect to such
destroyed, lost or stolen Secured Note, together with written notice of
ownership and destruction, loss or theft thereof, shall satisfy the conditions
of this sentence.
SECTION 2.07. New Notes, Payment of Expenses. (a) Each new Secured
------------------------------
Note issued pursuant to Section 2.06 (a "New Note") upon transfer of, in
--------
exchange for or in substitution for a Secured Note (an "Old Note") shall be
--------
dated as of the date of such Old Note. The Indenture Trustee shall mark on each
New Note (i) the date to which principal
<PAGE>
10
and interest have been paid on the applicable old Note and (ii) all payments and
prepayments of principal made on such Old Note which are allocable to such New
Note. Interest shall be deemed to have been paid on such New Note to the date
to which interest was paid on the applicable Old Note, and all payments and
prepayments of principal required to have been marked on such New Note, as
provided in clause (ii) of the preceding sentence, shall be deemed to have been
made thereon. All New Notes issued pursuant to Section 2.06 in exchange for or
in substitution for or in lieu of Old Notes shall be valid obligations of the
Owner Trustee evidencing the same debt as such Old Notes and shall be entitled
to the benefits and security of this Indenture to the same extent as such Old
Notes. Issuance of any New Note shall not for any purposes be deemed a further
advance of funds to the Owner Trustee and the perfection and priority of the
security interest in the Indenture Estate applicable to such New Note shall for
all purposes be the same as that applicable to the Secured Note replaced by such
New Note.
(b) Upon the issuance of a New Note or New Notes pursuant to Section
2.06, the Owner Trust and/or the Indenture Trustee may require from the party
requesting such New Note or New Notes payment of a sum to reimburse the Owner
Trust and/or the Indenture Trustee for, or to provide funds for, the payment of
any tax or other governmental charge or any other charge or expense paid or
payable with respect to such transfer by the Owner Trust or the Indenture
Trustee, without any right of reimbursement under any Operative Document with
respect to such payments.
SECTION 2.08. Additional Notes. (a) So long as no Charter Event of
----------------
Default or Indenture Event of Default shall have occurred and be continuing,
Additional Notes of one or more series may be issued under and secured by this
Indenture at any time or from time to time, subject to the conditions
hereinafter provided in this Section 2.08, for the purpose of providing funds to
finance (i) a portion of the initial cost of the Vessel if the U.K. Financing is
not concluded and (ii) the cost of any Modifications to the Vessel undertaken
pursuant to Article 13 of the Charter.
(b) Prior to the issuance of any Additional Notes of any series
pursuant to this Section 2.08, the Owner Trust shall have received from the
Owner Participant and delivered to the Indenture Trustee, not less than thirty
(30) days prior to the proposed date of issuance of such Additional Notes, a
request and authorization to issue Additional Notes (a "Request"), which Request
-------
shall include the amount and series of such Additional Notes, the proposed date
of issuance of such Additional Notes and other details with respect thereto
which are not inconsistent with this Section 2.08. Such Additional Notes shall
have a designation so as to distinguish such Additional Notes from the Initial
Secured Notes and Additional Notes of any other series, but otherwise shall be
substantially similar in form to the Initial Secured Notes, with such omissions
therefrom, variations therein and additions thereto as shall be appropriate.
Such Additional Notes shall be denominated and payable in
<PAGE>
11
United States Dollars and shall rank pari passu with all other Secured Notes
issued pursuant to the terms hereof.
(c) The terms, conditions and designations of such Additional Notes
(which shall be consistent with the Request and with the terms of this Indenture
and of the Participation Agreement) shall be set forth in a supplement to this
Indenture in form and substance satisfactory to the Indenture Trustee, which
shall be executed by the Owner Trust and the Indenture Trustee. Such indenture
supplement shall set forth:
(i) after giving effect to the issuance of the Additional Notes
pursuant to clause (a)(i) of this Section 2.08, the aggregate unpaid
principal amount of all Secured Notes Outstanding (which shall not exceed
80% of the initial cost of the Vessel to the Owner Trust);
(ii) after giving effect to the issuance of the Additional Notes
pursuant to clauses (a)(i) and (a)(ii) of this Section 2.08, the aggregate
unpaid principal amount of all Secured Notes Outstanding (including any
other Additional Notes issued under this Section 2.08) (which shall not
exceed 85% of the total Fair Market Sales Value of the Vessel (as
determined pursuant to the Appraisal Procedure) after giving effect to such
Modifications);
(iii) the text of such Additional Notes (which, except for the terms
of payment thereof, shall be of substantially the same effect as the text
of the initial Secured Notes set forth in this Indenture, with such changes
as are consistent with and permitted by this Indenture and which in all
events shall provide that such Additional Notes are never more than pari
passu in priority of payment, in right of security and in all other
respects with the Initial Secured Notes);
(iv) the date of maturity of such Additional Notes (which shall be no
later than the end of the Charter Period);
(v) the date from which, and the date or dates on which, interest is
payable (which shall be Interest Payment Dates);
(vi) the terms for the repayment of the principal amount of such
Additional Notes (each regularly scheduled payment of principal shall be on
an Interest Payment Date);
(vii) the terms, if any, as to prepayment or redemption of such
Additional Notes at the option of the Owner Trust, and as to the premium,
if any, payable on any redemption or prepayment of such Additional Notes;
and
<PAGE>
12
(viii) any other terms and agreements in respect thereof provided or
permitted by this Indenture or necessary to specify the terms and
conditions on which such Additional Notes shall be issued.
(d) Such Additional Notes shall be executed by the Owner Trust as
provided in Section 2.01 and deposited with the Indenture Trustee for
authentication and delivery, but before such Additional Notes shall be
authenticated and delivered by the Indenture Trustee, there shall be delivered
to or deposited with the Indenture Trustee the following:
(i) the Request;
(ii) such supplement to this Indenture, duly executed by the Owner
Trust;
(iii) a supplement to the Charter, duly authorized, executed and
delivered by the Charterer and the Owner Trust, providing for adjustments
to the Assigned Hire required to ensure that payments of Assigned Hire will
be adequate to provide for the payment, when due, of all scheduled payments
of principal of, Make-Whole Amount, if any, and interest on the Secured
Notes, including any other Additional Notes, after giving effect to the
issuance of such Additional Notes, together with such instruments of
conveyance, assignment and transfer, if any, necessary to subject such
supplement to the Charter to the Lien and security interest of this
Indenture and to perfect such Lien and security interest subject to no
Liens other than Permitted Liens, and evidence as to the due recording or
filing of each thereof or of financing or similar statements with respect
thereto;
(iv) such instruments of conveyance, assignment and transfer
(including, without limitation, contractors' waivers) duly executed and
delivered by the respective parties thereto, and such evidence of the due
filing thereof or of financing statements with respect thereto, as may be
required to convey to the Owner Trust all property included in such
Modification, if any, and to subject such property to the Lien of this
Indenture, subject to no Liens except Permitted Liens;
(v) an amendment to the Ship Mortgage so that it will secure the
Additional Notes or an opinion of counsel that such amendment is not
required;
(vi) if the Head Lease is in effect, if necessary, an amendment to the
Head Lease so that the amount set forth on Schedule 7 thereof on each date
will be greater than the scheduled principal amount of the Secured Notes
including such Additional Notes to be Outstanding on such date;
<PAGE>
13
(vii) originals or certified copies of all corporate actions
necessary for the due and valid issue of such Additional Notes, the due and
valid authorization, execution, delivery and performance by the Owner Trust
of the supplement to this Indenture relating thereto, and the due and valid
authorization, execution, delivery and performance by the Charterer and the
Owner Trust of the supplement to the Charter and the creation of the Lien
and security interest thereon referred to above, all of which corporate
actions shall have been duly obtained and shall be in full force and
effect, together with evidence as to the due occurrence of all such
authorization, execution, delivery and performance;
(viii) documentation, duly executed and delivered by the respective
parties thereto whereby the proposed holders of the Additional Notes agree
to be bound by the terms of the Operative Documents (including, without
limitation, representations and covenants corresponding to those contained
in Section 12.2 of the Participation Agreement);
(ix) an Officer's Certificate of the Charterer certifying (a) as to
the cost of such Modification and (b) that all conditions precedent to the
issuance of the Additional Notes contained in this Section 2.08 have been
satisfied unless such conditions have been waived in writing by the
Indenture Trustee and the Owner Trust;
(x) such opinions of counsel as are customary in transactions of this
type, including, without limitation, opinions as to the due authorization,
execution, delivery and enforceability of such supplement to this Indenture
and such Additional Notes and the creation and perfection of the security
interest in such Modification (subject to usual or customary exceptions,
qualifications and assumptions), and such other certificates and other
documents as may be reasonably requested by the Indenture Trustee to
evidence the validity and binding effect of such supplement to this
Indenture and such Additional Notes and compliance with this Section 2.08;
and
(xi) Rating Agency Confirmation with respect to the issuance of such
Additional Notes.
(e) When the documents referred to in Section 2.08(d) shall have been
delivered to or deposited with the Indenture Trustee and when such Additional
Notes described in the Request and the supplement to this Indenture have been
executed by the Owner Trust as required by this Indenture, the Indenture Trustee
shall authenticate and deliver such Additional Notes in the manner described in
such Request, but only upon payment to the Owner Trust of the sum or sums
specified in such Request, whereupon the Owner Trust shall pay such sum or sums
to the Charterer.
<PAGE>
14
SECTION 2.09. Termination of Interest in Indenture Estate. A Holder
-------------------------------------------
shall have no further interest in, or other right with respect to, the Indenture
Estate upon the payment of all principal of, Make-Whole Amount, if any, and
interest on, any Secured Notes held by such Holder and all other sums payable to
such Holder hereunder with respect to any such Secured Notes under the other
Operative Documents and under such Secured Notes.
SECTION 2.10. Equally and Ratably Secured. Except as otherwise
---------------------------
expressly provided in this Indenture, all Secured Notes, including any
Additional Notes, at any time Outstanding under this Indenture shall be equally
and ratably secured by this Indenture without preference, priority or
distinction on account of the series, date, time of issue or maturity of such
Secured Notes. All Additional Notes at any time Outstanding under this
Indenture shall be equally and ratably secured by this Indenture without
preference, priority or distinction on account of the series, date, time of
issue or maturity of such Additional Notes.
ARTICLE III
REDEMPTION AND REFUNDING
SECTION 3.01. Generally. The Secured Notes may not be redeemed or
---------
prepaid except to the extent and in the manner expressly permitted or required
by this Indenture. Except as otherwise expressly provided in this Indenture,
any amount prepaid in partial redemption of the Secured Notes Outstanding shall
be distributed by the Indenture Trustee to all Holders ratably, without priority
of any Holder over any other Holder, in the proportion that the principal amount
of Secured Notes held by such Holder bears to the principal amount of all
Secured Notes then Outstanding.
SECTION 3.02. Mandatory Casualty Redemption. In the event that an
-----------------------------
Event of Loss shall occur with respect to the Vessel, then the Owner Trust shall
redeem, on the date on which Termination Value is paid pursuant to the Charter
(the date of any redemption under this Section 3.02 being herein called a
"Casualty Redemption Date"), the entire unpaid principal amount of the Secured
- -------------------------
Notes Outstanding on such Casualty Redemption Date at a redemption price equal
to 100% of the unpaid principal amount of the Secured Notes, together with any
accrued and unpaid interest thereon to such Casualty Redemption Date and without
the payment of any Make-Whole Amount or other premium.
SECTION 3.03. Mandatory Early Termination Redemption. (a) In the
--------------------------------------
event that the Head Lease is terminated under circumstances where the (x)
Charter is terminated or (y) the Vessel is sold pursuant to the Head Lease and
the purchaser of the Vessel is not substituted as obligor of the Secured Notes
issued thereunder pursuant to Section 3.04, the Owner Trust shall redeem in
whole on the date on which Termination Value is paid pursuant
<PAGE>
15
to the Charter (the date of any redemption under this Section 3.03(a) being
herein called a "Special Termination Redemption Date") the entire unpaid
-----------------------------------
principal amount of the Secured Notes Outstanding on such Special Termination
Redemption Date, at a redemption price equal to 100% of the unpaid principal
amount of the Secured Notes, together with any accrued and unpaid interest
thereon to such Special Termination Redemption Date plus a premium equal to the
Make-Whole Amount, if any.
(b) In the event that the Charter with respect to the Vessel is
terminated pursuant to Article 18 of the Charter, the Owner Trust shall redeem
in whole on the applicable Termination Date (the date if any redemption under
this Section 3.03(b) being herein called a "Termination Redemption Date") the
---------------------------
entire unpaid principal amount of the Secured Notes Outstanding on such
Termination Redemption Date, at a redemption price equal to 100% of such unpaid
principal amount of the Secured Notes, together with any accrued and unpaid
interest thereon to such Termination Redemption Date plus a premium equal to the
Make-Whole Amount, if any, and otherwise without premium.
SECTION 3.04. Assumption of Obligations of Owner Trust. (a) If, in
----------------------------------------
connection with a termination of the Head Lease, the Vessel is sold to another
owner trust (the "Substitute Obligor"), the Substitute Obligor may assume all of
------------------
the rights and obligations of the Owner Trust under this Indenture and the other
Operative Documents to which the Owner Trust is a party (the date of any such
assumption being referred to hereinafter as the "Substitution Date") and the
-----------------
Secured Notes shall not be redeemed pursuant to Section 3.02 if on or prior to
the Substitution Date:
(i) the Indenture Trustee shall have received a certificate executed
by the Charterer, dated the Substitution Date, stating that the Charterer
has paid to the Owner Trust all amounts, if any, required to be paid to the
Owner Trust pursuant to the Trust Agreement and the other Operative
Documents in connection with such assumption and that the Substitute
Obligor has received title to the Vessel, and such substitute owner trust
shall provide to the Indenture Trustee an executed copy of the trust
agreement pursuant to which such substitute owner trust was organized;
(ii) each substitute owner trustee shall have delivered to the
Indenture Trustee the notice required to be delivered pursuant to Section
8.01, together with evidence satisfactory to the Indenture Trustee of such
substitute owner trustee's compliance with Section 10.1 of the Trust
Agreement;
(iii) the Substitute Obligor shall have executed and delivered to the
Indenture Trustee a supplement to this Indenture and the other Operative
Documents, substantially in the form of Exhibit C (the "Substitution Date
-----------------
Agreement"), duly executed by the Substitute Obligor, whereby such
---------
Substitute Obligor shall agree that it is purchasing the Vessel Interest
subject to the mortgage and security interest of this
<PAGE>
16
Indenture (or a mortgage and security interest in the same or substantially
identical terms) on the Vessel Interest in favor of the Indenture Trustee
and assuming the obligations and liabilities of the Owner Trust under the
Indenture, the Secured Notes and each other Operative Document to which the
Owner Trust is a party, as provided in Section 2 of the form of
Substitution Date Agreement attached as Exhibit C;
(iv) the Indenture Trustee shall have received, on or prior to the
Substitution Date, evidence of all filings, recordings and other actions
referred to in the opinion of counsel referred to below;
(v) the Charterer shall have confirmed in writing to the Indenture
Trustee that the Charter remains in full force and effect and the Guarantor
shall have confirmed in writing to the Indenture Trustee that the Parent
Guaranty remains in full force and effect;
(vi) the Substitute Obligor shall have caused to be delivered to the
Indenture Trustee an opinion of counsel to the effect that such assumption
will not have an adverse United States income tax effect on the holders of
the Pass Through Certificates and such holders will be taxed under United
States tax law in the same manner as if such assumption had not occurred;
(vii) the Substitute Obligor shall have caused to be delivered to the
Indenture Trustee opinions of counsel as are customary for transactions of
this type, subject to usual or customary qualifications, exceptions and
assumptions, and shall include opinions, subject to such qualifications,
exceptions and assumptions, to the effect that, after giving effect to the
Substitution Date Agreement:
(A) on the Substitution Date, this Indenture, as supplemented by
the Substitution Date Agreement and the Secured Notes issued
thereunder constitute the legal, valid and binding obligations of the
Substitute Obligor, enforceable against such Substitute Obligor in
accordance with their terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and by
general principles of equity, and except as limited by applicable laws
which may affect the remedies provided for in this Indenture as so
supplemented, which laws, however, do not in the opinion of such
counsel make the remedies provided for in this Indenture inadequate
for the practical realization of the rights and benefits provided for
in this Indenture as so supplemented;
(B) on the Substitution Date, each of the Charter and Parent
Guarantee, constitutes the legal, valid and binding obligations of the
Charterer,
<PAGE>
17
the Substitute Obligor and the Guarantor, as the case may be,
enforceable in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general principles of equity; and
(C) the Lien of this Indenture, including the Ship Mortgage, on
the Vessel, has been accomplished and creates a security interest in
the Indenture Estate and all filings and recordings and other action
necessary or appropriate to perfect the interests of the Indenture
Trustee have been accomplished;
(ix) the Indenture Trustee shall have received Rating Agency
Confirmation with respect to such assumption; and
(x) after giving effect to the substitution no Indenture Event of
Default shall have occurred and be continuing
(b) Upon satisfaction of the conditions and the delivery of such
documents set forth in Section 3.04(a), the Indenture Trustee shall execute and
deliver the Substitution Date Agreement, and automatically and without the
requirement of further action by any Person, effective as of the Substitution
Date, the Owner Trustees and the Owner Trust shall be released from all of its
obligations under this Indenture in respect of the Secured Notes (other than any
obligations or liabilities of either Owner Trustee in its individual capacity
incurred on or prior to the Substitution Date or arising out of or based upon
events occurring on or prior to the Substitution Date, which obligations and
liabilities shall remain the sole responsibility of such Owner Trustee) and such
Substitute Obligor and each successor owner trustee shall immediately and
without further act, be substituted for and assume all of the respective
obligations of the Owner Trust and the Owner Trustees under this Indenture and
the Secured Notes.
SECTION 3.05. Optional Redemption. The Owner Trust may at any time
-------------------
with the prior written consent of the Charterer redeem in whole all Outstanding
Secured Notes at a redemption price equal to 100% of the unpaid principal amount
of the Secured Notes to be redeemed pursuant to this Section 3.05, together with
any accrued and unpaid interest thereon to the date of redemption, plus a
premium equal to the Make-Whole Amount, if any, with respect to the Secured
Notes.
SECTION 3.06. Owner Trust's and Owner Participant's Option to Redeem
------------------------------------------------------
or Purchase Secured Notes. In the event that (a) at any time one or more
- -------------------------
Charter Events of Default shall have occurred and be continuing and such Charter
Event of Default shall have continued for a period of less than 270 days, during
which time the Secured Notes shall not have been accelerated pursuant to Section
5.04, or (b)(i) at any time one or more Charter Events of Default shall have
occurred and be continuing and such Charter Event of Default
<PAGE>
18
shall have continued for a period of 270 days or more during which time the
Secured Notes shall not have been accelerated pursuant to Section 5.04, (ii) the
Indenture Trustee shall have given the Owner Trust or the Owner Participant
notice of the intent to accelerate the Secured Notes pursuant to Section 5.04,
(iii) the Secured Notes shall have been accelerated pursuant to Section 5.04,
the Owner Trust or the Owner Participant may, at its option, give at least 25
days' prior irrevocable notice to the Indenture Trustee that it will redeem (or
purchase in lieu of redemption) all Secured Notes then Outstanding, which
redemption or purchase shall be at a redemption or purchase price equal to 100%
of the unpaid principal amount of such Secured Notes, together with any accrued
and unpaid interest thereon, plus in the case of any redemption or purchase
pursuant to clause (a) above, a premium equal to the Make-Whole Amount, if any,
with respect to such Secured Note, and on or prior to the Business Day preceding
such Redemption Date, the Owner Trust or the Owner Participant will deposit with
the Indenture Trustee an amount sufficient to redeem or purchase at the
applicable Redemption Price all Secured Notes then Outstanding (including, in
the case of a redemption or purchase pursuant to clause (a) above, a good faith
estimate of the premium computed as provided for herein) plus an amount equal to
all other sums then due and payable to each Loan Participant hereunder, and to
pay the Indenture Trustee all amounts then due it hereunder, which funds shall
be held by the Indenture Trustee as provided in Section 7.04. Upon the giving
such notice and the receipt by the Indenture Trustee of such deposit, the
Indenture Trustee shall deem all instructions received from the Owner Trustee or
the Owner Participant as having been given by the Loan Participants of 100% of
the Outstanding principal amount of Secured Notes for all purposes of this
Indenture. If such notice is given, the Owner Trust further agrees that it will
deposit, or cause to be deposited with the Indenture Trustee, on or prior to the
Business Day preceding the applicable Redemption Date, whether or not an
Indenture Event of Default is then continuing, funds sufficient, when added to
the funds already held by the Indenture Trustee for such purpose, to redeem or
purchase at the applicable Redemption Price (including the premium actually
payable in respect thereof computed as provided for herein), on such Redemption
Date all Secured Notes then Outstanding to pay all other sums then due and
payable to each Loan Participant hereunder and to pay the Indenture Trustee all
amounts then due it hereunder. In the event the Owner Trust shall have given
any such notice to purchase or redeem, unless the Owner Trustee shall have
consented thereto, the Indenture Trustee shall not during the period from such
notice to the Redemption Date specified therein institute any new remedy or
proceeding in respect of any new remedy under this Indenture, and the Indenture
Trustee shall, to the extent the same may be accomplished without prejudicing
the rights of the Indenture Trustee hereunder, take such actions and forbear
from taking actions, in each case sufficient to maintain the status quo with
respect to any pending remedies or proceedings in respect thereof being then
pursued hereunder; provided, however, that in no event shall the Indenture
Trustee sell or assign any portion of the Indenture Estate during the period
from such notice to the Redemption Date specified therein. In the event the
Owner Trust shall have given any such notice to purchase or redeem, and the
Owner Trust has deposited with the Indenture Trustee the amounts required to be
deposited pursuant to this Section 3.06, then on the
<PAGE>
19
Redemption Date, each Loan Participant will be deemed to sell, assign, transfer
and convey to the Owner Trust or its designee (without recourse or warranty of
any kind other than of title to the Secured Notes so conveyed) all of the right,
title and interest of such Loan Participant in and to the Secured Notes held by
such Loan Participant. On and after such Redemption Date, the Indenture Trustee
shall no longer treat the former Loan Participants as the "Loan Participants",
except for purposes of the Loan Participants' right to receive their respective
portions
of the amounts paid to the Indenture Trustee as aforesaid and all other amounts
due to such Loan Participants under the Operative Documents with respect to
acts, events, circumstances or conditions occurring or existing prior to such
Redemption Date, and on such date the Indenture Trustee shall register the
transfer of ownership of the Secured Notes into the name of the Owner Trust or
its designee. If the Owner Trust elects to purchase the Secured Notes under
this Section 3.06, nothing herein, including the use of the terms "Redemption
Date" and "Redemption Price", shall be deemed to result in a redemption of the
Secured Notes.
SECTION 3.07. Deposited Redemption Moneys. Moneys held by the
---------------------------
Indenture Trustee for redemption of any Secured Note issued hereunder as
provided in this Article III shall be held by the Indenture Trustee as a
separate fund in trust for the account of the respective Holders of the Secured
Notes to be redeemed, shall be invested in accordance with the provisions of
Section 7.04 and shall be delivered to them respectively in accordance with
Section 2.03 on the Redemption Date. Any amounts so held by the Indenture
Trustee shall be deemed paid for purposes of Section 2.09, and promptly after
payment of all amounts of principal of, Make-Whole Amount, if any, and interest
on, and all other amounts due and payable under any such Secured Notes, the
Holders thereof shall deliver such Secured Notes to the Indenture Trustee for
cancellation.
SECTION 3.08. Acquisition of Secured Notes. The Owner Trust
----------------------------
covenants that it will not, directly or indirectly, acquire or make any offer to
acquire any Secured Note except pursuant to the provisions of this Indenture.
SECTION 3.09. Condition to Redemption and Refunding. It shall be a
-------------------------------------
condition to any redemption of Secured Notes effected under this Article III
that all amounts of principal of, Make-Whole Amount, if any, and interest on,
and all other amounts then due and payable under the Secured Notes which are to
be the subject of such redemption as well as all other amounts due and payable
to the Holders of such Secured Notes as are to be the subject of such redemption
shall upon completion of such redemption have been paid as specified therein or
herein.
SECTION 3.10. Notice of Certain Redemptions. In connection with a
-----------------------------
redemption of any of the Secured Notes pursuant to Section 3.02, Section 3.03 or
Section 3.05, the Owner Trust shall give irrevocable notice of such redemption
at least 25 days and not more than 60 days prior to the Redemption Date to each
Loan Participant of
<PAGE>
20
such Secured Notes to be redeemed, at such Loan Participant's address appearing
in the Note Register; provided, however, that if such notice of redemption shall
be given in connection with the early termination of the Charter and the
proposed sale of the Vessel pursuant to Article 18 of the Charter, and if the
Owner Trust does not sell the Vessel on or prior to the Redemption Date, then
such notice of redemption may be revoked by the Owner Trust.
Any such notice of redemption shall state:
(i) the Redemption Date;
(ii) the applicable basis for determining the redemption price
pursuant to Section 3.02, 3.03 or Section 3.05 (the "Redemption Price");
----------------
(iii) that on the Redemption Date, the Redemption Price will become
due and payable upon each such Secured Note, and that, if any such Secured
Notes are then Outstanding, interest on such Secured Notes shall cease to
accrue on and after such Redemption Date;
(iv) whether the notice of redemption may be revoked and under what
circumstances; and
(v) the place or places where such Secured Notes are to be surrendered
for payment of the Redemption Price.
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE INDENTURE ESTATE
SECTION 4.01. Distribution of Hire. (a) Generally. Pursuant to
-------------------- ---------
Article 3(c) of the Charter and subject to Section 5.01(g), prior to an
Indenture Event of Default the Charterer shall pay directly to the Indenture
Trustee and, upon receipt of such amount, the Owner Trust shall pay over to the
Indenture Trustee, that portion of Hire constituting Base Hire, Termination
Value, if any, amounts measured by Termination Value and that portion of
Supplemental Hire payable in respect of premium, if any, and interest on overdue
payments due to the Indenture Trustee or any amounts payable to the Indenture
Trustee pursuant to Section 5.03 (collectively, "Assigned Hire"). Except as
-------------
otherwise provided in Sections 4.01(c) and 4.03, each installment of Assigned
Hire shall be promptly distributed by the Indenture Trustee in accordance with
Section 4.04 on the date such payment is due from the Charterer (or as soon
thereafter as such payment shall be received by the Indenture Trustee) to pay in
full the aggregate amount of the payment or repayment of principal,
<PAGE>
21
interest and other amounts then due under all Secured Notes and such amounts
shall be distributed to the Holders of such Secured Notes ratably, without
priority of one Holder over any other Holder, in the proportion that the amount
of such payment or payments then due under each such Secured Note bears to the
aggregate amount of the payments then due under all such Secured Notes.
(b) Application of Certain Amounts Held by the Indenture Trustee upon
-----------------------------------------------------------------
Certain Defaults. If as a result of any default by the Charterer or the Owner
- ----------------
Participant in the performance of its obligations under any Operative Document,
the Indenture Trustee shall not have received for distribution on any Base Hire
Payment Date (or the Indenture Trustee shall be prevented from distributing on
such date) the full amount then distributable pursuant to Section 4.01(a), the
Indenture Trustee shall, if Section 4.03 is not applicable but subject in any
case to any restrictions contained in Section 4.05, distribute other amounts of
the character referred to in Section 4.05 then held by it or thereafter received
by it to the Holders to the extent necessary to make all distributions then due
pursuant to Section 4.01(a).
(c) Retention of Amounts by the Indenture Trustee. If an Indenture
---------------------------------------------
Event of Default shall have occurred and be continuing, all payments under the
Charter (other than Excepted Payments) or any other Operative Documents will
upon notice to the Charterer become immediately payable by the Charterer to the
Indenture Trustee, and the Indenture Trustee shall withhold any amounts that
would have been otherwise payable directly to the Owner Trust until the earlier
to occur of (i) the first Business Day following the date that is 180 days after
the Indenture Trustee received such amount and (ii) the date that such Indenture
Event of Default is no longer continuing, in which cases described in clauses
(i) and (ii) such amounts shall be distributed to the Owner Trust, unless, prior
thereto, the Secured Notes shall have been declared or otherwise shall have
become immediately due and payable pursuant to Section 5.04 or the Indenture
Trustee shall have given notice to the Owner Trust of its intention to
accelerate the Secured Notes pursuant to the first proviso of Section 5.04 or
the Indenture Trustee (as assignee of the Owner Trust) shall have given notice
of its intent to declare the Charter to be in default in accordance with Article
22 thereof, in which case such amounts shall be distributed by the Indenture
Trustee forthwith in accordance with the terms of Section 4.03.
SECTION 4.02. Certain Distributions. (a) Any payment received by
---------------------
the Indenture Trustee (i) pursuant to Article 14 of the Charter as a result of
the occurrence of an Event of Loss with respect to the Vessel, (ii) upon the
termination or special termination of the Charter with respect to the Vessel
pursuant to Article 18 or 23 of the Charter or (iii) pursuant to Section 3.05,
shall be distributed forthwith in the following order of priority:
first, in the manner provided in clause "first" of Section 4.03;
<PAGE>
22
second, in the manner provided in clause "third" of Section 4.03;
third, in the manner provided in clause "second" of Section 4.03;
fourth, in the manner provided in clause "fourth" of Section 4.03; and
fifth, in the manner provided in clause "fifth" of Section 4.03.
(b) The portion of each payment referred to in this Section 4.02
distributed to a Holder on account of principal or interest on any Secured Note
held by such Holder shall be applied by such Holder in payment of such Secured
Note in accordance with the terms of Section 4.04.
SECTION 4.03. Distribution After Indenture Event of Default. If (a)
---------------------------------------------
an Indenture Event of Default shall have occurred and be continuing, and (b) the
Indenture Trustee (as assignee of the Owner Trust) shall have given notice to
declare the Charter to be in default pursuant to Article 22 thereof, the
Indenture Trustee shall have given notice to the Owner Trust pursuant to the
first proviso of Section 5.04 of its intent to declare the Secured Notes due and
payable or any of the Secured Notes shall have been declared or otherwise shall
have become immediately due and payable pursuant to Section 5.04, then, to the
extent that each such notice or declaration shall not have been rescinded or the
Secured Notes shall remain immediately due and payable, (i) all amounts then
held by the Indenture Trustee pursuant to Section 4.05 or 4.06 (and not excluded
from the operation of this Section 4.03) or then otherwise held by the Indenture
Trustee hereunder or under any Operative Document (other than amounts held for
its own account), and (ii) all payments and amounts thereafter realized by the
Indenture Trustee through the exercise of remedies hereunder or under any of the
agreements assigned or pledged to the Indenture Trustee under this Indenture or
otherwise as trustee under this Indenture (for purposes of this Section 4.03,
all such amounts and payments held or realized being herein called "proceeds"),
--------
other than amounts expressly paid to it for its own account and other than
Excepted Payments, shall be distributed forthwith by the Indenture Trustee in
the following order of priority:
first, so much of such proceeds as shall be required to reimburse the
Indenture Trustee for any unpaid fees for its services under this Indenture
and any unreimbursed tax, expense (including reasonable legal fees) or
other loss incurred by it (in each case to the extent reimbursable under
the Operative Documents) shall be distributed to the Indenture Trustee for
application to itself;
second, so much of the remaining proceeds as shall be required to
reimburse the then existing or prior Holders for amounts paid or advanced
by the Holders pursuant to Section 6.04 (to the extent not previously
reimbursed), shall be distributed to the then existing and prior Holders as
their respective interests may appear, and if
<PAGE>
23
the proceeds remaining are insufficient to pay all such amounts in full,
they shall be distributed ratably, without priority of any recipient over
any other recipient (except as otherwise expressly provided herein), in the
proportion the aggregate amount due each such Person under this clause
"second" bears to the aggregate amount and interest due all such Persons
under this clause "second";
third, so much of the proceeds remaining as shall be required to pay
in full the aggregate unpaid principal amount of each Secured Note then
Outstanding and Make-Whole Amount, if any, and all accrued but unpaid
interest thereon to the date of distribution, shall be distributed to the
Holder of such Secured Note, and if the proceeds remaining are insufficient
to pay all such amounts in full, they shall be distributed to all Holders
ratably, without priority of any Holder over any other Holder (except as
otherwise expressly provided herein), in the proportion that the aggregate
amount due each such Holder under this clause "third" bears to the
aggregate amount due all such Holders under this clause "third";
fourth, so much of the proceeds remaining as shall be required to pay
to each Holder all other amounts payable pursuant to the indemnification
provisions of Section 13 of the Participation Agreement or pursuant to any
other provision of any Operative Document and secured hereunder to such
Holder or to its predecessors and remaining unpaid shall be distributed to
such Holder for distribution to itself and such predecessors, as their
respective interests may appear, and if the proceeds remaining are
insufficient to pay all such amounts in full, they shall be distributed
ratably, without priority of any Holder over any other Holder (except as
otherwise expressly provided herein), in the proportion that the aggregate
amount due each such Holder under this clause "fourth" bears to the
aggregate amount due all such Holders under this clause "fourth"; and
fifth, the balance, if any, of the proceeds remaining shall be
distributed to the Owner Trust for distribution pursuant to the Trust
Agreement.
All amounts distributed to any Holder pursuant to clause "third" of
this Section 4.03 shall be applied by such Holder in payment of the Secured
Notes held by it in accordance with the terms of Section 4.04.
SECTION 4.04. Application of Payments on Secured Notes. Each payment
----------------------------------------
on a Secured Note shall be applied, first, to the payment of accrued interest on
such Secured Note to the date of such payment, second, to the payment of any
principal on such Secured Note then due thereunder, and third, to the payment of
the installments of principal remaining unpaid on such Secured Note in the
inverse order of the installment due date thereof.
<PAGE>
24
SECTION 4.05. Applications of Payments According to Applicable
------------------------------------------------
Operative Document Provisions. (a) Any payments or amounts (other than
- -----------------------------
Excepted Payments) received by the Indenture Trustee, provision for the
application of which is made in any Operative Document, shall be applied
promptly as provided in such Operative Document, unless (i) in the case of
payments or amounts that would be payable to the Charterer upon satisfaction of
any applicable conditions, a Charter Event of Default shall have occurred and be
continuing at the time the Indenture Trustee receives such payment and the
Indenture Trustee has Actual Knowledge of such Charter Event of Default, in
which case the Indenture Trustee shall hold such payments and amounts as cash
collateral security for the obligations of the Charterer under the Operative
Documents and shall invest such payments and amounts in accordance with the
terms of Section 7.04, and, subject to earlier distribution thereof by the
Indenture Trustee under Section 4.03 if the Charter shall have been declared in
default in accordance with Article 22 thereof, or under Section 4.01(b) (subject
to Section 4.05(b)), such payments and amounts, and the proceeds of any
investment thereof, shall be paid by the Indenture Trustee to the Charterer at
such time as any applicable conditions shall have been satisfied and no Charter
Event of Default shall be continuing, and (ii) in the case of any other such
payments and amounts, an Indenture Event of Default shall have occurred and be
continuing at the time the Indenture Trustee receives such payment and the
Indenture Trustee has Actual Knowledge of such Indenture Event of Default, in
which case the Indenture Trustee shall hold such payment as part of the
Indenture Estate, as cash collateral security hereunder for the performance of
the Indenture Indebtedness and on the earlier of the next Business Day on which
no Indenture Event of Default shall have occurred and be continuing or the first
Business Day occurring more than 180 days after the receipt of such payment,
and, subject to any prior application of such payment pursuant to Section
4.01(b) or 4.03, the Indenture Trustee shall apply such payment, and the
proceeds of any investment thereof, to the purpose for which it was made.
(b) Notwithstanding any other provision of this Indenture to the
contrary, and whether or not any such provision refers to this Section 4.05, any
Excepted Payment or other amount expressly provided by the terms of this
Indenture to be paid directly to the Owner Trust or to the Owner Participant
received by the Indenture Trustee shall be paid or distributed immediately by
the Indenture Trustee to the Owner Trust or the Owner Participant, as the case
may be.
SECTION 4.06. Amounts Received for Which No Provision Is Made. (a)
-----------------------------------------------
Any payment received or amounts realized by the Indenture Trustee for which no
provision as to the application thereof is made elsewhere in this Indenture or
any other Operative Document shall be held by the Indenture Trustee as part of
the Indenture Estate in a cash collateral account maintained under Section 7.04,
and (b) all payments received and amounts realized by the Indenture Trustee
under the Charter, including without limitation, Article 14(b) of the Charter,
or otherwise with respect to the Vessel, to the extent received or realized at
any time after payment in full of the principal of and interest on all Secured
<PAGE>
25
Notes issued hereunder, as well as any other amounts remaining as part of or as
proceeds of the Indenture Estate after payment in full of the principal of,
Make-Whole Amount, if any, and interest on all such Secured Notes, shall be
distributed forthwith by the Indenture Trustee in the order of priority set
forth in Section 4.03, omitting clause "third" thereof. The Indenture Trustee
shall give prompt notice to the Owner Trust and each Holder of the receipt of
any moneys by the Indenture Trustee subject to the provisions of this Section
4.06.
SECTION 4.07. Payment Procedures. All amounts which are
------------------
distributable from time to time by the Indenture Trustee to the Owner Trust, the
Owner Participant or any Holder shall be paid by the Indenture Trustee in
immediately available funds promptly after such amounts become immediately
available to it, and the Indenture Trustee shall not be obligated to see to the
application of any such payment made by it. All payments made by the Indenture
Trustee to the Owner Trust or to the Owner Participant shall be made in the
manner and to the address set forth in Schedule 1 to the Participation Agreement
or to such other address as may be specified from time to time by notice to the
Indenture Trustee from the Owner Trust or the Owner Participant.
SECTION 4.08. Application of Payments Under Parent Guaranty. All
---------------------------------------------
payments received by the Indenture Trustee pursuant to the Parent Guaranty shall
be distributed forthwith by the Indenture Trustee in the same order of priority,
and in the same manner, as it would have distributed the payment in respect of
which such payment under the Parent Guaranty was received.
ARTICLE V
COVENANTS OF OWNER TRUST AND THE OWNER TRUSTEES;
CERTAIN AGREEMENTS; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 5.01. Covenants of Owner Trust and the Managing Trustee;
--------------------------------------------------
Certain Agreements. (a) Subject to Section 2.02, the Owner Trust will duly and
- ------------------
punctually perform and observe all covenants and conditions to be performed and
observed by it pursuant to the terms of any Operative Document. Except as
permitted by this Indenture or the terms of any Operative Document, the Owner
Trust will take no action and will cooperate with the Indenture Trustee so as to
permit no action to be taken by others which will release, or which may be
construed as releasing, the Owner Trust or the Charterer from any of its or the
Charterer's, as the case may be, obligations or liabilities under any Operative
Document, or which may result in the termination, amendment or modification, or
impair the validity, of any such Operative Document.
(b) If the Owner Trust has Actual Knowledge of any Indenture Event of
Default, Indenture Default, any failure on the part of the Charterer to make any
payment of
<PAGE>
26
Assigned Hire when due or Event of Loss, the Owner Trust will give prompt
written notice thereof to the Indenture Trustee, the Charterer and the Owner
Participant if such notice shall not already have been given to such party. The
notice shall set forth in reasonable detail the circumstances of such default or
loss known to the Owner Trust.
(c) At any time and from time to time, upon the reasonable request of
the Indenture Trustee, the Owner Trust shall promptly and duly execute and
deliver any and all such further instruments and documents as the Indenture
Trustee may deem necessary or desirable (and as shall be consistent with the
intent, purposes and provisions hereof) to perfect or maintain the Lien of this
Indenture, to perfect a first priority ship mortgage in the Vessel in favor of
the Indenture Trustee upon the termination of the Head Lease or to obtain for
the Indenture Trustee the full benefit of the specific rights and powers herein
granted, conveyed or assigned, or which the Owner Trust may be or may hereafter
be bound to convey or assign to the Indenture Trustee or to facilitate the
performance of the terms of this Indenture, or the filing, registering or
recording of this Indenture, including, without limitation, the execution and
delivery of any financing statement (and any continuation statement with respect
to any such financing statement) or any other similar document specified in such
instructions as may be necessary or desirable to perfect or maintain the Lien of
this Indenture.
(d) The Owner Trust does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants that, except as provided in or
permitted by the other Operative Documents, it will not assign or pledge, so
long as this Indenture shall remain in effect and the Lien of this Indenture
shall not have been released pursuant to Section 6.03 hereof, any of the Owner
Trust's right, title or interest hereby assigned to anyone other than the
Indenture Trustee, and that the Owner Trust will not (other than in respect of
Excepted Payments), except as provided in or permitted by this Indenture or any
other Operative Document, (i) accept any payment from the Charterer, (ii)
terminate or consent to the cancellation or surrender of the Charter or accept
any prepayment of Assigned Hire, or any portion thereof, under the Charter,
(iii) enter into any agreement amending or supplementing any Operative Document,
(iv) execute or grant any waiver or modification of, or consent under, the terms
of any Operative Document, (v) settle or compromise any claim arising under any
Operative Document, or (vi) submit or consent to the submission of any dispute,
difference or other matter arising under or in respect of any Operative Document
to arbitration thereunder.
(e) The Owner Trust does hereby ratify and confirm the Charter, and
does hereby agree the Owner Trust will not, except as provided in or permitted
by this Indenture or the terms of any other Operative Document, take or omit to
take any action, the taking or omission of which might result in an alteration
or impairment of the Charter or any other Operative Document, or of any of the
rights created by the Charter or any Operative Document, or the assignment
hereunder or thereunder, as the case may be.
<PAGE>
27
(f) The Managing Trustee, in its individual capacity and at its own
cost and expense, will promptly take such action as may be necessary to
discharge any Owner Trustee's Lien attributable to it on any of its estate,
right, title or interest in the Trust Estate so pledged or assigned or intended
to be conveyed, pledged or assigned under this Indenture.
(g) Until the release of the security interest in the Indenture Estate
pursuant to Section 6.03, all payments of Assigned Hire shall be made directly
to the Indenture Trustee or in accordance with the Indenture Trustee's
instructions, and the Owner Trust shall give all notices as shall be required to
be given under each Operative Document to direct that such payments be made to
the Indenture Trustee and promptly upon receipt of any such amount, transfer
such amount to the Indenture Trustee for distribution pursuant to this
Indenture; provided, however, that, if an Indenture Event of Default shall have
occurred and is continuing, upon written notice from the Indenture Trustee to
the Charterer, all payments due or to become due under the Charter and the other
Operative Documents to the Owner Trust (other than Excepted Payments) shall be
made directly to the Indenture Trustee or in accordance with the Indenture
Trustee's instructions, and the Owner Trust shall (i) give all notices as shall
be required to be given under each Operative Document to direct that such
payments be made to the Indenture Trustee and (ii) promptly upon receipt of any
and all moneys from time to time received by it constituting part of the
Indenture Estate, transfer such amount to the Indenture Trustee for distribution
pursuant to this Indenture.
(h) An executed counterpart of each amendment or supplement to the
Trust Agreement shall be delivered within 20 Business Days after the execution
thereof to the Indenture Trustee; provided that any amendment or supplement
under which a successor trustee is appointed shall be mailed to the Indenture
Trustee within 10 days after the execution thereof. The Lien of this Indenture
shall not be affected by any amendment or supplement to the Trust Agreement or
by any other action taken under or in respect of the Trust Agreement. Without
the prior written consent of the Indenture Trustee, the Trust Agreement may not
in any event be terminated or revoked by the Owner Participant prior to the
termination of this Indenture. In the case of any appointment of a successor to
any Owner Trustee pursuant to the Trust Agreement or any merger, conversion,
consolidation or transfer of all or substantially all of the corporate trust
business of either Owner Trustee pursuant to the Trust Agreement, the applicable
successor Owner Trustee shall give prompt notice thereof to the Indenture
Trustee.
SECTION 5.02. Indenture Events of Default. An "Indenture Event of
--------------------------- ------------------
Default" means any of the following events (whatever the reason for such
- -------
Indenture Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any
Governmental Rule):
<PAGE>
28
(a) any Charter Event of Default (other than a Charter Event of
Default arising from the failure of the Charterer to make any payment of
Excess Hire or Additional Excess Hire or to make an Excepted Payment unless
the Owner Trust shall elect to make such failure a Charter Event of
Default) shall have occurred and be continuing; or
(b) any payment of principal of, Make-Whole Amount, if any, or
interest on any Secured Note shall not have been made when due and such
default shall continue unremedied for ten Business Days after the same
shall have become due and payable; or
(c) any failure by any of the Owner Trust, the Owner Participant or
the Managing Trustee, in their individual or trust capacities, as the case
may be, to perform or observe in any material respect any covenant or
agreement to be performed or observed by it under this Indenture or any
other Operative Document, (i) which failure shall continue for a period of
30 days after receipt by the Owner Trust, the Owner Participant or the
Managing Trustee of a notice from the Indenture Trustee or the Pass Through
Trustee specifying such failure and requiring it be remedied or (ii) which
failure, if such failure is remediable and the Owner Trust, the Owner
Participant or the Managing Trustee is diligently attempting to remedy such
failure, shall continue for a period of 180 days after such receipt of
written notice thereof; or
(d) any representation or warranty made by the Owner Trust, the Owner
Participant or the Managing Trustee pursuant to Sections 7 or 9, as the
case may be, of the Participation Agreement shall prove to have been
inaccurate in any material respect when made, unless such inaccurate
representation or warranty shall not be material to the recipient at the
time when the notice referred to below shall have been received by the
Owner Trust, the Owner Participant or the Managing Trustee, as the case may
be, or any material adverse impact thereof shall have been cured within 30
days after receipt by the Owner Trust, the Owner Participant or the
Managing Trustee, as the case may be, of a written notice thereof from the
Indenture Trustee; provided that if such material adverse impact is
remediable and the Owner Participant, Owner Trust or the Managing Trustee,
as the case may be, is diligently attempting to remedy such impact, the
Owner Participant, Owner Trust or Managing Trustee shall have 90 days after
such receipt of written notice thereof to remedy such material adverse
impact; or
(e) either of the Owner Trust or the Owner Participant shall commence
a voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to itself or its debts under any bankruptcy,
insolvency, or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver,
<PAGE>
29
liquidator, custodian or other similar official of its or any substantial
part of its property, or shall consent to any such relief or to the
appointment or taking possession by any such official or agency in an
involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall take any
corporate action to authorize any of the foregoing, or an involuntary case
or other proceeding shall be commenced against either of the Owner Trust or
the Owner Participant seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official or
agency of its or any substantial part of its part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 90 days, or if, under the provisions of any law providing
for reorganization or winding-up of corporations which may apply to the
Owner Trust or the Owner Participant, any court of competent jurisdiction
shall assume jurisdiction, custody or control of the Indenture Estate, the
Owner Trust or the Owner Participant or of any substantial part of its
property and such jurisdiction, custody or control shall remain in force
unrelinquished, unstayed or unterminated for a period of 90 days.
SECTION 5.03. Certain Rights. (a) If the Charterer shall fail to
--------------
make any payment of Base Hire under the Charter when the same shall become due,
and if such failure of the Charterer to make such payment of Base Hire shall not
constitute the fourth consecutive such failure or the seventh or subsequent
cumulative such failure, then as long as no Indenture Event of Default (other
than arising from a Charter Event of Default not involving any failure to make
any payments to which the Indenture Trustee or any Loan Participant is entitled
hereunder when due) shall have occurred and be continuing, the Owner Trust or
the Owner Participant may (but need not), without consent or concurrence of the
Indenture Trustee or any Holder, pay, in the manner provided in Section 2.03 for
application in accordance with Section 4.01, to the Indenture Trustee, at any
time prior to the day which is the eleventh day subsequent to the expiration of
the grace period provided for in Article 21(1) of the Charter with respect to
the payment of Base Hire (and the Indenture Trustee and the Holders of the
Secured Notes shall not (without the prior written consent of the Owner Trust)
declare the Charter in default pursuant to Article 22 thereof or exercise any of
the rights, powers or remedies pursuant to Article 22 of the Charter or Section
5.04 hereof prior to the occurrence of such later date), an amount equal to the
full amount of such payment of Base Hire, together with any interest due thereon
on account of the delayed payment thereof to the date of such payment in
accordance with Section 2.03(c) hereof, and such payment by the Owner Trust or
the Owner Participant shall be deemed to cure, as of the date of such payment,
any Indenture Event of Default which arose from such failure of the Charterer
(including any Charter Event of Default arising from the Charterer's failure to
pay interest in respect of such overdue Base Hire for the period commencing on
the date of such payment), but such cure shall not relieve the Charterer of any
of its obligations. If the Charterer shall fail to perform or observe any
covenant, condition or agreement to be performed or observed
<PAGE>
30
by it under the Charter or any other Charter Event of Default shall exist (other
than the failure to pay Base Hire), and if (but only if) the performance or
observance of such covenant, condition or agreement or the cure of such Charter
Event of Default can be effected by the payment of money alone (it being
understood that actions such as the obtaining of insurance can be so effected),
then as long as no other Indenture Event of Default (other than those arising
from a Charter Event of Default) shall have occurred and be continuing, the
Owner Trust or the Owner Participant may (but need not), without consent or
concurrence of the Indenture Trustee or any Holder, pay to the Indenture Trustee
(or to such other person as may be entitled to receive the same), at any time
prior to the day which is the later of (x) the eleventh day subsequent to notice
of such failure or such Charter Event of Default by the Indenture Trustee to the
Owner Trust or the Owner Participant and (y) the eleventh day subsequent to the
expiration of the grace period, if any, provided with respect to such failure or
such Charter Event of Default on the part of the Charterer in Article 21 of the
Charter (and the Indenture Trustee shall not (without the prior written consent
of the Owner Trust) declare the Charter in default pursuant to Article 22
thereof or exercise any of the rights, powers or remedies pursuant to such
Article 22 or Section 5.04 hereof prior to the occurrence of such later date),
all sums necessary to effect the performance or observance of such covenant or
agreement of the Charterer or to cure such Charter Event of Default, together
with any interest due thereon on account of the delayed payment thereof to the
date of such payment, and such payment by the Owner Trust or the Owner
Participant shall be deemed to cure as of the date of such payment any Indenture
Event of Default which arose from such failure of the Charterer or such Charter
Event of Default (including any Charter Event of Default arising from the
Charterer's failure to pay interest in respect of such overdue payment for the
period commencing on the date of such payment), but such cure shall not relieve
the Charterer of any of its obligations.
(b) To the extent of any payment made by the Owner Participant or the
Owner Trust pursuant to Section 5.03(a), the Owner Participant or the Owner
Trust, as the case may be, shall be subrogated to the rights of the Holders
hereunder to receive from the Indenture Trustee the payment of Assigned Hire or
other amount for which such payment was made by the Owner Participant or the
Owner Trust, as the case may be, and the Owner Participant or the Owner Trust,
as the case may be, shall be entitled to receive such payment from the Indenture
Trustee upon receipt thereof by the Indenture Trustee; provided, however, that
no such amount shall be paid to the Owner Participant or the Owner Trust, as the
case may be, unless all principal of and interest on the Secured Notes then due
and payable and any other amounts then due and payable under the Secured Notes
and this Indenture shall have been paid in full and no Indenture Default shall
have occurred and be continuing.
(c) Neither the Owner Trust nor the Owner Participant, upon exercising
cure rights under Section 5.03(a) or rights under Section 6.08(a)(iii) or under
Article 22(a) of the Charter, shall obtain any Lien on any part of the Indenture
Estate or Trust Estate on account of such payment for the costs and expenses
incurred in connection therewith, nor
<PAGE>
31
shall any claims of the Owner Trust or the Owner Participant against the
Charterer for the repayment thereof impair the prior right and security interest
of the Indenture Trustee in and to the Indenture Estate or otherwise related to
the Indenture Estate.
(d) If there shall occur an Indenture Event of Default pursuant to
Section 5.02(a) arising as a result of a failure by the Charterer to make any
payment of Assigned Hire when due, the Indenture Trustee shall so notify the
Owner Trust in writing promptly upon such occurrence.
SECTION 5.04. Remedies. (a) If an Indenture Event of Default shall
--------
have occurred and be continuing and so long as the same shall be unremedied,
then and in every such case the Indenture Trustee, subject to Sections 5.03,
5.04(d), 5.05, 5.09 and 6.08, may exercise any or all of the rights and powers
and pursue any and all of the remedies herein provided or available under
applicable law; provided, however, the Indenture Trustee must give the Owner
Trust at least ten Business Days' (or five Business Days in the case of
acceleration of the Secured Notes other than an automatic acceleration of the
Secured Notes as provided in Section 5.04(c)) prior written notice of its
intention to exercise remedies pursuant to this Section 5.04 (it being
understood that such notice may be given concurrently with any notice of default
given hereunder or under the Charter and prior to the expiration of any
applicable grace periods). Subject to the provisions in this Indenture, upon
the occurrence and during the continuance of an Indenture Event of Default, the
Indenture Trustee may exercise, subject to Sections 5.03(a), 5.05, 5.09 and
6.08, all rights and remedies of the Owner Trust to the exclusion of the Owner
Trust under the Charter (other than those rights and remedies to the extent
relating to Excepted Payments), including, without limitation, the right to take
possession of all or any part of the Indenture Estate and exclude the Owner
Trust and all Persons (including the Charterer, but excluding the U.K. Lessor to
the extent of the U.K. Lessor's rights under the Conditional Sale Agreement)
claiming under the Owner Trust wholly or partly therefrom. In addition to and
without limiting the foregoing, the Indenture Trustee, upon at least 25 days'
prior written notice to the Owner Participant and the Owner Trust, may invoke
and exercise the power of sale and sell any or all of the Indenture Estate in
the manner required by law at public auction, or in any other manner which shall
be in accordance with applicable law, or, in lieu of sale pursuant to the power
of sale, the Indenture Estate may be foreclosed, and the Indenture Trustee has
and may exercise all rights and remedies of a secured party under the Uniform
Commercial Code as in effect in any applicable jurisdiction; provided that (i)
notwithstanding any provision herein to the contrary, the Indenture Trustee
shall not sell, assign, transfer or deliver any of the Indenture Estate or take
possession of the Indenture Estate unless the Secured Notes shall have been
accelerated pursuant to Section 5.04(b) or 5.04(c) and (ii) if an Indenture
Event of Default has occurred and is continuing solely by virtue of one or more
Charter Events of Default (at a time when no other Indenture Events of Default
shall have occurred and be continuing), the Indenture Trustee shall not exercise
foreclosure remedies under this Indenture without declaring the Charter to be in
default and exercising one or
<PAGE>
32
more material remedies seeking to terminate the Charter, unless exercising such
remedies under the Charter shall be prohibited by law, governmental authority or
court order, in which case the Indenture Trustee shall not exercise foreclosure
remedies under the Indenture until the later of (i) the expiration of a period
of sixty (60) days from the commencement of such prohibition and (ii) the
expiration of an additional period commencing on the day immediately following
the expiration of such 60-day period and ending on the earlier of (x) the 180th
day after the relevant stay or prohibition is imposed, (y) the occurrence of any
additional Indenture Event of Default during such additional period and (z)
rejection of the Charter; provided that such extended period will not apply
unless, on the 60th day following the date upon which such stay or prohibition
becomes effective, all Indenture Events of Default theretofore existing have
been cured (except to the extent arising from the bankruptcy or similar
proceeding giving rise to the applicable stay or similar prohibition) and to the
extent the Owner Trust, as Owner under the Charter, exercises its right to cure
any Charter defaults or Charter Events of Default during such 180-day period,
the exercise of such rights will not limit the cure rights otherwise available
to the Owner under Section 5.03(a). The Indenture Trustee shall notify the
Owner Trust, the Owner Participant and the Charterer as soon as is reasonably
practicable after its commencement of the exercise of any remedy pursuant to
this Section 5.04.
(b) If an Indenture Event of Default (other than an Indenture Event of
Default specified in Section 5.02(e) or an Indenture Event of Default of the
type specified in Section 5.02(a) which arises as a result of any Charter Event
of Default as is specified in Article 21(7) of the Charter) shall have occurred
and be continuing, then, subject to Sections 5.03, 6.02 and 6.08, the Indenture
Trustee may at any time, by five days' written notice to the Owner Trust,
declare all (but not less than all) of the Secured Notes Outstanding to be due
and payable. Upon such declaration, the unpaid principal of all Secured Notes
then Outstanding, together with accrued but unpaid interest thereon, and any
other amounts due thereunder, shall immediately become due and payable without
presentment, demand, protest or notice, all of which are hereby waived.
(c) If an Indenture Event of Default of the type specified in Section
5.02(e), or an Indenture Event of Default of the type specified in Section
5.02(a) which arises as a result of any Charter Event of Default specified in
Article 21(7) of the Charter shall have occurred and be continuing, the
principal of all Secured Notes then Outstanding, together with accrued but
unpaid interest thereon and any other amounts due thereunder, shall become and
be due and payable automatically, without declaration, notice, demand, or any
other action on the part of the Indenture Trustee or any Holder, all of which
are hereby waived. Each of Section 5.04(b) and this Section 5.04(c), however,
is subject to the condition that, if at any time after the principal of the
Secured Notes shall have become due and payable upon a declared or automatic
acceleration thereof as provided herein, and before any judgment or decree for
the payment of the money so due, or any portion thereof, shall be entered, all
overdue payments of interest upon the Secured Notes, the Make-Whole
<PAGE>
33
Amount, if any, and all other amounts payable under the Secured Notes (except
the principal of the Secured Notes which by such acceleration shall have become
payable) shall have been duly paid, and every other Indenture Event of Default
with respect to any covenant or provision of this Indenture shall have been
cured, then in every such case a Majority in Interest of Holders of Notes, by
written instrument filed with the Indenture Trustee, may (but shall not be
obligated to) rescind and annul such declared or automatic acceleration and its
consequences; but no such rescission or annulment shall extend to or affect any
subsequent Event of Default or impair any right consequent thereon.
(d) Notwithstanding any provision in any document or instruction that
purports to require the Indenture Trustee to acquire title to any or all of the
Indenture Estate upon foreclosure, or pursuant to instructions, the Indenture
Trustee shall not be obligated to acquire any such title unless: (i) the
Indenture Trustee is provided with such security or indemnity as it shall deem
satisfactory to it, (ii) such acquisition of title complies with all applicable
Operative Documents, laws, rules and regulations, which shall be evidenced by an
opinion of counsel to such effect in form and substance satisfactory to the
Indenture Trustee and (iii) the Indenture Trustee shall have obtained such
executed certificates, instruments or other documents, in accordance with its
reasonable inquiries or requests.
SECTION 5.05. Suit; Possession; Title; Sale of Indenture Estate. (a)
-------------------------------------------------
The Owner Trust agrees that, if an Indenture Event of Default shall have
occurred and be continuing and the Indenture Trustee shall be entitled to
exercise remedies hereunder as provided in Section 5.04, the Indenture Trustee
may take possession of all or any part of the Indenture Estate and may exclude
the Owner Trust, and all Persons claiming under the Owner Trust, wholly or
partly therefrom; provided, however, that at least ten Business Days' prior
notice of such taking of possession shall be given to the Owner Trust. If an
Indenture Event of Default shall have occurred and be continuing and the
Indenture Trustee shall be entitled to exercise remedies hereunder as provided
in Section 5.04, at the request of the Indenture Trustee, the Owner Trust shall
promptly execute and deliver to the Indenture Trustee such instruments of title
and other documents as the Indenture Trustee may deem necessary or advisable to
enable the Indenture Trustee or any agent or representative designated by the
Indenture Trustee, at such time or times and place or places as the Indenture
Trustee may specify, to obtain possession of all or any part of the Indenture
Estate to which the Indenture Trustee shall at the time be entitled hereunder.
If the Owner Trust shall for any reason fail to execute and deliver such
instruments and documents after such request by the Indenture Trustee, the
Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee
the right to immediate possession of any property comprising a portion of the
Indenture Estate and requiring the Owner Trust to execute and deliver such
instruments and documents to the Indenture Trustee, or (ii) pursue all or part
of such property wherever it may be found, and the Indenture Trustee may enter
any of the premises where such property or any portion thereof may be or is
supposed to be and search for such
<PAGE>
34
property. All expenses of obtaining such judgment or of pursuing, searching for
and taking such property shall, until paid, be secured by the Lien of this
Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may
make, from time to time and at the expense of the Indenture Estate, such
expenditures for maintenance, insurance, repairs, replacements, alterations,
additions and improvements to and of the Indenture Estate as it may deem proper.
In each such case, the Indenture Trustee shall have the right to maintain, use,
operate, store, lease, control or manage the Indenture Estate and to exercise
all rights and power of the Owner Trust relating to the Indenture Estate as the
Indenture Trustee shall deem to be in the best interest of the Holders. The
Indenture Trustee shall be entitled to collect and receive directly all tolls,
rents (including Hire), revenue, issues, income, products and profits of the
Indenture Estate and every part thereof, other than Excepted Payments. Such
tolls, rents (including Hire), revenues, issues, income, products and profits
shall be applied (i) to pay the expenses of the use, operation, storage,
leasing, control, management or disposition of the Indenture Estate, (ii) to pay
the expense of all maintenance, repairs, replacements, alterations, additions
and improvements, (iii) to make all payments which the Indenture Trustee may be
required or may elect to make, if any, for taxes, assessments, insurance or
other proper charges upon the Indenture Estate or any portion thereof, including
without limitation the employment of engineers and accountants to examine,
inspect and make reports upon the properties and books and records of the Owner
Trust, and (iv) to pay amounts owing in respect of the Secured Notes in
accordance with the provisions thereof and hereof and to make all other payments
which the Indenture Trustee may be required or authorized to make under any
provision of this Indenture, as well as just and reasonable compensation for the
services of the Indenture Trustee and of all Persons properly engaged and
employed by the Indenture Trustee.
(c) The Indenture Trustee or any Holder may be a purchaser of the
Indenture Estate or any portion thereof or any interest therein at any sale
thereof, whether pursuant to foreclosure or power of sale or otherwise. The
Indenture Trustee may apply against the purchase price therefor the amount then
due to it hereunder or under any of the Secured Notes secured hereby and any
Holder may apply against the purchase price therefor the amount then due to it
hereunder or under the Secured Notes held by such Holder, to the extent of such
portion of the purchase price as it would have received had it been entitled to
share in any distribution thereof. The Indenture Trustee or any Holder or any
nominee of any such Holder shall acquire, upon any such purchase, good title to
the property so purchased, free of the Lien of this Indenture and, to the extent
permitted by applicable law, free of all rights of redemption in the Owner Trust
in respect of the property so purchased.
(d) Any sale or other conveyance of any of the Indenture Estate by the
Indenture Trustee made pursuant to the terms of this Indenture or the Charter
shall bind the Holders, Owner Trust and the Owner Participant and shall be
effective to transfer or convey all right, title and interest of the Indenture
Trustee, the Owner Trust, the Holders and the
<PAGE>
35
Owner Participant in and to such Indenture Estate or portion thereof, as the
case may be. No purchaser or other grantee shall be required to inquire as to
the authorization, necessity, expediency or regularity of such sale or
conveyance, or as to the application of any sale or other proceeds with respect
thereto by the Indenture Trustee. In the event of any such sale, the Owner
Trust shall execute any and all such bills of sale and other documents, and
perform and do all other acts and things requested by the Indenture Trustee in
order to permit continuation of such sale and to effectuate the transfer or
conveyance referred to in the first sentence of this Section 5.05(d). The Owner
Trust shall ratify and confirm any such sale or sales by executing and
delivering to the Indenture Trustee or to such purchaser or purchasers all
instruments as may reasonably be requested for such purpose. Any such sale or
sales made hereunder shall operate to divest all the estate, right, title,
interest, claim and demand whatsoever, whether at law or in equity, of the Owner
Trust in and to the properties and rights so sold, and shall be a perpetual bar
both at law and in equity against the Owner Trust and against any and all
persons claiming or who may claim the same, or any part thereof from, through or
under the Owner Trust. Upon any sale or other disposition of the Indenture
Estate by the Indenture Trustee, the Indenture Trustee will promptly account in
writing, in reasonable detail, to the Owner Trust for the amount of such sale,
the costs and expenses incurred in connection therewith and any surplus
proceeds.
(e) The Indenture Trustee shall, as a matter of right, be entitled to
the appointment of a receiver (who may be the Indenture Trustee or any successor
or nominee thereof), at any time after an Indenture Event of Default either
before or after declaring due and payable the principal of all Secured Notes
then Outstanding, together with accrued but unpaid interest thereon and any
other amounts due thereunder, for all or any portion of the Indenture Estate,
whether such receivership be incidental to a proposed sale of the Indenture
Estate or the taking of possession thereof or otherwise, and the Owner Trust
hereby consents to the appointment of such a receiver, and agrees that it will
not oppose any such appointment. Any receiver appointed for all or any portion
of the Indenture Estate shall be entitled in addition to any powers available
under applicable law, to exercise all the rights and powers of the Indenture
Trustee with respect to the Indenture Estate.
(f) To the extent now or at any time hereafter enforceable under
applicable law, the Owner Trust covenants that it will not at any time insist
upon or plead, or in any manner whatsoever claim or take any benefit or
advantage of any stay, extension, moratorium, any exemption from execution or
sale or other similar law or from any law now or hereafter in force providing
for the valuation or appraisement of the Indenture Estate or any part thereof,
prior to any sale or sales thereof to be made pursuant to any provision herein
contained, or prior to any applicable decree, judgment or order of any court of
competent jurisdiction; nor, after such sale or sales, claim or exercise any
right under any statute now or hereafter made or enacted by any state or any
right to have a portion of the Indenture Estate or the security for the Secured
Notes marshalled or otherwise redeem the property so sold or any part thereof,
and hereby expressly waives for itself and on behalf of
<PAGE>
36
each and every Person, except decree or judgment creditors of the Owner Trust
acquiring any interest in or title to the Indenture Estate or any part thereof
subsequent to the date of this Indenture, all benefit and advantage of any such
law or laws, and covenants that it will not invoke or use any such law or laws,
but will suffer and permit the execution of every such power as though no such
law or laws had been made or enacted. Nothing in this Section 5.05(f) shall be
deemed to be a waiver by the Owner Trust of its rights under Section 5.03
hereof.
The Indenture Trustee may maintain such a pleading, or, in any manner
whatsoever, claim or take any benefit or advantage of or from any law now or
hereafter in force even if it does not possess any of the Secured Notes or does
not produce any of them in the proceeding. A delay or omission by the Indenture
Trustee or any Holder in exercising any right or remedy accruing upon an
Indenture Event of Default under this Indenture shall not impair the right or
remedy or constitute a waiver of or acquiescence in such Indenture Event of
Default.
(g) The Indenture Trustee may adjourn from time to time any sale to be
made under or by virtue of this Indenture for such sale or for such adjourned
sale or sales, and, except as otherwise provided by any applicable provision of
law, the Indenture Trustee, without further notice or publication, may make such
sale at the time and place to which the same shall be so adjourned.
(h) Any recovery of any judgment by the Indenture Trustee under the
Secured Notes and any levy of any execution under any such judgment upon the
Indenture Estate shall not affect in any manner or to any extent the security
title and security interest conveyed hereby upon the Indenture Estate or any
part thereof, or any conveyances, powers, rights and remedies of the Indenture
Trustee hereunder, but such conveyances, powers, rights and remedies shall
continue unimpaired as before.
(i) Notwithstanding anything contained herein, so long as any Pass
Through Trustee is a registered Holder, the Indenture Trustee is not authorized
or empowered to acquire title to all or any portion of the Indenture Estate or
take any action with respect to all or any portion of the Indenture Estate so
acquired by it if such acquisition or action would cause the related Pass
Through Trust to fail to qualify as a "grantor trust" for federal income tax
purposes.
SECTION 5.06. Remedies Cumulative. Each and every right, power and
-------------------
remedy provided the Indenture Trustee specifically or otherwise in this
Indenture shall be cumulative and shall be in addition to every right, power and
remedy herein specifically provided or now or hereafter existing at law, in
equity or otherwise. Each and every such right, power and remedy may be
exercised from time to time and as often and in such order as may be deemed
expedient by the Indenture Trustee, and the exercise or the beginning of
<PAGE>
37
the exercise of any such right, power or remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any other right,
power or remedy. No delay or omission by the Indenture Trustee in the exercise
of any right or power or in the pursuit of any remedy shall impair any such
right, power or remedy, or be construed to be a waiver of any Indenture Event of
Default or to be an acquiescence therein.
SECTION 5.07. Discontinuance of Proceedings. In case the Indenture
-----------------------------
Trustee shall have instituted any proceeding to enforce any right, power or
remedy under this Indenture by foreclosure, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee, then and in every such
case the Owner Trust, the Indenture Trustee and the Charterer shall, subject to
any determination in such proceeding, be restored to their former positions and
rights hereunder with respect to the Indenture Estate, and all right, powers and
remedies of the Indenture Trustee shall continue as if no such proceeding had
been instituted.
SECTION 5.08. Waiver of Past Defaults. Upon written instruction of a
-----------------------
Majority in Interest of Holders of Notes, the Indenture Trustee shall waive any
Indenture Event of Default specified in such instruction and its consequences
and, upon any such waiver, such Indenture Event of Default shall cease to exist
for every purpose of this Indenture; provided, however, that no such waiver
shall extend to any subsequent or other Indenture Event of Default or impair any
right or consequence thereof; and provided further, however, that in the absence
of the written instruction of the Holders of all Secured Notes then Outstanding,
the Indenture Trustee shall not waive any Indenture Event of Default arising
from a default (i) in the payment of the principal of or interest on, or other
amounts due under, any Secured Note then Outstanding, or (ii) in respect of a
covenant or provision hereof which, pursuant to the terms of Article IX, cannot
be modified or amended without the consent of each Holder of a Secured Note then
Outstanding.
SECTION 5.09. No Action Contrary to Certain Third Party Rights.
------------------------------------------------
Notwithstanding any other provision of any Operative Document, unless a Charter
Event of Default shall have occurred and be continuing and the Charter shall
have been declared to be in default pursuant to Article 22 thereof, the
Indenture Trustee shall not take or cause to be taken any action contrary to the
Charterer's rights under the Charter, including without limitation the rights of
the Charterer under Article 7 thereof.
SECTION 5.10. Rights of Holders of Secured Notes. Notwithstanding
----------------------------------
any provision herein (including Section 5.11) to the contrary, the Holder of a
Secured Note shall have the absolute and unconditional right to receive payment
from the Indenture Estate of the principal of and interest on such Secured Note
on the dates and as specified in such Secured Note, and to institute suit
against the Owner Trust for the enforcement of any such payment,
<PAGE>
38
subject to Section 2.02, and such right shall not be impaired without the
consent of such Holder.
SECTION 5.11. Limitation on Suits by Holders. A Holder may pursue a
------------------------------
remedy under this Indenture or under a Secured Note only if:
(i) the Holder gives to the Indenture Trustee written notice of a
continuing Indenture Event of Default under this Indenture;
(ii) the Holders of at least 25 percent (25%) of the Outstanding
principal amount of the Secured Notes instruct the Indenture Trustee to
pursue the remedy;
(iii) such Holder or Holders offer to the Indenture Trustee indemnity
satisfactory to the Indenture Trustee against any loss, liability or
expense to be, or which may be, incurred by the Indenture Trustee in
pursuing the remedy;
(iv) the Indenture Trustee does not comply with the request within 60
days after receipt of the instructions and the offer of indemnity; and
(v) during such 60-day period, a Majority in Interest of Holders do
not give the Indenture Trustee an instruction inconsistent with the
request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
ARTICLE VI
DUTIES OF THE INDENTURE TRUSTEE
SECTION 6.01. Certain Actions. If the Indenture Trustee shall have
---------------
Actual Knowledge of any Indenture Event of Default or any Indenture Default or
any failure on the part of the Charterer to make any payment of Assigned Hire
when due or any Event of Loss or other material fact relating to the Indenture
Estate, the Indenture Trustee shall (a) give prompt telephonic notice (promptly
confirmed in writing) to the Owner Trust, the Owner Participant and the
Charterer and (b) within 90 days after obtaining such Actual Knowledge, mail to
each Holder notice of any such Indenture Event of Default unless, in each case,
such Indenture Event of Default has been remedied before the giving of such
notice and the Indenture Trustee has Actual Knowledge of such remedy; provided,
however, that the failure by the Indenture Trustee to provide such notice shall
not invalidate any actions subsequently taken by the Indenture Trustee in
connection with such Indenture Event of Default. Except in the case of a
default in the payment of the principal or interest on any Secured Note, the
<PAGE>
39
Indenture Trustee shall be protected in withholding the notice required under
clause (b) above if and so long as Responsible Officers of the Indenture Trustee
in good faith determine that withholding such notice is in the interest of the
Holders.
SECTION 6.02. Action Upon Instructions. (a) The Indenture Trustee
------------------------
shall, upon the written instruction at any time and from time to time of a
Majority in Interest of Holders of Notes, give such notice, consent or direction
or exercise such right, remedy or power hereunder or under the Charter or any
other agreement constituting part of the Indenture Estate as shall be specified
in such instruction; provided, however, that nothing set forth in this Section
6.02(a) shall entitle the Holders to cause the Indenture Trustee to give any
notice or exercise any right, power or remedy that is not elsewhere authorized
by, or is otherwise restricted or prohibited by, this Indenture. If the
Indenture Trustee shall not have received instructions as above provided within
20 days after mailing of the notice pursuant to Section 6.01 to the Holders, the
Indenture Trustee may take such action, or refrain from taking such action, but
shall be under no duty to take or refrain from taking any action, with respect
to such Indenture Event of Default, Event of Loss or fact as it shall determine
to be advisable and in the best interest of the Holders. If the Indenture
Trustee receives any instructions after the expiration of the aforementioned 20-
day period, the Indenture Trustee shall use its best efforts to conform any
action being taken to comply with those instructions.
(b) The Indenture Trustee shall not consent to the assignment by the
Charterer of all or any material portion of its right, title and interest in, to
and under the Charter, except (i) with respect to an assignment permitted under
Section 20(c) of the Charter or (ii) upon the written instruction at any time
and from time to time of a Majority in Interest of Holders of Notes. Nothing
set forth herein shall be construed to permit such assignment without the
consent of the Owner Trust or to adversely affect any right of the Owner Trust.
SECTION 6.03. Release of Lien of Indenture. (a) Release of
---------------------------- ----------
Indenture Estate. Upon satisfaction of the conditions for termination of this
- ----------------
Indenture set forth in Section 10.01, the Indenture Trustee, upon the written
request of the Owner Trust, shall execute and deliver to, or as directed by, the
Owner Trust, all appropriate instruments (in due form for recording or filing)
releasing the Indenture Estate from the Lien of this Indenture, the Ship
Mortgage and the U.K. Security Assignment, and the Indenture Trustee shall pay
all moneys or other properties or proceeds held by it under this Indenture to
the Owner Trust and shall give notice to the Charterer of such payment. The
cost and expense associated with any action taken by the Indenture Trustee
pursuant to the provisions of this Section 6.03(a) shall be borne by the
Charterer.
(b) Release of the Vessel upon Transfer. Upon any transfer by the
-----------------------------------
Owner Trust of the Vessel pursuant to Article 18 or 23 of the Charter or any
retention by the Owner Trust of the Vessel pursuant to Article 18 of the Charter
and receipt by the Indenture Trustee
<PAGE>
40
of all amounts of Hire therefor that constituted a part of the Indenture Estate
due and payable by the Charterer and the concurrent redemption of Secured Notes
as set forth in Sections 3.02, 3.03 and 4.02 and the payment of any other
amounts then due and owing hereunder, the Indenture Trustee, upon the written
request of the Owner Trust, shall execute and deliver to, or as directed by, the
Owner Trust, all appropriate instruments (in due form for recording or filing),
releasing the Vessel and all other property relating thereto and then
constituting a portion of the Indenture Estate, as the case may be, from the
Lien of this Indenture and the Ship Mortgage. The cost and expense associated
with any action taken by the Indenture Trustee pursuant to the provisions of
this Section 6.03(b) shall be borne by the Charterer.
(c) Release of Lien upon Full Payment of Secured Notes. Upon payment
--------------------------------------------------
in full of the principal of and interest on and all other amounts due and
payable under the Secured Notes, and all other amounts due and payable to any
Holder or the Indenture Trustee hereunder or under any other Operative Document,
the Indenture Trustee, upon the written request of the Owner Trust, shall
execute and deliver to, or as directed by, the Owner Trust, all appropriate
instruments (in due form for recording or filing) releasing the Vessel and all
other property relating thereto and then constituting a portion of the Indenture
Estate from the Lien of this Indenture, the Ship Mortgage and the U.K. Security
Assignment. The cost and expense associated with any action taken by the
Indenture Trustee pursuant to the provisions of this Section 6.03(c) shall be
borne by the Charterer.
SECTION 6.04. Indemnification. The Indenture Trustee shall not be
---------------
required to take any action or refrain from taking any action instructed to be
taken or refrained from being taken pursuant to Section 6.02 or under Article V
unless the Indenture Trustee shall have been indemnified to the Indenture
Trustee's reasonable satisfaction against any liability (including, without
limitation, environmental liability), cost or expense (including, without
limitation, the reasonable fees and expenses of counsel) which may be incurred
in connection therewith, other than any such liability, cost or expense which
results from the willful misconduct or gross negligence of the Indenture Trustee
and for the failure of the Indenture Trustee to exercise ordinary care in
distributing funds in accordance with the terms of the Operative Documents.
Except with respect to actions required by the first sentence of Section 6.01
hereof, the Indenture Trustee shall be under no obligation to take any action
under this Indenture and nothing contained in this Indenture shall require the
Indenture Trustee to expend or risk the Indenture Trustee's own funds or
otherwise incur any financial liability or any other liability (including,
without limitation, environmental liability) in the performance of any of the
Indenture Trustee's duties hereunder or in the exercise of any of the Indenture
Trustee's rights or powers if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it. The Indenture Trustee shall not be
required to take any action under Section 6.02 or Article V, nor shall any other
provision of this Indenture be deemed to impose a duty on the Indenture Trustee
to take any action, if such Indenture Trustee shall have reasonably determined
or been advised in writing by its counsel that such action is
<PAGE>
41
contrary to the terms hereof or of any other Operative Document, or is contrary
to applicable law.
SECTION 6.05. No Implied Duties. No implied duties or obligations of
-----------------
the Indenture Trustee shall be read into this Indenture.
SECTION 6.06. Duties to Remove Certain Liens. The Indenture Trustee,
------------------------------
in its individual capacity, shall comply with Section 12.4(a) of the
Participation Agreement.
SECTION 6.07. No Action Except Under Operative Documents or
---------------------------------------------
Instructions. The Owner Trust and the Indenture Trustee agree that they will
- ------------
not use, operate, store, lease, control, manage, sell, dispose of or otherwise
deal with the Vessel or any other part of the Indenture Estate, except (a) in
accordance with the terms of the Charter or the other Operative Documents or the
U.K. Documents or (b) in accordance with the powers granted to, or the authority
conferred upon, the Owner Trust and the Indenture Trustee pursuant to the
express terms of this Indenture and the Trust Agreement.
SECTION 6.08. Certain Rights of the Owner Trust and the Owner
-----------------------------------------------
Participant. Notwithstanding any provision in this Indenture to the contrary:
- -----------
(a) each of the Owner Trust and the Owner Participant shall have the
right, to the exclusion of the Indenture Trustee, whether or not an
Indenture Event of Default is continuing and whether or not the Indenture
Trustee has foreclosed on the Lien of the Indenture, (i) to receive
Excepted Payments, (ii) to demand, collect, sue for or waive any notice of
default with respect to Excepted Payments, (iii) prior to the foreclosure
of the Lien of the Indenture and subject to Section 5.03(c), to declare the
Charter in default in respect of Expected Payments and (iv) to enforce the
payment of Excepted Payments due and payable to it by appropriate judicial
proceedings and to exercise other remedies as provided under any Operative
Document to the extent and with respect to any portion of the Indenture
Estate which shall have been released pursuant to the terms of this
Indenture; provided that the rights referred to in this Section
6.08(a)(iii) and (iv) shall not be deemed to include the exercise of any
remedies provided for in Article 22 of the Charter other than the right to
proceed by appropriate court action or actions, either at law or in equity,
to enforce performance by the Charterer of the applicable covenants or to
recover damages for breach thereof;
(b) at all times prior to the foreclosure of the Lien of the
Indenture, whether or not an Indenture Event of Default is continuing, each
of the Owner Trust and the Owner Participant shall have the right, but not
to the exclusion of the Indenture Trustee, (i) to receive from the
Charterer all notices, financial statements, certificates, opinions of
counsel and other documents and information which the
<PAGE>
42
Charterer is permitted or required to give or furnish to the Owner Trust or
the Owner Participant pursuant to the terms of any Operative Document, (ii)
to retain all rights with respect to liability insurance which Article 16
of the Charter specifically confers upon the Owner Trust or the Owner
Participant, or other insurance under Article 16 of the Charter purchased
for the benefit of the Owner Trust or the Owner Participant (subject,
however to the provisions of the definition of "Excepted Payments") and
(iii) to exercise inspection rights pursuant to Article 11.6 of the
Participation Agreement and Article 11(b) of the Charter;
(c) so long as no Indenture Event of Default shall have occurred and
be continuing, the Owner Trust shall have the right, to the exclusion of
the Indenture Trustee, to adjust Bareboat Hire other than Assigned Hire;
and
(d) so long as no Indenture Event of Default shall have occurred and
be continuing (subject to Section 9.02), the Owner Trust shall retain (to
the exclusion of the Indenture Trustee) (i) all rights of the "Owner" under
the Charter, other than the Indenture Trustee's right to receive Assigned
Hire and other as set forth in (a), (b) or (c) of this Section 6.08, (ii)
all rights of the "Lessee" under the Head Lease, (iii) all rights of the
"Seller" under the Conditional Sale Agreement and (iv) all rights of the
"Purchaser" under the Construction Contract and the Bill of Sale.
SECTION 6.09. Filing of Financing and Continuation Statements. The
-----------------------------------------------
Indenture Trustee shall, at the expense of the Owner Trust, execute and file any
continuation or similar statement or document delivered to it by the Owner Trust
or the Charterer in a form reasonably satisfactory to the Indenture Trustee and
proper for filing.
SECTION 6.10. Publishing of Notices. The Indenture Trustee will
---------------------
furnish to the Owner Trust and the Owner Participant, promptly upon receipt
thereof, a duplicate or copy of each report, notice, request, demand,
instruction, certificate, financial statement or other instrument furnished to
the Indenture Trustee hereunder or under any other Operative Document.
SECTION 6.11. Taxes; Withholding; Information Reporting. The
-----------------------------------------
Indenture Trustee shall exclude and withhold from each distribution of principal
and interest and other amounts due hereunder or under the Secured Notes any and
all withholding taxes applicable thereto as required by law. The Indenture
Trustee agrees (a) to act as such withholding agent and, in connection
therewith, whenever any present or future taxes or similar charges are required
to be withheld with respect to any amounts payable in respect of the Secured
Notes or otherwise due hereunder, to withhold such taxes or charges and timely
pay the same to the appropriate authority in the name of and on behalf of the
Loan Participants, (b) that it will file any necessary withholding tax returns
or statements when due and (c) that, as promptly as possible after the payment
of such withheld amounts, it will deliver to each Loan
<PAGE>
43
Participant appropriate documentation showing the payment of such withheld
amounts, together with such additional documentary evidence as such Loan
Participants may reasonably request from time to time. The Indenture Trustee
agrees to file any other information reports as it may be required to file under
United States law. No withholding or action with respect thereto shall
constitute or give rise to any Indenture Event of Default or any other claims
against the Owner Participant or the Owner Trust. Any tax withheld by the
Indenture Trustee pursuant to this Section 6.11 shall be deemed for all purposes
of this Indenture and the Secured Notes to have been paid to the Holder with
respect to which such tax was withheld.
ARTICLE VII
THE INDENTURE TRUSTEE AND THE OWNER TRUSTEE
SECTION 7.01. Acceptance of Trusts and Duties. The Indenture Trustee
-------------------------------
accepts the duties hereby created and applicable to it and agrees to perform the
same upon the terms and conditions set forth in this Indenture and the
Participation Agreement. The Indenture Trustee further agrees to receive and
disburse all moneys constituting part of the Indenture Estate in accordance with
the terms hereof. The Indenture Trustee shall not be answerable or accountable
in its individual capacity under any circumstances, except (a) for its willful
misconduct or gross negligence, (b) for its failure to exercise reasonable care
in safeguarding the security held by it pursuant to the terms hereof, (c) in the
case of the inaccuracy of any representations or warranties made by the
Indenture Trustee in its individual capacity and contained in the Participation
Agreement or any other Operative Document or referred to by reference in Section
7.03 hereof, (d) as provided in Sections 2.03 and 6.06, (e) for any Tax based on
or measured by any fees, commissions or compensation received by it for acting
as trustee hereunder or (f) except as otherwise expressly provided herein for
its failure to use reasonable care in disbursing funds in accordance with the
terms hereof.
SECTION 7.02. Absence of Duties Except as Specified. Except in
-------------------------------------
accordance with written instructions pursuant to Section 6.01 or 6.02, and
except as provided in, and without limiting the generality of, Sections 6.04,
6.05, 6.06 and 6.07, the Indenture Trustee shall have no duty (a) to record or
file the Charter, this Indenture, the Ship Mortgage or any other document, or to
maintain any such recording or filing, or to rerecord or refile any such
document, (b) to effect or maintain any such insurance, whether or not the
Charterer shall be in default with respect thereto, (c) to discharge any Lien of
any kind against any part of the Trust Estate or the Indenture Estate, or (d) to
inspect the Vessel at any time, or to ascertain or inquire as to the performance
or observance of any of the Charterer's covenants pursuant to the terms of the
Charter.
<PAGE>
44
SECTION 7.03. No Representations or Warranties. NONE OF THE MANAGING
--------------------------------
TRUSTEE (IN ITS INDIVIDUAL OR TRUST CAPACITY), THE OWNER TRUST OR THE INDENTURE
TRUSTEE (IN ITS INDIVIDUAL OR TRUST CAPACITY) MAKES (a) ANY REPRESENTATION OR
WARRANTY, WHETHER WRITTEN, ORAL, EXPRESS OR IMPLIED, AS TO THE VALUE, COMPLIANCE
WITH SPECIFICATIONS, DURABILITY, OPERATION, CONSTRUCTION, PERFORMANCE, DESIGN OR
CONDITION OF THE VESSEL OR ANY PART THEREOF, THE MERCHANTABILITY THEREOF OR THE
FITNESS THEREOF FOR ANY PARTICULAR PURPOSE, TITLE TO THE VESSEL OR ANY COMPONENT
OF THE VESSEL, THE QUALITY OF THE MATERIALS OR WORKMANSHIP THEREOF OR CONFORMITY
THEREOF TO SPECIFICATIONS, OR THE PRESENCE OR ABSENCE OF ANY LATENT OR OTHER
DEFECTS, WHETHER OR NOT DISCOVERABLE, OR ANY OTHER REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE VESSEL, OR ANY COMPONENT OF
THE VESSEL, or (b) any representation or warranty as to the validity, legality
or enforceability of this Indenture, any of the other Operative Documents or the
Secured Notes, or as to the correctness of any statement contained in any
thereof, except as set forth in Sections 9 and 10 of the Participation Agreement
and Section 7.4 of the Trust Agreement.
SECTION 7.04. No Segregation of Moneys; No Interest; Investments.
--------------------------------------------------
Any moneys paid to or retained by the Indenture Trustee pursuant to any
provision hereof and not then required to be distributed to the Holders, the
Charterer or the Owner Trust shall be deposited in a separate, interest bearing
cash collateral account; provided that any payments received or applied
hereunder by the Indenture Trustee shall be accounted for by the Indenture
Trustee so that any portion thereof paid or applied pursuant hereto shall be
identifiable as to the source thereof. Any amounts held by the Indenture
Trustee pursuant to the express terms of this Indenture or any other Operative
Document shall be invested and reinvested by the Indenture Trustee from time to
time in Permitted Investments at the direction of (i) the Charterer if such
amounts would be payable to the Charterer upon satisfaction of any applicable
conditions; or (ii) the Owner Participant in the case of the remaining portion
of such amounts; provided, however, that in the event there shall be continuing
any Indenture Event of Default, such directions may be given exclusively by a
Majority in Interest of Holders of Notes. The Indenture Trustee shall have no
liability for any loss resulting from any investment required to be made
hereunder other than by reason of its own willful misconduct or negligence in
failing to comply with such instructions. Any net income or gain realized as a
result of any such investment or reinvestment shall be held as part of the
Indenture Estate and shall be applied by the Indenture Trustee at the same time,
on the same conditions and in the same manner as the amounts in respect of which
such income or gain was realized are required to be distributed in accordance
with the provisions hereof. Any Permitted Investment may be sold or otherwise
reduced to cash (without regard to maturity) by the Indenture Trustee whenever
necessary to make any
<PAGE>
45
application as required by the terms of this Indenture or of any applicable
Operative Document.
SECTION 7.05. Reliance; Agents; Advice of Counsel. Neither the Owner
-----------------------------------
Trust nor the Indenture Trustee (in their respective individual or trust
capacities for the purposes of this Section 7.05) shall incur any liability to
anyone in acting upon any signature, instrument, notice, resolution, request,
consent, order, certificate, report, opinion, bond or other document or paper
reasonably believed by it to be genuine and believed by it to be signed by the
proper party or parties. Either of the Owner Trust or the Indenture Trustee may
accept a copy of a resolution of the Board of Directors or other governing body
of any party to the Participation Agreement or other Operative Agreement,
certified by the Secretary or any Assistant Secretary thereof as duly adopted
and in full force and effect, as conclusive evidence that such resolution has
been duly adopted and that the same is in full force and effect. As to any fact
or matter relating to the Charterer the manner of ascertainment of which is not
specifically described herein, the Owner Trust and the Indenture Trustee may for
all purposes hereof rely on an Officer's Certificate of the relevant party as to
such fact or matter, and such Officer's Certificate shall constitute full
protection to the Owner Trust or the Indenture Trustee (in their individual or
trust capacities), as the case may be, for any action taken or omitted to be
taken by it in good faith in reliance thereon. The Indenture Trustee shall
assume, and shall be fully protected in assuming, that the Owner Trust is
authorized by the Trust Agreement to enter into this Indenture and to take all
action to be taken by the Owner Trust pursuant to the provisions hereof, and
shall not inquire into the authorization of the Owner Trust with respect
thereto. The Owner Trust shall assume, and shall be fully protected in
assuming, that the Indenture Trustee is authorized to enter into this Indenture
and to take all action to be taken by the Indenture Trustee pursuant to the
provisions hereof, and shall not inquire into the authorization of the Indenture
Trustee with respect thereto. In the administration of the trusts hereunder,
the Indenture Trustee may execute any of the trusts or powers hereof and perform
its powers and duties hereunder directly or through agents or attorneys and at
the expense of the Indenture Estate may consult with counsel, accountants and
other skilled Persons to be selected and retained by it, and the Indenture
Trustee shall not be liable for anything done, suffered or omitted in good faith
by it in accordance with the written advice or written opinion of any such
counsel, accountant or other skilled Person acting within such Person's area of
competence (so long as the Indenture Trustee shall have exercised due care in
selecting such Person).
SECTION 7.06. No Compensation from Holders or Indenture Estate.
------------------------------------------------
Notwithstanding any other provision hereof, the Indenture Trustee shall have no
right against the Holders, the Managing Trustee or the Delaware Trustee, in
their respective individual capacities, the Owner Trust, the Owner Participant
or, except as otherwise provided in Section 4.03, the Indenture Estate for any
fee as compensation for its services hereunder.
<PAGE>
46
SECTION 7.07. Right of the Indenture Trustee to Perform Covenants,
----------------------------------------------------
Etc. If the Owner Trust or the Charterer shall fail to make any payment or
- ---
perform any act required to be made or performed by it hereunder or under any
Operative Document to which it is a party or if the Owner Trust or the Charterer
shall fail to release any Lien affecting the Indenture Estate which it is
required to release by the terms of this Indenture or any other Operative
Document to which it is a party, the Indenture Trustee, after notice to and
demand upon the Owner Trust or the Charterer and affording the Owner Trust and
the Charterer a reasonable opportunity to cure, and without waiving or releasing
any obligation or Charter Event of Default, may (but shall be under no
obligation to) at any time thereafter make such payment or perform such act for
the account of and at the expense of the Indenture Estate, and may enter upon
any property for such purpose and take all such action with respect thereto as,
in the Indenture Trustee's opinion, may be necessary or appropriate therefor.
No such entry shall be deemed an eviction. All sums so paid by the Indenture
Trustee and all costs and expenses (including, without limitation, legal fees
and expenses) so incurred, shall constitute additional indebtedness secured by
this Indenture and shall be paid from the Indenture Estate to the Indenture
Trustee on demand. The Indenture Trustee shall not be liable for any damages
resulting from any such payment or action unless such damages shall be a
consequence of willful misconduct or gross negligence on the part of the
Indenture Trustee.
SECTION 7.08. Moneys for Payments in Respect of Notes to be Held in
-----------------------------------------------------
Trust. In case the Holder of any Secured Note shall fail to present the same
- -----
for payment on any date on which the principal thereof becomes payable, the
Indenture Trustee may set aside in trust the moneys then due thereon uninvested
and shall pay such moneys to any Holder of such Secured Note upon due
presentation for surrender thereof in accordance with the provisions of this
Indenture, subject to the provisions of Section 7.09.
SECTION 7.09. Disposition of Moneys Held for Payments of Notes. Any
------------------------------------------------
money set aside under Section 7.08 and not paid to Holders under Section 7.08
shall be held by the Indenture Trustee in trust until the latest of (a) the date
three years after the date of such setting aside, (b) the date all other Holders
(other than other Holders for which the Indenture Trustee is holding such moneys
pursuant to Section 7.08) of the Secured Notes shall have received full payment
of all principal of and interest and other sums payable to them on such Secured
Notes or the Indenture Trustee shall hold (and shall have notified such Persons
that it holds) in trust an amount sufficient to make full payment thereof when
due, and (c) the date the Owner Trust shall have fully performed and observed
all its covenants and obligations contained in this Indenture with respect to
the Secured Notes; and thereafter shall be paid to the Owner Trust by the
Indenture Trustee, who then shall be released from all further liability with
respect to such moneys, and thereafter the Holders of the Secured Notes in
respect of which such moneys were so paid to the Owner Trust shall have no
rights in respect thereof except to obtain payment of such moneys from the Owner
Trust.
<PAGE>
47
ARTICLE VIII
SUCCESSOR TRUSTEES AND ADDITIONAL TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee. In the case of any
---------------------------------
appointment of a successor to either Owner Trustee pursuant to the Trust
Agreement, or any merger, conversion or consolidation or transfer of
substantially all of the corporate trust business of either Owner Trustee, the
Managing Trustee shall give prompt written notice thereof to the Indenture
Trustee.
SECTION 8.02. Resignation of Indenture Trustee; Appointment of
------------------------------------------------
Successor. (a) The Indenture Trustee or any successor thereto may resign at
- ---------
any time without cause by giving at least thirty (30) days prior written notice
to the Owner Trust, the Owner Participant, the Charterer and each Holder, such
resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee as provided in Section 8.02(b). In addition, a
Majority in Interest of Holders of Notes may at any time remove the Indenture
Trustee without cause by an instrument in writing delivered to the Owner Trust,
the Owner Participant, the Charterer and the Indenture Trustee, such removal to
be effective upon the acceptance of the trusteeship by a successor Indenture
Trustee as provided in Section 8.02(b). In the case of the resignation or
removal of the Indenture Trustee, the Owner Trust may appoint a successor
Indenture Trustee. If a successor Indenture Trustee shall not have been
appointed within thirty (30) days of such notice of resignation or removal, the
Indenture Trustee, the Owner Trust, the Owner Participant, the Charterer or a
Majority in Interest of Holders may apply to any court of competent jurisdiction
to appoint a successor Indenture Trustee qualified under Section 8.02(c) to act
until such time, if any, as a successor shall have been appointed as above
provided in this Section 8.02. The successor Indenture Trustee so appointed by
such court shall immediately and without further act be superseded by any
successor Indenture Trustee appointed as above provided in this Section 8.02.
(b) Any successor Indenture Trustee, however appointed, shall execute
and deliver to the Owner Trust and to the predecessor Indenture Trustee (with a
copy to each Holder) an instrument accepting such appointment, and shall give
the Owner Participant, the Holders and the Charterer written notice of such
acceptance. Upon the execution and delivery of such instrument, such successor
Indenture Trustee, without further act, shall become vested with all the
estates, properties, rights, powers and duties of the predecessor Indenture
Trustee hereunder, with like effect as if originally named the Indenture Trustee
herein. Notwithstanding and without limiting the foregoing, the predecessor
Indenture Trustee, upon the written request of the successor Indenture Trustee,
shall execute and deliver an instrument transferring to such successor Indenture
Trustee, upon the trusts herein expressed applicable to it, all the estates,
properties, rights and powers of such predecessor Indenture Trustee, and such
predecessor Indenture Trustee shall duly assign, transfer, deliver
<PAGE>
48
and pay over to such successor Indenture Trustee all moneys or other property
then held by such predecessor Indenture Trustee hereunder.
(c) There shall at all times be an Indenture Trustee hereunder which
shall be a bank or trust company organized and doing business under the laws of
the United States of America or of any state thereof, authorized under such laws
to exercise corporate trust powers, subject to supervision or examination by
federal or state authority, having a combined capital and surplus of at least
$75,000,000. If such bank or trust company publishes reports of condition at
least annually, pursuant to applicable law or to the requirements of the
aforesaid supervising or examining authority, then for purposes hereof the
combined capital and surplus of such bank or trust company shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published.
(d) Any corporation into which the Indenture Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation to which substantially all the corporate
trust business of the Indenture Trustee may be transferred, shall, subject to
the terms of paragraph (c) of this Section 8.02, be the Indenture Trustee under
this Indenture without further act.
SECTION 8.03. Co-Trustees and Separate Trustees. (a) If, at any
---------------------------------
time, it shall be necessary or prudent in order to conform to any law of any
jurisdiction in which property shall be held subject to the Lien of this
Indenture, the Ship Mortgage and the U.K. Security Assignment, the Indenture
Trustee shall be advised by counsel that it is so necessary or prudent in the
interest of the Holders, or a Majority in Interest of Holders of Notes in
writing shall so request the Indenture Trustee and the Owner Trust, the
Indenture Trustee and the Owner Trust shall execute and deliver all instruments
and agreements necessary or proper either (i) to constitute another bank or
trust company or one or more Persons approved by the Indenture Trustee and the
Owner Trust, either to act as co-trustee or co-trustees of all or any portion of
the Indenture Estate, jointly with the Indenture Trustee originally named herein
or any successor or successors, or to act as separate trustee or trustees of all
or any such portion of the Indenture Estate in each case with such rights,
powers, duties and obligations as may be provided in such supplemental indenture
or such instrument of appointment as the Indenture Trustee or a Majority in
Interest of Holders of Notes may deem necessary or advisable, or (ii) to
clarify, add to or subtract from the rights, powers, duties and obligations
theretofore granted any such additional or separate trustee, subject in each
case to the remaining provisions of this Section 8.03. In the event that the
Owner Trust shall not have joined in the execution of such instruments and
agreements within fifteen (15) days after the receipt of a written request from
the Indenture Trustee to do so, or if an Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee may act under the foregoing
provisions of this Section 8.03 without the concurrence of the Owner Trust; and
the Owner Trust hereby appoints the Indenture Trustee its agent and
<PAGE>
49
attorney-in-fact to act for it under the foregoing provisions of this Section
8.03(a) in either of such contingencies. The Indenture Trustee may, in such
capacity, execute deliver and perform any such supplemental indenture, or any
such instrument, as may be required for the appointment of any such co-
trustee(s) or separate trustee(s) or for the clarification of, addition to or
subtraction from the rights, powers, duties or obligations theretofore granted
to any such co-trustee(s) or separate trustee(s). In case any co-trustee(s) or
separate trustee(s) appointed under this Section 8.03(a) shall die, become
incapable of acting, resign or be removed, all the assets, property, rights,
powers, trusts, duties and obligations of such co-trustee(s) or separate
trustee(s) shall revert to and shall vest in and may be exercised by the
Indenture Trustee, to the extent permitted by law until a successor, additional
or separate trustee is appointed as provided in this Section 8.03(a).
(b) Every co-trustee and separate trustee hereunder, to the extent
permitted by law and except as otherwise expressly provided in any Operative
Document, shall be appointed and act, and the Indenture Trustee and its
successors shall act, subject to the following provisions and conditions:
(i) the Secured Notes shall be authenticated and delivered by the
Indenture Trustee, and all powers, duties, obligations and rights conferred
upon the Indenture Trustee in respect of the receipt, custody, control,
payment and management of moneys, papers or securities, shall be exercised,
solely by the Indenture Trustee;
(ii) all other rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such co-trustee or co-
trustees or separate trustee or trustees jointly, except to the extent that
under any applicable law or in any jurisdiction in which any particular act
or acts are to be performed, the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations shall be exercised and performed by such co-
trustee or co-trustees or separate trustee or trustees; but subject to the
same limitations in any exercise of his, her or its power and authority as
those to which the Indenture Trustee is subject under the terms of this
Indenture;
(iii) notwithstanding anything herein contained to the contrary, no
power given hereby to, or which it is provided hereby may be exercised by,
any such co-trustee or co-trustees or separate trustee or trustees, shall
be exercised hereunder by such additional trustee or trustees except
jointly with, or with consent in writing of, the Indenture Trustee;
(iv) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder;
<PAGE>
50
(v) the powers of any co-trustee(s) or separate trustee(s) appointed
pursuant to this Section 8.03 shall not in any case exceed those of the
Indenture Trustee hereunder; and
(vi) the Owner Trust and the Indenture Trustee, at any time, by an
instrument in writing executed by them jointly, may remove any such
trustee, and in that case, by an instrument in writing executed by them
jointly, may appoint a successor or successors to such co-trustee or co-
trustees or separate trustee or trustees, as the case may be. In the event
that the Owner Trust shall not have joined in the execution of any such
instrument within fifteen (15) days after the receipt of a written request
from the Indenture Trustee to do so, the Indenture Trustee shall have the
power to remove any such co-trustee or separate trustee and to appoint a
successor co-trustee or separate trustee without the concurrence of the
Owner Trust. In the event that the Indenture Trustee alone shall have
appointed a separate trustee or trustees or co-trustee or co-trustees as
above provided in this Section 8.03, it may at any time, by an instrument
in writing, remove any such separate trustee or co-trustee, the successor
to any such separate trustee or co-trustee so removed to be appointed by
the Owner Trust and the Indenture Trustee, or by the Indenture Trustee
alone, as provided in this Section 8.03.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Indenture Supplements Without Consent of Holders. The
------------------------------------------------
Owner Trust and the Indenture Trustee, without the consent of any Holder and at
any time and from time to time, may enter into one or more amendments or
supplements to this Indenture, in form satisfactory to each of the Owner Trust
and Indenture Trust, for any of the following purposes:
(a) to subject to the Lien of this Indenture additional property
constituting part of the Indenture Estate pursuant to a supplement to this
Indenture substantially in the form of Exhibit D to this Indenture;
(b) to correct or amplify the description of any property at any time
subject to the Lien of this Indenture;
(c) to add to the covenants of the Owner Trust for the benefit of the
Holders or to surrender any right or power herein conferred upon the Owner
Trust, the Owner Participant or the Charterer;
<PAGE>
51
(d) to cure any ambiguity, to correct or supplement any provision
herein or in the Secured Notes which may be defective or inconsistent with
any other provisions of this Indenture, provided that such action shall not
adversely affect the interests of any Holder;
(e) to evidence the succession of a new Owner Trustee in accordance
with the Trust Agreement or the succession of a new Indenture Trustee
hereunder or the appointment or removal of any co-trustee or separate
trustee thereunder or hereunder;
(f) to convey, transfer, assign, mortgage or pledge any property to or
with the Indenture Trustee or to make any other provisions with respect to
matters or questions arising hereunder so long as such action shall not
adversely affect the interests of the Loan Participants;
(g) to add to the rights of the Loan Participants;
(h) to include on the Secured Notes any legend as may be required by
law;
(i) to provide for the establishment and issuance of Additional Notes
pursuant to Section 2.08; or
(j) to provide for the substitution of a new owner trust in accordance
with Section 3.04.
SECTION 9.02. Supplements and Amendments to Operative Documents With
------------------------------------------------------
Consent Holders of Notes. (a) Without the consent of a Majority in Interest of
- ------------------------
Holders of Notes, the respective parties to the Charter, the Participation
Agreement, the Trust Agreement, the Head Lease, the Conditional Sale Agreement
and any other Operative Document or U.K. Document included in the Indenture
Estate may not modify, amend or supplement any of such agreements, or give any
consent, waiver, authorization or approval thereunder, for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
thereof or of modifying in any manner the rights of the respective parties
thereunder; provided that, so long as no Indenture Event of Default shall have
occurred and be continuing, such agreements may be modified, amended or
supplemented if the Indenture Trustee determines that any such proposed
modification, amendment or supplement would not adversely affect the interests
of the Holders; provided, however, that the actions specified in Section 9.02(c)
may be taken without the consent of the Indenture Trustee or any Holder.
(b) Except as provided in Section 9.01 or 9.02(c) or 9.02(d), at any
time and from time to time, with the consent of a Majority in Interest of
Holders of Notes and upon the written request of the Owner Trust, the Indenture
Trustee (x) shall execute an
<PAGE>
52
amendment or supplement to this Indenture for the purpose of adding provisions
to, or changing in any manner or eliminating any of the provisions of, this
Indenture, or (y) shall execute an amendment or supplement to, or give a
consent, waiver, authorization or approval, for the purposes of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, the Participation Agreement or (z) shall consent to any amendment or
supplement to, or give a consent, waiver, authorization or approval, for the
purposes of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, any of the other Operative Documents or U.K. Document;
provided, however, that no such amendment or supplement to this Indenture, or
consent, waiver, authorization, approval, amendment or supplement to the
Participation Agreement or any such other Operative Document or U.K. Document
(whether pursuant to subsection (a) or (c) of this Section 9.02, and anything in
such subsections or elsewhere in this Indenture to the contrary notwithstanding)
shall, without the consent of each Holder of a Secured Note then Outstanding:
(i) change the stated maturity of the principal of, or any installment
of interest on, or any mandatory or optional repayment, purchase or
redemption provision with respect to, any Secured Note, or change the
principal amount thereof or any other amount payable in respect thereof or
reduce the Make-Whole Amount, if any, or interest thereon, or impair the
right to institute suit for the enforcement of any such payment or change
mandatory or optional prepayment provisions or change the place of payment
where, or the coin or currency in which, any Secured Note or the interest
thereon is payable;
(ii) permit the creation of any Lien on the Indenture Estate not
otherwise permitted hereunder or deprive any Holder of the benefit of the
Lien of this Indenture upon the Indenture Estate for the security of its
Secured Notes;
(iii) change the percentage of the aggregate principal amount of
Secured Notes Outstanding necessary to modify or amend any provision
hereunder or any other Operative Document or to waive compliance therewith;
(iv) modify the definitions of "Indenture Default," "Indenture Event
of Default," "Majority in Interest of Holders of Notes," "Charter Default"
or "Charter Event of Default";
(v) modify the order of priorities in which distributions are to be
made under Article IV;
(vi) reduce the amount or change the time of any payment of Assigned
Hire under the Charter;
<PAGE>
53
(vii) modify, amend or supplement any of the provisions of this
Section 9.02;
(viii) modify, amend or supplement the Charter or the Parent
Guaranty, or consent to any assignment of the Charter (other than an
assignment pursuant to Article 20 of the Charter), in either case releasing
the Charterer or the Guarantor from its respective obligations in respect
of the payment of Assigned Hire payable pursuant to the Charter, or
changing the absolute and unconditional character of such obligations; or
(ix) materially adversely affect any indemnities in favor of any
Holder as provided pursuant to the terms of any Operative Document, except
as may be consented to by each Person adversely affected thereby.
(c) Notwithstanding anything to the contrary contained in Section
9.02(b) (except as provided in the proviso to Section 9.02(b)), (x) without the
necessity of the consent of any of the Holders or the Indenture Trustee, the
Owner Trust may and (y) in the case of clause (iii) of this Section 9.02(c),
without the consent of any of the Holders, the Indenture Trustee may:
(i) so long as no Indenture Event of Default shall have occurred and
be continuing, modify, amend or supplement the Charter, or give any
consent, waiver, authorization or approval with respect thereto, except
that without compliance with Sections 9.02(a) and 9.02(b), the Owner Trust
shall not modify, amend or supplement, or give any consent, waiver,
authorization or approval for the purposes of adding any provisions to or
changing in any manner or eliminating any of the provisions thereof, or of
modifying in any manner the rights of the respective parties thereunder,
with respect to the following provisions of the Charter as originally
executed: Article 2 (if the result thereof would be to shorten the term of
the Charter to a period shorter than the period ending with the maturity
date of the Secured Notes), Articles 3(a) (except to the extent that such
change or modification relates solely to Excess Hire, Bareboat Market Rate,
Excess Hire Rate, Additional Excess Hire or Additional Excess Hire Rate),
3(b), 3(c), (3(e), 3(f) (3g), 5(b), 9, 14, 15, 16, 17, 18, 21, 22, 23 and
Schedule 2 (except to the extent that such change or modification relates
solely to Excess Hire, Bareboat Market Rate, Excess Hire Rate, Additional
Excess Hire or Additional Excess Hire Rate) and any definition of terms
used in the Charter, to the extent that any modification of such definition
would result in a modification of the Charter not permitted pursuant to
this Section 9.02(c); provided that, subject to the next proviso, in the
event an Indenture Event of Default shall have occurred and be continuing,
the Indenture Trustee shall have all rights of the Owner Trust as Owner
under the Charter to modify, amend or supplement the Charter or give any
consent, waiver, authorization or approval thereunder, for the
<PAGE>
54
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions thereof or of modifying in any manner the
rights of the Owner thereunder; provided further that, without the prior
consent of the Owner Trust, and subject to the Indenture Trustee's rights
to exercise remedies under Article 22 of the Charter without the prior
consent of the Owner Trust, whether or not an Indenture Event of Default
shall have occurred and be continuing, no such action shall be taken with
respect to any of the provisions of Article 1 (if any modification of a
definition contained therein would result in a modification of the Charter
not permitted by this proviso), 3, 11, 14, 15, 16 (except to increase the
amounts or types of insurance the Charterer must provide thereunder at its
expense), 18, 20, 21, 25, 27, 28 and 29 of the Charter, or any other
Section of the Charter (including Section 22 of the Charter) to the extent
such action shall affect the amount or timing of any amounts payable by the
Charterer under the Charter as originally executed (or as subsequently
modified with the consent of the Owner Trust) which, absent the occurrence
and continuance of an Indenture Event of Default, would be distributable to
the Owner Trust or the Owner Participant under Article IV;
(ii) modify, amend or supplement the Trust Agreement, or give any
consent, waiver, authorization or approval with respect thereto, except
that without compliance with Section 9.02(b), the Owner Trust shall not
modify, amend or supplement, or give any consent, waiver, authorization or
approval for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions thereof or of modifying in any
manner the rights of the respective parties thereunder, with respect to the
following provisions of the Trust Agreement as originally executed:
Section 3.2, Section 5.1, Section 9.2, Section 10, Section 11, Section 12.7
and any definition of terms used in the Trust Agreement, to the extent that
any modification of such definition would result in a modification of the
Trust Agreement not permitted pursuant to this Section 9.02(c), and in each
case only to the extent any such action shall adversely impact the
interests of the Holders; and
(iii) modify, amend or supplement the Participation Agreement, or
give any consent, waiver, authorization or approval with respect thereto,
except that without compliance with Section 9.02(a) or Section 9.02(b), the
Owner Trust and the Indenture Trustee shall not modify, amend or
supplement, or give any consent, waiver, authorization or approval for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions thereof or of modifying in any manner the
rights of the respective parties thereunder, with respect to the following
provisions of the Participation Agreement as originally executed: Section
2, Section 4, Section 6, Section 9, Section 11 (other than an amendment to
add to the covenants of the Charterer), Section 12, Section 13 (insofar as
such Section 13 relates to the Indenture Trustee, the Indenture Estate and
the Holders) and, to the extent the Loan Participants would be adversely
affected thereby, Section 14 and Section 15 and
<PAGE>
55
any definition of terms used in the Participation Agreement to the extent
that any modification of such definition would result in a modification of
the Participation Agreement not permitted pursuant to this Section 9.02(c);
and
(iv) modify, amend or supplement any of said agreements in order to
cure any ambiguity, to correct or supplement any provisions thereof which
may be defective or inconsistent with any other provision thereof or of any
provision of this Indenture, or to make any other provision with respect to
matters or questions arising thereunder or under this Indenture which shall
not be inconsistent with the provisions of this Indenture; provided that
the making of any such other provision shall not adversely affect the
interests of the Holders unless such provision corrects a mistake.
SECTION 9.03. Execution of Indenture Supplement, Amendments, Etc. In
--------------------------------------------------
executing or accepting the additional trusts created by any amendment or
supplement to this Indenture, or any amendment, consent, waiver or other
modification permitted by this Article IX or the modifications thereby of the
trusts created by this Indenture, each of the Indenture Trustee and the Owner
Trust shall be entitled to receive, and (subject to Section 7.01 and Section
7.02) shall be fully protected in relying upon, an opinion of independent
counsel stating that the execution of such amendment or supplement to this
Indenture, or of such amendment, consent, waiver or modification, is authorized
or permitted by this Indenture. Either of the Indenture Trustee or the Managing
Trustee may, but shall not be obligated to, enter into any such amendment or
supplement to this Indenture which affects its own rights, duties or immunities
under this Indenture or otherwise. It shall not be necessary for Holders to
approve the particular form of any proposed amendment or supplement to this
Indenture, or any amendment, consent, waiver or other modification of any other
Operative Document or U.K. Document, but it shall be sufficient if such action
shall approve the substance thereof.
SECTION 9.04. Effect of Indenture Supplement. Upon the execution of
------------------------------
any amendment or supplement to this Indenture pursuant to this Article IX, this
Indenture shall be modified in accordance therewith, and such amendment or
supplement shall form a part of this Indenture for all purposes; and every
Holder of a Secured Note theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 9.05. Reference in Secured Notes to Indenture Supplements.
---------------------------------------------------
Secured Notes authenticated and delivered after the execution of any amendment
or supplement pursuant to this Article IX may, and shall if required by the
Indenture Trustee, bear a notation in form approved by the Indenture Trustee as
to any matter provided for in such amendment or supplement. If the amendment or
supplement to this Indenture shall so provide, new Secured Notes so modified as
to conform, in the opinion of the Indenture Trustee and the Owner Trust, to any
such amendment or supplement may be prepared and
<PAGE>
56
executed by the Owner Trust and authenticated and delivered by the Indenture
Trustee in exchange for outstanding Secured Notes.
SECTION 9.06. Notices of Indenture Supplements and Amendments, Etc.
----------------------------------------------------
Promptly after the execution by the Owner Trust and the Indenture Trustee of any
amendment or supplement to this Indenture, or any amendment, consent, waiver or
other modification pursuant to the provisions hereof, the Indenture Trustee
shall send a conformed copy of such instrument to each Holder, the Charterer,
the Owner Trust and the Owner Participant, but the failure of the Indenture
Trustee to send such a conformed copy shall not impair or affect the validity of
such document.
SECTION 9.07. Charterer Rights. Without the consent of the
----------------
Charterer, no amendment or supplement to this Indenture or amendment, waiver or
other modification of any provision of this Indenture shall alter or modify the
provisions of Section 5.09 or this Section 9.07.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture. This Indenture and the
------------------------
trusts created hereby shall terminate, and this Indenture shall be of no further
force or effect, upon the payment in full of the principal of and interest on
and all other amounts due and payable under all Secured Notes and all other
amounts due and payable to any Holder or the Indenture Trustee hereunder or
under any other Operative Document. The foregoing shall not impair any rights
of a Holder in respect of indemnification or other claims which may be available
against any party under the terms of any other Operative Document. Except as
otherwise provided in the preceding sentence, this Indenture and the trusts
created hereby shall continue in full force and effect in accordance with the
terms hereof.
SECTION 10.02. No Legal Title to Indenture Estate in Holders. No
---------------------------------------------
Holder shall have legal title to any part of the Indenture Estate. No transfer,
by operation of law or otherwise, of any Secured Note or other right, title and
interest of any Holder in and to the Indenture Estate or hereunder shall operate
to terminate this Indenture or entitle such Holder or any successor or
transferee of such Holder to an accounting or to the transfer to it of any legal
title to any part of the Indenture Estate.
SECTION 10.03. Power of Attorney. The Owner Trust does hereby
-----------------
constitute the Indenture Trustee its true and lawful attorney-in-fact,
irrevocably and coupled with the interest of the Indenture Trustee created by
this Indenture, so long as any Secured Notes are Outstanding and so long as
there are any other amounts due hereunder, under any
<PAGE>
57
other Operative Documents, or under the Secured Notes, with full power (in the
name of and as attorney-in-fact for the Owner Trust or otherwise) to ask for,
require, demand and receive any and all moneys and claims for moneys, and all
other property, which now or hereafter constitutes part of the Indenture Estate,
to endorse any checks or other instruments or orders in connection therewith and
to file any claims or to take any action, or to institute any proceedings, which
the Indenture Trustee may deem to be necessary or advisable in the premises.
The Owner Trust has directed the Indenture Trustee to make all necessary
conveyances, assignments, transfers and deliveries of the Indenture Estate and
any rights hereunder pursuant to the provisions of this Indenture, and for that
purpose the Indenture Trustee may execute all necessary instruments of
conveyance, assignment and transfer, and may substitute one or more persons with
like power, and the Owner Trust hereby ratifies and confirms all that the
Indenture Trustee, acting as its attorney, or any such substitute, shall
lawfully do by virtue hereof and whether pursuant to the exercise of any
remedies hereunder or otherwise.
SECTION 10.04. Regarding the Owner Trust and the Owner Trustees. (a)
------------------------------------------------
Except as expressly provided herein, all and each of the representations,
warranties, undertakings and agreements herein made on the part of the Owner
Trust are made and intended not as personal representations, warranties,
undertakings and agreements by or for the purpose or with the intention of
binding the Managing Trustee or the Delaware Trustee personally, but are made
and intended for the purpose of binding only the Trust Estate, and this
Indenture is executed and delivered by the Managing Trustee solely in the
exercise of the powers expressly conferred upon it as trustee under the Trust
Agreement; and no personal liability or responsibility is assumed hereunder by,
or at any time shall be enforceable against, the Managing Trustee or any of its
successors in trust on account of any representation, warranty, undertaking or
agreement hereunder of the Owner Trust, either expressed or implied, all such
personal liability, if any, being expressly waived by the Indenture Trustee;
provided, however, that (i) the Indenture Trustee or any Person claiming by,
through or under it, making claim hereunder, may, subject to the terms and
conditions hereof, look to the Trust Estate for satisfaction of such liability
or responsibility and (ii) the Managing Trustee or its successor in trust, as
applicable, shall be personally liable for its own gross negligence and willful
misconduct and for the matters described in clauses (i) through (v) of the last
sentence of Section 7.4 of the Trust Agreement. Subject to the terms and
conditions hereof, each time a successor Managing Trustee is appointed in
accordance with the terms of the Trust Agreement, such successor Managing
Trustee shall, without further act, succeed to all the rights, duties,
immunities and obligations of the predecessor Managing Trustee hereunder and
under the other Operative Documents, and such predecessor Managing Trustee shall
be released from all further duties and obligations hereunder and under the
other Operative Documents, all without the necessity of any consent or approval
by the Indenture Trustee and without in any way altering the terms of this
Indenture or such other Operative Documents or the obligations of the Indenture
Trustee hereunder or thereunder.
<PAGE>
58
(b) As to the aggregate unpaid principal amount of Secured Notes
Outstanding as of any date, the Owner Trust may rely on an Officer's Certificate
of the Indenture Trustee.
SECTION 10.05. Notices. All communications, notices and consents
-------
provided for in this Indenture shall be in writing and shall be given in person
or by courier or by means of telex, telecopy or other wire transmission (with
request for assurance of receipt in a manner typical with respect to
communications of that type), or mailed by first class mail or overnight
courier, addressed: (a) in the case of the Owner Trust, to the Owner Trust in
care of Deutsche Morgan Grenfell (Cayman) Limited, as Managing Trustee,
Elizabethan Square, P.O. Box 1984, George Town, Grand Cayman, Cayman Islands,
British West Indies, Attention: Managing Director (telephone: (809) 949-8000;
telecopier: (809) 949-8178); (b) in the case of the Indenture Trustee, to State
Street Bank and Trust Company, Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department (telephone: (617)
664-5340; telecopier: (617) 664-5371); and, in the case of all other parties, as
set forth in Schedule I to the Participation Agreement or at such other address
as any such Person may from time to time designate by notice duly given in
accordance with the provisions of this Section 10.05 to the other parties hereto
and shall be deemed given when received by (or when proffered to, if receipt is
not accepted) the party to whom it is addressed.
SECTION 10.06. Severability of Provisions. Any provision of this
--------------------------
Indenture which may be determined by competent authority to be invalid or
unenforceable in such jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable any remaining terms and provisions
hereof, and any such invalidity or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
The parties shall negotiate in good faith to replace such provision with an
appropriate legal provision. To the extent permitted by applicable law, the
parties hereto waive any provision thereof that renders any term or provision
hereof invalid or unenforceable in any respect.
SECTION 10.07. No Oral Modification or Continuing Waivers. No term
------------------------------------------
or provision of this Indenture or the Secured Notes may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party or the person against whom enforcement of the change, waiver,
discharge or termination is sought; and any waiver of the terms hereof or of any
Secured Note shall be effective only in the specific instance and for the
specific purpose given.
SECTION 10.08. Successors and Assigns. All covenants and agreements
----------------------
contained herein shall be binding upon each of the parties hereto and their
respective successors and permitted assigns, and inure to the benefit of each of
the parties hereto and their respective successors and permitted assigns, all as
herein provided. Any request,
<PAGE>
59
notice, direction, consent, waiver or other instrument or action by any Holder
shall bind the successors and assigns of such Holder. This Indenture and the
Indenture Estate shall not be affected by any amendment or supplement to the
Trust Agreement or by any other action taken under or in respect of the Trust
Agreement, except as otherwise provided in or permitted by this Indenture. Each
Holder by its acceptance of a Secured Note agrees to be bound by this Indenture
and all provisions of the Operative Documents applicable to it.
SECTION 10.09. Headings; Table of Contents. The division of this
---------------------------
Indenture into Articles, Sections, subsections and paragraphs, the provision of
a table of contents and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation hereof.
SECTION 10.10. Normal Commercial Relations. Notwithstanding anything
---------------------------
contained in this Indenture to the contrary, any of the Owner Participant, the
Indenture Trustee, the Owner Trust, the Managing Trustee, the Delaware Trustee
or any bank or other affiliate of any such Person may conduct any banking or
other financial transactions and have banking or other commercial relationships
with the Charterer, fully to the same extent as if this Indenture were not in
effect.
SECTION 10.11. Governing Law. THIS INDENTURE SHALL BE GOVERNED BY,
-------------
AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 10.12. Execution. This Indenture may be executed in separate
---------
counterparts by the parties thereto, each of which, when so executed and
delivered, shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 10.13. Security Agreement. This Indenture shall constitute a
------------------
security agreement and, in addition to all other rights of the Indenture Trustee
hereunder, the Indenture Trustee shall have for the benefit of the Holders all
of the rights conferred upon secured parties by the UCC and any other similar
legislation as from time to time in effect in any applicable jurisdiction.
SECTION 10.14. Benefits of Indenture. Nothing in this Indenture,
---------------------
whether express or implied, shall be construed to give to any Person other than
the parties hereto, the Holders and (to the extent expressly provided herein)
the Owner Participant any legal or equitable right, remedy or claim under or in
respect of this Indenture or the Secured Notes, and this Indenture shall be held
for the sole and exclusive benefit of the parties hereto, the Holders and, to
the extent expressly provided herein, the Owner Participant.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
DUMOCO EAGLE TRUST,
Owner Trust
By: DEUTSCHE MORGAN GRENFELL
(CAYMAN) LIMITED,
not in its individual capacity, except
as expressly provided herein, but
solely as Managing Trustee
By: /s/ J.H. Gullimare
---------------------------
Name: J.H. Gullimare
Title: Authorized Signatory
STATE STREET BANK AND
TRUST COMPANY,
as Indenture Trustee
By: /s/ Ruth A. Smith
------------------------------
Name: Ruth A. Smith
Title: Vice-President
<PAGE>
Schedule 1
to Indenture
------------
DESCRIPTION OF VESSEL
---------------------
That certain double hulled, double bottom, very large crude carrier, know as the
M/V Eagle, having a gross registered tonnage of approximately 160,000 tons, a
net registered tonnage of approximately 95,000 tons and a designed deadweight
capacity of approximately 280,000 metric tons, constructed built by Sumitomo
Heavy Industries, Ltd and delivered in August 1993.
SCH-1-1
<PAGE>
Exhibit A
to Indenture
------------
FORM OF
SERIES 1996 A-2 SECURED NON-RECOURSE NOTE
DUMOCO EAGLE TRUST
Maturity Date: _________
Registered No. _________ New York, New York
Dated:_________
Principal Amount: $_______ Interest Rate Per Annum: ____%
DUMOCO EAGLE TRUST, a trust created pursuant to the Delaware Business
Trust Act (the "Owner Trust"), of which Deutsche Morgan Grenfell (Cayman)
Limited and Wilmington Trust Company are acting not in their respective
individual capacities but solely as Owner Trustees (the "Owner Trustees") under
that certain Declaration of Agreement of Trust, dated as of November 22, 1996,
among the Owner Participant named therein and the Owner Trustees (the "Trust
Agreement"), for value received hereby promise to pay to State Street Bank and
Trust Company, as Pass Through Trustee (the "Pass Through Trustee") under that
certain 1996-A Pass Through Trust (the "Pass Through Trust") created by the Pass
Through Trust Agreement, dated as of December 19, 1996, as supplemented and
amended by that certain Pass through Trust Supplement, dated as of December 19,
1996 (as supplemented and amended, the "Agreement"), or registered assigns
(collectively, the "Holders"), the principal sum of _____________________
DOLLARS ($_______) in installments on each Interest Payment Date defined
below as set forth in Schedule I hereof with the final installment due and
payable on the Maturity Date specified above and to pay interest on the unpaid
principal amount of this Secured Note from time to time from the date hereof
until the principal amount hereof shall have been paid in full at the interest
rate set forth above (based on a 360-day year of twelve 30-day months), and (to
the extent not prohibited by applicable law) to pay interest on any overdue
principal at the Overdue Rate. Subject to Section 2.03(b) of the Indenture (as
defined below), the first payment of accrued and unpaid interest on the unpaid
principal of this Secured Note shall be payable on _______ and thereafter on
each _________ and _________ in each year (each such date being an "Interest
Payment Date").
This Secured Note is one of the Secured Notes issued by the Owner
Trust pursuant to the terms of the Trust Indenture, Assignment of Charter and
Head Lease, and Security Agreement, dated as of December 19, 1996 (the
"Indenture"), between the Owner Trust and State Street Bank and Trust Company,
not in its individual capacity but solely as
<PAGE>
Indenture Trustee thereunder, for the Holder of this Secured Note and the
Holders of all other Secured Notes Outstanding thereunder (the "Indenture
Trustee"). Capitalized terms used in this Secured Note and not otherwise
defined shall have the respective meanings assigned to them in the Indenture.
Each payment of principal and interest shall be due and payable at the
times, places and in the manner as specified herein and in the Indenture.
Each payment on this Secured Note shall be applied, first, to the
payment of accrued interest on this Secured Note to the date of such payment,
second, to the payment of any principal on this Secured Note then due hereunder,
and third, to the payment of the installments of principal remaining unpaid on
this Secured Note in the inverse order of the maturity thereof.
This Secured Note is one of the Owner Trust's Series 1996 A-2 Secured
Notes, which, together with any Additional Notes and any note or notes issued
from time to time in exchange or substitution therefor in accordance with the
terms of the Indenture, are equally and ratably secured by the Indenture, except
as otherwise provided therein. The property of the Owner Trust (excluding
Excepted Payments) included in the Indenture Estate is pledged, assigned or
mortgaged to the Indenture Trustee, to the extent provided in the Indenture, as
security for the payment of the principal of, Make-Whole Amount, if any, and
interest on this Secured Note and all other Secured Notes issued and outstanding
from time to time under the Indenture. Reference is hereby made to the
Indenture for a description of the Indenture Estate, and for a statement of the
rights of the Holder of, and the nature and extent of the security for, this
Secured Note and of the rights of, and the nature and extent of the security
for, the Holders of the other Secured Notes and of certain rights of the Owner
Trust and the Owner Participant, as well as for a statement of the terms and
conditions of the trusts created by the Indenture, to all of which terms and
conditions the Holder agrees by its acceptance of this Secured Note.
This Secured Note is subject to redemption or purchase in whole as
specified in Article III of the Indenture.
In case an Indenture Event of Default shall occur and be continuing,
the unpaid balance of the principal of the Secured Notes, together with all
accrued but unpaid interest, may be declared or may otherwise become due and
payable in the manner and with the effect provided in Article V of the
Indenture.
The Secured Notes are issuable only as registered notes. There shall
be maintained a note register for the purpose of registering transfers and
exchanges of the Secured Notes at the principal corporate trust office of the
Indenture Trustee, or of any successor Indenture Trustee, in the manner provided
in Section 2.05 of the Indenture. The Owner Trust and the Indenture Trustee may
deem and treat the Person in whose name this Secured Note is registered on the
Note Register as the absolute owner hereof (whether or not
EXHA-2
<PAGE>
this Secured Note shall be overdue) for the purpose of receiving payments of
principal, Make Whole Amount, if any, and interest and for all other purposes,
and neither the Owner Trust nor the Indenture Trustee shall be affected by any
notice to the contrary.
All payments of principal, Make-Whole Amount, if any, and interest to
be made by the Owner Trust and, except as otherwise provided in the Operative
Documents, all payments of any other amounts payable by or on behalf of the
Owner Trust under the Secured Notes or under the Indenture, shall be made only
from the income and proceeds from the Indenture Estate, and only to the extent
that the Indenture Trustee shall have received sufficient income and proceeds
from the Indenture Estate to make such payments in accordance with the
Indenture. The Holder, by its acceptance of this Secured Note, agrees that it
will look solely to the income and proceeds from the Indenture Estate to the
extent available for payment as provided in the Indenture, and that none of the
Owner Participant, the Owner Trust, the Managing Trustee, the Delaware Trustee
or the Indenture Trustee (whether in their respective individual or trust
capacities) shall be personally liable to the Indenture Trustee or to the Holder
for any amounts payable under this or any Secured Note, nor, except as
specifically provided in the Indenture or any other Operative Document, for any
amounts payable or any liability under the Indenture.
This Secured Note shall not be valid or become obligatory for any
purpose or be entitled to any security or benefit under the Indenture until the
certificate of authentication hereon shall have been signed by the Indenture
Trustee.
No delay or omission of the Holder to exercise its rights hereunder
shall impair any such right or power or shall be construed to be a waiver of any
Indenture Event of Default or an acquiescence therein. No waiver of any
Indenture Event of Default shall be construed, taken or held to be a waiver of
any other Indenture Event of Default or a waiver, acquiescence in, or consent to
any further or succeeding Indenture Event of Default. The Owner Trust waives
demand, notice and protest in any defense by reason of extension of time for
payment or other indulgence granted by the Holder.
THIS SECURED NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
EXHA-3
<PAGE>
IN WITNESS WHEREOF, the Owner Trust has caused this Secured Note to be
duly executed.
Date: ___________
DUMOCO EAGLE TRUST,
Owner Trust
By: DEUTSCHE MORGAN GRENFELL
(CAYMAN) LIMITED,
not in its individual capacity, except as
expressly provided herein, but solely as
Managing Trustee
By:
--------------------------------
Name:
Title:
EXHA-4
<PAGE>
Certificate of Authentication
-----------------------------
This Secured Note is one of the Series 1996 A-2 Secured Notes due
_________ of DUMOCO EAGLE TRUST, the Owner Trust as described in the within-
mentioned Indenture.
STATE STREET BANK AND
TRUST COMPANY, not in its individual
capacity, but soley as Indenture Trustee
By:
---------------------------------
Authorized Signatory
EXHA-5
<PAGE>
Schedule 1
to Exhibit A
to Indenture
------------
SCHEDULE OF PRINCIPAL PAYMENTS ON THE SECURED NOTES
SERIES 1996 A-2 SECURED NOTE
DUMOCO EAGLE TRUST
Payment Aggregate Payment
Regular Distribution Date Percentage Amount
- ------------------------- ---------- ------
EXHA-6
<PAGE>
Exhibit B-1
to Indenture
------------
SCHEDULE OF PRINCIPAL PAYMENTS ON THE SECURED NOTES
SERIES 1996 A-2 SECURED NOTE
DUMOCO EAGLE TRUST
<TABLE>
<CAPTION>
Payment Aggregate Payment
Regular Distribution Date Percentage Amount
- ------------------------- ---------- ------
<S> <C> <C>
July 2, 1997 0.38509573% $ 893,037.00
January 2, 1998 0.37257740% 864,007.00
July 2, 1998 0.38556145% 894,117.00
January 2, 1999 0.39899828% 925,277.00
July 2, 1999 0.41290341% 957,523.00
January 2, 2000 0.42729323% 990,893.00
July 2, 2000 0.44218413% 1,025,425.00
January 2, 2001 0.45759465% 1,061,162.00
July 2, 2001 0.47354161% 1,098,143.00
January 2, 2002 0.49004442% 1,136,413.00
July 2, 2002 0.50712247% 1,176,017.00
January 2, 2003 0.52479560% 1,217,001.00
July 2, 2003 0.54308495% 1,259,414.00
January 2, 2004 0.56201164% 1,303,305.00
July 2, 2004 0.58159767% 1,348,725.00
January 2, 2005 0.60186632% 1,395,728.00
July 2, 2005 0.62284131% 1,444,369.00
January 2, 2006 0.64454722% 1,494,705.00
July 2, 2006 0.66700992% 1,546,796.00
January 2, 2007 0.69025485% 1,600,701.00
July 2, 2007 0.71431048% 1,656,486.00
January 2, 2008 0.73920397% 1,714,214.00
July 2, 2008 0.76496550% 1,773,955.00
January 2, 2009 0.79162441% 1,835,777.00
July 2, 2009 0.81921259% 1,899,754.00
January 2, 2010 0.84776197% 1,965,960.00
July 2, 2010 0.87730660% 2,034,474.00
January 2, 2011 0.90788098% 2,105,376.00
July 2, 2011 0.93952048% 2,178,748.00
January 2, 2012 0.97226261% 2,254,677.00
July 2, 2012 1.00614618% 2,333,253.00
January 2, 2013 1.04121087% 2,414,568.00
</TABLE>
EXHB-1
<PAGE>
Exhibit B-2
to Indenture
------------
Issuance of Series 1996 A-2 Secured Notes
-----------------------------------------
The issuance of the Series 1996 A-2 Secured Notes issued hereunder shall be
issued to and shall be payable to the Pass Through Trustee under the Pass
Through Trust Agreement with respect to the grantor trust created thereby, in
each case as set forth below:
Mobil Corporation 1996 A Pass Through Trust:
6.97% Certificates due July 2, 2017
<PAGE>
Exhibit C
to Indenture
------------
FORM OF SUBSTITUTION DATE SUPPLEMENT
SUBSTITUTION DATE AGREEMENT dated as of (this "Substitution
------------
Agreement"), among [ ], a trust created pursuant to
- ---------
(the "Substitute Obligor") under the [Substitute Trust Agreement] (as defined
------------------
below), DUMOCO Eagle Trust, a trust created pursuant to the Delaware Business
Trust Act (the "Owner Trust") under a Declaration of Agreement of Trust dated as
of November 22, 1996, as amended, among Deutsche Morgan Grenfell (Cayman)
Limited, Wilmington Trust Company and DUMOCO LLC, a Cayman Islands limited life
company, as owner participant, MOBIL MARINE FINANCE COMPANY I INC., as
Charterer, STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company,
not in its individual capacity, except as expressly provided in the Indenture,
but solely as Indenture Trustee (the "Indenture Trustee"), and STATE STREET BANK
-----------------
AND TRUST COMPANY, as Pass Through Trustee, who each being duly sworn did
declare and say as follows.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, terms used herein and not otherwise defined shall have the
respective meanings assigned to them in the Indenture;
WHEREAS, the Substitute Obligor was organized pursuant to a
Declaration and Agreement of Trust dated (the
"Substitute Trust Agreement"), among , as
- ---------------------------
managing trustee (together with its permitted successors and assigns, the
"Managing Trustee"),[ ], as
- -----------------
Delaware trustee (together with its permitted successors and assigns, the
"Delaware Trustee"), each acting not individually, except as otherwise provided
- -----------------
herein (when acting in such individual capacities, the "
Trust Company" and "Delaware Trust Company", respectively), but solely as
- ------------- ----------------------
trustees for the Substitute Obligor (the Managing Trustee and the Delaware
Trustee, collectively in such capacities being, the "Owner Trustees" and each
--------------
individually, an "Owner Trustee"), and
-------------
, as owner participant (the "Owner Participant") as amended and supplemented;
-----------------
and
WHEREAS, the Owner Trust desires to sell, and the Substitute Obligor
desires to purchase all of the Owner Trust's beneficial interest in the Vessel
Interest created under the Operative Documents.
<PAGE>
WHEREAS, the Indenture provides for the execution and delivery of a
supplement substantially in the form of this Substitution Agreement, which
supplement shall provide for certain matters relating to the assumption by the
Substitute Obligor of the obligations of the Owner Trust pursuant to Section
3.04 of the Indenture;
NOW, THEREFORE, the parties hereto agree as follows:
1. As of the date of this Substitution Agreement (the "Substitution
Date"), the Owner Trust hereby irrevocably sells, assigns , transfers and
conveys to the Substitute Obligor all of Owner Trust's right, title and interest
in and to the Vessel Interest.
2. The Substitute Obligor hereby (a) accepts the foregoing
assignment, (b) confirms that it is purchasing the Vessel Interest subject to
the security interest and Lien of the Indenture and ratifies the security
interest and Lien which the Owner Trust granted to the Indenture Trustee
pursuant to the Granting Clause of the Indenture in all of the Owner Trust's
right, title and interest in and to the Indenture Estate and (b) explicitly
agrees that it is acquiring the Vessel Interest, and all property relating
thereto, constituting a portion of the Indenture Estate, subject to such
security interest and Lien, which shall remain in full force and effect until
the Lien of the Indenture on the Vessel is discharged in accordance with the
terms thereof, and the Indenture Trustee acknowledges that the Charter and the
obligations of Owner Trust thereunder as the Charterer have been terminated,
except as specifically provided for therein.
3. Effective as of the Substitution Date, each party hereto agrees
that the Substitute Obligor shall be deemed to be a party to the Indenture, the
Secured Notes and each other Operative Document to which the Owner Trust is a
party, and all references to the Owner Trust in the Indenture, the Secured Notes
and each other Operative Document shall be deemed to be references to the
Substitute Obligor; provided, however, that any obligations or liabilities of
the Managing Trustee or the Delaware Trustee in its individual capacities
incurred on or prior to the Substitution Date or arising out of or based upon
events occurring on or prior to the Substitution Date, shall remain the
responsibility of the Owner Trust.
4. This Substitution Agreement shall be construed as supplemental to
the Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference in this Substitution Agreement.
5. Representations and Warranties of Owner Trust. Owner Trust
---------------------------------------------
hereby represents and warrants to the Substitute Obligor and the Indenture
Trustee as follows:
(a) Organization and Good Standing. Owner Trust is a trust duly
------------------------------
organized, validly existing and in good standing under the Delaware Business
Trust Act.
EXCH-2
<PAGE>
(b) Power and Authority. Owner Trust has full corporate power and
-------------------
authority to execute, deliver and perform this Substitution Agreement and to
consummate the transactions contemplated hereby.
(c) Due Authorization. This Substitution Agreement has been duly
-----------------
authorized, executed and delivered by the Owner Trust, and assuming due
authorization, execution and delivery by the Substitute Obligor and the
Indenture Trustee, constitutes a legal, valid and binding obligation of the
Owner Trust, enforceable against it in accordance with its terms except as such
enforcement may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general applicability
affecting the enforcement of creditors' rights or by general principles of
equity.
(d) Compliance with Law. Neither the execution, delivery or
-------------------
performance by the Owner Trust of this Substitution Agreement nor compliance
with the terms and provisions hereof, conflicts or will conflict with or will
result in a breach or violation of any of the terms, conditions or provisions of
any law including, without limitation, the Securities Act of 1933, as amended,
and any law, governmental rule or regulation applicable to the Owner Trust.
6. Representations and Warranties of Substitute Obligor. The
----------------------------------------------------
Substitute Obligor hereby represents and warrants to the Owner Trust and the
Indenture Trustee as follows:
(a) Organization and Good Standing. The Substitute Obligor is a trust
------------------------------
duly organized and validly existing under the Delaware Business Trust Act.
(b) Power and Authority. The Substitute Obligor has full trust power
-------------------
and authority to execute, deliver and perform this Substitution Agreement and to
consummate the transactions contemplated hereby.
(c) Due Authorization. This Substitution Agreement has been duly
-----------------
authorized, executed and delivered by the Substitute Obligor and, assuming the
due authorization, execution and delivery thereof by the Owner Trust and the
Indenture Trustee, constitutes the legal, valid and binding obligation of the
Substitute Obligor, enforceable against it in accordance with its terms, except
as such enforcement may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general applicability
affecting the enforcement of creditors' rights or by general principles of
equity.
(d) Compliance with Law. Neither the execution, delivery or
-------------------
performance by the Substitute Obligor of this Substitution Agreement nor
compliance with the terms and provisions hereof, conflicts or will conflict with
or will result in a breach or violation of any of the terms, conditions or
provisions of any law, governmental rule or regulation applicable to Substitute
Obligor.
EXHC-3
<PAGE>
(e) Investment Intent. Substitute Obligor is acquiring the Vessel
-----------------
Interest for its own account for investment and with no present intention of
distributing or reselling such Vessel Interest or any part thereof other than a
transfer to an affiliate of the Substitute Obligor or a transfer to another
person in compliance with the provisions of the Securities Act of 1933, as
amended, and the Operative Documents.
7. Counterparts. This Substitution Agreement may be executed in one
------------
or more counterparts, each of which shall be deemed as original, but all of
which together shall constitute one and the same instrument.
8. Successors and Assigns. The terms of this Substitution Agreement
----------------------
shall be binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns.
9. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
10. Amendment. No waiver, modification or amendment of any provision
---------
of this Substitution Agreement shall be effective unless it is in writing and
signed by the party against which it is sought to be enforced.
11. Further Assurances. Each party agrees that from time to time
------------------
after the date hereof, it shall execute and deliver or cause to be executed and
delivered such instruments, documents and papers, and take all such further
action as may be reasonably required in order to consummate fully the purposes
of this Substitution Agreement and to implement the transactions contemplated
hereby.
EXHC-4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Substitution
Agreement to be duly executed and delivered on the day and year first above
written.
DUMOCO EAGLE TRUST, Owner Trust
By: DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED, not
in its individual capacity, except as
expressly provided in the Indenture, but
solely as Managing Trustee of the Owner Trust
By: :
-----------------------------
Title:
[ ], Substitute
Obligor
By:[ ],
not in its individual capacity, except as
expressly provided herein and in the
Indenture, but solely as Managing Trustee of
the Substitute Obligor
By:
-----------------------------
Title:
STATE STREET BANK AND TRUST
COMPANY, Indenture Trustee
By:
---------------------------------
Title:
MOBIL MARINE FINANCE COMPANY I
INC., as Charterer
By:
---------------------------------
Title:
EXHC-5
<PAGE>
STATE STREET BANK AND TRUST COMPANY, as Pass
Through Trustee
By:
---------------------------------
Title:
EXHC-6
<PAGE>
Exhibit D
to Indenture
------------
FORM OF TRUST INDENTURE, ASSIGNMENT OF
CHARTER AND HEAD LEASE AND SECURITY AGREEMENT
SUPPLEMENT NO. ____
This TRUST INDENTURE, ASSIGNMENT OF CHARTER AND HEAD LEASE AND
SECURITY AGREEMENT SUPPLEMENT NO. ____, dated _________________ (this "Indenture
Supplement") between DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED, a Cayman Islands
banking corporation, and WILMINGTON TRUST COMPANY, a Delaware banking
corporation, not in their individual capacities, but solely as Owner Trustees
(the "Owner Trustees") of DUMOCO EAGLE TRUST, a trust created under the
Declaration of Agreement of Trust pursuant to the Delaware Business Trust Act
(the "Owner Trust") and STATE STREET BANK AND TRUST COMPANY, a Massachusetts
-----------
trust company, not in its individual capacity, except as expressly provided
herein, but solely as Indenture Trustee (the "Indenture Trustee").
-----------------
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, terms used herein and not otherwise defined shall have the
respective meanings assigned to them in the Indenture; and
WHEREAS, the Indenture provides for the execution and delivery of one
or more supplements substantially in the form of this Indenture Supplement,
which supplement shall describe the property from time to time included in the
Indenture Estate;
NOW, THEREFORE, THIS INDENTURE SUPPLEMENT WITNESSETH that, to secure
(i) the prompt payment of the principal of, Make-Whole Amount, if any, and
interest on all Secured Notes from time to time Outstanding under the Indenture
and of all other amounts payable to the Holders (whether as Holders or Loan
Participants) thereunder, under the Secured Notes and under the other Operative
Documents, (ii) the performance and observance by the Owner Trust of all of the
provisions, covenants and agreements contained in the Participation Agreement,
in the Secured Notes and in the other Operative Documents for the benefit of the
Indenture Trustee or the Holders therein, and (iii) the performance and
observance by the Owner Participant of its covenants and agreements contained in
the Operative Documents (the obligations described in the above clauses (i),
(ii) and (iii), collectively, the "Indenture Indebtedness"), and for the uses
and purposes and subject to the terms and provisions thereof, and in
consideration of the premises and of the covenants herein contained and of the
acceptance of the Secured Notes by the Holders thereof:
<PAGE>
GRANTING CLAUSE
---------------
The Owner Trust, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to secure the payment
and performance of the Indenture Indebtedness, hereby presently irrevocably
mortgages, hypothecates and pledges unto the Indenture Trustee and creates to
and for the benefit of the Indenture Trustee, a security interest in and
mortgage lien on all of the right, title and interest of the Owner Trust in, to
and under all of the property, rights, interests, and privileges described on
Exhibit I hereto now owned or in the future acquired by the Owner Trust or in
which the Owner Trust now has or may in the future acquire any estate, right,
title or interest (collectively, the "Additional Property"),
TO HAVE AND TO HOLD the aforesaid Additional Property unto the
Indenture Trustee, its successors and assigns, for the benefit and security of
the Holders, without any priority of any Secured Note over any other, and for
the uses and purposes and subject to the terms and provisions set forth in the
Indenture.
This Indenture Supplement shall be construed as supplemental to the
Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference in this Indenture Supplement and is hereby ratified,
approved and confirmed. From and after the date hereof, the Indenture Estate
shall include the Additional Property along with the all other property, rights
and interest granted to the Indenture Trustee under the Granting Clause of the
Indenture and the Additional Property shall be subject to the Lien of the
Indenture.
This Indenture Supplement may be executed by the Owner Trust and the
Indenture Trustee in separate counterparts, each of which, when so executed and
delivered, shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
THIS INDENTURE SUPPLEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
EXHD-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
Supplement to be duly executed, all as of the date first written above.
DUMOCO EAGLE TRUST, as
Owner Trust
By: DEUTSCHE MORGAN GRENFELL
(CAYMAN) LIMITED, not in its individual
capacity, except as expressly provided
herein, but solely as Owner Trustee
By:
--------------------------------
Title:
STATE STREET BANK AND TRUST COMPANY,
Indenture Trustee
By:
--------------------------------
Title:
EXHD-3
<PAGE>
Exhibit I to
Exhibit D
to Indenture
------------
Description of Additional Property
EXHD-4
<PAGE>
EXHIBIT E
TO INDENTURE
------------
FORM OF FIRST SHIP MORTGAGE
Dated ______________
by
_______________________
Shipowner and Mortgagor
to
______________________
Mortgagee
VLCC ______
<PAGE>
TABLE OF CONTENTS
Page No.
-------
ARTICLE I REPRESENTATIONS OF THE SHIPOWNER....................... -4-
(1) Organization.............................................. -4-
(2) Documentation............................................. -4-
ARTICLE II COVENANTS OF THE SHIPOWNER............................ -4-
(1) Maintenance of Entity Status.............................. -4-
(2) Liens..................................................... -4-
(3) Maintenance of Mortgage................................... -5-
ARTICLE III EVENTS OF DEFAULT AND REMEDIES....................... -5-
(1) Event of Default.......................................... -5-
(2) Remedies.................................................. -5-
(3) Conveyance after Sale..................................... -7-
(4) Shipowner Barred.......................................... -7-
(5) Arrest By Third Party..................................... -7-
(6) Powers of the Mortgagee................................... -8-
(7) Application of Proceeds................................... -8-
(8) No Exclusivity............................................ -8-
ARTICLE IV SUNDRY PROVISIONS..................................... -8-
(1) Recording................................................. -8-
(2) Successors and Assigns.................................... -8-
(3) Agents.................................................... -9-
(4) Notices................................................... -9-
(5) Governing Law............................................. -9-
(6) Termination of U.K. Documents............................. -9-
EXHIBIT 1 Indenture (with attached Appendix A and Exhibits A-E)
EXHIBIT 2 Article 21 of the Charter
EXHC-i
<PAGE>
THIS FIRST SHIP MORTGAGE, made and dated ____________, by (a)
____________________________________ (the "Shipowner"), with an address at
________________________________________________________________, created by the
__________________________ dated as of ______________, as amended and restated
as of _______________ (the "___________"), with the _________________ named
therein, and duly qualified as a _______________ foreign maritime entity, in
favor of (b) _____________________________________________, not in its
individual capacity but solely as Indenture Trustee (the "Mortgagee") under a
Trust Indenture, Assignment of Charter and Head Lease and Security Agreement,
dated as of ____________ (the "Indenture") between the Shipowner and the
Mortgagee.
WHEREAS:
A. The Shipowner is the registered owner of the Republic of
__________________ flag VLCC "_____" (the "Vessel"), Official No. __________, of
______ gross tons and _____ net tons, duly documented in the name of the
Shipowner under the laws and flag of the Republic of _____________ with her home
port at the port of ________.
B. Pursuant to the terms of the Indenture, the Shipowner has issued
and sold to the Pass Through Trustee (as defined in the Indenture) its Series
1996-A Secured Notes dated _______________ (the "Secured Notes") in the initial
principal amount of U.S.____________. The form of the Indenture (together with
Appendix A, Definitions, and Exhibits A-E (including the form of the Secured
Notes)) is attached hereto as Exhibit 1 and hereby made a part hereof as though
set forth fully herein. The term "Indenture" as used in this Mortgage shall
mean the Indenture and Appendix A (Definitions) and Exhibit A (Form of Secured
Notes) as attached hereto and as each may be amended, supplemented or modified
from time to time.
C. The Shipowner has entered into a demise charter (as the same may
be amended, supplemented or modified from time to time, the "Charter") with
_________________ (the "Charterer") respecting the Vessel pursuant to which the
Charterer has covenanted and agreed with the Shipowner, inter alia, to operate,
maintain, and insure the Vessel. The form of Article 21 of the Charter defining
Charter Events of Default is attached hereto as Exhibit 2 and hereby made a part
hereof as though set forth fully herein.
D. The Shipowner has entered into a ______________________________
(the "Conditional Sale Agreement") dated _____________ with the financial
institution named therein (the "U.K. Lessor") pursuant to which the U.K. Lessor
has been granted certain rights respecting the Vessel. The U.K. Lessor has
demise chartered the Vessel to the Shipowner pursuant to a U.K. Head Lease dated
______________ (the "Head Lease").
EXHC-3
<PAGE>
E. To secure payment of principal of, interest on, Make-Whole Amount,
if any, and any other amounts which may become due to the Mortgagee or the
holders of Secured Notes pursuant to the terms of the Indenture, the Secured
Notes and the other Operative Documents, the Shipowner has duly authorized the
execution, delivery and recording of this First Ship Mortgage under and pursuant
to the laws of the __________________. Notwithstanding anything contained
herein to the contrary the rights granted to the Indenture Trustee hereunder are
subject and subordinate to the rights of the U.K. Lessor under the Conditional
Sale Agreement and the Head Lease so long as either document is in full force
and effect.
F. Terms used herein and not otherwise defined herein are used as
defined in, or by reference in, the Indenture.
NOW, THEREFORE, THIS MORTGAGE, WITNESSETH:
That in consideration of the premises and other valuable
consideration, the receipt whereof is hereby acknowledged, and in order to
secure the payment of principal of, interest on, Make-Whole Amount, if any,
respecting the Secured Notes, and all other amounts which may become due under
the Indenture or hereunder (collectively, the "Indebtedness hereby secured) and
to secure the performance and observance of and compliance with the covenants,
terms and conditions herein and in the Secured Notes and the Indenture
contained, the Shipowner has granted, conveyed, mortgaged, pledged, assigned,
transferred, set over and confirmed and does by these presents grant, convey,
mortgage, pledge, assign, transfer, set over and confirm unto the Mortgagee, its
successors and assigns, the whole of the Vessel which term shall include all of
the boilers, engines, machinery, bowsprits, masts, spars, sails, rigging, boats,
anchors, cables, apparel, furniture, fitting, equipment and all other
appurtenances to the Vessel appertaining or belonging, whether now owned or
hereafter acquired, whether on board or not, and all additions, improvements and
replacements hereafter made in or to the Vessel, or any part thereof, or in or
to the equipment and appurtenances aforesaid, but excluding any leased
equipment;
SUBJECT AND SUBORDINATE to the rights of the U.K. Lessor under the
Conditional Sale Agreement and the Head Lease so long as either document is in
full force and effect;
TO HAVE AND TO HOLD the same unto the Mortgagee, its successors and
assigns, to its and its successors' and assigns' own use and behoof forever;
PROVIDED only, and the condition of these presents is such that if the
Shipowner, or its successors or assigns, shall pay or cause to be paid to the
Mortgagee the Indebtedness hereby secured as and when the same shall become due
and payable in accordance with the terms of this Mortgage, the Secured Notes and
the Indenture, and shall perform, observe and comply with the covenants, terms
and conditions in this Mortgage and
<PAGE>
in the Secured Notes and the Indenture contained, expressed or implied, to be
performed, observed or complied with, by and on the part of the Shipowner, then
these presents and the rights hereunder shall cease, determine and be void;
otherwise to be and remain in full force and effect.
ARTICLE I
REPRESENTATIONS OF THE SHIPOWNER
(1) Organization. The Shipowner is a trust created under the
------------
_________________________, duly organized and validly existing in good standing
under the laws of the State of Delaware and is duly qualified as a
_______________ foreign maritime entity. _______________________________ is
Managing Trustee of the Shipowner.
(2) Documentation. The Vessel is, and the Shipowner covenants that
-------------
it will remain, duly documented in the name of the Shipowner as owner thereof
under the laws and flag of the _______________________, free and clear of all
Liens and encumbrances except Permitted Liens, which include but are not limited
to, the rights of the U.K. Lessor under the Conditional Sale Agreement and the
Head Lease, so long as either document is in full force and effect.
ARTICLE II
COVENANTS OF THE SHIPOWNER
(1) Maintenance of Entity Status. The Shipowner covenants that it
----------------------------
will remain duly qualified as a _________________ foreign maritime entity.
(2) Liens. Neither the Shipowner, the Charterer or any other
-----
charterer, the master of the Vessel nor any other Person has or shall have any
right, power or authority to create, incur or permit to be placed or imposed
upon the Vessel any Lien whatsoever, other than the Lien of this Mortgage and
Permitted Liens.
(3) Maintenance of Mortgage. The Shipowner (or the Charterer under
-----------------------
the Charter) shall, at its expense and at no cost to the Mortgagee, comply with
and satisfy all of the provisions of the laws and flag of the
______________________, in order to establish, record and maintain this Mortgage
as a mortgage thereunder on the Vessel except to the extent provided by the
Indenture.
EXHC-5
<PAGE>
ARTICLE III
EVENTS OF DEFAULT AND REMEDIES
(1) Event of Default. An Indenture Event of Default shall constitute
----------------
an event of default hereunder.
(2) Remedies. If an Indenture Event of Default shall have occurred
--------
and be continuing, subject to the provisions of Article III, Section (2)(g)
hereof and the Indenture, (x) the Mortgagee shall have the rights and remedies
provided in the Indenture, (y) the Mortgagee shall have all of the rights and
remedies provided mortgagees under the laws of the __________________ and, in
addition, (z) the Mortgagee may:
(a) Enforce and exercise all or any of its rights and powers as a
first mortgagee at law, in equity, or in admiralty;
(b) Exercise all the rights and remedies in foreclosure and otherwise
given to mortgagees by the laws of the ____________________________, or by the
applicable laws of any jurisdiction where the Vessel may be found, and initiate
and prosecute such other judicial, extra-judicial, or administrative proceedings
as it may consider appropriate to recover any or all sums due, or declared due,
on the Indebtedness hereby secured out of the Vessel, with the right to enforce
payment of said sum against any assets of the Indenture Estate, and in
connection therewith obtain a decree ordering the sale of the Vessel in
accordance with Section 2(e) of this Article III;
(c) Have a receiver of the Vessel appointed as a matter of right in
any suit hereunder (and any such receiver may have the rights of the Mortgagee
set forth in, or by reference in, this Article III);
(d) Take possession of the Vessel, with or without legal proceedings,
at any place where the Vessel may be found (and the Shipowner, the Charterer or
other Person in possession of the Vessel shall forthwith surrender possession of
the Vessel to the Mortgagee on demand), and the Mortgagee shall have the right,
but shall not be obligated, to manage, insure, maintain, repair, employ, lay up,
hold, charter, lease, operate or otherwise use the Vessel for such period and
under such terms as it may reasonably deem most expedient for its interest,
accounting only for the net profits, if any, arising from such use and charging
against all receipts from such use of the Vessel, all reasonable charges and
expenses in connection with such use;
(e) Sell the Vessel at private sale, on such terms and conditions as
it deems best, free of any claim of the Shipowner and, except as provided by
law, any other Person excluding the U.K. Lessor, upon advance notice of twenty-
five (25) consecutive days published in a newspaper authorized to publish legal
notices of that kind in New York, New York, and by sending notice of such sale
no later than the date of first publication, by
EXHC-6
<PAGE>
telegraph, cable, telecopy or telex, to the Shipowner as provided in Section
10.05 of the Indenture. Any such sale may be held at such place and at such
time as the Mortgagee by notice may have specified, or may be adjourned by the
Mortgagee from time to time by announcement at the time and place appointed for
such sale or for such adjourned sale, and without further notice or publication
the Mortgagee may make any such sale at the time and place to which the same
shall be so adjourned. Any such sale may be conducted without bringing the
Vessel to the place designated for such sale. The Mortgagee or any holder of a
Secured Note may become the purchaser at any such sale, and shall have the right
to credit on the purchase price any and all sums of money due in respect of the
Secured Notes and any other Indebtedness hereby secured;
(f) Accept a conveyance of title to, and to take without legal
process (and the Shipowner or other Person in possession shall forthwith
surrender possession to the Mortgagee), the whole or any part of the Vessel
wherever the same may be, and to take possession of and hold the same; and
(g) Notwithstanding anything contained herein to the contrary, the
rights and remedies granted to the Mortgagee under this Mortgage or by relevant
law shall not be exercised in such a manner as to interfere with or prejudice
the rights of the U.K. Lessor under the Conditional Sale Agreement or the Head
Lease. Without restricting the generality of the foregoing, so long as the Head
Lease is in full force and effect, the Mortgagee shall not, without the prior
written consent of the U.K. Lessor, exercise any remedy resulting in an in rem
judicial sale of the Vessel.
In addition, so long as the Charter is in effect and no Charter Event
of Default shall have occurred, the Mortgagee shall not, without the prior
written consent of the Charterer exercise any remedy resulting in an in rem
judicial sale of the Vessel.
(3) Conveyance after Sale. Subject to the provisions of Article III,
---------------------
Section (2)(g) hereof, the Shipowner hereby irrevocably appoints the Mortgagee
the true and lawful attorney of the Shipowner, in its name and stead, to make
all necessary transfers of the whole or any part of the Vessel in connection
with a sale, use or other disposition pursuant to Section 2 of Article III
hereof, and for that purpose to execute all necessary instruments of assignment
and transfer. Nevertheless, the Shipowner shall, if so requested by the
Mortgagee, ratify and confirm any sale, assignment, transfer or delivery by
executing and delivering such proper bill of sale, assignment, conveyance,
instrument of transfer or other instrument as may be designated in such request.
(4) Shipowner Barred. A sale of the Vessel made pursuant hereto
----------------
whether under the power of sale hereby granted or any judicial proceedings,
shall operate to divest all right, title and interest of any nature whatsoever
of the Shipowner therein and thereto, and shall bar the Shipowner, its
successors and assigns, and, subject to the provisions of Article III, Section
2(g) hereof, all Persons claiming by, through or under them. No purchaser shall
be bound to inquire whether notice has been given or whether any Indenture Event
of Default
EXHC-7
<PAGE>
or event of default hereunder has occurred, or as to the propriety of the sale,
or as to application of the proceeds thereof.
(5) Arrest By Third Party. (a) Subject to the provisions of Article
---------------------
III, Section (2)(g) hereof and any rights of the Charterer (including under
Article 7 of the Charter), in the event that an Indenture Event of Default shall
have occurred and be continuing and the Vessel shall be arrested or detained by
a marshal or other officer of any court of law, equity or admiralty jurisdiction
in any country of the world or by any government or other authority and shall
not be released from arrest or detention within thirty (30) days from the date
of arrest or detention, the Shipowner hereby authorizes the Mortgagee, in the
name of the Shipowner, to apply for and receive possession of and to take
possession of the Vessel with all of the rights and powers that the Shipowner
might have, possess and exercise in any such event. This authorization is
irrevocable.
(b) Subject to the provisions of Article III, Section (2)(g) hereof
and any rights of the Charterer, in the event that an Indenture Event of Default
(including Article 7 of the Charter), shall have occurred and be continuing, the
Shipowner irrevocably authorizes the Mortgagee or its appointees (with full
power of substitution) to appear in the name of the Shipowner in any court of
any country or nation of the world where a suit is pending against the Vessel
because of or on account of any alleged lien or claim against the Vessel from
which the Vessel shall not have been released in accordance with Article 15 of
the Charter.
(6) Powers of the Mortgagee. Subject to the provisions of Article
-----------------------
III, Section (2)(g) hereof, the Mortgagee is hereby appointed as attorney-in-
fact of the Shipowner, during the continuance of any Indenture Event of Default,
and upon compliance with the terms of the Indenture, in the name of the
Shipowner to demand, collect, receive, compromise and sue for, so far as may be
permitted by law, all freights, hire, earnings, issues, revenues, compensation,
income and profits of the Vessel, and all amounts due from underwriters under
any insurance thereon as payment of losses or as return premiums or otherwise,
salvage awards and recoveries, recoveries in general average or otherwise, and
to make, give and execute in the name of the Shipowner acquittances, receipts,
releases or other discharges for the same, whether under seal or otherwise, and
to endorse and accept in the name of the Shipowner all checks, notes, drafts,
warrants, agreements and all other instruments in writing with respect to the
foregoing.
(7) Application of Proceeds. Any monies collected by the Mortgagee
-----------------------
pursuant to any sale of the Vessel or other enforcement of any of its rights
hereunder on account of the occurrence of an Indenture Event of Default shall be
distributed in accordance with the provisions of Section 4.03 of the Indenture.
(8) No Exclusivity. Subject to the provisions of Article III,
--------------
Section (2)(g) hereof, no right or remedy herein conferred upon or reserved to
the Mortgagee is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given
EXHC-8
<PAGE>
hereunder or under the Indenture or now or hereafter existing at law, in equity,
in admiralty, by statute or otherwise. The assertion or employment of any right
or remedy hereunder or otherwise shall not prevent the concurrent or subsequent
assertion or employment of any other right or remedy hereunder or otherwise.
ARTICLE IV
SUNDRY PROVISIONS
(1) Recording. For the purposes of recording this First Ship
---------
Mortgage as required by the __________________________________, as amended, the
total amount of this Mortgage is (i) ______________________________________ and
(ii) interest, Make-Whole Amount, if any, and performance of mortgage covenants.
The discharge amount is the same as the total amount.
(2) Successors and Assigns. All the covenants, promises,
----------------------
stipulations and agreements of the Shipowner contained in this Mortgage shall
bind the Shipowner, its successors and assignees, and shall inure to the benefit
of the Mortgagee, its successors and assigns.
(3) Agents. Wherever and whenever herein any right, power or
------
authority is granted or given to the Mortgagee, such right, power or authority
may be exercised in all cases by the Mortgagee or such agent or agents as it may
appoint; and the authorized acts of such agent or agents when taken shall
constitute the act of the Mortgagee hereunder.
(4) Notices. Any notice or demand or other communication to the
-------
Shipowner or the Mortgagee under this Mortgage shall be made in accordance with
Section 10.05 of the Indenture.
(5) Governing Law. The provisions of this Mortgage shall, with
-------------
respect to its validity, effect, recordation and enforcement, be governed by and
construed in accordance with the applicable laws of the
__________________________.
(6) Termination of U.K. Documents. If the Conditional Sale Agreement
-----------------------------
and the Head Lease shall cease to be in full force and effect, this Mortgage
shall be read and construed as though such documents were not mentioned herein.
In such event, (a) to the extent permitted by applicable law, this Mortgage
shall succeed to the position of a first preferred ship mortgage, and the
Mortgagee shall have all of the rights of a mortgagee of a first preferred ship
mortgage, or (b) at the request of the Mortgagee, the Shipowner shall execute,
deliver and cause to be recorded, at the Shipowner's expense, in favor of the
Indenture Trustee a first preferred ship mortgage containing substantially
similar provisions to those of this Mortgage.
EXHC-9
<PAGE>
IN WITNESS WHEREOF, the Shipowner has caused this Mortgage to be duly
executed by its authorized representative the day and year first above written.
_____________________________ ,
not in its individual capacity but
solely as the Managing Trustee
By:__________________________
Name:
Title: Attorney-in-Fact
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of December, 1996, before me personally appeared
________________, known to me, and known to be the person who executed the
foregoing instrument, who, being by me duly sworn, did depose and say that he
resides at _______________________________; that he is Attorney-in-Fact of
__________________________________________________________, not in its
individual capacity but solely as the Managing Trustee of the ______________,
the party described in and which executed the foregoing instrument; that he
signed his name thereto by authority of a power of attorney issued by said Trust
and he further acknowledged such mortgage is the free act and deed of such
Trust.
____________________________
Notary Public
EXHC-10
<PAGE>
[For use in the ______________________]
EXHC-11
<PAGE>
EXHIBIT 4.4
EXECUTION COPY
--------------
TRUST INDENTURE, ASSIGNMENT OF CHARTER AND HEAD LEASE
AND SECURITY AGREEMENT
among
SAMOCO 1233 TRUST,
a Delaware Business Trust,
created under the
Trust Agreement dated
as of November 22, 1996, with
the Owner Participant thereto
and
STATE STREET BANK AND TRUST COMPANY
Indenture Trustee
Dated as of December 19, 1996
Leveraged Lease of one Very Large Crude Carrier
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.................................. 5
ARTICLE II
THE SECURED NOTES
SECTION 2.01. Secured Notes................................ 6
SECTION 2.02. Payment from Indenture Estate Only........... 7
SECTION 2.03. Method of Payment............................ 7
SECTION 2.04. Note Register................................ 8
SECTION 2.05. Registered Owners............................ 9
SECTION 2.06. Transfer, Exchange and Replacement of Notes.. 9
SECTION 2.07. New Notes, Payment of Expenses............... 10
SECTION 2.08. Additional Notes............................. 10
SECTION 2.09. Termination of Interest in Indenture Estate.. 14
SECTION 2.10. Equally and Ratably Secured.................. 14
ARTICLE III
REDEMPTION AND REFUNDING
SECTION 3.01. Generally................................ 14
SECTION 3.02. Mandatory Casualty Redemption............ 15
SECTION 3.03. Mandatory Early Termination Redemption... 15
SECTION 3.04. Assumption of Obligations of Owner Trust. 15
SECTION 3.05. Optional Redemption...................... 18
SECTION 3.06. Owner Trust's and Owner Participant's
Option to Redeem or Purchase Secured
Notes.................................... 18
SECTION 3.07. Deposited Redemption Moneys.............. 19
SECTION 3.08. Acquisition of Secured Notes............. 20
SECTION 3.09. Condition to Redemption and Refunding.... 20
SECTION 3.10. Notice of Certain Redemptions............ 20
<PAGE>
ii
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE INDENTURE ESTATE;
ACTIONS UPON VESSEL DELIVERY
SECTION 4.01. Distribution of Hire..................... 21
SECTION 4.02. Certain Distributions................... 22
SECTION 4.03. Distribution After Indenture Event of
Default................................. 22
SECTION 4.04. Application of Payments on Secured Notes 24
SECTION 4.05. Applications of Payments According to
Applicable Operative Document Provisions 24
SECTION 4.06. Amounts Received for Which No Provision
Is Made................................. 25
SECTION 4.07. Payment Procedures...................... 25
SECTION 4.08. Application of Payments Under Parent
Guaranty................................ 26
SECTION 4.09 Actions upon Vessel Delivery............. 26
ARTICLE V
COVENANTS OF OWNER TRUST AND THE OWNER TRUSTEES;
CERTAIN AGREEMENTS; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 5.01. Covenants of Owner Trust and the
Managing Trustee; Certain
Agreements.............................. 26
SECTION 5.02. Indenture Events of Default............. 28
SECTION 5.03. Certain Rights.......................... 30
SECTION 5.04. Remedies................................ 31
SECTION 5.05. Suit; Possession; Title; Sale of
Indenture Estate........................ 34
SECTION 5.06. Remedies Cumulative..................... 37
SECTION 5.07. Discontinuance of Proceedings........... 37
SECTION 5.08. Waiver of Past Defaults................. 38
SECTION 5.09. No Action Contrary to Certain Third
Party Rights............................ 38
SECTION 5.10. Rights of Holders of Secured Notes...... 38
SECTION 5.11. Limitation on Suits by Holders.......... 38
<PAGE>
iii
ARTICLE VI
DUTIES OF THE INDENTURE TRUSTEE
SECTION 6.01. Certain Actions......................... 39
SECTION 6.02. Action Upon Instructions................ 39
SECTION 6.03. Release of Lien of Indenture............ 40
SECTION 6.04. Indemnification......................... 41
SECTION 6.05. No Implied Duties....................... 41
SECTION 6.06. Duties to Remove Certain Liens.......... 41
SECTION 6.07. No Action Except Under Operative
Documents or Instructions............... 41
SECTION 6.08. Certain Rights of the Owner Trust
and the Owner Participant............... 42
SECTION 6.09. Filing of Financing and Continuation
Statements.............................. 43
SECTION 6.10. Publishing of Notices................... 43
SECTION 6.11. Taxes; Withholding; Information
Reporting............................... 43
ARTICLE VII
THE INDENTURE TRUSTEE AND THE OWNER TRUSTEE
SECTION 7.01. Acceptance of Trusts and Duties......... 44
SECTION 7.02. Absence of Duties Except as Specified... 44
SECTION 7.03. No Representations or Warranties........ 44
SECTION 7.04. No Segregation of Moneys; No Interest;
Investments............................. 45
SECTION 7.05. Reliance; Agents; Advice of Counsel..... 45
SECTION 7.06. No Compensation from Holders or
Indenture Estate........................ 46
SECTION 7.07. Right of the Indenture Trustee to
Perform Covenants, Etc.................. 46
SECTION 7.08. Moneys for Payments in Respect of
Notes to be Held in Trust............... 47
SECTION 7.09. Disposition of Moneys Held for
Payments of Notes....................... 47
ARTICLE VIII
SUCCESSOR TRUSTEES AND ADDITIONAL TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee....... 47
SECTION 8.02. Resignation of Indenture Trustee;
Appointment of Successor................ 48
SECTION 8.03. Co-Trustees and Separate Trustees....... 49
<PAGE>
iv
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Indenture Supplements Without Consent of
Holders..................................... 51
SECTION 9.02. Supplements and Amendments to Operative
Documents With Consent Holders of Notes..... 52
SECTION 9.03. Execution of Indenture Supplement,
Amendments, Etc............................. 56
SECTION 9.04. Effect of Indenture Supplement.............. 56
SECTION 9.05. Reference in Secured Notes to Indenture
Supplements................................. 56
SECTION 9.06. Notices of Indenture Supplements and
Amendments, Etc............................. 57
SECTION 9.07. Charterer Rights............................ 57
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture................... 57
SECTION 10.02. No Legal Title to Indenture Estate in
Holders.................................... 57
SECTION 10.03. Power of Attorney.......................... 58
SECTION 10.04. Regarding the Owner Trust and the Owner
Trustees................................... 58
SECTION 10.05. Notices.................................... 59
SECTION 10.06. Severability of Provisions................. 59
SECTION 10.07. No Oral Modification or Continuing Waivers. 59
SECTION 10.08. Successors and Assigns..................... 60
SECTION 10.09. Headings; Table of Contents................ 60
SECTION 10.10. Normal Commercial Relations................ 60
SECTION 10.11. Governing Law.............................. 60
SECTION 10.12. Execution.................................. 60
SECTION 10.13. Security Agreement......................... 60
SECTION 10.14. Benefits of Indenture...................... 60
Appendix A Definitions
Schedule 1 Description of Vessel
Exhibit A Form of Secured Note
Exhibit B Maturity Dates, Etc.
Exhibit C Form of Substitution Agreement
Exhibit D Form of Indenture Supplement
Exhibit E Form of Ship Mortgage
<PAGE>
TRUST INDENTURE, ASSIGNMENT OF CHARTER AND HEAD LEASE,
AND SECURITY AGREEMENT
This TRUST INDENTURE, ASSIGNMENT OF CHARTER AND HEAD LEASE, AND SECURITY
AGREEMENT dated as of December 19, 1996 (this "Indenture"), between SAMOCO 1233
---------
TRUST, a trust created pursuant to the Delaware Business Trust Act (the "Owner
-----
Trust") under the Trust Agreement (as hereinafter defined), under which DEUTSCHE
- -----
MORGAN GRENFELL (CAYMAN) LIMITED, a Cayman Islands banking corporation is the
Managing Trustee, (together with its permitted successors and assigns, the
"Managing Trustee"), acting not individually, except as otherwise provided
- -----------------
herein (when acting in such individual capacity, the "Cayman Trust Company"),
--------------------
but solely as trustee for the Owner Trust (the Managing Trustee in such capacity
being, the "Owner Trustee", and STATE STREET BANK AND TRUST COMPANY, a
-------------
Massachusetts trust company (together with its permitted successors and assigns,
the "Indenture Trustee").
-----------------
WITNESSETH:
----------
WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant, the Cayman Trust Company and Wilmington
Trust Company (the "Delaware Trust Company") have heretofore entered into the
Declaration of Agreement of Trust dated as of November 22, 1996 (the "Trust
-----
Agreement"), whereby, among other things, the Cayman Trust Company and the
- ---------
Delaware Trust Company in their respective capacities as Managing Trustee and
Delaware Trustee thereunder have declared a certain trust for the use and
benefit of the Owner Participant, subject, however, to the Lien of this
Indenture, and the Owner Trust is authorized and directed to execute and deliver
this Indenture;
WHEREAS, the Owner Trust desires by this Indenture to provide, among other
things, (i) for the issuance by the Owner Trust to the Pass Through Trustee of
the Series 1996-A-3 Secured Notes, a form of which is set forth in Exhibit A
hereto, upon payment by the Pass Through Trustee of the aggregate principal
amount of such Secured Notes, (ii) for the grant, assignment, mortgage and
pledge by the Owner Trust to the Indenture Trustee, as part of the Indenture
Estate thereunder, among other things, all of the right, title and interest of
the Owner Trust in, to and under, as the case may be, the Vessel (by virtue of
the grant hereunder and the grant under the Ship Mortgage), the Construction
Contract, the Bill of Sale, the Head Lease, the Conditional Sale Agreement, the
Charter and the Parent Guaranty, and all payments and other amounts received
hereunder or thereunder
<PAGE>
2
(other than Excepted Payments), in accordance with the terms hereof and thereof,
as security for, among other things, the Owner Trust's obligations to the
Indenture Trustee, the Loan Participants and the other Holders and for the
benefit and security of the Loan Participants and such Holders;
WHEREAS, all things have been done to make the Secured Notes, when executed
by the Owner Trust and authenticated, issued and delivered hereunder, the legal,
valid, binding and enforceable obligations of the Owner Trust in accordance with
their terms; and
WHEREAS, all things necessary to make this Indenture the legal, valid,
binding and enforceable obligation of the Owner Trust, for the uses and purposes
herein set forth, in accordance with its terms, have been done and performed and
have happened, and the Indenture Trustee has duly accepted the trust created
hereby and as evidenced thereof has joined in the execution hereof;
NOW, THEREFORE, THIS TRUST INDENTURE, ASSIGNMENT OF CHARTER AND SECURITY
AGREEMENT WITNESSETH that, to secure (i) the prompt payment of the principal of,
Make-Whole Amount, if any, and interest on all Secured Notes from time to time
Outstanding hereunder and of all other amounts payable to the Holders (whether
as Holders or Loan Participants) hereunder, under the Secured Notes and under
the other Operative Documents, (ii) the performance and observance by the Owner
Trust of all of the provisions, covenants and agreements contained in the
Participation Agreement, in the Secured Notes and in the other Operative
Documents for the benefit of the Indenture Trustee or the Holders herein, and
(iii) the performance and observance by the Owner Participant of its covenants
and agreements contained in the Operative Documents (the obligations described
in the above clauses (i), (ii) and (iii), collectively, the "Indenture
---------
Indebtedness"), and for the uses and purposes and subject to the terms and
- ------------
provisions hereof, and in consideration of the premises and of the covenants
herein contained and of the acceptance of the Secured Notes by the Holders
thereof:
GRANTING CLAUSE
---------------
The Owner Trust, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in order to secure the payment and
performance of the Indenture Indebtedness, hereby presently irrevocably
mortgages, hypothecates and pledges unto the Indenture Trustee and creates to
and for the benefit of the Indenture Trustee, a security interest in and
mortgage lien on, and assigns by way of security, all of the right, title and
interest of the Owner Trust in, to and under the following property, rights,
interests, and privileges, now owned or in the future acquired by the Owner
Trust or in which the Owner Trust now has or may in the future acquire any
estate, right, title or interest (which collectively, together with all of the
Indenture Trustee's right, title and interest in and to the
<PAGE>
3
Vessel described in the Ship Mortgage, by virtue of the grant of the Ship
Mortgage and the U.K. Security Assignment, including all property hereafter
subjected to the Lien of this Indenture, the Ship Mortgage or the U.K. Security
Assignment by any Indenture Supplement or any mortgage supplemental hereto or
thereto, but excluding Excepted Payments, shall constitute the "Indenture
---------
Estate"), to wit:
(a) all right, title and interest of the Owner Trust in the Vessel (as
described in Schedule 1 hereto), including, without limitation, any
Component (including any replacement Component) or Modification or
Alteration to the Vessel which, pursuant to the terms of the Conditional
Sale Agreement and the Charter, are the property of the Owner Trust;
(b) the Construction Contract, together with all amendments thereto,
and including, without limitation, all moneys and claims for moneys due and
to become due to the Owner Trust thereunder, subject to the rights of the
U.K. Lessor under the Conditional Sale Agreement;
(c) upon delivery of the Vessel, the Bill of Sale and all rights,
powers and remedies of the Owner Trust pursuant thereto, whether arising
thereunder or by statute, at law, in equity or otherwise, subject to the
rights of the U.K. Lessor under the Conditional Sale Agreement;
(d) the Charter, including, without limitation, (i) all amounts of
hire, rent, income insurance proceeds and requisition, indemnity or other
payments of any kind for or with respect to any asset leased or subleased
thereunder, (ii) all rights of the Owner Trust to exercise any election or
option, or to give any notice, consent, waiver or approval under or in
respect of the Charter, or to accept any surrender or enter into any
modification thereof, as the case may be, and (iii) all rights, powers and
remedies of the Owner Trust pursuant to the Charter, whether arising
thereunder or by statute, at law, in equity or otherwise, including,
without limitation, the right to possession of any asset demised
thereunder;
(e) the Conditional Sale Agreement, the Head Lease, the Lessee Support
Agreement and the Lessor's Mortgage, including, without limitation, (i) all
amounts payable to the Owner Trust under any of them, (ii) all right of the
Owner Trust to exercise any election or option, or to give any notice,
consent, waiver or approval under or in respect of any such agreement, or
to accept any surrender or enter into any modification thereof, as the case
may be, and (iii) all rights, powers and remedies of the Owner Trust
pursuant to any such agreement, whether arising thereunder or by statute,
at law, in equity or otherwise;
<PAGE>
4
(f) the Parent Guaranty, including without limitation, (i) all amounts
payable thereunder, (ii) all rights of the Owner Trust to exercise any
election or option, or to give any notice, consent, waiver or approval
under or in respect of the Parent Guaranty, or to accept any surrender or
enter into any modification thereof, as the case may be, and (iii) all
rights, powers and remedies of the Owner Trust pursuant to the Parent
Guaranty, whether arising thereunder or by statute, at law, in equity or
otherwise;
(g) all moneys and securities now or hereafter paid or deposited or
required to be paid or deposited to or with the Indenture Trustee pursuant
to any term of any Operative Document, and held or required to be held by
the Indenture Trustee hereunder;
(h) to the extent assignable, any and all permits, certificates,
approvals and authorizations, however characterized, issued or in any way
furnished in connection with the Vessel, whether necessary or not for the
operation and use of the Vessel;
(i) all the tolls, rents, issues, profits, products, revenues and
other income of the property subjected or required to be subjected to the
Lien of this Indenture, including all payments or proceeds payable to the
Owner Trust upon or after termination of the Charter as the result of the
sale, lease or other disposition thereof, and all estate, right, title and
interest of every nature whatsoever of the Owner Trust in and to the same
and every part thereof; and
(j) all rights or property which may be received upon the exercise of
any remedy or option contained in any of the above-described instruments
and all proceeds in whatever form of all or any part of any of the
foregoing;
EXCLUDING, HOWEVER, from the foregoing grant, and thereby from the
Lien of this Indenture and from the Indenture Estate, any and all Excepted
Payments; and
SUBJECT to the rights of the Owner Trust and the Owner Participant
hereunder, including, without limitation, Section 6.08;
TO HAVE AND TO HOLD the aforesaid property unto the Indenture Trustee,
its successors and assigns, for the benefit and security of the Holders, without
any priority of any one Secured Note over any other, and for the uses and
purposes and subject to the terms and conditions set forth in this Indenture.
This Indenture is a mortgage given to secure the payment of the Indenture
Indebtedness and is also intended to operate as, among other things, a security
agreement and an assignment of Bareboat Hire, leases and rents.
<PAGE>
5
It is expressly agreed that anything contained in this Indenture to
the contrary notwithstanding, the Owner Trust shall remain liable under the
Operative Documents to which it is a party or a third party beneficiary to
perform all of the obligations of the Owner Trust thereunder or by which it is
bound, all in accordance with and pursuant to the terms and provisions of each
thereof and the Holders and, except as expressly provided herein, the Indenture
Trustee shall have no obligation or liability under any Operative Document by
reason of or arising out of this Indenture. None of the Indenture Trustee or
any Holder shall be required or obligated in any manner to perform or fulfill
any obligation of the Owner Trust under or pursuant to any Operative Document
or, except as herein expressly provided, to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by it, or to
present or file any claim, or to take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time.
Simultaneously with the delivery pursuant to the Construction Contract
of the Vessel to the Owner Trust, the Owner Trust, as mortgagor, shall execute
and deliver the Ship Mortgage, substantially in the form annexed hereto as
Exhibit E, except that the blanks in such form shall be filled in and such form
may be modified as contemplated therein and shall execute and deliver to the
Indenture Trustee a Supplemental Indenture pursuant to Section 4.09 for the
purpose of including in the Indenture Estate all of the Owner Trust's right,
title and interest in the Bill of Sale and the Vessel.
Accordingly, the Owner Trust and the Indenture Trustee hereby agree
for themselves and for the benefit and security of the Holders as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Unless otherwise defined herein, for the
-----------
purposes hereof, capitalized terms used herein and not otherwise defined shall
have the meanings assigned to them in Appendix A. References in this Indenture
to Sections, subsections, paragraphs, Schedules, Appendices and Exhibits are to
Sections, subsections and paragraphs in, and Schedules, Appendices and Exhibits
to, this Indenture unless otherwise indicated.
<PAGE>
6
ARTICLE II
THE SECURED NOTES
SECTION 2.01. Secured Notes. (a) Generally. Except for Secured
------------- ---------
Notes issued pursuant to Section 2.06 or 2.08, Secured Notes may be issued only
on the Closing Date. On the Closing Date, the Secured Notes to be issued on
such date pursuant to Section 2.2 of the Participation Agreement shall be duly
executed by the Managing Trustee on behalf of the Owner Trust, duly
authenticated and delivered by the Indenture Trustee and registered in the name
of the Loan Participant to which such Secured Note is being issued. Each
Secured Note shall have attached thereto the Amortization Schedule for such
Secured Note. Receipt by the Indenture Trustee of Secured Notes duly executed
by the Managing Trustee on behalf of the Owner Trust shall constitute
instructions to the Indenture Trustee to authenticate, register and deliver such
Secured Notes on the Closing Date.
(b) Series 1996 A-3 Secured Notes. The Series 1996 A-3 Secured Notes
-----------------------------
shall:
(i) be limited in aggregate principal amount (including the full
accretion of discount) to the amount specified in Exhibit B hereto (the
principal amount of such Secured Notes shall be the Accreted Value of such
Secured Note during the period prior to the Full Accrual Date, and
thereafter, the face amount thereof as such amount may be reduced from time
to time by the payment of principal installments thereunder);
(ii) be issuable only as registered Secured Notes in denominations of
at least $1,000, or if the remaining principal amount thereof shall be less
than $1,000, such remaining principal amount;
(iii) be dated the Closing Date;
(iv) bear interest on the unpaid principal amount thereof from the
date of such Series 1996A-3 Secured Notes to the Full Accrual Date thereof
in the form of accretion of discount, and after the Full Accrual Date with
respect to such Secured Notes, at the rate specified in Exhibit B (computed
on the basis of a 360-day year consisting of twelve 30-day months);
(v) provide for payments of interest and otherwise be due and payable
as to principal and interest as specified herein and therein;
(vi) be prepayable only as provided in Article III; and
<PAGE>
7
(vii) be substantially of the tenor and in the form set forth in
Exhibit A.
(c) Execution and Authentication. Each Secured Note shall be signed
----------------------------
on behalf of the Owner Trust by a Responsible Officer of the Managing Trustee,
manually or in facsimile. No Secured Note shall be secured by or entitled to
any benefit under this Indenture, or be valid for any purpose, unless there
appears thereon a certificate of authentication executed by or on behalf of the
Indenture Trustee by the manual signature of a Responsible Officer of the
Indenture Trustee, and such certificate on any Secured Note shall be conclusive
evidence that such Secured Note has been duly authenticated and delivered
hereunder.
SECTION 2.02. Payment from Indenture Estate Only. All payments of
----------------------------------
principal, Make-Whole Amount, if any, and interest to be made by the Owner Trust
and, except as otherwise provided in the Operative Documents, all payments of
any other amounts payable by or on behalf of the Owner Trust under the Secured
Notes and this Indenture, shall be made only from the income and proceeds from
the Indenture Estate, and only to the extent that the Indenture Trustee shall
have received sufficient income or proceeds from the Indenture Estate to make
such payments in accordance with the terms hereof. Each Holder, by its
acceptance of a Secured Note, agrees that it will look solely to the income and
proceeds from the Indenture Estate to the extent available for payment as herein
provided and that (a) none of the Managing Trustee or the Indenture Trustee
(whether in their respective individual or trust capacities) or the Owner Trust
shall be personally liable to such Holder for any amounts payable under the
Secured Notes, nor, except as specifically provided herein or in the other
Operative Documents, for any amounts payable or any liability under this
Indenture and (b) the Owner Participant shall not be liable to the Indenture
Trustee or to any Holder under any circumstances for any reason whatsoever,
except to the extent expressly provided herein or in any other Operative
Document.
SECTION 2.03. Method of Payment. (a) The principal of, and Make-
-----------------
Whole Amount, if any, and interest, on each Secured Note shall be payable in
immediately available funds, the receipt of which has been confirmed by a
Responsible Officer of the Indenture Trustee (which shall be done promptly upon
receipt thereof) on or before 12:00 p.m., New York time, at the place of
receipt, on the due date therefor, to the Indenture Trustee at the corporate
trust office of the Indenture Trustee. Amounts so received by the Indenture
Trustee shall be paid by the Indenture Trustee to each Holder on the due date
therefor without any presentment or surrender of any Secured Note held by such
Holder by whichever of the following methods shall be specified by prior written
notice from such Holder to the Indenture Trustee: (i) by transferring prior to
2:00 p.m., New York City time, on such date such payment to such Holder in
immediately available funds by crediting the amount to be distributed to any
Holder to any account maintained by such Holder with the Indenture Trustee or
(ii) by initiating a wire transfer prior to the time set forth in clause (i) of
this Section 2.03(a) of such amount in immediately available funds to a banking
institution
<PAGE>
8
designated in such notice with bank wire transfer facilities for the account of
such Holder, in all cases without any presentment or surrender of any Secured
Note, except that, on the date of the final maturity thereof (whether at
maturity, upon prepayment, acceleration or otherwise), the Holder of each
Secured Note shall surrender such Secured Note promptly after payment; provided
that failure to so present such Secured Note shall not diminish the effect of
full and final payment by the Owner Trust. In the event the Indenture Trustee
shall fail to make any payment as provided in the preceding sentence after its
receipt of funds at the place and on or before the time specified in this
Section 2.03(a), the Indenture Trustee in its individual capacity agrees to
compensate each Holder for loss of use of funds in an amount equal to the
overnight rate for Federal Funds.
(b) Whenever any payment to be made hereunder or pursuant to the terms
of any Secured Note shall be stated to be due on a day which is not a Business
Day, such payment shall be due and payable on the next succeeding Business Day
with the same force and effect as if made on such scheduled date and (provided
such payment is timely made on such succeeding Business Day) no interest shall
accrue on the amount of such payment from and after such scheduled date.
(c) If payment of any installment of principal or interest payable in
accordance with the terms hereof and of the Secured Notes is not paid in full
when due, whether as scheduled or upon acceleration and whether before or after
the maturity date of the Secured Notes, such overdue amount of principal or
interest shall bear (to the extent not prohibited by applicable law) interest,
payable on demand, for each day from and including the date payment thereof was
due to the actual date of payment, at the Overdue Rate.
(d) Subject to Section 6.11, the Holder of any Secured Note shall be
entitled to the principal of, and the Make-Whole Amount, if any, and interest on
such Secured Note free from all rights of set-off or counterclaims of the Owner
Trust, the Indenture Trustee or any prior Holder of such Secured Note. Nothing
set forth in this Section 2.03(d) shall impair the right of the Owner Trust to
receive a return from the Indenture Trustee of any amount unintentionally
overpaid by the Owner Trust in respect of a Secured Note.
SECTION 2.04. Note Register. The Indenture Trustee shall cause to be
-------------
kept at the Indenture Trustee's corporate trust office a register (the "Note
----
Register") for the registration or transfer of the Secured Notes. The Note
- --------
Register shall be maintained by the Indenture Trustee, and the names and
addresses of the registered Holders of the Secured Notes, the transfers of the
Secured Notes and the names and addresses of the transferees of the Secured
Notes shall be entered in the Note Register under such reasonable regulations as
the Indenture Trustee may prescribe. Each Loan Participant shall be provided
reasonable opportunities to inspect the Note Register from time to time.
<PAGE>
9
SECTION 2.05. Registered Owners. The Owner Trust and the Indenture
-----------------
Trustee may deem and treat any registered Holder as the absolute owner of any
Secured Note held by such Holder, as indicated in the Note Register, for the
purpose of receiving payment of all amounts payable with respect to such Secured
Note and for all other purposes, and neither the Owner Trust nor the Indenture
Trustee shall be affected by any notice to the contrary. All such payments so
made shall be valid and effectual to satisfy and discharge the liability of the
Owner Trust upon such Secured Note to the extent of the sum or sums so paid.
SECTION 2.06. Transfer, Exchange and Replacement of Notes. (a)
-------------------------------------------
Secured Notes may be transferred only on the Note Register. Any Secured Note
may be transferred on the Note Register if such Secured Note is surrendered for
cancellation at the corporate trust office of the Indenture Trustee and is
accompanied by an instrument of transfer in form and substance reasonably
satisfactory to the Indenture Trustee, which Secured Note or Secured Notes shall
be cancelled by the Indenture Trustee. A new Secured Note or Secured Notes of
the same series, duly executed by the Owner Trust and registered in the name of
the transferee or transferees in a principal amount or amounts equal to the
principal amount of such transferred Secured Note, shall be duly authenticated
and delivered by the Indenture Trustee to the transferee or transferees named by
the Holder of such transferred Secured Note in exchange for such transferred
Secured Note. Promptly after registration of the transfer of any Secured Note,
the Indenture Trustee shall give notice thereof to the Charterer and the Owner
Trust specifying the name and address for notices of the transferee or
transferees.
(b) Any Secured Note may be exchanged for a new Secured Note if such
Secured Note to be so exchanged is surrendered for cancellation at the corporate
trust office of the Indenture Trustee and is accompanied by the request of the
Holder thereof specifying the denomination of the new Secured Note (which shall
be in denominations of at least $1,000 or, if less, the then unpaid principal
amount thereof) to be issued in exchange therefor. Upon instructions from the
Indenture Trustee, the Owner Trust shall deliver to the Indenture Trustee a new
Secured Note of the same series, duly executed by the Owner Trust and registered
in the name of such Holder in the denominations so requested and in an aggregate
principal amount equal to the aggregate original principal amount of such
Secured Note to be so exchanged, and such new Secured Note shall be duly
authenticated by the Indenture Trustee and delivered by the Indenture Trustee to
such Holder in exchange for such Secured Note to be so exchanged, which Secured
Note shall be cancelled by the Indenture Trustee.
(c) If any Secured Note shall become mutilated or be destroyed, lost
or stolen, upon request of the Holder thereof, a new Secured Note of the same
series, duly executed by the Owner Trust and registered in the name of such
Holder in the same original principal amount as the Secured Note so mutilated,
destroyed, lost or stolen, shall be duly
<PAGE>
10
authenticated and delivered by the Indenture Trustee to such Holder in exchange
for such Secured Note, if mutilated, or in substitution for such Secured Note,
if destroyed, lost or stolen. In the case of a mutilated Secured Note, such
Secured Note shall be surrendered for cancellation at the corporate trust office
of the Indenture Trustee and shall be cancelled by the Indenture Trustee. In
the case of a destroyed, lost or stolen Secured Note, the Holder thereof shall
furnish to the Owner Trust and the Indenture Trustee (i) evidence to their
reasonable satisfaction of the destruction, loss or theft of such Secured Note
and ownership thereof, and (ii) such security or indemnity as may be reasonably
required by them to save them harmless; provided that if the affected Holder is
a Pass Through Trustee, the written agreement of such Holder to indemnify the
Managing Trustee, the Delaware Trustee, the Indenture Trustee and the Owner
Trust (in their respective individual and trust capacities) with respect to such
destroyed, lost or stolen Secured Note, together with written notice of
ownership and destruction, loss or theft thereof, shall satisfy the conditions
of this sentence.
SECTION 2.07. New Notes, Payment of Expenses. (a) Each new Secured
------------------------------
Note issued pursuant to Section 2.06 (a "New Note") upon transfer of, in
--------
exchange for or in substitution for a Secured Note (an "Old Note") shall be
--------
dated as of the date of such Old Note. The Indenture Trustee shall mark on each
New Note (i) the date to which principal and interest have been paid on the
applicable old Note and (ii) all payments and prepayments of principal made on
such Old Note which are allocable to such New Note. Interest shall be deemed to
have been paid on such New Note to the date to which interest was paid on the
applicable Old Note, and all payments and prepayments of principal required to
have been marked on such New Note, as provided in clause (ii) of the preceding
sentence, shall be deemed to have been made thereon. All New Notes issued
pursuant to Section 2.06 in exchange for or in substitution for or in lieu of
Old Notes shall be valid obligations of the Owner Trustee evidencing the same
debt as such Old Notes and shall be entitled to the benefits and security of
this Indenture to the same extent as such Old Notes. Issuance of any New Note
shall not for any purposes be deemed a further advance of funds to the Owner
Trustee and the perfection and priority of the security interest in the
Indenture Estate applicable to such New Note shall for all purposes be the same
as that applicable to the Secured Note replaced by such New Note.
(b) Upon the issuance of a New Note or New Notes pursuant to Section
2.06, the Owner Trust and/or the Indenture Trustee may require from the party
requesting such New Note or New Notes payment of a sum to reimburse the Owner
Trust and/or the Indenture Trustee for, or to provide funds for, the payment of
any tax or other governmental charge or any other charge or expense paid or
payable with respect to such transfer by the Owner Trust or the Indenture
Trustee, without any right of reimbursement under any Operative Document with
respect to such payments.
SECTION 2.08. Additional Notes. (a) So long as no Charter Event of
----------------
Default or Indenture Event of Default shall have occurred and be continuing,
Additional
<PAGE>
11
Notes of one or more series may be issued under and secured by this Indenture at
any time or from time to time, subject to the conditions hereinafter provided in
this Section 2.08, for the purpose of providing funds to finance (i) a portion
of the initial cost of the Vessel if the U.K. Financing is not concluded, (ii)
the cost of any Modifications to the Vessel undertaken pursuant to Article 13 of
the Charter and (iii) the cost of any Alteration to the Vessel undertaken
pursuant to Section 15 of the Construction Contract.
(b) Prior to the issuance of any Additional Notes of any series
pursuant to this Section 2.08, the Owner Trust shall have received from the
Owner Participant and delivered to the Indenture Trustee, not less than thirty
(30) days prior to the proposed date of issuance of such Additional Notes, a
request and authorization to issue Additional Notes (a "Request"), which Request
-------
shall include the amount and series of such Additional Notes, the proposed date
of issuance of such Additional Notes and other details with respect thereto
which are not inconsistent with this Section 2.08. Such Additional Notes shall
have a designation so as to distinguish such Additional Notes from the Initial
Secured Notes and Additional Notes of any other series, but otherwise shall be
substantially similar in form to the Initial Secured Notes, with such omissions
therefrom, variations therein and additions thereto as shall be appropriate.
Such Additional Notes shall be denominated and payable in United States Dollars
and shall rank pari passu with all other Secured Notes issued pursuant to the
terms hereof.
(c) The terms, conditions and designations of such Additional Notes
(which shall be consistent with the Request and with the terms of this Indenture
and of the Participation Agreement) shall be set forth in a supplement to this
Indenture in form and substance satisfactory to the Indenture Trustee, which
shall be executed by the Owner Trust and the Indenture Trustee. Such indenture
supplement shall set forth:
(i) after giving effect to the issuance of the Additional Notes
pursuant to clause (a)(i) of this Section 2.08, the aggregate unpaid
principal amount of all Secured Notes Outstanding (which shall not exceed
80% of the initial cost of the Vessel to the Owner Trust);
(ii) after giving effect to the issuance of the Additional Notes
pursuant to clauses (a)(i) and (a)(ii) of this Section 2.08, the aggregate
unpaid principal amount of all Secured Notes Outstanding (including any
other Additional Notes issued under this Section 2.08) (which shall not
exceed 85% of the total Fair Market Sales Value of the Vessel (as
determined pursuant to the Appraisal Procedure) after giving effect to such
Modifications or Alterations);
(iii) the text of such Additional Notes (which, except for the terms
of payment thereof, shall be of substantially the same effect as the text
of the initial Secured Notes set forth in this Indenture, with such changes
as are consistent with and
<PAGE>
12
permitted by this Indenture and which in all events shall provide that such
Additional Notes are never more than pari passu in priority of payment, in
right of security and in all other respects with the Initial Secured
Notes);
(iv) the date of maturity of such Additional Notes (which shall be no
later than the end of the Charter Period);
(v) the date from which, and the date or dates on which, interest is
payable (which shall be Interest Payment Dates);
(vi) the terms for the repayment of the principal amount of such
Additional Notes (each regularly scheduled payment of principal shall be on
an Interest Payment Date);
(vii) the terms, if any, as to prepayment or redemption of such
Additional Notes at the option of the Owner Trust, and as to the premium,
if any, payable on any redemption or prepayment of such Additional Notes;
and
(viii) any other terms and agreements in respect thereof provided or
permitted by this Indenture or necessary to specify the terms and
conditions on which such Additional Notes shall be issued.
(d) Such Additional Notes shall be executed by the Owner Trust as
provided in Section 2.01 and deposited with the Indenture Trustee for
authentication and delivery, but before such Additional Notes shall be
authenticated and delivered by the Indenture Trustee, there shall be delivered
to or deposited with the Indenture Trustee the following:
(i) the Request;
(ii) such supplement to this Indenture, duly executed by the Owner
Trust;
(iii) a supplement to the Charter, duly authorized, executed and
delivered by the Charterer and the Owner Trust, providing for adjustments
to the Assigned Hire required to ensure that payments of Assigned Hire will
be adequate to provide for the payment, when due, of all scheduled payments
of principal of, Make-Whole Amount, if any, and interest on the Secured
Notes, including any other Additional Notes, after giving effect to the
issuance of such Additional Notes, together with such instruments of
conveyance, assignment and transfer, if any, necessary to subject such
supplement to the Charter to the Lien and security interest of this
Indenture and to perfect such Lien and security interest subject to no
Liens other than Permitted Liens, and
<PAGE>
13
evidence as to the due recording or filing of each thereof or of financing
or similar statements with respect thereto;
(iv) such instruments of conveyance, assignment and transfer
(including, without limitation, contractors' waivers) duly executed and
delivered by the respective parties thereto, and such evidence of the due
filing thereof or of financing statements with respect thereto, as may be
required to convey to the Owner Trust all property included in such
Modification or Alteration, if any, and to subject such property to the
Lien of this Indenture, subject to no Liens except Permitted Liens;
(v) an amendment to the Ship Mortgage so that it will secure the
Additional Notes or an opinion of counsel that such amendment is not
required;
(vi) if the Head Lease is in effect, if necessary, an amendment to the
Head Lease so that the amount set forth on Schedule 7 thereof on each date
will be greater than the scheduled principal amount of the Secured Notes
including such Additional Notes to be Outstanding on such date;
(vii) originals or certified copies of all corporate actions
necessary for the due and valid issue of such Additional Notes, the due and
valid authorization, execution, delivery and performance by the Owner Trust
of the supplement to this Indenture relating thereto, and the due and valid
authorization, execution, delivery and performance by the Charterer and the
Owner Trust of the supplement to the Charter and the creation of the Lien
and security interest thereon referred to above, all of which corporate
actions shall have been duly obtained and shall be in full force and
effect, together with evidence as to the due occurrence of all such
authorization, execution, delivery and performance;
(viii) documentation, duly executed and delivered by the respective
parties thereto whereby the proposed holders of the Additional Notes agree
to be bound by the terms of the Operative Documents (including, without
limitation, representations and covenants corresponding to those contained
in Section 12.2 of the Participation Agreement);
(ix) an Officer's Certificate of the Charterer certifying (a) as to
the cost of such Modification or Alteration and (b) that all conditions
precedent to the issuance of the Additional Notes contained in this Section
2.08 have been satisfied unless such conditions have been waived in writing
by the Indenture Trustee and the Owner Trust;
(x) such opinions of counsel as are customary in transactions of this
type, including, without limitation, opinions as to the due authorization,
execution, delivery and enforceability of such supplement to this Indenture
and such Additional Notes and
<PAGE>
14
the creation and perfection of the security interest in such Modification
or Alteration (subject to usual or customary exceptions, qualifications and
assumptions), and such other certificates and other documents as may be
reasonably requested by the Indenture Trustee to evidence the validity and
binding effect of such supplement to this Indenture and such Additional
Notes and compliance with this Section 2.08; and
(xi) Rating Agency Confirmation with respect to the issuance of such
Additional Notes.
(e) When the documents referred to in Section 2.08(d) shall have been
delivered to or deposited with the Indenture Trustee and when such Additional
Notes described in the Request and the supplement to this Indenture have been
executed by the Owner Trust as required by this Indenture, the Indenture Trustee
shall authenticate and deliver such Additional Notes in the manner described in
such Request, but only upon payment to the Owner Trust of the sum or sums
specified in such Request, whereupon the Owner Trust shall pay such sum or sums
to the Charterer.
SECTION 2.09. Termination of Interest in Indenture Estate. A Holder
-------------------------------------------
shall have no further interest in, or other right with respect to, the Indenture
Estate upon the payment of all principal of, Make-Whole Amount, if any, and
interest on, any Secured Notes held by such Holder and all other sums payable to
such Holder hereunder with respect to any such Secured Notes under the other
Operative Documents and under such Secured Notes.
SECTION 2.10. Equally and Ratably Secured. Except as otherwise
---------------------------
expressly provided in this Indenture, all Secured Notes, including any
Additional Notes, at any time Outstanding under this Indenture shall be equally
and ratably secured by this Indenture without preference, priority or
distinction on account of the series, date, time of issue or maturity of such
Secured Notes. All Additional Notes at any time Outstanding under this
Indenture shall be equally and ratably secured by this Indenture without
preference, priority or distinction on account of the series, date, time of
issue or maturity of such Additional Notes.
ARTICLE III
REDEMPTION AND REFUNDING
SECTION 3.01. Generally. The Secured Notes may not be redeemed or
---------
prepaid except to the extent and in the manner expressly permitted or required
by this Indenture. Except as otherwise expressly provided in this Indenture,
any amount prepaid in partial redemption of the Secured Notes Outstanding shall
be distributed by the Indenture Trustee to all Holders ratably, without priority
of any Holder over any other Holder, in the
<PAGE>
15
proportion that the principal amount of Secured Notes held by such Holder bears
to the principal amount of all Secured Notes then Outstanding.
SECTION 3.02. Mandatory Casualty Redemption. In the event that (i)
-----------------------------
an Event of Loss shall occur with respect to the Vessel, (ii) the Construction
Contract shall be terminated prior to delivery of the Vessel under circumstances
which would make the Owner Trust eligible for a refund under Section 6(f) of the
Construction Contract or (iii) the Vessel shall not have been delivered to the
Owner Trust by the Builder by the Final Delivery Date, then the Owner Trust
shall redeem, on the date on which Termination Value is paid pursuant to the
Charter (the date of any redemption under this Section 3.02 being herein called
a "Casualty Redemption Date"), the entire unpaid principal amount of the Secured
------------------------
Notes Outstanding on such Casualty Redemption Date at a redemption price equal
to 100% of the unpaid principal amount of the Secured Notes, together with any
accrued and unpaid interest thereon to such Casualty Redemption Date and without
the payment of any Make-Whole Amount or other premium.
SECTION 3.03. Mandatory Early Termination Redemption. (a) In the
--------------------------------------
event that (i) the Construction Contract shall be terminated prior to delivery
of the Vessel under circumstances which would not make the Owner Trust eligible
for a refund under Section 6(f) of the Construction Contract or (ii) the Head
Lease is terminated under circumstances where the (x) Charter is terminated or
(y) the Vessel is sold pursuant to the Head Lease and the purchaser of the
Vessel is not substituted as obligor of the Secured Notes issued thereunder
pursuant to Section 3.04, the Owner Trust shall redeem in whole on the date on
which Termination Value is paid pursuant to the Charter (the date of any
redemption under this Section 3.03(a) being herein called a "Special Termination
-------------------
Redemption Date") the entire unpaid principal amount of the Secured Notes
- ---------------
Outstanding on such Special Termination Redemption Date, at a redemption price
equal to 100% of the unpaid principal amount of the Secured Notes, together with
any accrued and unpaid interest thereon to such Special Termination Redemption
Date plus a premium equal to the Make-Whole Amount, if any.
(b) In the event that the Charter with respect to the Vessel is
terminated pursuant to Article 18 of the Charter, the Owner Trust shall redeem
in whole on the applicable Termination Date (the date if any redemption under
this Section 3.03(b) being herein called a "Termination Redemption Date") the
---------------------------
entire unpaid principal amount of the Secured Notes Outstanding on such
Termination Redemption Date, at a redemption price equal to 100% of such unpaid
principal amount of the Secured Notes, together with any accrued and unpaid
interest thereon to such Termination Redemption Date plus a premium equal to the
Make-Whole Amount, if any, and otherwise without premium.
SECTION 3.04. Assumption of Obligations of Owner Trust. (a) If, in
----------------------------------------
connection with a termination of the Head Lease, the Vessel is sold to another
owner trust (the "Substitute Obligor"), the Substitute Obligor may assume all of
------------------
the rights and obligations
<PAGE>
16
of the Owner Trust under this Indenture and the other Operative Documents to
which the Owner Trust is a party (the date of any such assumption being referred
to hereinafter as the "Substitution Date") and the Secured Notes shall not be
-----------------
redeemed pursuant to Section 3.02 if on or prior to the Substitution Date:
(i) the Indenture Trustee shall have received a certificate executed
by the Charterer, dated the Substitution Date, stating that the Charterer
has paid to the Owner Trust all amounts, if any, required to be paid to the
Owner Trust pursuant to the Trust Agreement and the other Operative
Documents in connection with such assumption and that the Substitute
Obligor has received title to the Vessel, and such substitute owner trust
shall provide to the Indenture Trustee an executed copy of the trust
agreement pursuant to which such substitute owner trust was organized;
(ii) each substitute owner trustee shall have delivered to the
Indenture Trustee the notice required to be delivered pursuant to Section
8.01, together with evidence satisfactory to the Indenture Trustee of such
substitute owner trustee's compliance with Section 10.1 of the Trust
Agreement;
(iii) the Substitute Obligor shall have executed and delivered to the
Indenture Trustee a supplement to this Indenture and the other Operative
Documents, substantially in the form of Exhibit C (the "Substitution Date
-----------------
Agreement"), duly executed by the Substitute Obligor, whereby such
---------
Substitute Obligor shall agree that it is purchasing the Vessel Interest
subject to the mortgage and security interest of this Indenture (or a
mortgage and security interest in the same or substantially identical
terms) on the Vessel Interest in favor of the Indenture Trustee and
assuming the obligations and liabilities of the Owner Trust under the
Indenture, the Secured Notes and each other Operative Document to which the
Owner Trust is a party, as provided in Section 2 of the form of
Substitution Date Agreement attached as Exhibit C;
(iv) the Indenture Trustee shall have received, on or prior to the
Substitution Date, evidence of all filings, recordings and other actions
referred to in the opinion of counsel referred to below;
(v) the Charterer shall have confirmed in writing to the Indenture
Trustee that the Charter remains in full force and effect and the Guarantor
shall have confirmed in writing to the Indenture Trustee that the Parent
Guaranty remains in full force and effect;
(vi) the Substitute Obligor shall have caused to be delivered to the
Indenture Trustee an opinion of counsel to the effect that such assumption
will not have an adverse United States income tax effect on the holders of
the Pass Through
<PAGE>
17
Certificates and such holders will be taxed under United States tax law in
the same manner as if such assumption had not occurred;
(vii) the Substitute Obligor shall have caused to be delivered to the
Indenture Trustee opinions of counsel as are customary for transactions of
this type, subject to usual or customary qualifications, exceptions and
assumptions, and shall include opinions, subject to such qualifications,
exceptions and assumptions, to the effect that, after giving effect to the
Substitution Date Agreement:
(A) on the Substitution Date, this Indenture, as supplemented by
the Substitution Date Agreement and the Secured Notes issued
thereunder constitute the legal, valid and binding obligations of the
Substitute Obligor, enforceable against such Substitute Obligor in
accordance with their terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and by
general principles of equity, and except as limited by applicable laws
which may affect the remedies provided for in this Indenture as so
supplemented, which laws, however, do not in the opinion of such
counsel make the remedies provided for in this Indenture inadequate
for the practical realization of the rights and benefits provided for
in this Indenture as so supplemented;
(B) on the Substitution Date, each of the Charter and Parent
Guarantee, constitutes the legal, valid and binding obligations of the
Charterer, the Substitute Obligor and the Guarantor, as the case may
be, enforceable in accordance with its terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general principles of equity; and
(C) the Lien of this Indenture, including the Ship Mortgage, on
the Vessel, has been accomplished and creates a security interest in
the Indenture Estate and all filings and recordings and other action
necessary or appropriate to perfect the interests of the Indenture
Trustee have been accomplished;
(ix) the Indenture Trustee shall have received Rating Agency
Confirmation with respect to such assumption; and
(x) after giving effect to the substitution no Indenture Event of
Default shall have occurred and be continuing
(b) Upon satisfaction of the conditions and the delivery of such
documents set forth in Section 3.04(a), the Indenture Trustee shall execute and
deliver the Substitution
<PAGE>
18
Date Agreement, and automatically and without the requirement of further action
by any Person, effective as of the Substitution Date, the Owner Trustees and the
Owner Trust shall be released from all of its obligations under this Indenture
in respect of the Secured Notes (other than any obligations or liabilities of
either Owner Trustee in its individual capacity incurred on or prior to the
Substitution Date or arising out of or based upon events occurring on or prior
to the Substitution Date, which obligations and liabilities shall remain the
sole responsibility of such Owner Trustee) and such Substitute Obligor and each
successor owner trustee shall immediately and without further act, be
substituted for and assume all of the respective obligations of the Owner Trust
and the Owner Trustees under this Indenture and the Secured Notes.
SECTION 3.05. Optional Redemption. The Owner Trust may at any time
-------------------
with the prior written consent of the Charterer redeem in whole all Outstanding
Secured Notes at a redemption price equal to 100% of the unpaid principal amount
of the Secured Notes to be redeemed pursuant to this Section 3.05, together with
any accrued and unpaid interest thereon to the date of redemption, plus a
premium equal to the Make-Whole Amount, if any, with respect to the Secured
Notes.
SECTION 3.06. Owner Trust's and Owner Participant's Option to Redeem
------------------------------------------------------
or Purchase Secured Notes. In the event that (a) at any time one or more
- -------------------------
Charter Events of Default shall have occurred and be continuing and such Charter
Event of Default shall have continued for a period of less than 270 days, during
which time the Secured Notes shall not have been accelerated pursuant to Section
5.04, or (b)(i) at any time one or more Charter Events of Default shall have
occurred and be continuing and such Charter Event of Default shall have
continued for a period of 270 days or more during which time the Secured Notes
shall not have been accelerated pursuant to Section 5.04, (ii) the Indenture
Trustee shall have given the Owner Trust or the Owner Participant notice of the
intent to accelerate the Secured Notes pursuant to Section 5.04, (iii) the
Secured Notes shall have been accelerated pursuant to Section 5.04, the Owner
Trust or the Owner Participant may, at its option, give at least 25 days' prior
irrevocable notice to the Indenture Trustee that it will redeem (or purchase in
lieu of redemption) all Secured Notes then Outstanding, which redemption or
purchase shall be at a redemption or purchase price equal to 100% of the unpaid
principal amount of such Secured Notes, together with any accrued and unpaid
interest thereon, plus in the case of any redemption or purchase pursuant to
clause (a) above, a premium equal to the Make-Whole Amount, if any, with respect
to such Secured Note, and on or prior to the Business Day preceding such
Redemption Date, the Owner Trust or the Owner Participant will deposit with the
Indenture Trustee an amount sufficient to redeem or purchase at the applicable
Redemption Price all Secured Notes then Outstanding (including, in the case of a
redemption or purchase pursuant to clause (a) above, a good faith estimate of
the premium computed as provided for herein) plus an amount equal to all other
sums then due and payable to each Loan Participant hereunder, and to pay the
Indenture Trustee all amounts then due it hereunder, which funds shall be held
by the Indenture Trustee as provided in Section 7.04.
<PAGE>
19
Upon the giving such notice and the receipt by the Indenture Trustee of such
deposit, the Indenture Trustee shall deem all instructions received from the
Owner Trustee or the Owner Participant as having been given by the Loan
Participants of 100% of the Outstanding principal amount of Secured Notes for
all purposes of this Indenture. If such notice is given, the Owner Trust
further agrees that it will deposit, or cause to be deposited with the Indenture
Trustee, on or prior to the Business Day preceding the applicable Redemption
Date, whether or not an Indenture Event of Default is then continuing, funds
sufficient, when added to the funds already held by the Indenture Trustee for
such purpose, to redeem or purchase at the applicable Redemption Price
(including the premium actually payable in respect thereof computed as provided
for herein), on such Redemption Date all Secured Notes then Outstanding to pay
all other sums then due and payable to each Loan Participant hereunder and to
pay the Indenture Trustee all amounts then due it hereunder. In the event the
Owner Trust shall have given any such notice to purchase or redeem, unless the
Owner Trustee shall have consented thereto, the Indenture Trustee shall not
during the period from such notice to the Redemption Date specified therein
institute any new remedy or proceeding in respect of any new remedy under this
Indenture, and the Indenture Trustee shall, to the extent the same may be
accomplished without prejudicing the rights of the Indenture Trustee hereunder,
take such actions and forbear from taking actions, in each case sufficient to
maintain the status quo with respect to any pending remedies or proceedings in
respect thereof being then pursued hereunder; provided, however, that in no
event shall the Indenture Trustee sell or assign any portion of the Indenture
Estate during the period from such notice to the Redemption Date specified
therein. In the event the Owner Trust shall have given any such notice to
purchase or redeem, and the Owner Trust has deposited with the Indenture Trustee
the amounts required to be deposited pursuant to this Section 3.06, then on the
Redemption Date, each Loan Participant will be deemed to sell, assign, transfer
and convey to the Owner Trust or its designee (without recourse or warranty of
any kind other than of title to the Secured Notes so conveyed) all of the right,
title and interest of such Loan Participant in and to the Secured Notes held by
such Loan Participant. On and after such Redemption Date, the Indenture Trustee
shall no longer treat the former Loan Participants as the "Loan Participants",
except for purposes of the Loan Participants' right to receive their respective
portions of the amounts paid to the Indenture Trustee as aforesaid and all other
amounts due to such Loan Participants under the Operative Documents with respect
to acts, events, circumstances or conditions occurring or existing prior to such
Redemption Date, and on such date the Indenture Trustee shall register the
transfer of ownership of the Secured Notes into the name of the Owner Trust or
its designee. If the Owner Trust elects to purchase the Secured Notes under this
Section 3.06, nothing herein, including the use of the terms "Redemption Date"
and "Redemption Price", shall be deemed to result in a redemption of the Secured
Notes.
SECTION 3.07. Deposited Redemption Moneys. Moneys held by the
---------------------------
Indenture Trustee for redemption of any Secured Note issued hereunder as
provided in this Article III shall be held by the Indenture Trustee as a
separate fund in trust for the account of
<PAGE>
20
the respective Holders of the Secured Notes to be redeemed, shall be invested in
accordance with the provisions of Section 7.04 and shall be delivered to them
respectively in accordance with Section 2.03 on the Redemption Date. Any
amounts so held by the Indenture Trustee shall be deemed paid for purposes of
Section 2.09, and promptly after payment of all amounts of principal of, Make-
Whole Amount, if any, and interest on, and all other amounts due and payable
under any such Secured Notes, the Holders thereof shall deliver such Secured
Notes to the Indenture Trustee for cancellation.
SECTION 3.08. Acquisition of Secured Notes. The Owner Trust
----------------------------
covenants that it will not, directly or indirectly, acquire or make any offer to
acquire any Secured Note except pursuant to the provisions of this Indenture.
SECTION 3.09. Condition to Redemption and Refunding. It shall be a
-------------------------------------
condition to any redemption of Secured Notes effected under this Article III
that all amounts of principal of, Make-Whole Amount, if any, and interest on,
and all other amounts then due and payable under the Secured Notes which are to
be the subject of such redemption as well as all other amounts due and payable
to the Holders of such Secured Notes as are to be the subject of such redemption
shall upon completion of such redemption have been paid as specified therein or
herein.
SECTION 3.10. Notice of Certain Redemptions. In connection with a
-----------------------------
redemption of any of the Secured Notes pursuant to Section 3.02, Section 3.03 or
Section 3.05, the Owner Trust shall give irrevocable notice of such redemption
at least 25 days and not more than 60 days prior to the Redemption Date to each
Loan Participant of such Secured Notes to be redeemed, at such Loan
Participant's address appearing in the Note Register; provided, however, that if
such notice of redemption shall be given in connection with the early
termination of the Charter and the proposed sale of the Vessel pursuant to
Article 18 of the Charter, and if the Owner Trust does not sell the Vessel on or
prior to the Redemption Date, then such notice of redemption may be revoked by
the Owner Trust.
Any such notice of redemption shall state:
(i) the Redemption Date;
(ii) the applicable basis for determining the redemption price
pursuant to Section 3.02, 3.03 or Section 3.05 (the "Redemption Price");
----------------
(iii) that on the Redemption Date, the Redemption Price will become
due and payable upon each such Secured Note, and that, if any such Secured
Notes are then Outstanding, interest on such Secured Notes shall cease to
accrue on and after such Redemption Date;
<PAGE>
21
(iv) whether the notice of redemption may be revoked and under what
circumstances; and
(v) the place or places where such Secured Notes are to be surrendered
for payment of the Redemption Price.
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE INDENTURE ESTATE;
ACTIONS UPON VESSEL DELIVERY
SECTION 4.01. Distribution of Hire. (a) Generally. Pursuant to
-------------------- ---------
Article 3(c) of the Charter and subject to Section 5.01(g), prior to an
Indenture Event of Default the Charterer shall pay directly to the Indenture
Trustee and, upon receipt of such amount, the Owner Trust shall pay over to the
Indenture Trustee, that portion of Hire constituting Base Hire, Termination
Value, if any, amounts measured by Termination Value and that portion of
Supplemental Hire payable in respect of premium, if any, and interest on overdue
payments due to the Indenture Trustee or any amounts payable to the Indenture
Trustee pursuant to Section 5.03 (collectively, "Assigned Hire"). Except as
-------------
otherwise provided in Sections 4.01(c) and 4.03, each installment of Assigned
Hire shall be promptly distributed by the Indenture Trustee in accordance with
Section 4.04 on the date such payment is due from the Charterer (or as soon
thereafter as such payment shall be received by the Indenture Trustee) to pay in
full the aggregate amount of the payment or repayment of principal, interest and
other amounts then due under all Secured Notes and such amounts shall be
distributed to the Holders of such Secured Notes ratably, without priority of
one Holder over any other Holder, in the proportion that the amount of such
payment or payments then due under each such Secured Note bears to the aggregate
amount of the payments then due under all such Secured Notes.
(b) Application of Certain Amounts Held by the Indenture Trustee upon
-----------------------------------------------------------------
Certain Defaults. If as a result of any default by the Charterer or the Owner
- ----------------
Participant in the performance of its obligations under any Operative Document,
the Indenture Trustee shall not have received for distribution on any Base Hire
Payment Date (or the Indenture Trustee shall be prevented from distributing on
such date) the full amount then distributable pursuant to Section 4.01(a), the
Indenture Trustee shall, if Section 4.03 is not applicable but subject in any
case to any restrictions contained in Section 4.05, distribute other amounts of
the character referred to in Section 4.05 then held by it or thereafter received
by it to the Holders to the extent necessary to make all distributions then due
pursuant to Section 4.01(a).
<PAGE>
22
(c) Retention of Amounts by the Indenture Trustee. If an Indenture
---------------------------------------------
Event of Default shall have occurred and be continuing, all payments under the
Charter (other than Excepted Payments) or any other Operative Documents will
upon notice to the Charterer become immediately payable by the Charterer to the
Indenture Trustee, and the Indenture Trustee shall withhold any amounts that
would have been otherwise payable directly to the Owner Trust until the earlier
to occur of (i) the first Business Day following the date that is 180 days after
the Indenture Trustee received such amount and (ii) the date that such Indenture
Event of Default is no longer continuing, in which cases described in clauses
(i) and (ii) such amounts shall be distributed to the Owner Trust, unless, prior
thereto, the Secured Notes shall have been declared or otherwise shall have
become immediately due and payable pursuant to Section 5.04 or the Indenture
Trustee shall have given notice to the Owner Trust of its intention to
accelerate the Secured Notes pursuant to the first proviso of Section 5.04 or
the Indenture Trustee (as assignee of the Owner Trust) shall have given notice
of its intent to declare the Charter to be in default in accordance with Article
22 thereof, in which case such amounts shall be distributed by the Indenture
Trustee forthwith in accordance with the terms of Section 4.03.
SECTION 4.02. Certain Distributions. (a) Any payment received by
---------------------
the Indenture Trustee (i) pursuant to Article 14 of the Charter as a result of
the occurrence of an Event of Loss with respect to the Vessel, (ii) upon the
termination or special termination of the Charter with respect to the Vessel
pursuant to Article 18 or 23 of the Charter or (iii) pursuant to Section 3.05,
shall be distributed forthwith in the following order of priority:
first, in the manner provided in clause "first" of Section 4.03;
second, in the manner provided in clause "third" of Section 4.03;
third, in the manner provided in clause "second" of Section 4.03;
fourth, in the manner provided in clause "fourth" of Section 4.03; and
fifth, in the manner provided in clause "fifth" of Section 4.03.
(b) The portion of each payment referred to in this Section 4.02
distributed to a Holder on account of principal or interest on any Secured Note
held by such Holder shall be applied by such Holder in payment of such Secured
Note in accordance with the terms of Section 4.04.
SECTION 4.03. Distribution After Indenture Event of Default. If (a)
---------------------------------------------
an Indenture Event of Default shall have occurred and be continuing, and (b) the
Indenture Trustee (as assignee of the Owner Trust) shall have given notice to
declare the Charter to be in default pursuant to Article 22 thereof, the
Indenture Trustee shall have given notice to the
<PAGE>
23
Owner Trust pursuant to the first proviso of Section 5.04 of its intent to
declare the Secured Notes due and payable or any of the Secured Notes shall have
been declared or otherwise shall have become immediately due and payable
pursuant to Section 5.04, then, to the extent that each such notice or
declaration shall not have been rescinded or the Secured Notes shall remain
immediately due and payable, (i) all amounts then held by the Indenture Trustee
pursuant to Section 4.05 or 4.06 (and not excluded from the operation of this
Section 4.03) or then otherwise held by the Indenture Trustee hereunder or under
any Operative Document (other than amounts held for its own account), and (ii)
all payments and amounts thereafter realized by the Indenture Trustee through
the exercise of remedies hereunder or under any of the agreements assigned or
pledged to the Indenture Trustee under this Indenture or otherwise as trustee
under this Indenture (for purposes of this Section 4.03, all such amounts and
payments held or realized being herein called "proceeds"), other than amounts
--------
expressly paid to it for its own account and other than Excepted Payments, shall
be distributed forthwith by the Indenture Trustee in the following order of
priority:
first, so much of such proceeds as shall be required to reimburse the
Indenture Trustee for any unpaid fees for its services under this Indenture
and any unreimbursed tax, expense (including reasonable legal fees) or
other loss incurred by it (in each case to the extent reimbursable under
the Operative Documents) shall be distributed to the Indenture Trustee for
application to itself;
second, so much of the remaining proceeds as shall be required to
reimburse the then existing or prior Holders for amounts paid or advanced
by the Holders pursuant to Section 6.04 (to the extent not previously
reimbursed), shall be distributed to the then existing and prior Holders as
their respective interests may appear, and if the proceeds remaining are
insufficient to pay all such amounts in full, they shall be distributed
ratably, without priority of any recipient over any other recipient (except
as otherwise expressly provided herein), in the proportion the aggregate
amount due each such Person under this clause "second" bears to the
aggregate amount and interest due all such Persons under this clause
"second";
third, so much of the proceeds remaining as shall be required to pay
in full the aggregate unpaid principal amount of each Secured Note then
Outstanding and Make-Whole Amount, if any, and all accrued but unpaid
interest thereon to the date of distribution, shall be distributed to the
Holder of such Secured Note, and if the proceeds remaining are insufficient
to pay all such amounts in full, they shall be distributed to all Holders
ratably, without priority of any Holder over any other Holder (except as
otherwise expressly provided herein), in the proportion that the aggregate
amount due each such Holder under this clause "third" bears to the
aggregate amount due all such Holders under this clause "third";
<PAGE>
24
fourth, so much of the proceeds remaining as shall be required to pay
to each Holder all other amounts payable pursuant to the indemnification
provisions of Section 13 of the Participation Agreement or pursuant to any
other provision of any Operative Document and secured hereunder to such
Holder or to its predecessors and remaining unpaid shall be distributed to
such Holder for distribution to itself and such predecessors, as their
respective interests may appear, and if the proceeds remaining are
insufficient to pay all such amounts in full, they shall be distributed
ratably, without priority of any Holder over any other Holder (except as
otherwise expressly provided herein), in the proportion that the aggregate
amount due each such Holder under this clause "fourth" bears to the
aggregate amount due all such Holders under this clause "fourth"; and
fifth, the balance, if any, of the proceeds remaining shall be
distributed to the Owner Trust for distribution pursuant to the Trust
Agreement.
All amounts distributed to any Holder pursuant to clause "third" of
this Section 4.03 shall be applied by such Holder in payment of the Secured
Notes held by it in accordance with the terms of Section 4.04.
SECTION 4.04. Application of Payments on Secured Notes. Each payment
----------------------------------------
on a Secured Note shall be applied, first, to the payment of accrued interest on
such Secured Note to the date of such payment, second, to the payment of any
principal on such Secured Note then due thereunder, and third, to the payment of
the installments of principal remaining unpaid on such Secured Note in the
inverse order of the installment due date thereof.
SECTION 4.05. Applications of Payments According to Applicable
------------------------------------------------
Operative Document Provisions. (a) Any payments or amounts (other than
- -----------------------------
Excepted Payments) received by the Indenture Trustee, provision for the
application of which is made in any Operative Document, shall be applied
promptly as provided in such Operative Document, unless (i) in the case of
payments or amounts that would be payable to the Charterer upon satisfaction of
any applicable conditions, a Charter Event of Default shall have occurred and be
continuing at the time the Indenture Trustee receives such payment and the
Indenture Trustee has Actual Knowledge of such Charter Event of Default, in
which case the Indenture Trustee shall hold such payments and amounts as cash
collateral security for the obligations of the Charterer under the Operative
Documents and shall invest such payments and amounts in accordance with the
terms of Section 7.04, and, subject to earlier distribution thereof by the
Indenture Trustee under Section 4.03 if the Charter shall have been declared in
default in accordance with Article 22 thereof, or under Section 4.01(b) (subject
to Section 4.05(b)), such payments and amounts, and the proceeds of any
investment thereof, shall be paid by the Indenture Trustee to the Charterer at
such time as any applicable conditions shall have been satisfied and no Charter
Event of Default shall be continuing, and (ii) in the case of any
<PAGE>
25
other such payments and amounts, an Indenture Event of Default shall have
occurred and be continuing at the time the Indenture Trustee receives such
payment and the Indenture Trustee has Actual Knowledge of such Indenture Event
of Default, in which case the Indenture Trustee shall hold such payment as part
of the Indenture Estate, as cash collateral security hereunder for the
performance of the Indenture Indebtedness and on the earlier of the next
Business Day on which no Indenture Event of Default shall have occurred and be
continuing or the first Business Day occurring more than 180 days after the
receipt of such payment, and, subject to any prior application of such payment
pursuant to Section 4.01(b) or 4.03, the Indenture Trustee shall apply such
payment, and the proceeds of any investment thereof, to the purpose for which it
was made.
(b) Notwithstanding any other provision of this Indenture to the
contrary, and whether or not any such provision refers to this Section 4.05, any
Excepted Payment or other amount expressly provided by the terms of this
Indenture to be paid directly to the Owner Trust or to the Owner Participant
received by the Indenture Trustee shall be paid or distributed immediately by
the Indenture Trustee to the Owner Trust or the Owner Participant, as the case
may be.
SECTION 4.06. Amounts Received for Which No Provision Is Made. (a)
-----------------------------------------------
Any payment received or amounts realized by the Indenture Trustee for which no
provision as to the application thereof is made elsewhere in this Indenture or
any other Operative Document shall be held by the Indenture Trustee as part of
the Indenture Estate in a cash collateral account maintained under Section 7.04,
and (b) all payments received and amounts realized by the Indenture Trustee
under the Charter, including without limitation, Article 14(b) of the Charter,
or otherwise with respect to the Vessel, to the extent received or realized at
any time after payment in full of the principal of and interest on all Secured
Notes issued hereunder, as well as any other amounts remaining as part of or as
proceeds of the Indenture Estate after payment in full of the principal of,
Make-Whole Amount, if any, and interest on all such Secured Notes, shall be
distributed forthwith by the Indenture Trustee in the order of priority set
forth in Section 4.03, omitting clause "third" thereof. The Indenture Trustee
shall give prompt notice to the Owner Trust and each Holder of the receipt of
any moneys by the Indenture Trustee subject to the provisions of this Section
4.06.
SECTION 4.07. Payment Procedures. All amounts which are
------------------
distributable from time to time by the Indenture Trustee to the Owner Trust, the
Owner Participant or any Holder shall be paid by the Indenture Trustee in
immediately available funds promptly after such amounts become immediately
available to it, and the Indenture Trustee shall not be obligated to see to the
application of any such payment made by it. All payments made by the Indenture
Trustee to the Owner Trust or to the Owner Participant shall be made in the
manner and to the address set forth in Schedule 1 to the Participation Agreement
or to such other address as may be specified from time to time by notice to the
Indenture Trustee from the Owner Trust or the Owner Participant.
<PAGE>
26
SECTION 4.08. Application of Payments Under Parent Guaranty. All
---------------------------------------------
payments received by the Indenture Trustee pursuant to the Parent Guaranty shall
be distributed forthwith by the Indenture Trustee in the same order of priority,
and in the same manner, as it would have distributed the payment in respect of
which such payment under the Parent Guaranty was received.
SECTION 4.09 Actions upon Vessel Delivery. On the actual Delivery
----------------------------
Date, the Indenture Trustee shall execute a Supplemental Indenture in the form
of Exhibit D to this Indenture, and otherwise comply with its obligations under
Article 6 of the Charter.
ARTICLE V
COVENANTS OF OWNER TRUST AND THE OWNER TRUSTEES;
CERTAIN AGREEMENTS; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 5.01. Covenants of Owner Trust and the Managing Trustee;
--------------------------------------------------
Certain Agreements. (a) Subject to Section 2.02, the Owner Trust will duly and
- ------------------
punctually perform and observe all covenants and conditions to be performed and
observed by it pursuant to the terms of any Operative Document. Except as
permitted by this Indenture or the terms of any Operative Document, the Owner
Trust will take no action and will cooperate with the Indenture Trustee so as to
permit no action to be taken by others which will release, or which may be
construed as releasing, the Owner Trust or the Charterer from any of its or the
Charterer's, as the case may be, obligations or liabilities under any Operative
Document, or which may result in the termination, amendment or modification, or
impair the validity, of any such Operative Document.
(b) If the Owner Trust has Actual Knowledge of any Indenture Event of
Default, Indenture Default, any failure on the part of the Charterer to make any
payment of Assigned Hire when due or Event of Loss, the Owner Trust will give
prompt written notice thereof to the Indenture Trustee, the Charterer and the
Owner Participant if such notice shall not already have been given to such
party. The notice shall set forth in reasonable detail the circumstances of
such default or loss known to the Owner Trust.
(c) At any time and from time to time, upon the reasonable request of
the Indenture Trustee, the Owner Trust shall promptly and duly execute and
deliver any and all such further instruments and documents as the Indenture
Trustee may deem necessary or desirable (and as shall be consistent with the
intent, purposes and provisions hereof) to perfect the Lien of this Indenture,
the Ship Mortgage and the U.K. Security Assignment upon delivery of the Vessel,
to perfect or maintain the Lien of this Indenture, to perfect a first priority
ship mortgage in the Vessel in favor of the Indenture Trustee upon the
termination of
<PAGE>
27
the Head Lease or to obtain for the Indenture Trustee the full benefit of the
specific rights and powers herein granted, conveyed or assigned, or which the
Owner Trust may be or may hereafter be bound to convey or assign to the
Indenture Trustee or to facilitate the performance of the terms of this
Indenture, or the filing, registering or recording of this Indenture, including,
without limitation, the execution and delivery of any financing statement (and
any continuation statement with respect to any such financing statement) or any
other similar document specified in such instructions as may be necessary or
desirable to perfect or maintain the Lien of this Indenture.
(d) The Owner Trust does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants that, except as provided in or
permitted by the other Operative Documents, it will not assign or pledge, so
long as this Indenture shall remain in effect and the Lien of this Indenture
shall not have been released pursuant to Section 6.03 hereof, any of the Owner
Trust's right, title or interest hereby assigned to anyone other than the
Indenture Trustee, and that the Owner Trust will not (other than in respect of
Excepted Payments), except as provided in or permitted by this Indenture or any
other Operative Document, (i) accept any payment from the Charterer, (ii)
terminate or consent to the cancellation or surrender of the Charter or accept
any prepayment of Assigned Hire, or any portion thereof, under the Charter,
(iii) enter into any agreement amending or supplementing any Operative Document,
(iv) execute or grant any waiver or modification of, or consent under, the terms
of any Operative Document, (v) settle or compromise any claim arising under any
Operative Document, or (vi) submit or consent to the submission of any dispute,
difference or other matter arising under or in respect of any Operative Document
to arbitration thereunder.
(e) The Owner Trust does hereby ratify and confirm the Charter, and
does hereby agree the Owner Trust will not, except as provided in or permitted
by this Indenture or the terms of any other Operative Document, take or omit to
take any action, the taking or omission of which might result in an alteration
or impairment of the Charter or any other Operative Document, or of any of the
rights created by the Charter or any Operative Document, or the assignment
hereunder or thereunder, as the case may be.
(f) The Managing Trustee, in its individual capacity and at its own
cost and expense, will promptly take such action as may be necessary to
discharge any Owner Trustee's Lien attributable to it on any of its estate,
right, title or interest in the Trust Estate so pledged or assigned or intended
to be conveyed, pledged or assigned under this Indenture.
(g) Until the release of the security interest in the Indenture Estate
pursuant to Section 6.03, all payments of Assigned Hire shall be made directly
to the Indenture Trustee or in accordance with the Indenture Trustee's
instructions, and the Owner Trust shall give all notices as shall be required to
be given under each Operative Document to direct that such payments be made to
the Indenture Trustee and promptly upon receipt of any such
<PAGE>
28
amount, transfer such amount to the Indenture Trustee for distribution pursuant
to this Indenture; provided, however, that, if an Indenture Event of Default
shall have occurred and is continuing, upon written notice from the Indenture
Trustee to the Charterer, all payments due or to become due under the Charter
and the other Operative Documents to the Owner Trust (other than Excepted
Payments) shall be made directly to the Indenture Trustee or in accordance with
the Indenture Trustee's instructions, and the Owner Trust shall (i) give all
notices as shall be required to be given under each Operative Document to direct
that such payments be made to the Indenture Trustee and (ii) promptly upon
receipt of any and all moneys from time to time received by it constituting part
of the Indenture Estate, transfer such amount to the Indenture Trustee for
distribution pursuant to this Indenture.
(h) An executed counterpart of each amendment or supplement to the
Trust Agreement shall be delivered within 20 Business Days after the execution
thereof to the Indenture Trustee; provided that any amendment or supplement
under which a successor trustee is appointed shall be mailed to the Indenture
Trustee within 10 days after the execution thereof. The Lien of this Indenture
shall not be affected by any amendment or supplement to the Trust Agreement or
by any other action taken under or in respect of the Trust Agreement. Without
the prior written consent of the Indenture Trustee, the Trust Agreement may not
in any event be terminated or revoked by the Owner Participant prior to the
termination of this Indenture. In the case of any appointment of a successor to
any Owner Trustee pursuant to the Trust Agreement or any merger, conversion,
consolidation or transfer of all or substantially all of the corporate trust
business of either Owner Trustee pursuant to the Trust Agreement, the applicable
successor Owner Trustee shall give prompt notice thereof to the Indenture
Trustee.
SECTION 5.02. Indenture Events of Default. An "Indenture Event of
--------------------------- ------------------
Default" means any of the following events (whatever the reason for such
- -------
Indenture Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any
Governmental Rule):
(a) any Charter Event of Default (other than a Charter Event of
Default arising from the failure of the Charterer to make any payment of
Excess Hire or Additional Excess Hire or to make an Excepted Payment unless
the Owner Trust shall elect to make such failure a Charter Event of
Default) shall have occurred and be continuing; or
(b) any payment of principal of, Make-Whole Amount, if any, or
interest on any Secured Note shall not have been made when due and such
default shall continue unremedied for ten Business Days after the same
shall have become due and payable; or
<PAGE>
29
(c) any failure by any of the Owner Trust, the Owner Participant or
the Managing Trustee, in their individual or trust capacities, as the case
may be, to perform or observe in any material respect any covenant or
agreement to be performed or observed by it under this Indenture or any
other Operative Document, (i) which failure shall continue for a period of
30 days after receipt by the Owner Trust, the Owner Participant or the
Managing Trustee of a notice from the Indenture Trustee or the Pass Through
Trustee specifying such failure and requiring it be remedied or (ii) which
failure, if such failure is remediable and the Owner Trust, the Owner
Participant or the Managing Trustee is diligently attempting to remedy such
failure, shall continue for a period of 180 days after such receipt of
written notice thereof; or
(d) any representation or warranty made by the Owner Trust, the Owner
Participant or the Managing Trustee pursuant to Sections 7 or 9, as the
case may be, of the Participation Agreement shall prove to have been
inaccurate in any material respect when made, unless such inaccurate
representation or warranty shall not be material to the recipient at the
time when the notice referred to below shall have been received by the
Owner Trust, the Owner Participant or the Managing Trustee, as the case may
be, or any material adverse impact thereof shall have been cured within 30
days after receipt by the Owner Trust, the Owner Participant or the
Managing Trustee, as the case may be, of a written notice thereof from the
Indenture Trustee; provided that if such material adverse impact is
remediable and the Owner Participant, Owner Trust or the Managing Trustee,
as the case may be, is diligently attempting to remedy such impact, the
Owner Participant, Owner Trust or Managing Trustee shall have 90 days after
such receipt of written notice thereof to remedy such material adverse
impact; or
(e) either of the Owner Trust or the Owner Participant shall commence
a voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to itself or its debts under any bankruptcy,
insolvency, or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of its or any substantial part of its property, or shall consent
to any such relief or to the appointment or taking possession by any such
official or agency in an involuntary case or other proceeding commenced
against it, or shall make a general assignment for the benefit of
creditors, or shall take any corporate action to authorize any of the
foregoing, or an involuntary case or other proceeding shall be commenced
against either of the Owner Trust or the Owner Participant seeking
liquidation, reorganization or other relief with respect to it or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official or agency of its or any substantial
part of its part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for
<PAGE>
30
a period of 90 days, or if, under the provisions of any law providing for
reorganization or winding-up of corporations which may apply to the Owner
Trust or the Owner Participant, any court of competent jurisdiction shall
assume jurisdiction, custody or control of the Indenture Estate, the Owner
Trust or the Owner Participant or of any substantial part of its property
and such jurisdiction, custody or control shall remain in force
unrelinquished, unstayed or unterminated for a period of 90 days.
SECTION 5.03. Certain Rights. (a) If the Charterer shall fail to
--------------
make any payment of Base Hire under the Charter when the same shall become due,
and if such failure of the Charterer to make such payment of Base Hire shall not
constitute the fourth consecutive such failure or the seventh or subsequent
cumulative such failure, then as long as no Indenture Event of Default (other
than arising from a Charter Event of Default not involving any failure to make
any payments to which the Indenture Trustee or any Loan Participant is entitled
hereunder when due) shall have occurred and be continuing, the Owner Trust or
the Owner Participant may (but need not), without consent or concurrence of the
Indenture Trustee or any Holder, pay, in the manner provided in Section 2.03 for
application in accordance with Section 4.01, to the Indenture Trustee, at any
time prior to the day which is the eleventh day subsequent to the expiration of
the grace period provided for in Article 21(1) of the Charter with respect to
the payment of Base Hire (and the Indenture Trustee and the Holders of the
Secured Notes shall not (without the prior written consent of the Owner Trust)
declare the Charter in default pursuant to Article 22 thereof or exercise any of
the rights, powers or remedies pursuant to Article 22 of the Charter or Section
5.04 hereof prior to the occurrence of such later date), an amount equal to the
full amount of such payment of Base Hire, together with any interest due thereon
on account of the delayed payment thereof to the date of such payment in
accordance with Section 2.03(c) hereof, and such payment by the Owner Trust or
the Owner Participant shall be deemed to cure, as of the date of such payment,
any Indenture Event of Default which arose from such failure of the Charterer
(including any Charter Event of Default arising from the Charterer's failure to
pay interest in respect of such overdue Base Hire for the period commencing on
the date of such payment), but such cure shall not relieve the Charterer of any
of its obligations. If the Charterer shall fail to perform or observe any
covenant, condition or agreement to be performed or observed by it under the
Charter or any other Charter Event of Default shall exist (other than the
failure to pay Base Hire), and if (but only if) the performance or observance of
such covenant, condition or agreement or the cure of such Charter Event of
Default can be effected by the payment of money alone (it being understood that
actions such as the obtaining of insurance can be so effected), then as long as
no other Indenture Event of Default (other than those arising from a Charter
Event of Default) shall have occurred and be continuing, the Owner Trust or the
Owner Participant may (but need not), without consent or concurrence of the
Indenture Trustee or any Holder, pay to the Indenture Trustee (or to such other
person as may be entitled to receive the same), at any time prior to the day
which is the later of (x) the eleventh day subsequent to notice of such failure
or such Charter Event of Default by the Indenture Trustee to the Owner Trust or
the Owner Participant and (y) the
<PAGE>
31
eleventh day subsequent to the expiration of the grace period, if any, provided
with respect to such failure or such Charter Event of Default on the part of the
Charterer in Article 21 of the Charter (and the Indenture Trustee shall not
(without the prior written consent of the Owner Trust) declare the Charter in
default pursuant to Article 22 thereof or exercise any of the rights, powers or
remedies pursuant to such Article 22 or Section 5.04 hereof prior to the
occurrence of such later date), all sums necessary to effect the performance or
observance of such covenant or agreement of the Charterer or to cure such
Charter Event of Default, together with any interest due thereon on account of
the delayed payment thereof to the date of such payment, and such payment by the
Owner Trust or the Owner Participant shall be deemed to cure as of the date of
such payment any Indenture Event of Default which arose from such failure of the
Charterer or such Charter Event of Default (including any Charter Event of
Default arising from the Charterer's failure to pay interest in respect of such
overdue payment for the period commencing on the date of such payment), but such
cure shall not relieve the Charterer of any of its obligations.
(b) To the extent of any payment made by the Owner Participant or the
Owner Trust pursuant to Section 5.03(a), the Owner Participant or the Owner
Trust, as the case may be, shall be subrogated to the rights of the Holders
hereunder to receive from the Indenture Trustee the payment of Assigned Hire or
other amount for which such payment was made by the Owner Participant or the
Owner Trust, as the case may be, and the Owner Participant or the Owner Trust,
as the case may be, shall be entitled to receive such payment from the Indenture
Trustee upon receipt thereof by the Indenture Trustee; provided, however, that
no such amount shall be paid to the Owner Participant or the Owner Trust, as the
case may be, unless all principal of and interest on the Secured Notes then due
and payable and any other amounts then due and payable under the Secured Notes
and this Indenture shall have been paid in full and no Indenture Default shall
have occurred and be continuing.
(c) Neither the Owner Trust nor the Owner Participant, upon exercising
cure rights under Section 5.03(a) or rights under Section 6.08(a)(iii) or under
Article 22(a) of the Charter, shall obtain any Lien on any part of the Indenture
Estate or Trust Estate on account of such payment for the costs and expenses
incurred in connection therewith, nor shall any claims of the Owner Trust or the
Owner Participant against the Charterer for the repayment thereof impair the
prior right and security interest of the Indenture Trustee in and to the
Indenture Estate or otherwise related to the Indenture Estate.
(d) If there shall occur an Indenture Event of Default pursuant to
Section 5.02(a) arising as a result of a failure by the Charterer to make any
payment of Assigned Hire when due, the Indenture Trustee shall so notify the
Owner Trust in writing promptly upon such occurrence.
SECTION 5.04. Remedies. (a) If an Indenture Event of Default shall
--------
have occurred and be continuing and so long as the same shall be unremedied,
then and in every
<PAGE>
32
such case the Indenture Trustee, subject to Sections 5.03, 5.04(d), 5.05, 5.09
and 6.08, may exercise any or all of the rights and powers and pursue any and
all of the remedies herein provided or available under applicable law; provided,
however, the Indenture Trustee must give the Owner Trust at least ten Business
Days' (or five Business Days in the case of acceleration of the Secured Notes
other than an automatic acceleration of the Secured Notes as provided in Section
5.04(c)) prior written notice of its intention to exercise remedies pursuant to
this Section 5.04 (it being understood that such notice may be given
concurrently with any notice of default given hereunder or under the Charter and
prior to the expiration of any applicable grace periods). Subject to the
provisions in this Indenture, upon the occurrence and during the continuance of
an Indenture Event of Default, the Indenture Trustee may exercise, subject to
Sections 5.03(a), 5.05, 5.09 and 6.08, all rights and remedies of the Owner
Trust to the exclusion of the Owner Trust under the Charter (other than those
rights and remedies to the extent relating to Excepted Payments), including,
without limitation, the right to take possession of all or any part of the
Indenture Estate and exclude the Owner Trust and all Persons (including the
Charterer, but excluding the U.K. Lessor to the extent of the U.K. Lessor's
rights under the Conditional Sale Agreement) claiming under the Owner Trust
wholly or partly therefrom. In addition to and without limiting the foregoing,
the Indenture Trustee, upon at least 25 days' prior written notice to the Owner
Participant and the Owner Trust, may invoke and exercise the power of sale and
sell any or all of the Indenture Estate in the manner required by law at public
auction, or in any other manner which shall be in accordance with applicable
law, or, in lieu of sale pursuant to the power of sale, the Indenture Estate may
be foreclosed, and the Indenture Trustee has and may exercise all rights and
remedies of a secured party under the Uniform Commercial Code as in effect in
any applicable jurisdiction; provided that (i) notwithstanding any provision
herein to the contrary, the Indenture Trustee shall not sell, assign, transfer
or deliver any of the Indenture Estate or take possession of the Indenture
Estate unless the Secured Notes shall have been accelerated pursuant to Section
5.04(b) or 5.04(c) and (ii) if an Indenture Event of Default has occurred and is
continuing solely by virtue of one or more Charter Events of Default (at a time
when no other Indenture Events of Default shall have occurred and be
continuing), the Indenture Trustee shall not exercise foreclosure remedies under
this Indenture without declaring the Charter to be in default and exercising one
or more material remedies seeking to terminate the Charter, unless exercising
such remedies under the Charter shall be prohibited by law, governmental
authority or court order, in which case the Indenture Trustee shall not exercise
foreclosure remedies under the Indenture until the later of (i) the expiration
of a period of sixty (60) days from the commencement of such prohibition and
(ii) the expiration of an additional period commencing on the day immediately
following the expiration of such 60-day period and ending on the earlier of (x)
the 180th day after the relevant stay or prohibition is imposed, (y) the
occurrence of any additional Indenture Event of Default during such additional
period and (z) rejection of the Charter; provided that such extended period will
not apply unless, on the 60th day following the date upon which such stay or
prohibition becomes effective, all Indenture Events of Default theretofore
existing have been cured (except to the extent arising from the bankruptcy
<PAGE>
33
or similar proceeding giving rise to the applicable stay or similar prohibition)
and to the extent the Owner Trust, as Owner under the Charter, exercises its
right to cure any Charter defaults or Charter Events of Default during such 180-
day period, the exercise of such rights will not limit the cure rights otherwise
available to the Owner under Section 5.03(a). The Indenture Trustee shall
notify the Owner Trust, the Owner Participant and the Charterer as soon as is
reasonably practicable after its commencement of the exercise of any remedy
pursuant to this Section 5.04.
(b) If an Indenture Event of Default (other than an Indenture Event of
Default specified in Section 5.02(e) or an Indenture Event of Default of the
type specified in Section 5.02(a) which arises as a result of any Charter Event
of Default as is specified in Article 21(7) of the Charter) shall have occurred
and be continuing, then, subject to Sections 5.03, 6.02 and 6.08, the Indenture
Trustee may at any time, by five days' written notice to the Owner Trust,
declare all (but not less than all) of the Secured Notes Outstanding to be due
and payable. Upon such declaration, the unpaid principal of all Secured Notes
then Outstanding, together with accrued but unpaid interest thereon, and any
other amounts due thereunder, shall immediately become due and payable without
presentment, demand, protest or notice, all of which are hereby waived.
(c) If an Indenture Event of Default of the type specified in Section
5.02(e), or an Indenture Event of Default of the type specified in Section
5.02(a) which arises as a result of any Charter Event of Default specified in
Article 21(7) of the Charter shall have occurred and be continuing, the
principal of all Secured Notes then Outstanding, together with accrued but
unpaid interest thereon and any other amounts due thereunder, shall become and
be due and payable automatically, without declaration, notice, demand, or any
other action on the part of the Indenture Trustee or any Holder, all of which
are hereby waived. Each of Section 5.04(b) and this Section 5.04(c), however,
is subject to the condition that, if at any time after the principal of the
Secured Notes shall have become due and payable upon a declared or automatic
acceleration thereof as provided herein, and before any judgment or decree for
the payment of the money so due, or any portion thereof, shall be entered, all
overdue payments of interest upon the Secured Notes, the Make-Whole Amount, if
any, and all other amounts payable under the Secured Notes (except the principal
of the Secured Notes which by such acceleration shall have become payable) shall
have been duly paid, and every other Indenture Event of Default with respect to
any covenant or provision of this Indenture shall have been cured, then in every
such case a Majority in Interest of Holders of Notes, by written instrument
filed with the Indenture Trustee, may (but shall not be obligated to) rescind
and annul such declared or automatic acceleration and its consequences; but no
such rescission or annulment shall extend to or affect any subsequent Event of
Default or impair any right consequent thereon.
(d) Notwithstanding any provision in any document or instruction that
purports to require the Indenture Trustee to acquire title to any or all of the
Indenture Estate
<PAGE>
34
upon foreclosure, or pursuant to instructions, the Indenture Trustee shall not
be obligated to acquire any such title unless: (i) the Indenture Trustee is
provided with such security or indemnity as it shall deem satisfactory to it,
(ii) such acquisition of title complies with all applicable Operative Documents,
laws, rules and regulations, which shall be evidenced by an opinion of counsel
to such effect in form and substance satisfactory to the Indenture Trustee and
(iii) the Indenture Trustee shall have obtained such executed certificates,
instruments or other documents, in accordance with its reasonable inquiries or
requests.
SECTION 5.05. Suit; Possession; Title; Sale of Indenture Estate. (a)
-------------------------------------------------
The Owner Trust agrees that, if an Indenture Event of Default shall have
occurred and be continuing and the Indenture Trustee shall be entitled to
exercise remedies hereunder as provided in Section 5.04, the Indenture Trustee
may take possession of all or any part of the Indenture Estate and may exclude
the Owner Trust, and all Persons claiming under the Owner Trust, wholly or
partly therefrom; provided, however, that at least ten Business Days' prior
notice of such taking of possession shall be given to the Owner Trust. If an
Indenture Event of Default shall have occurred and be continuing and the
Indenture Trustee shall be entitled to exercise remedies hereunder as provided
in Section 5.04, at the request of the Indenture Trustee, the Owner Trust shall
promptly execute and deliver to the Indenture Trustee such instruments of title
and other documents as the Indenture Trustee may deem necessary or advisable to
enable the Indenture Trustee or any agent or representative designated by the
Indenture Trustee, at such time or times and place or places as the Indenture
Trustee may specify, to obtain possession of all or any part of the Indenture
Estate to which the Indenture Trustee shall at the time be entitled hereunder.
If the Owner Trust shall for any reason fail to execute and deliver such
instruments and documents after such request by the Indenture Trustee, the
Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee
the right to immediate possession of any property comprising a portion of the
Indenture Estate and requiring the Owner Trust to execute and deliver such
instruments and documents to the Indenture Trustee, or (ii) pursue all or part
of such property wherever it may be found, and the Indenture Trustee may enter
any of the premises where such property or any portion thereof may be or is
supposed to be and search for such property. All expenses of obtaining such
judgment or of pursuing, searching for and taking such property shall, until
paid, be secured by the Lien of this Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may
make, from time to time and at the expense of the Indenture Estate, such
expenditures for maintenance, insurance, repairs, replacements, alterations,
additions and improvements to and of the Indenture Estate as it may deem proper.
In each such case, the Indenture Trustee shall have the right to maintain, use,
operate, store, lease, control or manage the Indenture Estate and to exercise
all rights and power of the Owner Trust relating to the Indenture Estate as the
Indenture Trustee shall deem to be in the best interest of the Holders. The
Indenture Trustee shall be entitled to collect and receive directly all tolls,
rents (including Hire), revenue, issues, income, products and profits of the
Indenture Estate and every part
<PAGE>
35
thereof, other than Excepted Payments. Such tolls, rents (including Hire),
revenues, issues, income, products and profits shall be applied (i) to pay the
expenses of the use, operation, storage, leasing, control, management or
disposition of the Indenture Estate, (ii) to pay the expense of all maintenance,
repairs, replacements, alterations, additions and improvements, (iii) to make
all payments which the Indenture Trustee may be required or may elect to make,
if any, for taxes, assessments, insurance or other proper charges upon the
Indenture Estate or any portion thereof, including without limitation the
employment of engineers and accountants to examine, inspect and make reports
upon the properties and books and records of the Owner Trust, and (iv) to pay
amounts owing in respect of the Secured Notes in accordance with the provisions
thereof and hereof and to make all other payments which the Indenture Trustee
may be required or authorized to make under any provision of this Indenture, as
well as just and reasonable compensation for the services of the Indenture
Trustee and of all Persons properly engaged and employed by the Indenture
Trustee.
(c) The Indenture Trustee or any Holder may be a purchaser of the
Indenture Estate or any portion thereof or any interest therein at any sale
thereof, whether pursuant to foreclosure or power of sale or otherwise. The
Indenture Trustee may apply against the purchase price therefor the amount then
due to it hereunder or under any of the Secured Notes secured hereby and any
Holder may apply against the purchase price therefor the amount then due to it
hereunder or under the Secured Notes held by such Holder, to the extent of such
portion of the purchase price as it would have received had it been entitled to
share in any distribution thereof. The Indenture Trustee or any Holder or any
nominee of any such Holder shall acquire, upon any such purchase, good title to
the property so purchased, free of the Lien of this Indenture and, to the extent
permitted by applicable law, free of all rights of redemption in the Owner Trust
in respect of the property so purchased.
(d) Any sale or other conveyance of any of the Indenture Estate by the
Indenture Trustee made pursuant to the terms of this Indenture or the Charter
shall bind the Holders, Owner Trust and the Owner Participant and shall be
effective to transfer or convey all right, title and interest of the Indenture
Trustee, the Owner Trust, the Holders and the Owner Participant in and to such
Indenture Estate or portion thereof, as the case may be. No purchaser or other
grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such sale or conveyance, or as to the application of
any sale or other proceeds with respect thereto by the Indenture Trustee. In
the event of any such sale, the Owner Trust shall execute any and all such bills
of sale and other documents, and perform and do all other acts and things
requested by the Indenture Trustee in order to permit continuation of such sale
and to effectuate the transfer or conveyance referred to in the first sentence
of this Section 5.05(d). The Owner Trust shall ratify and confirm any such sale
or sales by executing and delivering to the Indenture Trustee or to such
purchaser or purchasers all instruments as may reasonably be requested for such
purpose. Any such sale or sales made hereunder shall operate to divest all the
estate, right, title, interest, claim and demand whatsoever, whether at law or
in equity, of the Owner Trust in and to the properties
<PAGE>
36
and rights so sold, and shall be a perpetual bar both at law and in equity
against the Owner Trust and against any and all persons claiming or who may
claim the same, or any part thereof from, through or under the Owner Trust.
Upon any sale or other disposition of the Indenture Estate by the Indenture
Trustee, the Indenture Trustee will promptly account in writing, in reasonable
detail, to the Owner Trust for the amount of such sale, the costs and expenses
incurred in connection therewith and any surplus proceeds.
(e) The Indenture Trustee shall, as a matter of right, be entitled to
the appointment of a receiver (who may be the Indenture Trustee or any successor
or nominee thereof), at any time after an Indenture Event of Default either
before or after declaring due and payable the principal of all Secured Notes
then Outstanding, together with accrued but unpaid interest thereon and any
other amounts due thereunder, for all or any portion of the Indenture Estate,
whether such receivership be incidental to a proposed sale of the Indenture
Estate or the taking of possession thereof or otherwise, and the Owner Trust
hereby consents to the appointment of such a receiver, and agrees that it will
not oppose any such appointment. Any receiver appointed for all or any portion
of the Indenture Estate shall be entitled in addition to any powers available
under applicable law, to exercise all the rights and powers of the Indenture
Trustee with respect to the Indenture Estate.
(f) To the extent now or at any time hereafter enforceable under
applicable law, the Owner Trust covenants that it will not at any time insist
upon or plead, or in any manner whatsoever claim or take any benefit or
advantage of any stay, extension, moratorium, any exemption from execution or
sale or other similar law or from any law now or hereafter in force providing
for the valuation or appraisement of the Indenture Estate or any part thereof,
prior to any sale or sales thereof to be made pursuant to any provision herein
contained, or prior to any applicable decree, judgment or order of any court of
competent jurisdiction; nor, after such sale or sales, claim or exercise any
right under any statute now or hereafter made or enacted by any state or any
right to have a portion of the Indenture Estate or the security for the Secured
Notes marshalled or otherwise redeem the property so sold or any part thereof,
and hereby expressly waives for itself and on behalf of each and every Person,
except decree or judgment creditors of the Owner Trust acquiring any interest in
or title to the Indenture Estate or any part thereof subsequent to the date of
this Indenture, all benefit and advantage of any such law or laws, and covenants
that it will not invoke or use any such law or laws, but will suffer and permit
the execution of every such power as though no such law or laws had been made or
enacted. Nothing in this Section 5.05(f) shall be deemed to be a waiver by the
Owner Trust of its rights under Section 5.03 hereof.
The Indenture Trustee may maintain such a pleading, or, in any manner
whatsoever, claim or take any benefit or advantage of or from any law now or
hereafter in force even if it does not possess any of the Secured Notes or does
not produce any of them in the proceeding. A delay or omission by the Indenture
Trustee or any Holder in exercising
<PAGE>
37
any right or remedy accruing upon an Indenture Event of Default under this
Indenture shall not impair the right or remedy or constitute a waiver of or
acquiescence in such Indenture Event of Default.
(g) The Indenture Trustee may adjourn from time to time any sale to be
made under or by virtue of this Indenture for such sale or for such adjourned
sale or sales, and, except as otherwise provided by any applicable provision of
law, the Indenture Trustee, without further notice or publication, may make such
sale at the time and place to which the same shall be so adjourned.
(h) Any recovery of any judgment by the Indenture Trustee under the
Secured Notes and any levy of any execution under any such judgment upon the
Indenture Estate shall not affect in any manner or to any extent the security
title and security interest conveyed hereby upon the Indenture Estate or any
part thereof, or any conveyances, powers, rights and remedies of the Indenture
Trustee hereunder, but such conveyances, powers, rights and remedies shall
continue unimpaired as before.
(i) Notwithstanding anything contained herein, so long as any Pass
Through Trustee is a registered Holder, the Indenture Trustee is not authorized
or empowered to acquire title to all or any portion of the Indenture Estate or
take any action with respect to all or any portion of the Indenture Estate so
acquired by it if such acquisition or action would cause the related Pass
Through Trust to fail to qualify as a "grantor trust" for federal income tax
purposes.
SECTION 5.06. Remedies Cumulative. Each and every right, power and
-------------------
remedy provided the Indenture Trustee specifically or otherwise in this
Indenture shall be cumulative and shall be in addition to every right, power and
remedy herein specifically provided or now or hereafter existing at law, in
equity or otherwise. Each and every such right, power and remedy may be
exercised from time to time and as often and in such order as may be deemed
expedient by the Indenture Trustee, and the exercise or the beginning of the
exercise of any such right, power or remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any other right,
power or remedy. No delay or omission by the Indenture Trustee in the exercise
of any right or power or in the pursuit of any remedy shall impair any such
right, power or remedy, or be construed to be a waiver of any Indenture Event of
Default or to be an acquiescence therein.
SECTION 5.07. Discontinuance of Proceedings. In case the Indenture
-----------------------------
Trustee shall have instituted any proceeding to enforce any right, power or
remedy under this Indenture by foreclosure, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee, then and in every such
case the Owner Trust, the Indenture Trustee and the Charterer shall, subject to
any determination in such proceeding, be restored to their
<PAGE>
38
former positions and rights hereunder with respect to the Indenture Estate, and
all right, powers and remedies of the Indenture Trustee shall continue as if no
such proceeding had been instituted.
SECTION 5.08. Waiver of Past Defaults. Upon written instruction of a
-----------------------
Majority in Interest of Holders of Notes, the Indenture Trustee shall waive any
Indenture Event of Default specified in such instruction and its consequences
and, upon any such waiver, such Indenture Event of Default shall cease to exist
for every purpose of this Indenture; provided, however, that no such waiver
shall extend to any subsequent or other Indenture Event of Default or impair any
right or consequence thereof; and provided further, however, that in the absence
of the written instruction of the Holders of all Secured Notes then Outstanding,
the Indenture Trustee shall not waive any Indenture Event of Default arising
from a default (i) in the payment of the principal of or interest on, or other
amounts due under, any Secured Note then Outstanding, or (ii) in respect of a
covenant or provision hereof which, pursuant to the terms of Article IX, cannot
be modified or amended without the consent of each Holder of a Secured Note then
Outstanding.
SECTION 5.09. No Action Contrary to Certain Third Party Rights.
------------------------------------------------
Notwithstanding any other provision of any Operative Document, unless a Charter
Event of Default shall have occurred and be continuing and the Charter shall
have been declared to be in default pursuant to Article 22 thereof, the
Indenture Trustee shall not take or cause to be taken any action contrary to the
Charterer's rights under the Charter, including without limitation the rights of
the Charterer under Article 7 thereof.
SECTION 5.10. Rights of Holders of Secured Notes. Notwithstanding
----------------------------------
any provision herein (including Section 5.11) to the contrary, the Holder of a
Secured Note shall have the absolute and unconditional right to receive payment
from the Indenture Estate of the principal of and interest on such Secured Note
on the dates and as specified in such Secured Note, and to institute suit
against the Owner Trust for the enforcement of any such payment, subject to
Section 2.02, and such right shall not be impaired without the consent of such
Holder.
SECTION 5.11. Limitation on Suits by Holders. A Holder may pursue a
------------------------------
remedy under this Indenture or under a Secured Note only if:
(i) the Holder gives to the Indenture Trustee written notice of a
continuing Indenture Event of Default under this Indenture;
(ii) the Holders of at least 25 percent (25%) of the Outstanding
principal amount of the Secured Notes instruct the Indenture Trustee to
pursue the remedy;
<PAGE>
39
(iii) such Holder or Holders offer to the Indenture Trustee indemnity
satisfactory to the Indenture Trustee against any loss, liability or
expense to be, or which may be, incurred by the Indenture Trustee in
pursuing the remedy;
(iv) the Indenture Trustee does not comply with the request within 60
days after receipt of the instructions and the offer of indemnity; and
(v) during such 60-day period, a Majority in Interest of Holders do
not give the Indenture Trustee an instruction inconsistent with the
request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
ARTICLE VI
DUTIES OF THE INDENTURE TRUSTEE
SECTION 6.01. Certain Actions. If the Indenture Trustee shall have
---------------
Actual Knowledge of any Indenture Event of Default or any Indenture Default or
any failure on the part of the Charterer to make any payment of Assigned Hire
when due or any Event of Loss or other material fact relating to the Indenture
Estate, the Indenture Trustee shall (a) give prompt telephonic notice (promptly
confirmed in writing) to the Owner Trust, the Owner Participant and the
Charterer and (b) within 90 days after obtaining such Actual Knowledge, mail to
each Holder notice of any such Indenture Event of Default unless, in each case,
such Indenture Event of Default has been remedied before the giving of such
notice and the Indenture Trustee has Actual Knowledge of such remedy; provided,
however, that the failure by the Indenture Trustee to provide such notice shall
not invalidate any actions subsequently taken by the Indenture Trustee in
connection with such Indenture Event of Default. Except in the case of a
default in the payment of the principal or interest on any Secured Note, the
Indenture Trustee shall be protected in withholding the notice required under
clause (b) above if and so long as Responsible Officers of the Indenture Trustee
in good faith determine that withholding such notice is in the interest of the
Holders.
SECTION 6.02. Action Upon Instructions. (a) The Indenture Trustee
------------------------
shall, upon the written instruction at any time and from time to time of a
Majority in Interest of Holders of Notes, give such notice, consent or direction
or exercise such right, remedy or power hereunder or under the Charter or any
other agreement constituting part of the Indenture Estate as shall be specified
in such instruction; provided, however, that nothing set forth in this Section
6.02(a) shall entitle the Holders to cause the Indenture Trustee to give any
notice or exercise any right, power or remedy that is not elsewhere authorized
by, or is otherwise restricted or prohibited by, this Indenture. If the
Indenture Trustee shall not have
<PAGE>
40
received instructions as above provided within 20 days after mailing of the
notice pursuant to Section 6.01 to the Holders, the Indenture Trustee may take
such action, or refrain from taking such action, but shall be under no duty to
take or refrain from taking any action, with respect to such Indenture Event of
Default, Event of Loss or fact as it shall determine to be advisable and in the
best interest of the Holders. If the Indenture Trustee receives any
instructions after the expiration of the aforementioned 20-day period, the
Indenture Trustee shall use its best efforts to conform any action being taken
to comply with those instructions.
(b) The Indenture Trustee shall not consent to the assignment by the
Charterer of all or any material portion of its right, title and interest in, to
and under the Charter, except (i) with respect to an assignment permitted under
Section 20(c) of the Charter or (ii) upon the written instruction at any time
and from time to time of a Majority in Interest of Holders of Notes. Nothing
set forth herein shall be construed to permit such assignment without the
consent of the Owner Trust or to adversely affect any right of the Owner Trust.
SECTION 6.03. Release of Lien of Indenture. (a) Release of
---------------------------- ----------
Indenture Estate. Upon satisfaction of the conditions for termination of this
- ----------------
Indenture set forth in Section 10.01, the Indenture Trustee, upon the written
request of the Owner Trust, shall execute and deliver to, or as directed by, the
Owner Trust, all appropriate instruments (in due form for recording or filing)
releasing the Indenture Estate from the Lien of this Indenture, the Ship
Mortgage and the U.K. Security Assignment, and the Indenture Trustee shall pay
all moneys or other properties or proceeds held by it under this Indenture to
the Owner Trust and shall give notice to the Charterer of such payment. The
cost and expense associated with any action taken by the Indenture Trustee
pursuant to the provisions of this Section 6.03(a) shall be borne by the
Charterer.
(b) Release of the Vessel upon Transfer. Upon any transfer by the
-----------------------------------
Owner Trust of the Vessel pursuant to Article 18 or 23 of the Charter or any
retention by the Owner Trust of the Vessel pursuant to Article 18 of the Charter
and receipt by the Indenture Trustee of all amounts of Hire therefor that
constituted a part of the Indenture Estate due and payable by the Charterer and
the concurrent redemption of Secured Notes as set forth in Sections 3.02, 3.03
and 4.02 and the payment of any other amounts then due and owing hereunder, the
Indenture Trustee, upon the written request of the Owner Trust, shall execute
and deliver to, or as directed by, the Owner Trust, all appropriate instruments
(in due form for recording or filing), releasing the Vessel and all other
property relating thereto and then constituting a portion of the Indenture
Estate, as the case may be, from the Lien of this Indenture and the Ship
Mortgage. The cost and expense associated with any action taken by the
Indenture Trustee pursuant to the provisions of this Section 6.03(b) shall be
borne by the Charterer.
(c) Release of Lien upon Full Payment of Secured Notes. Upon payment
--------------------------------------------------
in full of the principal of and interest on and all other amounts due and
payable under the
<PAGE>
41
Secured Notes, and all other amounts due and payable to any Holder or the
Indenture Trustee hereunder or under any other Operative Document, the Indenture
Trustee, upon the written request of the Owner Trust, shall execute and deliver
to, or as directed by, the Owner Trust, all appropriate instruments (in due form
for recording or filing) releasing the Vessel and all other property relating
thereto and then constituting a portion of the Indenture Estate from the Lien of
this Indenture, the Ship Mortgage and the U.K. Security Assignment. The cost
and expense associated with any action taken by the Indenture Trustee pursuant
to the provisions of this Section 6.03(c) shall be borne by the Charterer.
SECTION 6.04. Indemnification. The Indenture Trustee shall not be
---------------
required to take any action or refrain from taking any action instructed to be
taken or refrained from being taken pursuant to Section 6.02 or under Article V
unless the Indenture Trustee shall have been indemnified to the Indenture
Trustee's reasonable satisfaction against any liability (including, without
limitation, environmental liability), cost or expense (including, without
limitation, the reasonable fees and expenses of counsel) which may be incurred
in connection therewith, other than any such liability, cost or expense which
results from the willful misconduct or gross negligence of the Indenture Trustee
and for the failure of the Indenture Trustee to exercise ordinary care in
distributing funds in accordance with the terms of the Operative Documents.
Except with respect to actions required by the first sentence of Section 6.01
hereof, the Indenture Trustee shall be under no obligation to take any action
under this Indenture and nothing contained in this Indenture shall require the
Indenture Trustee to expend or risk the Indenture Trustee's own funds or
otherwise incur any financial liability or any other liability (including,
without limitation, environmental liability) in the performance of any of the
Indenture Trustee's duties hereunder or in the exercise of any of the Indenture
Trustee's rights or powers if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it. The Indenture Trustee shall not be
required to take any action under Section 6.02 or Article V, nor shall any other
provision of this Indenture be deemed to impose a duty on the Indenture Trustee
to take any action, if such Indenture Trustee shall have reasonably determined
or been advised in writing by its counsel that such action is contrary to the
terms hereof or of any other Operative Document, or is contrary to applicable
law.
SECTION 6.05. No Implied Duties. No implied duties or obligations of
-----------------
the Indenture Trustee shall be read into this Indenture.
SECTION 6.06. Duties to Remove Certain Liens. The Indenture Trustee,
------------------------------
in its individual capacity, shall comply with Section 12.4(a) of the
Participation Agreement.
SECTION 6.07. No Action Except Under Operative Documents or
---------------------------------------------
Instructions. The Owner Trust and the Indenture Trustee agree that they will
- ------------
not use, operate, store, lease, control, manage, sell, dispose of or otherwise
deal with the Vessel or
<PAGE>
42
any other part of the Indenture Estate, except (a) in accordance with the terms
of the Charter or the other Operative Documents or the U.K. Documents or (b) in
accordance with the powers granted to, or the authority conferred upon, the
Owner Trust and the Indenture Trustee pursuant to the express terms of this
Indenture and the Trust Agreement.
SECTION 6.08. Certain Rights of the Owner Trust and the Owner
-----------------------------------------------
Participant. Notwithstanding any provision in this Indenture to the contrary:
- -----------
(a) each of the Owner Trust and the Owner Participant shall have the
right, to the exclusion of the Indenture Trustee, whether or not an
Indenture Event of Default is continuing and whether or not the Indenture
Trustee has foreclosed on the Lien of the Indenture, (i) to receive
Excepted Payments, (ii) to demand, collect, sue for or waive any notice of
default with respect to Excepted Payments, (iii) prior to the foreclosure
of the Lien of the Indenture and subject to Section 5.03(c), to declare the
Charter in default in respect of Expected Payments and (iv) to enforce the
payment of Excepted Payments due and payable to it by appropriate judicial
proceedings and to exercise other remedies as provided under any Operative
Document to the extent and with respect to any portion of the Indenture
Estate which shall have been released pursuant to the terms of this
Indenture; provided that the rights referred to in this Section
6.08(a)(iii) and (iv) shall not be deemed to include the exercise of any
remedies provided for in Article 22 of the Charter other than the right to
proceed by appropriate court action or actions, either at law or in equity,
to enforce performance by the Charterer of the applicable covenants or to
recover damages for breach thereof;
(b) at all times prior to the foreclosure of the Lien of the
Indenture, whether or not an Indenture Event of Default is continuing, each
of the Owner Trust and the Owner Participant shall have the right, but not
to the exclusion of the Indenture Trustee, (i) to receive from the
Charterer all notices, financial statements, certificates, opinions of
counsel and other documents and information which the Charterer is
permitted or required to give or furnish to the Owner Trust or the Owner
Participant pursuant to the terms of any Operative Document, (ii) to retain
all rights with respect to liability insurance which Article 16 of the
Charter specifically confers upon the Owner Trust or the Owner Participant,
or other insurance under Article 16 of the Charter purchased for the
benefit of the Owner Trust or the Owner Participant (subject, however to
the provisions of the definition of "Excepted Payments") and (iii) to
exercise inspection rights pursuant to Article 11.6 of the Participation
Agreement and Article 11(b) of the Charter;
(c) so long as no Indenture Event of Default shall have occurred and
be continuing, the Owner Trust shall have the right, to the exclusion of
the Indenture Trustee, to adjust Bareboat Hire other than Assigned Hire;
and
<PAGE>
43
(d) so long as no Indenture Event of Default shall have occurred and be
continuing (subject to Section 9.02), the Owner Trust shall retain (to the
exclusion of the Indenture Trustee) (i) all rights of the "Owner" under the
Charter, other than the Indenture Trustee's right to receive Assigned Hire
and other as set forth in (a), (b) or (c) of this Section 6.08, (ii) all
rights of the "Lessee" under the Head Lease, (iii) all rights of the
"Seller" under the Conditional Sale Agreement and (iv) all rights of the
"Purchaser" under the Construction Contract and the Bill of Sale.
SECTION 6.09. Filing of Financing and Continuation Statements. The
-----------------------------------------------
Indenture Trustee shall, at the expense of the Owner Trust, execute and file any
continuation or similar statement or document delivered to it by the Owner Trust
or the Charterer in a form reasonably satisfactory to the Indenture Trustee and
proper for filing.
SECTION 6.10. Publishing of Notices. The Indenture Trustee will
---------------------
furnish to the Owner Trust and the Owner Participant, promptly upon receipt
thereof, a duplicate or copy of each report, notice, request, demand,
instruction, certificate, financial statement or other instrument furnished to
the Indenture Trustee hereunder or under any other Operative Document.
SECTION 6.11. Taxes; Withholding; Information Reporting. The
-----------------------------------------
Indenture Trustee shall exclude and withhold from each distribution of principal
and interest and other amounts due hereunder or under the Secured Notes any and
all withholding taxes applicable thereto as required by law. The Indenture
Trustee agrees (a) to act as such withholding agent and, in connection
therewith, whenever any present or future taxes or similar charges are required
to be withheld with respect to any amounts payable in respect of the Secured
Notes or otherwise due hereunder, to withhold such taxes or charges and timely
pay the same to the appropriate authority in the name of and on behalf of the
Loan Participants, (b) that it will file any necessary withholding tax returns
or statements when due and (c) that, as promptly as possible after the payment
of such withheld amounts, it will deliver to each Loan Participant appropriate
documentation showing the payment of such withheld amounts, together with such
additional documentary evidence as such Loan Participants may reasonably request
from time to time. The Indenture Trustee agrees to file any other information
reports as it may be required to file under United States law. No withholding
or action with respect thereto shall constitute or give rise to any Indenture
Event of Default or any other claims against the Owner Participant or the Owner
Trust. Any tax withheld by the Indenture Trustee pursuant to this Section 6.11
shall be deemed for all purposes of this Indenture and the Secured Notes to have
been paid to the Holder with respect to which such tax was withheld.
<PAGE>
44
ARTICLE VII
THE INDENTURE TRUSTEE AND THE OWNER TRUSTEE
SECTION 7.01. Acceptance of Trusts and Duties. The Indenture Trustee
-------------------------------
accepts the duties hereby created and applicable to it and agrees to perform the
same upon the terms and conditions set forth in this Indenture and the
Participation Agreement. The Indenture Trustee further agrees to receive and
disburse all moneys constituting part of the Indenture Estate in accordance with
the terms hereof. The Indenture Trustee shall not be answerable or accountable
in its individual capacity under any circumstances, except (a) for its willful
misconduct or gross negligence, (b) for its failure to exercise reasonable care
in safeguarding the security held by it pursuant to the terms hereof, (c) in the
case of the inaccuracy of any representations or warranties made by the
Indenture Trustee in its individual capacity and contained in the Participation
Agreement or any other Operative Document or referred to by reference in Section
7.03 hereof, (d) as provided in Sections 2.03 and 6.06, (e) for any Tax based on
or measured by any fees, commissions or compensation received by it for acting
as trustee hereunder or (f) except as otherwise expressly provided herein for
its failure to use reasonable care in disbursing funds in accordance with the
terms hereof.
SECTION 7.02. Absence of Duties Except as Specified. Except in
-------------------------------------
accordance with written instructions pursuant to Section 6.01 or 6.02, and
except as provided in, and without limiting the generality of, Sections 6.04,
6.05, 6.06 and 6.07, the Indenture Trustee shall have no duty (a) to record or
file the Charter, this Indenture, the Ship Mortgage or any other document, or to
maintain any such recording or filing, or to rerecord or refile any such
document, (b) to effect or maintain any such insurance, whether or not the
Charterer shall be in default with respect thereto, (c) to discharge any Lien of
any kind against any part of the Trust Estate or the Indenture Estate, or (d) to
inspect the Vessel at any time, or to ascertain or inquire as to the performance
or observance of any of the Charterer's covenants pursuant to the terms of the
Charter.
SECTION 7.03. No Representations or Warranties. NONE OF THE MANAGING
--------------------------------
TRUSTEE (IN ITS INDIVIDUAL OR TRUST CAPACITY), THE OWNER TRUST OR THE INDENTURE
TRUSTEE (IN ITS INDIVIDUAL OR TRUST CAPACITY) MAKES (a) ANY REPRESENTATION OR
WARRANTY, WHETHER WRITTEN, ORAL, EXPRESS OR IMPLIED, AS TO THE VALUE, COMPLIANCE
WITH SPECIFICATIONS, DURABILITY, OPERATION, CONSTRUCTION, PERFORMANCE, DESIGN OR
CONDITION OF THE VESSEL OR ANY PART THEREOF, THE MERCHANTABILITY THEREOF OR THE
FITNESS THEREOF FOR ANY PARTICULAR PURPOSE, TITLE TO THE VESSEL OR ANY COMPONENT
OF THE VESSEL, THE QUALITY OF THE MATERIALS OR WORKMANSHIP THEREOF OR CONFORMITY
THEREOF TO SPECIFICATIONS, OR THE PRESENCE OR
<PAGE>
45
ABSENCE OF ANY LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, OR ANY
OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO
THE VESSEL, OR ANY COMPONENT OF THE VESSEL, or (b) any representation or
warranty as to the validity, legality or enforceability of this Indenture, any
of the other Operative Documents or the Secured Notes, or as to the correctness
of any statement contained in any thereof, except as set forth in Sections 9 and
10 of the Participation Agreement and Section 7.4 of the Trust Agreement.
SECTION 7.04. No Segregation of Moneys; No Interest; Investments.
--------------------------------------------------
Any moneys paid to or retained by the Indenture Trustee pursuant to any
provision hereof and not then required to be distributed to the Holders, the
Charterer or the Owner Trust shall be deposited in a separate, interest bearing
cash collateral account; provided that any payments received or applied
hereunder by the Indenture Trustee shall be accounted for by the Indenture
Trustee so that any portion thereof paid or applied pursuant hereto shall be
identifiable as to the source thereof. Any amounts held by the Indenture
Trustee pursuant to the express terms of this Indenture or any other Operative
Document shall be invested and reinvested by the Indenture Trustee from time to
time in Permitted Investments at the direction of (i) the Charterer if such
amounts would be payable to the Charterer upon satisfaction of any applicable
conditions; or (ii) the Owner Participant in the case of the remaining portion
of such amounts; provided, however, that in the event there shall be continuing
any Indenture Event of Default, such directions may be given exclusively by a
Majority in Interest of Holders of Notes. The Indenture Trustee shall have no
liability for any loss resulting from any investment required to be made
hereunder other than by reason of its own willful misconduct or negligence in
failing to comply with such instructions. Any net income or gain realized as a
result of any such investment or reinvestment shall be held as part of the
Indenture Estate and shall be applied by the Indenture Trustee at the same time,
on the same conditions and in the same manner as the amounts in respect of which
such income or gain was realized are required to be distributed in accordance
with the provisions hereof. Any Permitted Investment may be sold or otherwise
reduced to cash (without regard to maturity) by the Indenture Trustee whenever
necessary to make any application as required by the terms of this Indenture or
of any applicable Operative Document.
SECTION 7.05. Reliance; Agents; Advice of Counsel. Neither the Owner
-----------------------------------
Trust nor the Indenture Trustee (in their respective individual or trust
capacities for the purposes of this Section 7.05) shall incur any liability to
anyone in acting upon any signature, instrument, notice, resolution, request,
consent, order, certificate, report, opinion, bond or other document or paper
reasonably believed by it to be genuine and believed by it to be signed by the
proper party or parties. Either of the Owner Trust or the Indenture Trustee may
accept a copy of a resolution of the Board of Directors or other governing body
of any party to the Participation Agreement or other Operative Agreement,
certified by the
<PAGE>
46
Secretary or any Assistant Secretary thereof as duly adopted and in full force
and effect, as conclusive evidence that such resolution has been duly adopted
and that the same is in full force and effect. As to any fact or matter
relating to the Charterer the manner of ascertainment of which is not
specifically described herein, the Owner Trust and the Indenture Trustee may for
all purposes hereof rely on an Officer's Certificate of the relevant party as to
such fact or matter, and such Officer's Certificate shall constitute full
protection to the Owner Trust or the Indenture Trustee (in their individual or
trust capacities), as the case may be, for any action taken or omitted to be
taken by it in good faith in reliance thereon. The Indenture Trustee shall
assume, and shall be fully protected in assuming, that the Owner Trust is
authorized by the Trust Agreement to enter into this Indenture and to take all
action to be taken by the Owner Trust pursuant to the provisions hereof, and
shall not inquire into the authorization of the Owner Trust with respect
thereto. The Owner Trust shall assume, and shall be fully protected in
assuming, that the Indenture Trustee is authorized to enter into this Indenture
and to take all action to be taken by the Indenture Trustee pursuant to the
provisions hereof, and shall not inquire into the authorization of the Indenture
Trustee with respect thereto. In the administration of the trusts hereunder,
the Indenture Trustee may execute any of the trusts or powers hereof and perform
its powers and duties hereunder directly or through agents or attorneys and at
the expense of the Indenture Estate may consult with counsel, accountants and
other skilled Persons to be selected and retained by it, and the Indenture
Trustee shall not be liable for anything done, suffered or omitted in good faith
by it in accordance with the written advice or written opinion of any such
counsel, accountant or other skilled Person acting within such Person's area of
competence (so long as the Indenture Trustee shall have exercised due care in
selecting such Person).
SECTION 7.06. No Compensation from Holders or Indenture Estate.
------------------------------------------------
Notwithstanding any other provision hereof, the Indenture Trustee shall have no
right against the Holders, the Managing Trustee or the Delaware Trustee, in
their respective individual capacities, the Owner Trust, the Owner Participant
or, except as otherwise provided in Section 4.03, the Indenture Estate for any
fee as compensation for its services hereunder.
SECTION 7.07. Right of the Indenture Trustee to Perform Covenants,
----------------------------------------------------
Etc. If the Owner Trust or the Charterer shall fail to make any payment or
- ---
perform any act required to be made or performed by it hereunder or under any
Operative Document to which it is a party or if the Owner Trust or the Charterer
shall fail to release any Lien affecting the Indenture Estate which it is
required to release by the terms of this Indenture or any other Operative
Document to which it is a party, the Indenture Trustee, after notice to and
demand upon the Owner Trust or the Charterer and affording the Owner Trust and
the Charterer a reasonable opportunity to cure, and without waiving or releasing
any obligation or Charter Event of Default, may (but shall be under no
obligation to) at any time thereafter make such payment or perform such act for
the account of and at the expense of the Indenture Estate, and may enter upon
any property for such purpose and take all such action
<PAGE>
47
with respect thereto as, in the Indenture Trustee's opinion, may be necessary or
appropriate therefor. No such entry shall be deemed an eviction. All sums so
paid by the Indenture Trustee and all costs and expenses (including, without
limitation, legal fees and expenses) so incurred, shall constitute additional
indebtedness secured by this Indenture and shall be paid from the Indenture
Estate to the Indenture Trustee on demand. The Indenture Trustee shall not be
liable for any damages resulting from any such payment or action unless such
damages shall be a consequence of willful misconduct or gross negligence on the
part of the Indenture Trustee.
SECTION 7.08. Moneys for Payments in Respect of Notes to be Held in
-----------------------------------------------------
Trust. In case the Holder of any Secured Note shall fail to present the same
- -----
for payment on any date on which the principal thereof becomes payable, the
Indenture Trustee may set aside in trust the moneys then due thereon uninvested
and shall pay such moneys to any Holder of such Secured Note upon due
presentation for surrender thereof in accordance with the provisions of this
Indenture, subject to the provisions of Section 7.09.
SECTION 7.09. Disposition of Moneys Held for Payments of Notes. Any
------------------------------------------------
money set aside under Section 7.08 and not paid to Holders under Section 7.08
shall be held by the Indenture Trustee in trust until the latest of (a) the date
three years after the date of such setting aside, (b) the date all other Holders
(other than other Holders for which the Indenture Trustee is holding such moneys
pursuant to Section 7.08) of the Secured Notes shall have received full payment
of all principal of and interest and other sums payable to them on such Secured
Notes or the Indenture Trustee shall hold (and shall have notified such Persons
that it holds) in trust an amount sufficient to make full payment thereof when
due, and (c) the date the Owner Trust shall have fully performed and observed
all its covenants and obligations contained in this Indenture with respect to
the Secured Notes; and thereafter shall be paid to the Owner Trust by the
Indenture Trustee, who then shall be released from all further liability with
respect to such moneys, and thereafter the Holders of the Secured Notes in
respect of which such moneys were so paid to the Owner Trust shall have no
rights in respect thereof except to obtain payment of such moneys from the Owner
Trust.
ARTICLE VIII
SUCCESSOR TRUSTEES AND ADDITIONAL TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee. In the case of any
---------------------------------
appointment of a successor to either Owner Trustee pursuant to the Trust
Agreement, or any merger, conversion or consolidation or transfer of
substantially all of the corporate trust business of either Owner Trustee, the
Managing Trustee shall give prompt written notice thereof to the Indenture
Trustee.
<PAGE>
48
SECTION 8.02. Resignation of Indenture Trustee; Appointment of
------------------------------------------------
Successor. (a) The Indenture Trustee or any successor thereto may resign at
- ---------
any time without cause by giving at least thirty (30) days prior written notice
to the Owner Trust, the Owner Participant, the Charterer and each Holder, such
resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee as provided in Section 8.02(b). In addition, a
Majority in Interest of Holders of Notes may at any time remove the Indenture
Trustee without cause by an instrument in writing delivered to the Owner Trust,
the Owner Participant, the Charterer and the Indenture Trustee, such removal to
be effective upon the acceptance of the trusteeship by a successor Indenture
Trustee as provided in Section 8.02(b). In the case of the resignation or
removal of the Indenture Trustee, the Owner Trust may appoint a successor
Indenture Trustee. If a successor Indenture Trustee shall not have been
appointed within thirty (30) days of such notice of resignation or removal, the
Indenture Trustee, the Owner Trust, the Owner Participant, the Charterer or a
Majority in Interest of Holders may apply to any court of competent jurisdiction
to appoint a successor Indenture Trustee qualified under Section 8.02(c) to act
until such time, if any, as a successor shall have been appointed as above
provided in this Section 8.02. The successor Indenture Trustee so appointed by
such court shall immediately and without further act be superseded by any
successor Indenture Trustee appointed as above provided in this Section 8.02.
(b) Any successor Indenture Trustee, however appointed, shall execute
and deliver to the Owner Trust and to the predecessor Indenture Trustee (with a
copy to each Holder) an instrument accepting such appointment, and shall give
the Owner Participant, the Holders and the Charterer written notice of such
acceptance. Upon the execution and delivery of such instrument, such successor
Indenture Trustee, without further act, shall become vested with all the
estates, properties, rights, powers and duties of the predecessor Indenture
Trustee hereunder, with like effect as if originally named the Indenture Trustee
herein. Notwithstanding and without limiting the foregoing, the predecessor
Indenture Trustee, upon the written request of the successor Indenture Trustee,
shall execute and deliver an instrument transferring to such successor Indenture
Trustee, upon the trusts herein expressed applicable to it, all the estates,
properties, rights and powers of such predecessor Indenture Trustee, and such
predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over
to such successor Indenture Trustee all moneys or other property then held by
such predecessor Indenture Trustee hereunder.
(c) There shall at all times be an Indenture Trustee hereunder which
shall be a bank or trust company organized and doing business under the laws of
the United States of America or of any state thereof, authorized under such laws
to exercise corporate trust powers, subject to supervision or examination by
federal or state authority, having a combined capital and surplus of at least
$75,000,000. If such bank or trust company publishes reports of condition at
least annually, pursuant to applicable law or to the requirements of the
aforesaid supervising or examining authority, then for purposes hereof
<PAGE>
49
the combined capital and surplus of such bank or trust company shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
condition so published.
(d) Any corporation into which the Indenture Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation to which substantially all the corporate
trust business of the Indenture Trustee may be transferred, shall, subject to
the terms of paragraph (c) of this Section 8.02, be the Indenture Trustee under
this Indenture without further act.
SECTION 8.03. Co-Trustees and Separate Trustees. (a) If, at any
---------------------------------
time, it shall be necessary or prudent in order to conform to any law of any
jurisdiction in which property shall be held subject to the Lien of this
Indenture, the Ship Mortgage and the U.K. Security Assignment, the Indenture
Trustee shall be advised by counsel that it is so necessary or prudent in the
interest of the Holders, or a Majority in Interest of Holders of Notes in
writing shall so request the Indenture Trustee and the Owner Trust, the
Indenture Trustee and the Owner Trust shall execute and deliver all instruments
and agreements necessary or proper either (i) to constitute another bank or
trust company or one or more Persons approved by the Indenture Trustee and the
Owner Trust, either to act as co-trustee or co-trustees of all or any portion of
the Indenture Estate, jointly with the Indenture Trustee originally named herein
or any successor or successors, or to act as separate trustee or trustees of all
or any such portion of the Indenture Estate in each case with such rights,
powers, duties and obligations as may be provided in such supplemental indenture
or such instrument of appointment as the Indenture Trustee or a Majority in
Interest of Holders of Notes may deem necessary or advisable, or (ii) to
clarify, add to or subtract from the rights, powers, duties and obligations
theretofore granted any such additional or separate trustee, subject in each
case to the remaining provisions of this Section 8.03. In the event that the
Owner Trust shall not have joined in the execution of such instruments and
agreements within fifteen (15) days after the receipt of a written request from
the Indenture Trustee to do so, or if an Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee may act under the foregoing
provisions of this Section 8.03 without the concurrence of the Owner Trust; and
the Owner Trust hereby appoints the Indenture Trustee its agent and attorney-in-
fact to act for it under the foregoing provisions of this Section 8.03(a) in
either of such contingencies. The Indenture Trustee may, in such capacity,
execute deliver and perform any such supplemental indenture, or any such
instrument, as may be required for the appointment of any such co-trustee(s) or
separate trustee(s) or for the clarification of, addition to or subtraction from
the rights, powers, duties or obligations theretofore granted to any such co-
trustee(s) or separate trustee(s). In case any co-trustee(s) or separate
trustee(s) appointed under this Section 8.03(a) shall die, become incapable of
acting, resign or be removed, all the assets, property, rights, powers, trusts,
duties and obligations of such co-trustee(s) or separate trustee(s) shall revert
to and shall vest in and may be exercised by the
<PAGE>
50
Indenture Trustee, to the extent permitted by law until a successor, additional
or separate trustee is appointed as provided in this Section 8.03(a).
(b) Every co-trustee and separate trustee hereunder, to the extent
permitted by law and except as otherwise expressly provided in any Operative
Document, shall be appointed and act, and the Indenture Trustee and its
successors shall act, subject to the following provisions and conditions:
(i) the Secured Notes shall be authenticated and delivered by the
Indenture Trustee, and all powers, duties, obligations and rights conferred
upon the Indenture Trustee in respect of the receipt, custody, control,
payment and management of moneys, papers or securities, shall be exercised,
solely by the Indenture Trustee;
(ii) all other rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such co-trustee or co-
trustees or separate trustee or trustees jointly, except to the extent that
under any applicable law or in any jurisdiction in which any particular act
or acts are to be performed, the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations shall be exercised and performed by such co-
trustee or co-trustees or separate trustee or trustees; but subject to the
same limitations in any exercise of his, her or its power and authority as
those to which the Indenture Trustee is subject under the terms of this
Indenture;
(iii) notwithstanding anything herein contained to the contrary, no
power given hereby to, or which it is provided hereby may be exercised by,
any such co-trustee or co-trustees or separate trustee or trustees, shall
be exercised hereunder by such additional trustee or trustees except
jointly with, or with consent in writing of, the Indenture Trustee;
(iv) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder;
(v) the powers of any co-trustee(s) or separate trustee(s) appointed
pursuant to this Section 8.03 shall not in any case exceed those of the
Indenture Trustee hereunder; and
(vi) the Owner Trust and the Indenture Trustee, at any time, by an
instrument in writing executed by them jointly, may remove any such
trustee, and in that case, by an instrument in writing executed by them
jointly, may appoint a successor or successors to such co-trustee or co-
trustees or separate trustee or trustees, as the case may be. In the event
that the Owner Trust shall not have joined
<PAGE>
51
in the execution of any such instrument within fifteen (15) days after the
receipt of a written request from the Indenture Trustee to do so, the
Indenture Trustee shall have the power to remove any such co-trustee or
separate trustee and to appoint a successor co-trustee or separate trustee
without the concurrence of the Owner Trust. In the event that the
Indenture Trustee alone shall have appointed a separate trustee or trustees
or co-trustee or co-trustees as above provided in this Section 8.03, it may
at any time, by an instrument in writing, remove any such separate trustee
or co-trustee, the successor to any such separate trustee or co-trustee so
removed to be appointed by the Owner Trust and the Indenture Trustee, or by
the Indenture Trustee alone, as provided in this Section 8.03.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Indenture Supplements Without Consent of Holders. The
------------------------------------------------
Owner Trust and the Indenture Trustee, without the consent of any Holder and at
any time and from time to time, may enter into one or more amendments or
supplements to this Indenture, in form satisfactory to each of the Owner Trust
and Indenture Trust, for any of the following purposes:
(a) to subject to the Lien of this Indenture additional property
constituting part of the Indenture Estate, including the Vessel upon its
delivery under the Construction Contract, pursuant to a supplement to this
Indenture substantially in the form of Exhibit D to this Indenture;
(b) to correct or amplify the description of any property at any time
subject to the Lien of this Indenture;
(c) to add to the covenants of the Owner Trust for the benefit of the
Holders or to surrender any right or power herein conferred upon the Owner
Trust, the Owner Participant or the Charterer;
(d) to cure any ambiguity, to correct or supplement any provision
herein or in the Secured Notes which may be defective or inconsistent with
any other provisions of this Indenture, provided that such action shall not
adversely affect the interests of any Holder;
<PAGE>
52
(e) to evidence the succession of a new Owner Trustee in accordance
with the Trust Agreement or the succession of a new Indenture Trustee
hereunder or the appointment or removal of any co-trustee or separate
trustee thereunder or hereunder;
(f) to convey, transfer, assign, mortgage or pledge any property to or
with the Indenture Trustee or to make any other provisions with respect to
matters or questions arising hereunder so long as such action shall not
adversely affect the interests of the Loan Participants;
(g) to add to the rights of the Loan Participants;
(h) to include on the Secured Notes any legend as may be required by
law;
(i) to provide for the establishment and issuance of Additional Notes
pursuant to Section 2.08; or
(j) to provide for the substitution of a new owner trust in accordance
with Section 3.04.
SECTION 9.02. Supplements and Amendments to Operative Documents With
------------------------------------------------------
Consent Holders of Notes. (a) Without the consent of a Majority in Interest of
- ------------------------
Holders of Notes, the respective parties to the Charter, the Participation
Agreement, the Trust Agreement, the Head Lease, the Conditional Sale Agreement
and any other Operative Document or U.K. Document included in the Indenture
Estate may not modify, amend or supplement any of such agreements, or give any
consent, waiver, authorization or approval thereunder, for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
thereof or of modifying in any manner the rights of the respective parties
thereunder; provided that, so long as no Indenture Event of Default shall have
occurred and be continuing, such agreements may be modified, amended or
supplemented if the Indenture Trustee determines that any such proposed
modification, amendment or supplement would not adversely affect the interests
of the Holders; provided, however, that the actions specified in Section 9.02(c)
may be taken without the consent of the Indenture Trustee or any Holder.
(b) Except as provided in Section 9.01 or 9.02(c) or 9.02(d), at any
time and from time to time, with the consent of a Majority in Interest of
Holders of Notes and upon the written request of the Owner Trust, the Indenture
Trustee (x) shall execute an amendment or supplement to this Indenture for the
purpose of adding provisions to, or changing in any manner or eliminating any of
the provisions of, this Indenture, or (y) shall execute an amendment or
supplement to, or give a consent, waiver, authorization or approval, for the
purposes of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, the Participation Agreement or (z) shall consent to
any
<PAGE>
53
amendment or supplement to, or give a consent, waiver, authorization or
approval, for the purposes of adding any provisions to, or changing in any
manner or eliminating any of the provisions of, any of the other Operative
Documents or U.K. Document; provided, however, that no such amendment or
supplement to this Indenture, or consent, waiver, authorization, approval,
amendment or supplement to the Participation Agreement or any such other
Operative Document or U.K. Document (whether pursuant to subsection (a) or (c)
of this Section 9.02, and anything in such subsections or elsewhere in this
Indenture to the contrary notwithstanding) shall, without the consent of each
Holder of a Secured Note then Outstanding:
(i) change the stated maturity of the principal of, or any installment
of interest on, or any mandatory or optional repayment, purchase or
redemption provision with respect to, any Secured Note, or change the
principal amount thereof or any other amount payable in respect thereof or
reduce the Make-Whole Amount, if any, or interest thereon, or impair the
right to institute suit for the enforcement of any such payment or change
mandatory or optional prepayment provisions or change the place of payment
where, or the coin or currency in which, any Secured Note or the interest
thereon is payable;
(ii) permit the creation of any Lien on the Indenture Estate not
otherwise permitted hereunder or deprive any Holder of the benefit of the
Lien of this Indenture upon the Indenture Estate for the security of its
Secured Notes;
(iii) change the percentage of the aggregate principal amount of
Secured Notes Outstanding necessary to modify or amend any provision
hereunder or any other Operative Document or to waive compliance therewith;
(iv) modify the definitions of "Indenture Default," "Indenture Event
of Default," "Majority in Interest of Holders of Notes," "Charter Default"
or "Charter Event of Default";
(v) modify the order of priorities in which distributions are to be
made under Article IV;
(vi) reduce the amount or change the time of any payment of Assigned
Hire under the Charter;
(vii) modify, amend or supplement any of the provisions of this
Section 9.02;
<PAGE>
54
(viii) modify, amend or supplement the Charter or the Parent
Guaranty, or consent to any assignment of the Charter (other than an
assignment pursuant to Article 20 of the Charter), in either case releasing
the Charterer or the Guarantor from its respective obligations in respect
of the payment of Assigned Hire payable pursuant to the Charter, or
changing the absolute and unconditional character of such obligations; or
(ix) materially adversely affect any indemnities in favor of any
Holder as provided pursuant to the terms of any Operative Document, except
as may be consented to by each Person adversely affected thereby.
(c) Notwithstanding anything to the contrary contained in Section
9.02(b) (except as provided in the proviso to Section 9.02(b)), (x) without the
necessity of the consent of any of the Holders or the Indenture Trustee, the
Owner Trust may and (y) in the case of clause (iii) of this Section 9.02(c),
without the consent of any of the Holders, the Indenture Trustee may:
(i) so long as no Indenture Event of Default shall have occurred and
be continuing, modify, amend or supplement the Charter, or give any
consent, waiver, authorization or approval with respect thereto, except
that without compliance with Sections 9.02(a) and 9.02(b), the Owner Trust
shall not modify, amend or supplement, or give any consent, waiver,
authorization or approval for the purposes of adding any provisions to or
changing in any manner or eliminating any of the provisions thereof, or of
modifying in any manner the rights of the respective parties thereunder,
with respect to the following provisions of the Charter as originally
executed: Article 2 (if the result thereof would be to shorten the term of
the Charter to a period shorter than the period ending with the maturity
date of the Secured Notes), Articles 3(a) (except to the extent that such
change or modification relates solely to Excess Hire, Bareboat Market Rate,
Excess Hire Rate, Additional Excess Hire or Additional Excess Hire Rate),
3(b), 3(c), (3(e), 3(f) (3g), 5(b), 9, 14, 15, 16, 17, 18, 21, 22, 23 and
Schedule 2 (except to the extent that such change or modification relates
solely to Excess Hire, Bareboat Market Rate, Excess Hire Rate, Additional
Excess Hire or Additional Excess Hire Rate) and any definition of terms
used in the Charter, to the extent that any modification of such definition
would result in a modification of the Charter not permitted pursuant to
this Section 9.02(c); provided that, subject to the next proviso, in the
event an Indenture Event of Default shall have occurred and be continuing,
the Indenture Trustee shall have all rights of the Owner Trust as Owner
under the Charter to modify, amend or supplement the Charter or give any
consent, waiver, authorization or approval thereunder, for the purpose of
adding any provisions to or changing in any manner or eliminating any of
the provisions thereof or of modifying in any manner the rights of the
Owner thereunder; provided further that, without the prior consent of the
Owner Trust, and
<PAGE>
55
subject to the Indenture Trustee's rights to exercise remedies under
Article 22 of the Charter without the prior consent of the Owner Trust,
whether or not an Indenture Event of Default shall have occurred and be
continuing, no such action shall be taken with respect to any of the
provisions of Article 1 (if any modification of a definition contained
therein would result in a modification of the Charter not permitted by this
proviso), 3, 11, 14, 15, 16 (except to increase the amounts or types of
insurance the Charterer must provide thereunder at its expense), 18, 20,
21, 25, 27, 28 and 29 of the Charter, or any other Section of the Charter
(including Section 22 of the Charter) to the extent such action shall
affect the amount or timing of any amounts payable by the Charterer under
the Charter as originally executed (or as subsequently modified with the
consent of the Owner Trust) which, absent the occurrence and continuance of
an Indenture Event of Default, would be distributable to the Owner Trust or
the Owner Participant under Article IV;
(ii) modify, amend or supplement the Trust Agreement, or give any
consent, waiver, authorization or approval with respect thereto, except
that without compliance with Section 9.02(b), the Owner Trust shall not
modify, amend or supplement, or give any consent, waiver, authorization or
approval for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions thereof or of modifying in any
manner the rights of the respective parties thereunder, with respect to the
following provisions of the Trust Agreement as originally executed:
Section 3.2, Section 5.1, Section 9.2, Section 10, Section 11, Section 12.7
and any definition of terms used in the Trust Agreement, to the extent that
any modification of such definition would result in a modification of the
Trust Agreement not permitted pursuant to this Section 9.02(c), and in each
case only to the extent any such action shall adversely impact the
interests of the Holders; and
(iii) modify, amend or supplement the Participation Agreement, or
give any consent, waiver, authorization or approval with respect thereto,
except that without compliance with Section 9.02(a) or Section 9.02(b), the
Owner Trust and the Indenture Trustee shall not modify, amend or
supplement, or give any consent, waiver, authorization or approval for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions thereof or of modifying in any manner the
rights of the respective parties thereunder, with respect to the following
provisions of the Participation Agreement as originally executed: Section
2, Section 4, Section 6, Section 9, Section 11 (other than an amendment to
add to the covenants of the Charterer), Section 12, Section 13 (insofar as
such Section 13 relates to the Indenture Trustee, the Indenture Estate and
the Holders) and, to the extent the Loan Participants would be adversely
affected thereby, Section 14 and Section 15 and any definition of terms
used in the Participation Agreement to the extent that any modification of
such definition would result in a modification of the Participation
Agreement not permitted pursuant to this Section 9.02(c);
<PAGE>
56
(iv) modify, amend or supplement the Construction Contract; provided
that such modification, amendment or supplement does not decrease (except to a
de minimis extent) the Fair Market Sales Value of the Vessel or decrease the
useful life or utility of the Vessel; and
(v) modify, amend or supplement any of said agreements in order to
cure any ambiguity, to correct or supplement any provisions thereof which
may be defective or inconsistent with any other provision thereof or of any
provision of this Indenture, or to make any other provision with respect to
matters or questions arising thereunder or under this Indenture which shall
not be inconsistent with the provisions of this Indenture; provided that
the making of any such other provision shall not adversely affect the
interests of the Holders unless such provision corrects a mistake.
SECTION 9.03. Execution of Indenture Supplement, Amendments, Etc. In
--------------------------------------------------
executing or accepting the additional trusts created by any amendment or
supplement to this Indenture, or any amendment, consent, waiver or other
modification permitted by this Article IX or the modifications thereby of the
trusts created by this Indenture, each of the Indenture Trustee and the Owner
Trust shall be entitled to receive, and (subject to Section 7.01 and Section
7.02) shall be fully protected in relying upon, an opinion of independent
counsel stating that the execution of such amendment or supplement to this
Indenture, or of such amendment, consent, waiver or modification, is authorized
or permitted by this Indenture. Either of the Indenture Trustee or the Managing
Trustee may, but shall not be obligated to, enter into any such amendment or
supplement to this Indenture which affects its own rights, duties or immunities
under this Indenture or otherwise. It shall not be necessary for Holders to
approve the particular form of any proposed amendment or supplement to this
Indenture, or any amendment, consent, waiver or other modification of any other
Operative Document or U.K. Document, but it shall be sufficient if such action
shall approve the substance thereof.
SECTION 9.04. Effect of Indenture Supplement. Upon the execution of
------------------------------
any amendment or supplement to this Indenture pursuant to this Article IX, this
Indenture shall be modified in accordance therewith, and such amendment or
supplement shall form a part of this Indenture for all purposes; and every
Holder of a Secured Note theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 9.05. Reference in Secured Notes to Indenture Supplements.
---------------------------------------------------
Secured Notes authenticated and delivered after the execution of any amendment
or supplement pursuant to this Article IX may, and shall if required by the
Indenture Trustee, bear a notation in form approved by the Indenture Trustee as
to any matter provided for in such amendment or supplement. If the amendment or
supplement to this Indenture shall so provide, new Secured Notes so modified as
to conform, in the opinion of the Indenture Trustee and the Owner Trust, to any
such amendment or supplement may be prepared and
<PAGE>
57
executed by the Owner Trust and authenticated and delivered by the Indenture
Trustee in exchange for outstanding Secured Notes.
SECTION 9.06. Notices of Indenture Supplements and Amendments, Etc.
----------------------------------------------------
Promptly after the execution by the Owner Trust and the Indenture Trustee of any
amendment or supplement to this Indenture, or any amendment, consent, waiver or
other modification pursuant to the provisions hereof, the Indenture Trustee
shall send a conformed copy of such instrument to each Holder, the Charterer,
the Owner Trust and the Owner Participant, but the failure of the Indenture
Trustee to send such a conformed copy shall not impair or affect the validity of
such document.
SECTION 9.07. Charterer Rights. Without the consent of the
----------------
Charterer, no amendment or supplement to this Indenture or amendment, waiver or
other modification of any provision of this Indenture shall alter or modify the
provisions of Section 5.09 or this Section 9.07.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture. This Indenture and the
------------------------
trusts created hereby shall terminate, and this Indenture shall be of no further
force or effect, upon the payment in full of the principal of and interest on
and all other amounts due and payable under all Secured Notes and all other
amounts due and payable to any Holder or the Indenture Trustee hereunder or
under any other Operative Document. The foregoing shall not impair any rights
of a Holder in respect of indemnification or other claims which may be available
against any party under the terms of any other Operative Document. Except as
otherwise provided in the preceding sentence, this Indenture and the trusts
created hereby shall continue in full force and effect in accordance with the
terms hereof.
SECTION 10.02. No Legal Title to Indenture Estate in Holders. No
---------------------------------------------
Holder shall have legal title to any part of the Indenture Estate. No transfer,
by operation of law or otherwise, of any Secured Note or other right, title and
interest of any Holder in and to the Indenture Estate or hereunder shall operate
to terminate this Indenture or entitle such Holder or any successor or
transferee of such Holder to an accounting or to the transfer to it of any legal
title to any part of the Indenture Estate.
SECTION 10.03. Power of Attorney. The Owner Trust does hereby
-----------------
constitute the Indenture Trustee its true and lawful attorney-in-fact,
irrevocably and coupled with the interest of the Indenture Trustee created by
this Indenture, so long as any Secured Notes are Outstanding and so long as
there are any other amounts due hereunder, under any
<PAGE>
58
other Operative Documents, or under the Secured Notes, with full power (in the
name of and as attorney-in-fact for the Owner Trust or otherwise) to ask for,
require, demand and receive any and all moneys and claims for moneys, and all
other property, which now or hereafter constitutes part of the Indenture Estate,
to endorse any checks or other instruments or orders in connection therewith and
to file any claims or to take any action, or to institute any proceedings, which
the Indenture Trustee may deem to be necessary or advisable in the premises.
The Owner Trust has directed the Indenture Trustee to make all necessary
conveyances, assignments, transfers and deliveries of the Indenture Estate and
any rights hereunder pursuant to the provisions of this Indenture, and for that
purpose the Indenture Trustee may execute all necessary instruments of
conveyance, assignment and transfer, and may substitute one or more persons with
like power, and the Owner Trust hereby ratifies and confirms all that the
Indenture Trustee, acting as its attorney, or any such substitute, shall
lawfully do by virtue hereof and whether pursuant to the exercise of any
remedies hereunder or otherwise.
SECTION 10.04. Regarding the Owner Trust and the Owner Trustees. (a)
------------------------------------------------
Except as expressly provided herein, all and each of the representations,
warranties, undertakings and agreements herein made on the part of the Owner
Trust are made and intended not as personal representations, warranties,
undertakings and agreements by or for the purpose or with the intention of
binding the Managing Trustee or the Delaware Trustee personally, but are made
and intended for the purpose of binding only the Trust Estate, and this
Indenture is executed and delivered by the Managing Trustee solely in the
exercise of the powers expressly conferred upon it as trustee under the Trust
Agreement; and no personal liability or responsibility is assumed hereunder by,
or at any time shall be enforceable against, the Managing Trustee or any of its
successors in trust on account of any representation, warranty, undertaking or
agreement hereunder of the Owner Trust, either expressed or implied, all such
personal liability, if any, being expressly waived by the Indenture Trustee;
provided, however, that (i) the Indenture Trustee or any Person claiming by,
through or under it, making claim hereunder, may, subject to the terms and
conditions hereof, look to the Trust Estate for satisfaction of such liability
or responsibility and (ii) the Managing Trustee or its successor in trust, as
applicable, shall be personally liable for its own gross negligence and willful
misconduct and for the matters described in clauses (i) through (v) of the last
sentence of Section 7.4 of the Trust Agreement. Subject to the terms and
conditions hereof, each time a successor Managing Trustee is appointed in
accordance with the terms of the Trust Agreement, such successor Managing
Trustee shall, without further act, succeed to all the rights, duties,
immunities and obligations of the predecessor Managing Trustee hereunder and
under the other Operative Documents, and such predecessor Managing Trustee shall
be released from all further duties and obligations hereunder and under the
other Operative Documents, all without the necessity of any consent or approval
by the Indenture Trustee and without in any way altering the terms of this
Indenture or such other Operative Documents or the obligations of the Indenture
Trustee hereunder or thereunder.
<PAGE>
59
(b) As to the aggregate unpaid principal amount of Secured Notes
Outstanding as of any date, the Owner Trust may rely on an Officer's Certificate
of the Indenture Trustee.
SECTION 10.05. Notices. All communications, notices and consents
-------
provided for in this Indenture shall be in writing and shall be given in person
or by courier or by means of telex, telecopy or other wire transmission (with
request for assurance of receipt in a manner typical with respect to
communications of that type), or mailed by first class mail or overnight
courier, addressed: (a) in the case of the Owner Trust, to the Owner Trust in
care of Deutsche Morgan Grenfell (Cayman) Limited, as Managing Trustee,
Elizabethan Square, P.O. Box 1984, George Town, Grand Cayman, Cayman Islands,
British West Indies, Attention: Managing Director (telephone: (809) 949-8000;
telecopier: (809) 949-8178); (b) in the case of the Indenture Trustee, to State
Street Bank and Trust Company, Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department (telephone: (617)
664-5340; telecopier: (617) 664-5371); and, in the case of all other parties, as
set forth in Schedule I to the Participation Agreement or at such other address
as any such Person may from time to time designate by notice duly given in
accordance with the provisions of this Section 10.05 to the other parties hereto
and shall be deemed given when received by (or when proffered to, if receipt is
not accepted) the party to whom it is addressed.
SECTION 10.06. Severability of Provisions. Any provision of this
--------------------------
Indenture which may be determined by competent authority to be invalid or
unenforceable in such jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable any remaining terms and provisions
hereof, and any such invalidity or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
The parties shall negotiate in good faith to replace such provision with an
appropriate legal provision. To the extent permitted by applicable law, the
parties hereto waive any provision thereof that renders any term or provision
hereof invalid or unenforceable in any respect.
SECTION 10.07. No Oral Modification or Continuing Waivers. No term
------------------------------------------
or provision of this Indenture or the Secured Notes may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party or the person against whom enforcement of the change, waiver,
discharge or termination is sought; and any waiver of the terms hereof or of any
Secured Note shall be effective only in the specific instance and for the
specific purpose given.
SECTION 10.08. Successors and Assigns. All covenants and agreements
----------------------
contained herein shall be binding upon each of the parties hereto and their
respective successors and permitted assigns, and inure to the benefit of each of
the parties hereto and their respective successors and permitted assigns, all as
herein provided. Any request,
<PAGE>
60
notice, direction, consent, waiver or other instrument or action by any Holder
shall bind the successors and assigns of such Holder. This Indenture and the
Indenture Estate shall not be affected by any amendment or supplement to the
Trust Agreement or by any other action taken under or in respect of the Trust
Agreement, except as otherwise provided in or permitted by this Indenture. Each
Holder by its acceptance of a Secured Note agrees to be bound by this Indenture
and all provisions of the Operative Documents applicable to it.
SECTION 10.09. Headings; Table of Contents. The division of this
---------------------------
Indenture into Articles, Sections, subsections and paragraphs, the provision of
a table of contents and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation hereof.
SECTION 10.10. Normal Commercial Relations. Notwithstanding anything
---------------------------
contained in this Indenture to the contrary, any of the Owner Participant, the
Indenture Trustee, the Owner Trust, the Managing Trustee, the Delaware Trustee
or any bank or other affiliate of any such Person may conduct any banking or
other financial transactions and have banking or other commercial relationships
with the Charterer, fully to the same extent as if this Indenture were not in
effect.
SECTION 10.11. Governing Law. THIS INDENTURE SHALL BE GOVERNED BY,
-------------
AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 10.12. Execution. This Indenture may be executed in separate
---------
counterparts by the parties thereto, each of which, when so executed and
delivered, shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 10.13. Security Agreement. This Indenture shall constitute a
------------------
security agreement and, in addition to all other rights of the Indenture Trustee
hereunder, the Indenture Trustee shall have for the benefit of the Holders all
of the rights conferred upon secured parties by the UCC and any other similar
legislation as from time to time in effect in any applicable jurisdiction.
SECTION 10.14. Benefits of Indenture. Nothing in this Indenture,
---------------------
whether express or implied, shall be construed to give to any Person other than
the parties hereto, the Holders and (to the extent expressly provided herein)
the Owner Participant any legal or equitable right, remedy or claim under or in
respect of this Indenture or the Secured Notes, and this Indenture shall be held
for the sole and exclusive benefit of the parties hereto, the Holders and, to
the extent expressly provided herein, the Owner Participant.
<PAGE>
61
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
SAMOCO 1233 TRUST,
Owner Trust
By: DEUTSCHE MORGAN GRENFELL
(CAYMAN) LIMITED,
not in its individual capacity, except
as expressly provided herein, but
solely as Managing Trustee
By: /s/ J.H. Gullimare
-----------------------------
Name: J.H. Gullimare
Title: Authorized Signatory
STATE STREET BANK AND
TRUST COMPANY,
as Indenture Trustee
By: /s/ Ruth A. Smith
--------------------------------
Name: Ruth A. Smith
Title: Vice President
<PAGE>
Appendix A
to Indenture
------------
DEFINITIONS
-----------
See Appendix A filed separately.
APP-1
<PAGE>
DESCRIPTION OF VESSEL
---------------------
That certain double hulled, double bottomed, very large crude carrier,
designated as Hull No. 1233, to be constructed by Sumitomo Heavy Industries,
Ltd. in the shipyard of Sumitomo Heavy Industries, Ltd. in Oppama, Japan,
pursuant to the Construction Contract and expected to be delivered in November
1998. The Vessel will have a gross registered tonnage of approximately 160,000
tons, a net registered tonnage of approximately 95,000 tons and a designed
deadweight capacity of approximately 280,000 metric tons.
SCH-1-1
<PAGE>
Exhibit A
to Indenture
------------
FORM OF
SERIES 1996 A-3 SECURED NON-RECOURSE DISCOUNT NOTE
SAMOCO 1233 TRUST
Maturity Date:
Registered No. _________ New York, New York
Dated:
Principal Sum at Full Accrual Date: ________$Interest Rate Per Annum: %
Full Accrual Date: __________
The following information is supplied for purposes of Sections 1273
and 1275 of the Internal Revenue Code:
<TABLE>
<S> <C>
Expected yield to maturity for period Original issue discount under Section
from Issue Date to Maturity Date: 1273 of the Internal Revenue Code
% (rounded to two decimal places), (for each $1,000 principal amount at
compounded semiannually on each the Full Accrual Date and at
_______ and _____, commencing on the maturity): $
Full Accrual Date (computed after
giving effect to (i) the accretion Issue Price (for each $1,000
of original issue discount prior to principal amount at maturity): $
the Full Accrual Date and (ii)
payment of interest on each _______
and ______ from and after the Full
Accrual Date to the Maturity Date at
the rate of interest set forth
above).
</TABLE>
SAMOCO 1233 TRUST, a trust created pursuant to the Delaware Business
Trust Act (the "Owner Trust"), of which Deutsche Morgan Grenfell (Cayman)
Limited and Wilmington Trust Company are acting not in their respective
individual capacities but solely as Owner Trustees (the "Owner Trustees") under
that certain Declaration of Agreement of Trust, dated as of November 22, 1996,
among the Owner Participant named therein and the Owner Trustees (the "Trust
Agreement"), for value received hereby promise to pay to State Street Bank and
Trust Company, as Pass Through Trustee (the "Pass Through Trustee") under that
certain 1996-A Pass Through Trust (the "Pass Through Trust") created by the Pass
Through Trust Agreement, dated as of December 19, 1996, as supplemented and
amended by that certain Pass Through Trust Supplement, dated as of December 19,
1996 (as
<PAGE>
supplemented and amended, the "Agreement"), or registered assigns (collectively,
the "Holders"), the principal sum of _________________________________________
DOLLARS ($__________) (or, in the event this Secured Note shall be redeemed
prior to the Full Accrual Date specified above, the Accreted Value of this
Secured Note as of such date) in installments on each Interest Payment Date
defined below as set forth in Schedule I hereof with the final installment due
and payable on the Maturity Date specified above and to pay interest on the
unpaid principal amount of this Secured Note accruing from the Full Accrual Date
until the principal amount of this Secured Note shall have been paid in full at
the Interest Rate specified above (based on a 360-day year of twelve 30 day
months) and (to the extent not prohibited by applicable law) to pay interest on
any overdue principal at the Overdue Rate. Subject to Section 2.03(b) of the
Indenture (defined below), the first payment of accrued and unpaid interest on
the unpaid principal of this Secured Note shall be payable on ____ and
thereafter on each ________ and ______ in each year (each such date being an
"Interest Payment Date"). No interest shall accrue on the principal amount of
this Secured Note prior to the Full Accrual Date as such amount may be reduced
from time to time by the payment of principal installments thereunder.
This Secured Note shall accrete original issue discount at a rate per
annum, as set forth in Schedule I hereof, such that the yield on this Secured
Note from the date hereof to the Full Accrual Date will equal the semi-annual
bond equivalent rate corresponding to the Interest Rate specified above. The
principal amount of this Secured Note on any date prior to the Full Accrual Date
shall be the Accreted Value, as defined in the Indenture (defined below), and,
from and after the Full Accrual Date, the principal amount of this Secured Note
shall be the full principal sum specified above.
This Secured Note is one of the Secured Notes issued by the Owner
Trust pursuant to the terms of the Trust Indenture, Assignment of Charter and
Head Lease, and Security Agreement, dated as of December 19, 1996 (the
"Indenture"), between the Owner Trust and State Street Bank and Trust Company,
not in its individual capacity but solely as Indenture Trustee thereunder, for
the Holder of this Secured Note and the Holders of all other Secured Notes
Outstanding thereunder (the "Indenture Trustee"). Capitalized terms used in
this Secured Note and not otherwise defined shall have the respective meanings
assigned to them in the Indenture.
Each payment of principal and interest shall be due and payable at the
times, places and in the manner as specified herein and in the Indenture.
Each payment on this Secured Note shall be applied, first, to the
payment of accrued interest on this Secured Note to the date of such payment,
second, to the payment of any principal on this Secured Note then due hereunder,
and third, to the payment of the installments of principal remaining unpaid on
this Secured Note in the inverse order of the maturity thereof.
EXHA-2
<PAGE>
This Secured Note is one of the Owner Trust's Series 1996 A-3 Secured
Notes, which, together with any Additional Notes and any note or notes issued
from time to time in exchange or substitution therefor in accordance with the
terms of the Indenture, are equally and ratably secured by the Indenture, except
as otherwise provided therein. The property of the Owner Trust (excluding
Excepted Payments) included in the Indenture Estate is pledged, assigned or
mortgaged to the Indenture Trustee, to the extent provided in the Indenture, as
security for the payment of the principal of, Make-Whole Amount, if any, and
interest on this Secured Note and all other Secured Notes issued and outstanding
from time to time under the Indenture. Reference is hereby made to the
Indenture for a description of the Indenture Estate, and for a statement of the
rights of the Holder of, and the nature and extent of the security for, this
Secured Note and of the rights of, and the nature and extent of the security
for, the Holders of the other Secured Notes and of certain rights of the Owner
Trust and the Owner Participant, as well as for a statement of the terms and
conditions of the trusts created by the Indenture, to all of which terms and
conditions the Holder agrees by its acceptance of this Secured Note.
This Secured Note is subject to redemption or purchase in whole as
specified in Article III of the Indenture.
In case an Indenture Event of Default shall occur and be continuing,
the unpaid balance of the principal of the Secured Notes, together with all
accrued but unpaid interest, may be declared or may otherwise become due and
payable in the manner and with the effect provided in Article V of the
Indenture.
The Secured Notes are issuable only as registered notes. There shall
be maintained a note register for the purpose of registering transfers and
exchanges of the Secured Notes at the principal corporate trust office of the
Indenture Trustee, or of any successor Indenture Trustee, in the manner provided
in Section 2.05 of the Indenture. The Owner Trust and the Indenture Trustee may
deem and treat the Person in whose name this Secured Note is registered on the
Note Register as the absolute owner hereof (whether or not this Secured Note
shall be overdue) for the purpose of receiving payments of principal, Make Whole
Amount, if any, and interest and for all other purposes, and neither the Owner
Trust nor the Indenture Trustee shall be affected by any notice to the contrary.
All payments of principal, Make-Whole Amount, if any, and interest to
be made by the Owner Trust and, except as otherwise provided in the Operative
Documents, all payments of any other amounts payable by or on behalf of the
Owner Trust under the Secured Notes or under the Indenture, shall be made only
from the income and proceeds from the Indenture Estate, and only to the extent
that the Indenture Trustee shall have received sufficient income and proceeds
from the Indenture Estate to make such payments in accordance with the
Indenture. The Holder, by its acceptance of this Secured Note, agrees that it
will look solely to the income and proceeds from the Indenture Estate to the
extent available for payment as provided in the Indenture, and that none of the
Owner Participant, the Owner Trust, the Managing Trustee, the Delaware Trustee
or the Indenture Trustee
EXHA-3
<PAGE>
(whether in their respective individual or trust capacities) shall be personally
liable to the Indenture Trustee or to the Holder for any amounts payable under
this or any Secured Note, nor, except as specifically provided in the Indenture
or any other Operative Document, for any amounts payable or any liability under
the Indenture.
This Secured Note shall not be valid or become obligatory for any
purpose or be entitled to any security or benefit under the Indenture until the
certificate of authentication hereon shall have been signed by the Indenture
Trustee.
No delay or omission of the Holder to exercise its rights hereunder
shall impair any such right or power or shall be construed to be a waiver of any
Indenture Event of Default or an acquiescence therein. No waiver of any
Indenture Event of Default shall be construed, taken or held to be a waiver of
any other Indenture Event of Default or a waiver, acquiescence in, or consent to
any further or succeeding Indenture Event of Default. The Owner Trust waives
demand, notice and protest in any defense by reason of extension of time for
payment or other indulgence granted by the Holder.
THIS SECURED NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
EXHA-4
<PAGE>
IN WITNESS WHEREOF, the Owner Trust has caused this Secured Note to be
duly executed.
Date: _________________
SAMOCO 1233 TRUST,
Owner Trust
By: DEUTSCHE MORGAN GRENFELL, (CAYMAN)
LIMITED, not in its individual capacity,
but solely as Managing Trustee under the
Trust Agreement
By:
-------------------------
Authorized Officer
EXHA-5
<PAGE>
Certificate of Authentication
-----------------------------
This Secured Note is one of the Series 1996 A-3 Secured Notes due
_______________ of SAMOCO 1233 TRUST, the Owner Trust as described in the
within-mentioned Indenture.
STATE STREET BANK AND
TRUST COMPANY, not in its individual
capacity, but soley as Indenture Trustee
By:
-------------------------
Authorized Signatory
EXHA-6
<PAGE>
Schedule I to
Exhibit A to
Indenture
---------
SERIES 1996 A-3 SECURED NON-RECOURSE DISCOUNT NOTE
SAMOCO 1233 TRUST
Payment Aggregate Payment
Interest Payment Date Percentage Amount
- --------------------- ---------- ------
EXHA-7
<PAGE>
Exhibit B-1
to Indenture
------------
Schedule of Principal Payments on the Secured Notes
SERIES 1996 A-3 SECURED NOTE SAMOCO 1233 TRUST
<TABLE>
<CAPTION>
Payment Aggregate Payment
Regular Distribution Date Percentage Amount
- ------------------------- ---------- -----------------
<S> <C> <C>
July 2, 1997 -- --
January 2, 1998 -- --
July 2, 1998 -- --
January 2, 1999 -- --
July 2, 1999 -- $ 899,795.00
January 2, 2000 0.38800992% 931,153.00
July 2, 2000 0.40153213% 963,603.00
January 2, 2001 0.41552523% 997,185.00
July 2, 2001 0.43000647% 1,031,937.00
January 2, 2002 0.44499224% 1,067,900.00
July 2, 2002 0.46050022% 1,105,166.00
January 2, 2003 0.47654851% 1,143,629.00
July 2, 2003 0.49315610% 1,183,485.00
January 2, 2004 0.51034282% 1,224,729.00
July 2, 2004 0.52812807% 1,267,411.00
January 2, 2005 0.54653342% 1,311,580.00
July 2, 2005 0.56557999% 1,357,289.00
January 2, 2006 0.58529064% 1,404,590.00
July 2, 2006 0.60568780% 1,453,540.00
January 2, 2007 0.62679603% 1,504,196.00
July 2, 2007 0.64863993% 1,556,617.00
January 2, 2008 0.67124493% 1,610,866.00
July 2, 2008 0.69463821% 1,667,004.00
January 2, 2009 0.71884605% 1,725,099.00
July 2, 2009 0.74389780% 1,785,219.00
January 2, 2010 0.76982277% 1,847,434.00
July 2, 2010 0.79665114% 1,911,817.00
January 2, 2011 0.82441440% 1,978,444.00
July 2, 2011 0.85314532% 2,047,393.00
January 2, 2012 0.88287753% 2,118,744.00
July 2, 2012 0.91364554% 2,192,582.00
January 2, 2013 0.94548599% 2,268,994.00
July 2, 2013 0.97843639% 2,348,068.00
January 2, 2014 1.01253471% 2,429,899.00
July 2, 2014 1.04782191% 2,514,581.00
January 2, 2015 1.08433851% 2,602,214.00
July 2, 2015 1.12212764% 2,692,901.00
January 2, 2016 1.16123372% 2,786,748.00
July 2, 2016 1.20170246% 2,883,867.00
January 2, 2017 1.24358215% 2,984,371.00
</TABLE>
EXHB-1
<PAGE>
Exhibit B-2
to Indenture
------------
Issuance of Series 1996 A-3 Secured Notes
-----------------------------------------
The issuance of the Series 1996 A-3 Secured Notes issued hereunder shall be
issued to and shall be payable to the Pass Through Trustee under the Pass
Through Trust Agreement with respect to the grantor trust created thereby, in
each case as set forth below:
Mobil Corporation 1996 A Pass Through Trust:
6.97% Certificates due July 2, 2017
EXHB-2
<PAGE>
Exhibit C
to Indenture
------------
FORM OF SUBSTITUTION DATE SUPPLEMENT
SUBSTITUTION DATE AGREEMENT dated as of
(this "Substitution Agreement"), among [
----------------------
], a trust created pursuant to
(the "Substitute Obligor") under the [Substitute Trust Agreement] (as defined
------------------
below), SAMOCO 1233 Trust, a trust created pursuant to the Delaware Business
Trust Act (the "Owner Trust") under a Declaration of Agreement of Trust dated as
of November 22, 1996, as amended, among Deutsche Morgan Grenfell (Cayman)
Limited, Wilmington Trust Company and SAMOCO LLC, a Cayman Islands limited life
company, as owner participant, MOBIL MARINE FINANCE COMPANY I INC., as
Charterer, STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company,
not in its individual capacity, except as expressly provided in the Indenture,
but solely as Indenture Trustee (the "Indenture Trustee"), and STATE STREET BANK
-----------------
AND TRUST COMPANY, as Pass Through Trustee, who each being duly sworn did
declare and say as follows.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, terms used herein and not otherwise defined shall have the
respective meanings assigned to them in the Indenture;
WHEREAS, the Substitute Obligor was organized pursuant to a
Declaration and Agreement of Trust dated (the
"Substitute Trust Agreement"), among , as
- ---------------------------
managing trustee (together with its permitted successors and assigns, the
"Managing Trustee"),[ ], as
- -----------------
Delaware trustee (together with its permitted successors and assigns, the
"Delaware Trustee"), each acting not individually, except as otherwise provided
- -----------------
herein (when acting in such individual capacities, the "
Trust Company" and "Delaware Trust Company", respectively), but solely as
- ------------- ----------------------
trustees for the Substitute Obligor (the Managing Trustee and the Delaware
Trustee, collectively in such capacities being, the "Owner Trustees" and each
--------------
individually, an "Owner Trustee"), and
-------------
, as owner participant (the "Owner Participant") as amended and supplemented;
-----------------
and
WHEREAS, the Owner Trust desires to sell, and the Substitute Obligor
desires to purchase all of the Owner Trust's beneficial interest in the Vessel
Interest created under the Operative Documents.
<PAGE>
WHEREAS, the Indenture provides for the execution and delivery of a
supplement substantially in the form of this Substitution Agreement, which
supplement shall provide for certain matters relating to the assumption by the
Substitute Obligor of the obligations of the Owner Trust pursuant to Section
3.04 of the Indenture;
NOW, THEREFORE, the parties hereto agree as follows:
1. As of the date of this Substitution Agreement (the "Substitution
Date"), the Owner Trust hereby irrevocably sells, assigns , transfers and
conveys to the Substitute Obligor all of Owner Trust's right, title and interest
in and to the Vessel Interest.
2. The Substitute Obligor hereby (a) accepts the foregoing
assignment, (b) confirms that it is purchasing the Vessel Interest subject to
the security interest and Lien of the Indenture and ratifies the security
interest and Lien which the Owner Trust granted to the Indenture Trustee
pursuant to the Granting Clause of the Indenture in all of the Owner Trust's
right, title and interest in and to the Indenture Estate and (b) explicitly
agrees that it is acquiring the Vessel Interest, and all property relating
thereto, constituting a portion of the Indenture Estate, subject to such
security interest and Lien, which shall remain in full force and effect until
the Lien of the Indenture on the Vessel is discharged in accordance with the
terms thereof, and the Indenture Trustee acknowledges that the Charter and the
obligations of Owner Trust thereunder as the Charterer have been terminated,
except as specifically provided for therein.
3. Effective as of the Substitution Date, each party hereto agrees
that the Substitute Obligor shall be deemed to be a party to the Indenture, the
Secured Notes and each other Operative Document to which the Owner Trust is a
party, and all references to the Owner Trust in the Indenture, the Secured Notes
and each other Operative Document shall be deemed to be references to the
Substitute Obligor; provided, however, that any obligations or liabilities of
the Managing Trustee or the Delaware Trustee in its individual capacities
incurred on or prior to the Substitution Date or arising out of or based upon
events occurring on or prior to the Substitution Date, shall remain the
responsibility of the Owner Trust.
4. This Substitution Agreement shall be construed as supplemental to
the Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference in this Substitution Agreement.
5. Representations and Warranties of Owner Trust. Owner Trust hereby
---------------------------------------------
represents and warrants to the Substitute Obligor and the Indenture Trustee as
follows:
(a) Organization and Good Standing. Owner Trust is a trust duly
------------------------------
organized, validly existing and in good standing under the Delaware Business
Trust Act.
EXHC-2
<PAGE>
(b) Power and Authority. Owner Trust has full corporate power and
-------------------
authority to execute, deliver and perform this Substitution Agreement and to
consummate the transactions contemplated hereby.
(c) Due Authorization. This Substitution Agreement has been duly
-----------------
authorized, executed and delivered by the Owner Trust, and assuming due
authorization, execution and delivery by the Substitute Obligor and the
Indenture Trustee, constitutes a legal, valid and binding obligation of the
Owner Trust, enforceable against it in accordance with its terms except as such
enforcement may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general applicability
affecting the enforcement of creditors' rights or by general principles of
equity.
(d) Compliance with Law. Neither the execution, delivery or
-------------------
performance by the Owner Trust of this Substitution Agreement nor compliance
with the terms and provisions hereof, conflicts or will conflict with or will
result in a breach or violation of any of the terms, conditions or provisions of
any law including, without limitation, the Securities Act of 1933, as amended,
and any law, governmental rule or regulation applicable to the Owner Trust.
6. Representations and Warranties of Substitute Obligor. The
----------------------------------------------------
Substitute Obligor hereby represents and warrants to the Owner Trust and the
Indenture Trustee as follows:
(a) Organization and Good Standing. The Substitute Obligor is a trust
------------------------------
duly organized and validly existing under the Delaware Business Trust Act.
(b) Power and Authority. The Substitute Obligor has full trust power
-------------------
and authority to execute, deliver and perform this Substitution Agreement and to
consummate the transactions contemplated hereby.
(c) Due Authorization. This Substitution Agreement has been duly
-----------------
authorized, executed and delivered by the Substitute Obligor and, assuming the
due authorization, execution and delivery thereof by the Owner Trust and the
Indenture Trustee, constitutes the legal, valid and binding obligation of the
Substitute Obligor, enforceable against it in accordance with its terms, except
as such enforcement may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general applicability
affecting the enforcement of creditors' rights or by general principles of
equity.
(d) Compliance with Law. Neither the execution, delivery or
-------------------
performance by the Substitute Obligor of this Substitution Agreement nor
compliance with the terms and provisions hereof, conflicts or will conflict with
or will result in a breach or violation of any of the terms, conditions or
provisions of any law, governmental rule or regulation applicable to Substitute
Obligor.
EXHC-3
<PAGE>
(e) Investment Intent. Substitute Obligor is acquiring the Vessel
-----------------
Interest for its own account for investment and with no present intention of
distributing or reselling such Vessel Interest or any part thereof other than a
transfer to an affiliate of the Substitute Obligor or a transfer to another
person in compliance with the provisions of the Securities Act of 1933, as
amended, and the Operative Documents.
7. Counterparts. This Substitution Agreement may be executed in one
------------
or more counterparts, each of which shall be deemed as original, but all of
which together shall constitute one and the same instrument.
8. Successors and Assigns. The terms of this Substitution Agreement
----------------------
shall be binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns.
9. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
10. Amendment. No waiver, modification or amendment of any provision
---------
of this Substitution Agreement shall be effective unless it is in writing and
signed by the party against which it is sought to be enforced.
11. Further Assurances. Each party agrees that from time to time
------------------
after the date hereof, it shall execute and deliver or cause to be executed and
delivered such instruments, documents and papers, and take all such further
action as may be reasonably required in order to consummate fully the purposes
of this Substitution Agreement and to implement the transactions contemplated
hereby.
EXHC-4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Substitution
Agreement to be duly executed and delivered on the day and year first above
written.
SAMOCO 1233 TRUST, Owner Trust
By: DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED, not
in its individual capacity, except as
expressly provided in the Indenture, but
solely as Managing Trustee of the Owner Trust
By: :
-----------------------------
Title:
[ ], Substitute Obligor
By:[ ],
not in its individual capacity, except as
expressly provided herein and in the
Indenture, but solely as Managing Trustee of
the Substitute Obligor
By:
-----------------------------
Title:
STATE STREET BANK AND TRUST COMPANY, Indenture
Trustee
By:
---------------------------------
Title:
MOBIL MARINE FINANCE COMPANY I INC., as Charterer
By:
---------------------------------
Title:
EXHC-5
<PAGE>
STATE STREET BANK AND TRUST COMPANY, as Pass
Through Trustee
By:
----------------------------------
Title:
EXHC-6
<PAGE>
Exhibit D
to Indenture
------------
FORM OF TRUST INDENTURE, ASSIGNMENT OF
CHARTER AND HEAD LEASE AND SECURITY AGREEMENT
SUPPLEMENT NO. ____
This TRUST INDENTURE, ASSIGNMENT OF CHARTER AND HEAD LEASE AND
SECURITY AGREEMENT SUPPLEMENT NO. ____, dated _________________ (this "Indenture
Supplement") between DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED, a Cayman Islands
banking corporation, and WILMINGTON TRUST COMPANY, a Delaware banking
corporation, not in their individual capacities, but solely as Owner Trustees
(the "Owner Trustees") of SAMOCO 1233 TRUST, a trust created under the
Declaration of Agreement of Trust pursuant to the Delaware Business Trust Act
(the "Owner Trust") and STATE STREET BANK AND TRUST COMPANY, a Massachusetts
-----------
trust company, not in its individual capacity, except as expressly provided
herein, but solely as Indenture Trustee (the "Indenture Trustee").
-----------------
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, terms used herein and not otherwise defined shall have the
respective meanings assigned to them in the Indenture; and
WHEREAS, the Indenture provides for the execution and delivery of one
or more supplements substantially in the form of this Indenture Supplement,
which supplement shall describe the property from time to time included in the
Indenture Estate;
NOW, THEREFORE, THIS INDENTURE SUPPLEMENT WITNESSETH that, to secure
(i) the prompt payment of the principal of, Make-Whole Amount, if any, and
interest on all Secured Notes from time to time Outstanding under the Indenture
and of all other amounts payable to the Holders (whether as Holders or Loan
Participants) thereunder, under the Secured Notes and under the other Operative
Documents, (ii) the performance and observance by the Owner Trust of all of the
provisions, covenants and agreements contained in the Participation Agreement,
in the Secured Notes and in the other Operative Documents for the benefit of the
Indenture Trustee or the Holders therein, and (iii) the performance and
observance by the Owner Participant of its covenants and agreements contained in
the Operative Documents (the obligations described in the above clauses (i),
(ii) and (iii), collectively, the "Indenture Indebtedness"), and for the uses
and purposes and subject to the terms and provisions thereof, and in
consideration of the premises and of the covenants herein contained and of the
acceptance of the Secured Notes by the Holders thereof:
<PAGE>
GRANTING CLAUSE
---------------
The Owner Trust, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to secure the payment
and performance of the Indenture Indebtedness, hereby presently irrevocably
mortgages, hypothecates and pledges unto the Indenture Trustee and creates to
and for the benefit of the Indenture Trustee, a security interest in and
mortgage lien on all of the right, title and interest of the Owner Trust in, to
and under all of the property, rights, interests, and privileges described on
Exhibit I hereto now owned or in the future acquired by the Owner Trust or in
which the Owner Trust now has or may in the future acquire any estate, right,
title or interest (collectively, the "Additional Property"),
TO HAVE AND TO HOLD the aforesaid Additional Property unto the
Indenture Trustee, its successors and assigns, for the benefit and security of
the Holders, without any priority of any Secured Note over any other, and for
the uses and purposes and subject to the terms and provisions set forth in the
Indenture.
This Indenture Supplement shall be construed as supplemental to the
Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference in this Indenture Supplement and is hereby ratified,
approved and confirmed. From and after the date hereof, the Indenture Estate
shall include the Additional Property along with the all other property, rights
and interest granted to the Indenture Trustee under the Granting Clause of the
Indenture and the Additional Property shall be subject to the Lien of the
Indenture.
This Indenture Supplement may be executed by the Owner Trust and the
Indenture Trustee in separate counterparts, each of which, when so executed and
delivered, shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
THIS INDENTURE SUPPLEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
EXHD-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
Supplement to be duly executed, all as of the date first written above.
SAMOCO 1233, as Owner Trust
By: DEUTSCHE MORGAN GRENFELL
(CAYMAN) LIMITED, not in its individual
capacity, except as expressly provided
herein, but solely as Owner Trustee
By:
-----------------------------
Title:
STATE STREET BANK AND TRUST COMPANY,
Indenture Trustee
By:
-----------------------------
Title:
EXHD-3
<PAGE>
Exhibit I to
Exhibit D
to Indenture
------------
Description of Additional Property.
EXHD-4
<PAGE>
EXHIBIT E
TO INDENTURE
------------
FORM OF FIRST SHIP MORTGAGE
Dated ______________
by
______________________
Shipowner and Mortgagor
to
______________________
Mortgagee
VLCC ______
<PAGE>
TABLE OF CONTENTS
Page No.
-------
ARTICLE IREPRESENTATIONS OF THE SHIPOWNER............................. -4-
(1) Organization................................................ -4-
(2) Documentation............................................... -4-
ARTICLE IICOVENANTS OF THE SHIPOWNER.................................. -4-
(1) Maintenance of Entity Status................................ -4-
(2) Liens....................................................... -4-
(3) Maintenance of Mortgage..................................... -5-
ARTICLE III EVENTS OF DEFAULT AND REMEDIES........................... -5-
(1) Event of Default............................................ -5-
(2) Remedies.................................................... -5-
(3) Conveyance after Sale....................................... -7-
(4) Shipowner Barred............................................ -7-
(5) Arrest By Third Party....................................... -7-
(6) Powers of the Mortgagee..................................... -8-
(7) Application of Proceeds..................................... -8-
(8) No Exclusivity.............................................. -8-
ARTICLE IV SUNDRY PROVISIONS......................................... -8-
(1) Recording................................................... -8-
(2) Successors and Assigns...................................... -8-
(3) Agents...................................................... -9-
(4) Notices..................................................... -9-
(5) Governing Law............................................... -9-
(6) Termination of U.K. Documents............................... -9-
EXHIBIT 1 Indenture (with attached Appendix A and Exhibits A-E)
EXHIBIT 2 Article 21 of the Charter
EXHE-i
<PAGE>
THIS FIRST SHIP MORTGAGE, made and dated ____________, by (a)
____________________________________ (the "Shipowner"), with an address at
________________________________________________________________, created by the
__________________________ dated as of ______________, as amended and restated
as of _______________ (the "___________"), with the _________________ named
therein, and duly qualified as a _______________ foreign maritime entity, in
favor of (b) _____________________________________________, not in its
individual capacity but solely as Indenture Trustee (the "Mortgagee") under a
Trust Indenture, Assignment of Charter and Head Lease and Security Agreement,
dated as of ____________ (the "Indenture") between the Shipowner and the
Mortgagee.
WHEREAS:
A. The Shipowner is the registered owner of the Republic of
__________________ flag VLCC "_____" (the "Vessel"), Official No. __________, of
______ gross tons and _____ net tons, duly documented in the name of the
Shipowner under the laws and flag of the Republic of _____________ with her home
port at the port of ________.
B. Pursuant to the terms of the Indenture, the Shipowner has issued
and sold to the Pass Through Trustee (as defined in the Indenture) its Series
1996-A Secured Notes dated _______________ (the "Secured Notes") in the initial
principal amount of U.S.____________. The form of the Indenture (together with
Appendix A, Definitions, and Exhibits A-E (including the form of the Secured
Notes)) is attached hereto as Exhibit 1 and hereby made a part hereof as though
set forth fully herein. The term "Indenture" as used in this Mortgage shall
mean the Indenture and Appendix A (Definitions) and Exhibit A (Form of Secured
Notes) as attached hereto and as each may be amended, supplemented or modified
from time to time.
C. The Shipowner has entered into a demise charter (as the same may
be amended, supplemented or modified from time to time, the "Charter") with
_________________ (the "Charterer") respecting the Vessel pursuant to which the
Charterer has covenanted and agreed with the Shipowner, inter alia, to operate,
maintain, and insure the Vessel. The form of Article 21 of the Charter defining
Charter Events of Default is attached hereto as Exhibit 2 and hereby made a part
hereof as though set forth fully herein.
D. The Shipowner has entered into a ______________________________
(the "Conditional Sale Agreement") dated _____________ with the financial
institution named therein (the "U.K. Lessor") pursuant to which the U.K. Lessor
has been granted certain rights respecting the Vessel. The U.K. Lessor has
demise chartered the Vessel to the Shipowner pursuant to a U.K. Head Lease dated
______________ (the "Head Lease").
EXHE-1
<PAGE>
E. To secure payment of principal of, interest on, Make-Whole Amount,
if any, and any other amounts which may become due to the Mortgagee or the
holders of Secured Notes pursuant to the terms of the Indenture, the Secured
Notes and the other Operative Documents, the Shipowner has duly authorized the
execution, delivery and recording of this First Ship Mortgage under and pursuant
to the laws of the __________________. Notwithstanding anything contained
herein to the contrary the rights granted to the Indenture Trustee hereunder are
subject and subordinate to the rights of the U.K. Lessor under the Conditional
Sale Agreement and the Head Lease so long as either document is in full force
and effect.
F. Terms used herein and not otherwise defined herein are used as
defined in, or by reference in, the Indenture.
NOW, THEREFORE, THIS MORTGAGE, WITNESSETH:
That in consideration of the premises and other valuable
consideration, the receipt whereof is hereby acknowledged, and in order to
secure the payment of principal of, interest on, Make-Whole Amount, if any,
respecting the Secured Notes, and all other amounts which may become due under
the Indenture or hereunder (collectively, the "Indebtedness hereby secured) and
to secure the performance and observance of and compliance with the covenants,
terms and conditions herein and in the Secured Notes and the Indenture
contained, the Shipowner has granted, conveyed, mortgaged, pledged, assigned,
transferred, set over and confirmed and does by these presents grant, convey,
mortgage, pledge, assign, transfer, set over and confirm unto the Mortgagee, its
successors and assigns, the whole of the Vessel which term shall include all of
the boilers, engines, machinery, bowsprits, masts, spars, sails, rigging, boats,
anchors, cables, apparel, furniture, fitting, equipment and all other
appurtenances to the Vessel appertaining or belonging, whether now owned or
hereafter acquired, whether on board or not, and all additions, improvements and
replacements hereafter made in or to the Vessel, or any part thereof, or in or
to the equipment and appurtenances aforesaid, but excluding any leased
equipment;
SUBJECT AND SUBORDINATE to the rights of the U.K. Lessor under the
Conditional Sale Agreement and the Head Lease so long as either document is in
full force and effect;
TO HAVE AND TO HOLD the same unto the Mortgagee, its successors and
assigns, to its and its successors' and assigns' own use and behoof forever;
PROVIDED only, and the condition of these presents is such that if the
Shipowner, or its successors or assigns, shall pay or cause to be paid to the
Mortgagee the Indebtedness hereby secured as and when the same shall become due
and payable in accordance with the terms of this Mortgage, the Secured Notes and
the Indenture, and shall perform, observe and comply with the covenants, terms
and conditions in this Mortgage and
EXHE-2
<PAGE>
in the Secured Notes and the Indenture contained, expressed or implied, to be
performed, observed or complied with, by and on the part of the Shipowner, then
these presents and the rights hereunder shall cease, determine and be void;
otherwise to be and remain in full force and effect.
ARTICLE I
REPRESENTATIONS OF THE SHIPOWNER
(1) Organization. The Shipowner is a trust created under the
------------
_________________________, duly organized and validly existing in good standing
under the laws of the State of Delaware and is duly qualified as a
_______________ foreign maritime entity. _______________________________ is
Managing Trustee of the Shipowner.
(2) Documentation. The Vessel is, and the Shipowner covenants that
-------------
it will remain, duly documented in the name of the Shipowner as owner thereof
under the laws and flag of the _______________________, free and clear of all
Liens and encumbrances except Permitted Liens, which include but are not limited
to, the rights of the U.K. Lessor under the Conditional Sale Agreement and the
Head Lease, so long as either document is in full force and effect.
ARTICLE II
COVENANTS OF THE SHIPOWNER
(1) Maintenance of Entity Status. The Shipowner covenants that it
----------------------------
will remain duly qualified as a _________________ foreign maritime entity.
(2) Liens. Neither the Shipowner, the Charterer or any other
-----
charterer, the master of the Vessel nor any other Person has or shall have any
right, power or authority to create, incur or permit to be placed or imposed
upon the Vessel any Lien whatsoever, other than the Lien of this Mortgage and
Permitted Liens.
(3) Maintenance of Mortgage. The Shipowner (or the Charterer under
-----------------------
the Charter) shall, at its expense and at no cost to the Mortgagee, comply with
and satisfy all of the provisions of the laws and flag of the
______________________, in order to establish, record and maintain this Mortgage
as a mortgage thereunder on the Vessel except to the extent provided by the
Indenture.
EXHE-3
<PAGE>
ARTICLE III
EVENTS OF DEFAULT AND REMEDIES
(1) Event of Default. An Indenture Event of Default shall constitute
----------------
an event of default hereunder.
(2) Remedies. If an Indenture Event of Default shall have occurred
--------
and be continuing, subject to the provisions of Article III, Section (2)(g)
hereof and the Indenture, (x) the Mortgagee shall have the rights and remedies
provided in the Indenture, (y) the Mortgagee shall have all of the rights and
remedies provided mortgagees under the laws of the __________________ and, in
addition, (z) the Mortgagee may:
(a) Enforce and exercise all or any of its rights and powers as a
first mortgagee at law, in equity, or in admiralty;
(b) Exercise all the rights and remedies in foreclosure and otherwise
given to mortgagees by the laws of the ____________________________, or by the
applicable laws of any jurisdiction where the Vessel may be found, and initiate
and prosecute such other judicial, extra-judicial, or administrative proceedings
as it may consider appropriate to recover any or all sums due, or declared due,
on the Indebtedness hereby secured out of the Vessel, with the right to enforce
payment of said sum against any assets of the Indenture Estate, and in
connection therewith obtain a decree ordering the sale of the Vessel in
accordance with Section 2(e) of this Article III;
(c) Have a receiver of the Vessel appointed as a matter of right in
any suit hereunder (and any such receiver may have the rights of the Mortgagee
set forth in, or by reference in, this Article III);
(d) Take possession of the Vessel, with or without legal proceedings,
at any place where the Vessel may be found (and the Shipowner, the Charterer or
other Person in possession of the Vessel shall forthwith surrender possession of
the Vessel to the Mortgagee on demand), and the Mortgagee shall have the right,
but shall not be obligated, to manage, insure, maintain, repair, employ, lay up,
hold, charter, lease, operate or otherwise use the Vessel for such period and
under such terms as it may reasonably deem most expedient for its interest,
accounting only for the net profits, if any, arising from such use and charging
against all receipts from such use of the Vessel, all reasonable charges and
expenses in connection with such use;
(e) Sell the Vessel at private sale, on such terms and conditions as
it deems best, free of any claim of the Shipowner and, except as provided by
law, any other Person excluding the U.K. Lessor, upon advance notice of twenty-
five (25) consecutive days published in a newspaper authorized to publish legal
notices of that kind in New York, New York, and by sending notice of such sale
no later than the date of first publication, by
EXHE-4
<PAGE>
telegraph, cable, telecopy or telex, to the Shipowner as provided in Section
10.05 of the Indenture. Any such sale may be held at such place and at such
time as the Mortgagee by notice may have specified, or may be adjourned by the
Mortgagee from time to time by announcement at the time and place appointed for
such sale or for such adjourned sale, and without further notice or publication
the Mortgagee may make any such sale at the time and place to which the same
shall be so adjourned. Any such sale may be conducted without bringing the
Vessel to the place designated for such sale. The Mortgagee or any holder of a
Secured Note may become the purchaser at any such sale, and shall have the right
to credit on the purchase price any and all sums of money due in respect of the
Secured Notes and any other Indebtedness hereby secured;
(f) Accept a conveyance of title to, and to take without legal
process (and the Shipowner or other Person in possession shall forthwith
surrender possession to the Mortgagee), the whole or any part of the Vessel
wherever the same may be, and to take possession of and hold the same; and
(g) Notwithstanding anything contained herein to the contrary, the
rights and remedies granted to the Mortgagee under this Mortgage or by relevant
law shall not be exercised in such a manner as to interfere with or prejudice
the rights of the U.K. Lessor under the Conditional Sale Agreement or the Head
Lease. Without restricting the generality of the foregoing, so long as the Head
Lease is in full force and effect, the Mortgagee shall not, without the prior
written consent of the U.K. Lessor, exercise any remedy resulting in an in rem
judicial sale of the Vessel.
In addition, so long as the Charter is in effect and no Charter Event
of Default shall have occurred, the Mortgagee shall not, without the prior
written consent of the Charterer exercise any remedy resulting in an in rem
judicial sale of the Vessel.
(3) Conveyance after Sale. Subject to the provisions of Article III,
---------------------
Section (2)(g) hereof, the Shipowner hereby irrevocably appoints the Mortgagee
the true and lawful attorney of the Shipowner, in its name and stead, to make
all necessary transfers of the whole or any part of the Vessel in connection
with a sale, use or other disposition pursuant to Section 2 of Article III
hereof, and for that purpose to execute all necessary instruments of assignment
and transfer. Nevertheless, the Shipowner shall, if so requested by the
Mortgagee, ratify and confirm any sale, assignment, transfer or delivery by
executing and delivering such proper bill of sale, assignment, conveyance,
instrument of transfer or other instrument as may be designated in such request.
(4) Shipowner Barred. A sale of the Vessel made pursuant hereto
----------------
whether under the power of sale hereby granted or any judicial proceedings,
shall operate to divest all right, title and interest of any nature whatsoever
of the Shipowner therein and thereto, and shall bar the Shipowner, its
successors and assigns, and, subject to the provisions of Article III, Section
2(g) hereof, all Persons claiming by, through or under them. No purchaser shall
be bound to inquire whether notice has been given or whether any Indenture Event
of Default
EXHE-5
<PAGE>
or event of default hereunder has occurred, or as to the propriety of the sale,
or as to application of the proceeds thereof.
(5) Arrest By Third Party. (a) Subject to the provisions of Article
---------------------
III, Section (2)(g) hereof and any rights of the Charterer (including under
Article 7 of the Charter), in the event that an Indenture Event of Default shall
have occurred and be continuing and the Vessel shall be arrested or detained by
a marshal or other officer of any court of law, equity or admiralty jurisdiction
in any country of the world or by any government or other authority and shall
not be released from arrest or detention within thirty (30) days from the date
of arrest or detention, the Shipowner hereby authorizes the Mortgagee, in the
name of the Shipowner, to apply for and receive possession of and to take
possession of the Vessel with all of the rights and powers that the Shipowner
might have, possess and exercise in any such event. This authorization is
irrevocable.
(b) Subject to the provisions of Article III, Section (2)(g) hereof
and any rights of the Charterer, in the event that an Indenture Event of Default
(including Article 7 of the Charter), shall have occurred and be continuing, the
Shipowner irrevocably authorizes the Mortgagee or its appointees (with full
power of substitution) to appear in the name of the Shipowner in any court of
any country or nation of the world where a suit is pending against the Vessel
because of or on account of any alleged lien or claim against the Vessel from
which the Vessel shall not have been released in accordance with Article 15 of
the Charter.
(6) Powers of the Mortgagee. Subject to the provisions of Article
-----------------------
III, Section (2)(g) hereof, the Mortgagee is hereby appointed as attorney-in-
fact of the Shipowner, during the continuance of any Indenture Event of Default,
and upon compliance with the terms of the Indenture, in the name of the
Shipowner to demand, collect, receive, compromise and sue for, so far as may be
permitted by law, all freights, hire, earnings, issues, revenues, compensation,
income and profits of the Vessel, and all amounts due from underwriters under
any insurance thereon as payment of losses or as return premiums or otherwise,
salvage awards and recoveries, recoveries in general average or otherwise, and
to make, give and execute in the name of the Shipowner acquittances, receipts,
releases or other discharges for the same, whether under seal or otherwise, and
to endorse and accept in the name of the Shipowner all checks, notes, drafts,
warrants, agreements and all other instruments in writing with respect to the
foregoing.
(7) Application of Proceeds. Any monies collected by the Mortgagee
-----------------------
pursuant to any sale of the Vessel or other enforcement of any of its rights
hereunder on account of the occurrence of an Indenture Event of Default shall be
distributed in accordance with the provisions of Section 4.03 of the Indenture.
(8) No Exclusivity. Subject to the provisions of Article III,
--------------
Section (2)(g) hereof, no right or remedy herein conferred upon or reserved to
the Mortgagee is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given
EXHE-6
<PAGE>
hereunder or under the Indenture or now or hereafter existing at law, in equity,
in admiralty, by statute or otherwise. The assertion or employment of any right
or remedy hereunder or otherwise shall not prevent the concurrent or subsequent
assertion or employment of any other right or remedy hereunder or otherwise.
ARTICLE IV
SUNDRY PROVISIONS
(1) Recording. For the purposes of recording this First Ship
---------
Mortgage as required by the __________________________________, as amended, the
total amount of this Mortgage is (i) ______________________________________ and
(ii) interest, Make-Whole Amount, if any, and performance of mortgage covenants.
The discharge amount is the same as the total amount.
(2) Successors and Assigns. All the covenants, promises,
----------------------
stipulations and agreements of the Shipowner contained in this Mortgage shall
bind the Shipowner, its successors and assignees, and shall inure to the benefit
of the Mortgagee, its successors and assigns.
(3) Agents. Wherever and whenever herein any right, power or
------
authority is granted or given to the Mortgagee, such right, power or authority
may be exercised in all cases by the Mortgagee or such agent or agents as it may
appoint; and the authorized acts of such agent or agents when taken shall
constitute the act of the Mortgagee hereunder.
(4) Notices. Any notice or demand or other communication to the
-------
Shipowner or the Mortgagee under this Mortgage shall be made in accordance with
Section 10.05 of the Indenture.
(5) Governing Law. The provisions of this Mortgage shall, with
-------------
respect to its validity, effect, recordation and enforcement, be governed by and
construed in accordance with the applicable laws of the
__________________________.
(6) Termination of U.K. Documents. If the Conditional Sale Agreement
-----------------------------
and the Head Lease shall cease to be in full force and effect, this Mortgage
shall be read and construed as though such documents were not mentioned herein.
In such event, (a) to the extent permitted by applicable law, this Mortgage
shall succeed to the position of a first preferred ship mortgage, and the
Mortgagee shall have all of the rights of a mortgagee of a first preferred ship
mortgage, or (b) at the request of the Mortgagee, the Shipowner shall execute,
deliver and cause to be recorded, at the Shipowner's expense, in favor of the
Indenture Trustee a first preferred ship mortgage containing substantially
similar provisions to those of this Mortgage.
EXHE-7
<PAGE>
IN WITNESS WHEREOF, the Shipowner has caused this Mortgage to be duly
executed by its authorized representative the day and year first above written.
_____________________________ ,
not in its individual capacity but
solely as the Managing Trustee
By:_____________________
Name:
Title: Attorney-in-Fact
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of December, 1996, before me personally appeared
________________, known to me, and known to be the person who executed the
foregoing instrument, who, being by me duly sworn, did depose and say that he
resides at _______________________________; that he is Attorney-in-Fact of
__________________________________________________________, not in its
individual capacity but solely as the Managing Trustee of the ______________,
the party described in and which executed the foregoing instrument; that he
signed his name thereto by authority of a power of attorney issued by said Trust
and he further acknowledged such mortgage is the free act and deed of such
Trust.
____________________________
Notary Public
[For use in the ______________________]
EXHE-8
<PAGE>
EXHIBIT 4.5
EXECUTION COPY
--------------
TRUST INDENTURE, ASSIGNMENT OF CHARTER AND HEAD LEASE
AND SECURITY AGREEMENT
among
SAMOCO 1234 TRUST,
a Delaware Business Trust,
created under the
Trust Agreement dated
as of November 22, 1996, with
the Owner Participant thereto
and
STATE STREET BANK AND TRUST COMPANY
Indenture Trustee
Dated as of December 19, 1996
Leveraged Lease of one Very Large Crude Carrier
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.................................. 5
ARTICLE II
THE SECURED NOTES
SECTION 2.01. Secured Notes................................ 6
SECTION 2.02. Payment from Indenture Estate Only........... 7
SECTION 2.03. Method of Payment............................ 7
SECTION 2.04. Note Register................................ 8
SECTION 2.05. Registered Owners............................ 9
SECTION 2.06. Transfer, Exchange and Replacement of Notes.. 9
SECTION 2.07. New Notes, Payment of Expenses............... 10
SECTION 2.08. Additional Notes............................. 10
SECTION 2.09. Termination of Interest in Indenture Estate.. 14
SECTION 2.10. Equally and Ratably Secured.................. 14
ARTICLE III
REDEMPTION AND REFUNDING
SECTION 3.01. Generally.................................... 14
SECTION 3.02. Mandatory Casualty Redemption................ 15
SECTION 3.03. Mandatory Early Termination Redemption....... 15
SECTION 3.04. Assumption of Obligations of Owner Trust..... 15
SECTION 3.05. Optional Redemption.......................... 18
SECTION 3.06. Owner Trust's and Owner Participant's
Option to Redeem or Purchase Secured Notes... 18
SECTION 3.07. Deposited Redemption Moneys.................. 19
SECTION 3.08. Acquisition of Secured Notes................. 20
SECTION 3.09. Condition to Redemption and Refunding........ 20
SECTION 3.10. Notice of Certain Redemptions................ 20
<PAGE>
ii
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE INDENTURE ESTATE;
ACTIONS UPON VESSEL DELIVERY
SECTION 4.01. Distribution of Hire..................... 21
SECTION 4.02. Certain Distributions................... 22
SECTION 4.03. Distribution After Indenture Event of
Default................................. 22
SECTION 4.04. Application of Payments on Secured Notes 24
SECTION 4.05. Applications of Payments According to
Applicable Operative Document Provisions. 24
SECTION 4.06. Amounts Received for Which No Provision
Is Made.................................. 25
SECTION 4.07. Payment Procedures....................... 25
SECTION 4.08. Application of Payments Under Parent
Guaranty................................. 26
SECTION 4.09 Actions upon Vessel Delivery.............. 26
ARTICLE V
COVENANTS OF OWNER TRUST AND THE OWNER TRUSTEES;
CERTAIN AGREEMENTS; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 5.01. Covenants of Owner Trust and the Managing
Trustee; Certain Agreements.............. 26
SECTION 5.02. Indenture Events of Default.............. 28
SECTION 5.03. Certain Rights........................... 30
SECTION 5.04. Remedies................................. 31
SECTION 5.05. Suit; Possession; Title; Sale of
Indenture Estate......................... 34
SECTION 5.06. Remedies Cumulative...................... 37
SECTION 5.07. Discontinuance of Proceedings............ 37
SECTION 5.08. Waiver of Past Defaults.................. 38
SECTION 5.09. No Action Contrary to Certain Third
Party Rights........................................... 38
SECTION 5.10. Rights of Holders of Secured Notes....... 38
SECTION 5.11. Limitation on Suits by Holders........... 38
<PAGE>
iii
ARTICLE VI
DUTIES OF THE INDENTURE TRUSTEE
SECTION 6.01. Certain Actions................................. 39
SECTION 6.02. Action Upon Instructions........................ 39
SECTION 6.03. Release of Lien of Indenture.................... 40
SECTION 6.04. Indemnification................................. 41
SECTION 6.05. No Implied Duties............................... 41
SECTION 6.06. Duties to Remove Certain Liens.................. 41
SECTION 6.07. No Action Except Under Operative Documents or
Instructions.................................... 41
SECTION 6.08. Certain Rights of the Owner Trust and the Owner
Participant..................................... 42
SECTION 6.09. Filing of Financing and Continuation Statements. 43
SECTION 6.10. Publishing of Notices........................... 43
SECTION 6.11. Taxes; Withholding; Information Reporting....... 43
ARTICLE VII
THE INDENTURE TRUSTEE AND THE OWNER TRUSTEE
SECTION 7.01. Acceptance of Trusts and Duties................. 44
SECTION 7.02. Absence of Duties Except as Specified........... 44
SECTION 7.03. No Representations or Warranties................ 44
SECTION 7.04. No Segregation of Moneys; No Interest;
Investments..................................... 45
SECTION 7.05. Reliance; Agents; Advice of Counsel............. 45
SECTION 7.06. No Compensation from Holders or Indenture
Estate.......................................... 46
SECTION 7.07. Right of the Indenture Trustee to Perform
Covenants, Etc.................................. 46
SECTION 7.08. Moneys for Payments in Respect of Notes to be
Held in Trust................................... 47
SECTION 7.09. Disposition of Moneys Held for Payments of
Notes........................................... 47
ARTICLE VIII
SUCCESSOR TRUSTEES AND ADDITIONAL TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee............... 47
SECTION 8.02. Resignation of Indenture Trustee; Appointment
of Successor.................................... 48
SECTION 8.03. Co-Trustees and Separate Trustees............... 49
<PAGE>
iv
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Indenture Supplements Without Consent of
Holders........................................ 51
SECTION 9.02. Supplements and Amendments to Operative
Documents With Consent Holders of Notes........
SECTION 9.03. Execution of Indenture Supplement,
Amendments, Etc................................ 56
SECTION 9.04. Effect of Indenture Supplement................. 56
SECTION 9.05. Reference in Secured Notes to Indenture
Supplements.................................... 56
SECTION 9.06. Notices of Indenture Supplements and
Amendments, Etc................................ 57
SECTION 9.07. Charterer Rights............................... 57
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture...................... 57
SECTION 10.02. No Legal Title to Indenture Estate in Holders. 57
SECTION 10.03. Power of Attorney............................. 58
SECTION 10.04. Regarding the Owner Trust and the Owner
Trustees...................................... 58
SECTION 10.05. Notices....................................... 59
SECTION 10.06. Severability of Provisions.................... 59
SECTION 10.07. No Oral Modification or Continuing Waivers.... 59
SECTION 10.08. Successors and Assigns........................ 60
SECTION 10.09. Headings; Table of Contents................... 60
SECTION 10.10. Normal Commercial Relations................... 60
SECTION 10.11. Governing Law................................. 60
SECTION 10.12. Execution..................................... 60
SECTION 10.13. Security Agreement............................ 60
SECTION 10.14. Benefits of Indenture......................... 60
Appendix A Definitions
Schedule 1 Description of Vessel
Exhibit A Form of Secured Note
Exhibit B Maturity Dates, Etc.
Exhibit C Form of Substitution Agreement
Exhibit D Form of Indenture Supplement
Exhibit E Form of Ship Mortgage
<PAGE>
TRUST INDENTURE, ASSIGNMENT OF CHARTER AND HEAD LEASE,
AND SECURITY AGREEMENT
This TRUST INDENTURE, ASSIGNMENT OF CHARTER AND HEAD LEASE, AND SECURITY
AGREEMENT dated as of December 19, 1996 (this "Indenture"), between SAMOCO 1234
---------
TRUST, a trust created pursuant to the Delaware Business Trust Act (the "Owner
-----
Trust") under the Trust Agreement (as hereinafter defined), under which DEUTSCHE
- -----
MORGAN GRENFELL (CAYMAN) LIMITED, a Cayman Islands banking corporation is the
Managing Trustee, (together with its permitted successors and assigns, the
"Managing Trustee"), acting not individually, except as otherwise provided
- -----------------
herein (when acting in such individual capacity, the "Cayman Trust Company"),
--------------------
but solely as trustee for the Owner Trust (the Managing Trustee in such capacity
being, the "Owner Trustee", and STATE STREET BANK AND TRUST COMPANY, a
-------------
Massachusetts trust company (together with its permitted successors and assigns,
the "Indenture Trustee").
-----------------
WITNESSETH:
----------
WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant, the Cayman Trust Company and Wilmington
Trust Company (the "Delaware Trust Company") have heretofore entered into the
Declaration of Agreement of Trust dated as of November 22, 1996 (the "Trust
-----
Agreement"), whereby, among other things, the Cayman Trust Company and the
- ---------
Delaware Trust Company in their respective capacities as Managing Trustee and
Delaware Trustee thereunder have declared a certain trust for the use and
benefit of the Owner Participant, subject, however, to the Lien of this
Indenture, and the Owner Trust is authorized and directed to execute and deliver
this Indenture;
WHEREAS, the Owner Trust desires by this Indenture to provide, among other
things, (i) for the issuance by the Owner Trust to the Pass Through Trustee of
the Series 1996-A-4 Secured Notes, a form of which is set forth in Exhibit A
hereto, upon payment by the Pass Through Trustee of the aggregate principal
amount of such Secured Notes, (ii) for the grant, assignment, mortgage and
pledge by the Owner Trust to the Indenture Trustee, as part of the Indenture
Estate thereunder, among other things, all of the right, title and interest of
the Owner Trust in, to and under, as the case may be, the Vessel (by virtue of
the grant hereunder and the grant under the Ship Mortgage), the Construction
Contract, the Bill of Sale, the Head Lease, the Conditional Sale Agreement, the
Charter and the Parent Guaranty, and all payments and other amounts received
hereunder or thereunder
<PAGE>
2
(other than Excepted Payments), in accordance with the terms hereof and thereof,
as security for, among other things, the Owner Trust's obligations to the
Indenture Trustee, the Loan Participants and the other Holders and for the
benefit and security of the Loan Participants and such Holders;
WHEREAS, all things have been done to make the Secured Notes, when executed
by the Owner Trust and authenticated, issued and delivered hereunder, the legal,
valid, binding and enforceable obligations of the Owner Trust in accordance with
their terms; and
WHEREAS, all things necessary to make this Indenture the legal, valid,
binding and enforceable obligation of the Owner Trust, for the uses and purposes
herein set forth, in accordance with its terms, have been done and performed and
have happened, and the Indenture Trustee has duly accepted the trust created
hereby and as evidenced thereof has joined in the execution hereof;
NOW, THEREFORE, THIS TRUST INDENTURE, ASSIGNMENT OF CHARTER AND SECURITY
AGREEMENT WITNESSETH that, to secure (i) the prompt payment of the principal of,
Make-Whole Amount, if any, and interest on all Secured Notes from time to time
Outstanding hereunder and of all other amounts payable to the Holders (whether
as Holders or Loan Participants) hereunder, under the Secured Notes and under
the other Operative Documents, (ii) the performance and observance by the Owner
Trust of all of the provisions, covenants and agreements contained in the
Participation Agreement, in the Secured Notes and in the other Operative
Documents for the benefit of the Indenture Trustee or the Holders herein, and
(iii) the performance and observance by the Owner Participant of its covenants
and agreements contained in the Operative Documents (the obligations described
in the above clauses (i), (ii) and (iii), collectively, the "Indenture
---------
Indebtedness"), and for the uses and purposes and subject to the terms and
- ------------
provisions hereof, and in consideration of the premises and of the covenants
herein contained and of the acceptance of the Secured Notes by the Holders
thereof:
GRANTING CLAUSE
---------------
The Owner Trust, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in order to secure the payment and
performance of the Indenture Indebtedness, hereby presently irrevocably
mortgages, hypothecates and pledges unto the Indenture Trustee and creates to
and for the benefit of the Indenture Trustee, a security interest in and
mortgage lien on, and assigns by way of security, all of the right, title and
interest of the Owner Trust in, to and under the following property, rights,
interests, and privileges, now owned or in the future acquired by the Owner
Trust or in which the Owner Trust now has or may in the future acquire any
estate, right, title or interest (which collectively, together with all of the
Indenture Trustee's right, title and interest in and to the
<PAGE>
3
Vessel described in the Ship Mortgage, by virtue of the grant of the Ship
Mortgage and the U.K. Security Assignment, including all property hereafter
subjected to the Lien of this Indenture, the Ship Mortgage or the U.K. Security
Assignment by any Indenture Supplement or any mortgage supplemental hereto or
thereto, but excluding Excepted Payments, shall constitute the "Indenture
---------
Estate"), to wit:
(a) all right, title and interest of the Owner Trust in the Vessel (as
described in Schedule 1 hereto), including, without limitation, any
Component (including any replacement Component) or Modification or
Alteration to the Vessel which, pursuant to the terms of the Conditional
Sale Agreement and the Charter, are the property of the Owner Trust;
(b) the Construction Contract, together with all amendments thereto,
and including, without limitation, all moneys and claims for moneys due and
to become due to the Owner Trust thereunder, subject to the rights of the
U.K. Lessor under the Conditional Sale Agreement;
(c) upon delivery of the Vessel, the Bill of Sale and all rights,
powers and remedies of the Owner Trust pursuant thereto, whether arising
thereunder or by statute, at law, in equity or otherwise, subject to the
rights of the U.K. Lessor under the Conditional Sale Agreement;
(d) the Charter, including, without limitation, (i) all amounts of
hire, rent, income insurance proceeds and requisition, indemnity or other
payments of any kind for or with respect to any asset leased or subleased
thereunder, (ii) all rights of the Owner Trust to exercise any election or
option, or to give any notice, consent, waiver or approval under or in
respect of the Charter, or to accept any surrender or enter into any
modification thereof, as the case may be, and (iii) all rights, powers and
remedies of the Owner Trust pursuant to the Charter, whether arising
thereunder or by statute, at law, in equity or otherwise, including,
without limitation, the right to possession of any asset demised
thereunder;
(e) the Conditional Sale Agreement, the Head Lease, the Lessee Support
Agreement and the Lessor's Mortgage, including, without limitation, (i) all
amounts payable to the Owner Trust under any of them, (ii) all right of the
Owner Trust to exercise any election or option, or to give any notice,
consent, waiver or approval under or in respect of any such agreement, or
to accept any surrender or enter into any modification thereof, as the case
may be, and (iii) all rights, powers and remedies of the Owner Trust
pursuant to any such agreement, whether arising thereunder or by statute,
at law, in equity or otherwise;
<PAGE>
4
(f) the Parent Guaranty, including without limitation, (i) all amounts
payable thereunder, (ii) all rights of the Owner Trust to exercise any
election or option, or to give any notice, consent, waiver or approval
under or in respect of the Parent Guaranty, or to accept any surrender or
enter into any modification thereof, as the case may be, and (iii) all
rights, powers and remedies of the Owner Trust pursuant to the Parent
Guaranty, whether arising thereunder or by statute, at law, in equity or
otherwise;
(g) all moneys and securities now or hereafter paid or deposited or
required to be paid or deposited to or with the Indenture Trustee pursuant
to any term of any Operative Document, and held or required to be held by
the Indenture Trustee hereunder;
(h) to the extent assignable, any and all permits, certificates,
approvals and authorizations, however characterized, issued or in any way
furnished in connection with the Vessel, whether necessary or not for the
operation and use of the Vessel;
(i) all the tolls, rents, issues, profits, products, revenues and
other income of the property subjected or required to be subjected to the
Lien of this Indenture, including all payments or proceeds payable to the
Owner Trust upon or after termination of the Charter as the result of the
sale, lease or other disposition thereof, and all estate, right, title and
interest of every nature whatsoever of the Owner Trust in and to the same
and every part thereof; and
(j) all rights or property which may be received upon the exercise of
any remedy or option contained in any of the above-described instruments
and all proceeds in whatever form of all or any part of any of the
foregoing;
EXCLUDING, HOWEVER, from the foregoing grant, and thereby from the
Lien of this Indenture and from the Indenture Estate, any and all Excepted
Payments; and
SUBJECT to the rights of the Owner Trust and the Owner Participant
hereunder, including, without limitation, Section 6.08;
TO HAVE AND TO HOLD the aforesaid property unto the Indenture Trustee,
its successors and assigns, for the benefit and security of the Holders, without
any priority of any one Secured Note over any other, and for the uses and
purposes and subject to the terms and conditions set forth in this Indenture.
This Indenture is a mortgage given to secure the payment of the Indenture
Indebtedness and is also intended to operate as, among other things, a security
agreement and an assignment of Bareboat Hire, leases and rents.
<PAGE>
5
It is expressly agreed that anything contained in this Indenture to
the contrary notwithstanding, the Owner Trust shall remain liable under the
Operative Documents to which it is a party or a third party beneficiary to
perform all of the obligations of the Owner Trust thereunder or by which it is
bound, all in accordance with and pursuant to the terms and provisions of each
thereof and the Holders and, except as expressly provided herein, the Indenture
Trustee shall have no obligation or liability under any Operative Document by
reason of or arising out of this Indenture. None of the Indenture Trustee or
any Holder shall be required or obligated in any manner to perform or fulfill
any obligation of the Owner Trust under or pursuant to any Operative Document
or, except as herein expressly provided, to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by it, or to
present or file any claim, or to take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time.
Simultaneously with the delivery pursuant to the Construction Contract
of the Vessel to the Owner Trust, the Owner Trust, as mortgagor, shall execute
and deliver the Ship Mortgage, substantially in the form annexed hereto as
Exhibit E, except that the blanks in such form shall be filled in and such form
may be modified as contemplated therein and shall execute and deliver to the
Indenture Trustee a Supplemental Indenture pursuant to Section 4.09 for the
purpose of including in the Indenture Estate all of the Owner Trust's right,
title and interest in the Bill of Sale and the Vessel.
Accordingly, the Owner Trust and the Indenture Trustee hereby agree
for themselves and for the benefit and security of the Holders as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Unless otherwise defined herein, for the
-----------
purposes hereof, capitalized terms used herein and not otherwise defined shall
have the meanings assigned to them in Appendix A. References in this Indenture
to Sections, subsections, paragraphs, Schedules, Appendices and Exhibits are to
Sections, subsections and paragraphs in, and Schedules, Appendices and Exhibits
to, this Indenture unless otherwise indicated.
<PAGE>
6
ARTICLE II
THE SECURED NOTES
SECTION 2.01. Secured Notes. (a) Generally. Except for Secured
------------- ---------
Notes issued pursuant to Section 2.06 or 2.08, Secured Notes may be issued only
on the Closing Date. On the Closing Date, the Secured Notes to be issued on
such date pursuant to Section 2.2 of the Participation Agreement shall be duly
executed by the Managing Trustee on behalf of the Owner Trust, duly
authenticated and delivered by the Indenture Trustee and registered in the name
of the Loan Participant to which such Secured Note is being issued. Each
Secured Note shall have attached thereto the Amortization Schedule for such
Secured Note. Receipt by the Indenture Trustee of Secured Notes duly executed
by the Managing Trustee on behalf of the Owner Trust shall constitute
instructions to the Indenture Trustee to authenticate, register and deliver such
Secured Notes on the Closing Date.
(b) Series 1996 A-4 Secured Notes. The Series 1996 A-4 Secured Notes
-----------------------------
shall:
(i) be limited in aggregate principal amount (including the full
accretion of discount) to the amount specified in Exhibit B hereto (the
principal amount of such Secured Notes shall be the Accreted Value of such
Secured Note during the period prior to the Full Accrual Date, and
thereafter, the face amount thereof as such amount may be reduced from time
to time by the payment of principal installments thereunder);
(ii) be issuable only as registered Secured Notes in denominations of
at least $1,000, or if the remaining principal amount thereof shall be less
than $1,000, such remaining principal amount;
(iii) be dated the Closing Date;
(iv) bear interest on the unpaid principal amount thereof from the
date of such Series 1996A-4 Secured Notes to the Full Accrual Date thereof
in the form of accretion of discount, and after the Full Accrual Date with
respect to such Secured Notes, at the rate specified in Exhibit B (computed
on the basis of a 360-day year consisting of twelve 30-day months);
(v) provide for payments of interest and otherwise be due and payable
as to principal and interest as specified herein and therein;
(vi) be prepayable only as provided in Article III; and
<PAGE>
7
(vii) be substantially of the tenor and in the form set forth in
Exhibit A.
(c) Execution and Authentication. Each Secured Note shall be signed
----------------------------
on behalf of the Owner Trust by a Responsible Officer of the Managing Trustee,
manually or in facsimile. No Secured Note shall be secured by or entitled to
any benefit under this Indenture, or be valid for any purpose, unless there
appears thereon a certificate of authentication executed by or on behalf of the
Indenture Trustee by the manual signature of a Responsible Officer of the
Indenture Trustee, and such certificate on any Secured Note shall be conclusive
evidence that such Secured Note has been duly authenticated and delivered
hereunder.
SECTION 2.02. Payment from Indenture Estate Only. All payments of
----------------------------------
principal, Make-Whole Amount, if any, and interest to be made by the Owner Trust
and, except as otherwise provided in the Operative Documents, all payments of
any other amounts payable by or on behalf of the Owner Trust under the Secured
Notes and this Indenture, shall be made only from the income and proceeds from
the Indenture Estate, and only to the extent that the Indenture Trustee shall
have received sufficient income or proceeds from the Indenture Estate to make
such payments in accordance with the terms hereof. Each Holder, by its
acceptance of a Secured Note, agrees that it will look solely to the income and
proceeds from the Indenture Estate to the extent available for payment as herein
provided and that (a) none of the Managing Trustee or the Indenture Trustee
(whether in their respective individual or trust capacities) or the Owner Trust
shall be personally liable to such Holder for any amounts payable under the
Secured Notes, nor, except as specifically provided herein or in the other
Operative Documents, for any amounts payable or any liability under this
Indenture and (b) the Owner Participant shall not be liable to the Indenture
Trustee or to any Holder under any circumstances for any reason whatsoever,
except to the extent expressly provided herein or in any other Operative
Document.
SECTION 2.03. Method of Payment. (a) The principal of, and Make-
-----------------
Whole Amount, if any, and interest, on each Secured Note shall be payable in
immediately available funds, the receipt of which has been confirmed by a
Responsible Officer of the Indenture Trustee (which shall be done promptly upon
receipt thereof) on or before 12:00 p.m., New York time, at the place of
receipt, on the due date therefor, to the Indenture Trustee at the corporate
trust office of the Indenture Trustee. Amounts so received by the Indenture
Trustee shall be paid by the Indenture Trustee to each Holder on the due date
therefor without any presentment or surrender of any Secured Note held by such
Holder by whichever of the following methods shall be specified by prior written
notice from such Holder to the Indenture Trustee: (i) by transferring prior to
2:00 p.m., New York City time, on such date such payment to such Holder in
immediately available funds by crediting the amount to be distributed to any
Holder to any account maintained by such Holder with the Indenture Trustee or
(ii) by initiating a wire transfer prior to the time set forth in clause (i) of
this Section 2.03(a) of such amount in immediately available funds to a banking
institution
<PAGE>
8
designated in such notice with bank wire transfer facilities for the account of
such Holder, in all cases without any presentment or surrender of any Secured
Note, except that, on the date of the final maturity thereof (whether at
maturity, upon prepayment, acceleration or otherwise), the Holder of each
Secured Note shall surrender such Secured Note promptly after payment; provided
that failure to so present such Secured Note shall not diminish the effect of
full and final payment by the Owner Trust. In the event the Indenture Trustee
shall fail to make any payment as provided in the preceding sentence after its
receipt of funds at the place and on or before the time specified in this
Section 2.03(a), the Indenture Trustee in its individual capacity agrees to
compensate each Holder for loss of use of funds in an amount equal to the
overnight rate for Federal Funds.
(b) Whenever any payment to be made hereunder or pursuant to the terms
of any Secured Note shall be stated to be due on a day which is not a Business
Day, such payment shall be due and payable on the next succeeding Business Day
with the same force and effect as if made on such scheduled date and (provided
such payment is timely made on such succeeding Business Day) no interest shall
accrue on the amount of such payment from and after such scheduled date.
(c) If payment of any installment of principal or interest payable in
accordance with the terms hereof and of the Secured Notes is not paid in full
when due, whether as scheduled or upon acceleration and whether before or after
the maturity date of the Secured Notes, such overdue amount of principal or
interest shall bear (to the extent not prohibited by applicable law) interest,
payable on demand, for each day from and including the date payment thereof was
due to the actual date of payment, at the Overdue Rate.
(d) Subject to Section 6.11, the Holder of any Secured Note shall be
entitled to the principal of, and the Make-Whole Amount, if any, and interest on
such Secured Note free from all rights of set-off or counterclaims of the Owner
Trust, the Indenture Trustee or any prior Holder of such Secured Note. Nothing
set forth in this Section 2.03(d) shall impair the right of the Owner Trust to
receive a return from the Indenture Trustee of any amount unintentionally
overpaid by the Owner Trust in respect of a Secured Note.
SECTION 2.04. Note Register. The Indenture Trustee shall cause to be
-------------
kept at the Indenture Trustee's corporate trust office a register (the "Note
----
Register") for the registration or transfer of the Secured Notes. The Note
- --------
Register shall be maintained by the Indenture Trustee, and the names and
addresses of the registered Holders of the Secured Notes, the transfers of the
Secured Notes and the names and addresses of the transferees of the Secured
Notes shall be entered in the Note Register under such reasonable regulations as
the Indenture Trustee may prescribe. Each Loan Participant shall be provided
reasonable opportunities to inspect the Note Register from time to time.
<PAGE>
9
SECTION 2.05. Registered Owners. The Owner Trust and the Indenture
-----------------
Trustee may deem and treat any registered Holder as the absolute owner of any
Secured Note held by such Holder, as indicated in the Note Register, for the
purpose of receiving payment of all amounts payable with respect to such Secured
Note and for all other purposes, and neither the Owner Trust nor the Indenture
Trustee shall be affected by any notice to the contrary. All such payments so
made shall be valid and effectual to satisfy and discharge the liability of the
Owner Trust upon such Secured Note to the extent of the sum or sums so paid.
SECTION 2.06. Transfer, Exchange and Replacement of Notes. (a)
-------------------------------------------
Secured Notes may be transferred only on the Note Register. Any Secured Note
may be transferred on the Note Register if such Secured Note is surrendered for
cancellation at the corporate trust office of the Indenture Trustee and is
accompanied by an instrument of transfer in form and substance reasonably
satisfactory to the Indenture Trustee, which Secured Note or Secured Notes shall
be cancelled by the Indenture Trustee. A new Secured Note or Secured Notes of
the same series, duly executed by the Owner Trust and registered in the name of
the transferee or transferees in a principal amount or amounts equal to the
principal amount of such transferred Secured Note, shall be duly authenticated
and delivered by the Indenture Trustee to the transferee or transferees named by
the Holder of such transferred Secured Note in exchange for such transferred
Secured Note. Promptly after registration of the transfer of any Secured Note,
the Indenture Trustee shall give notice thereof to the Charterer and the Owner
Trust specifying the name and address for notices of the transferee or
transferees.
(b) Any Secured Note may be exchanged for a new Secured Note if such
Secured Note to be so exchanged is surrendered for cancellation at the corporate
trust office of the Indenture Trustee and is accompanied by the request of the
Holder thereof specifying the denomination of the new Secured Note (which shall
be in denominations of at least $1,000 or, if less, the then unpaid principal
amount thereof) to be issued in exchange therefor. Upon instructions from the
Indenture Trustee, the Owner Trust shall deliver to the Indenture Trustee a new
Secured Note of the same series, duly executed by the Owner Trust and registered
in the name of such Holder in the denominations so requested and in an aggregate
principal amount equal to the aggregate original principal amount of such
Secured Note to be so exchanged, and such new Secured Note shall be duly
authenticated by the Indenture Trustee and delivered by the Indenture Trustee to
such Holder in exchange for such Secured Note to be so exchanged, which Secured
Note shall be cancelled by the Indenture Trustee.
(c) If any Secured Note shall become mutilated or be destroyed, lost
or stolen, upon request of the Holder thereof, a new Secured Note of the same
series, duly executed by the Owner Trust and registered in the name of such
Holder in the same original principal amount as the Secured Note so mutilated,
destroyed, lost or stolen, shall be duly
<PAGE>
10
authenticated and delivered by the Indenture Trustee to such Holder in exchange
for such Secured Note, if mutilated, or in substitution for such Secured Note,
if destroyed, lost or stolen. In the case of a mutilated Secured Note, such
Secured Note shall be surrendered for cancellation at the corporate trust office
of the Indenture Trustee and shall be cancelled by the Indenture Trustee. In
the case of a destroyed, lost or stolen Secured Note, the Holder thereof shall
furnish to the Owner Trust and the Indenture Trustee (i) evidence to their
reasonable satisfaction of the destruction, loss or theft of such Secured Note
and ownership thereof, and (ii) such security or indemnity as may be reasonably
required by them to save them harmless; provided that if the affected Holder is
a Pass Through Trustee, the written agreement of such Holder to indemnify the
Managing Trustee, the Delaware Trustee, the Indenture Trustee and the Owner
Trust (in their respective individual and trust capacities) with respect to such
destroyed, lost or stolen Secured Note, together with written notice of
ownership and destruction, loss or theft thereof, shall satisfy the conditions
of this sentence.
SECTION 2.07. New Notes, Payment of Expenses. (a) Each new Secured
------------------------------
Note issued pursuant to Section 2.06 (a "New Note") upon transfer of, in
--------
exchange for or in substitution for a Secured Note (an "Old Note") shall be
--------
dated as of the date of such Old Note. The Indenture Trustee shall mark on each
New Note (i) the date to which principal and interest have been paid on the
applicable old Note and (ii) all payments and prepayments of principal made on
such Old Note which are allocable to such New Note. Interest shall be deemed to
have been paid on such New Note to the date to which interest was paid on the
applicable Old Note, and all payments and prepayments of principal required to
have been marked on such New Note, as provided in clause (ii) of the preceding
sentence, shall be deemed to have been made thereon. All New Notes issued
pursuant to Section 2.06 in exchange for or in substitution for or in lieu of
Old Notes shall be valid obligations of the Owner Trustee evidencing the same
debt as such Old Notes and shall be entitled to the benefits and security of
this Indenture to the same extent as such Old Notes. Issuance of any New Note
shall not for any purposes be deemed a further advance of funds to the Owner
Trustee and the perfection and priority of the security interest in the
Indenture Estate applicable to such New Note shall for all purposes be the same
as that applicable to the Secured Note replaced by such New Note.
(b) Upon the issuance of a New Note or New Notes pursuant to Section
2.06, the Owner Trust and/or the Indenture Trustee may require from the party
requesting such New Note or New Notes payment of a sum to reimburse the Owner
Trust and/or the Indenture Trustee for, or to provide funds for, the payment of
any tax or other governmental charge or any other charge or expense paid or
payable with respect to such transfer by the Owner Trust or the Indenture
Trustee, without any right of reimbursement under any Operative Document with
respect to such payments.
SECTION 2.08. Additional Notes. (a) So long as no Charter Event of
----------------
Default or Indenture Event of Default shall have occurred and be continuing,
Additional
<PAGE>
11
Notes of one or more series may be issued under and secured by this Indenture at
any time or from time to time, subject to the conditions hereinafter provided in
this Section 2.08, for the purpose of providing funds to finance (i) a portion
of the initial cost of the Vessel if the U.K. Financing is not concluded, (ii)
the cost of any Modifications to the Vessel undertaken pursuant to Article 13 of
the Charter and (iii) the cost of any Alteration to the Vessel undertaken
pursuant to Section 15 of the Construction Contract.
(b) Prior to the issuance of any Additional Notes of any series
pursuant to this Section 2.08, the Owner Trust shall have received from the
Owner Participant and delivered to the Indenture Trustee, not less than thirty
(30) days prior to the proposed date of issuance of such Additional Notes, a
request and authorization to issue Additional Notes (a "Request"), which Request
-------
shall include the amount and series of such Additional Notes, the proposed date
of issuance of such Additional Notes and other details with respect thereto
which are not inconsistent with this Section 2.08. Such Additional Notes shall
have a designation so as to distinguish such Additional Notes from the Initial
Secured Notes and Additional Notes of any other series, but otherwise shall be
substantially similar in form to the Initial Secured Notes, with such omissions
therefrom, variations therein and additions thereto as shall be appropriate.
Such Additional Notes shall be denominated and payable in United States Dollars
and shall rank pari passu with all other Secured Notes issued pursuant to the
terms hereof.
(c) The terms, conditions and designations of such Additional Notes
(which shall be consistent with the Request and with the terms of this Indenture
and of the Participation Agreement) shall be set forth in a supplement to this
Indenture in form and substance satisfactory to the Indenture Trustee, which
shall be executed by the Owner Trust and the Indenture Trustee. Such indenture
supplement shall set forth:
(i) after giving effect to the issuance of the Additional Notes
pursuant to clause (a)(i) of this Section 2.08, the aggregate unpaid
principal amount of all Secured Notes Outstanding (which shall not exceed
80% of the initial cost of the Vessel to the Owner Trust);
(ii) after giving effect to the issuance of the Additional Notes
pursuant to clauses (a)(i) and (a)(ii) of this Section 2.08, the aggregate
unpaid principal amount of all Secured Notes Outstanding (including any
other Additional Notes issued under this Section 2.08) (which shall not
exceed 85% of the total Fair Market Sales Value of the Vessel (as
determined pursuant to the Appraisal Procedure) after giving effect to such
Modifications or Alterations);
(iii) the text of such Additional Notes (which, except for the terms
of payment thereof, shall be of substantially the same effect as the text
of the initial Secured Notes set forth in this Indenture, with such changes
as are consistent with and
<PAGE>
12
permitted by this Indenture and which in all events shall provide that such
Additional Notes are never more than pari passu in priority of payment, in
right of security and in all other respects with the Initial Secured
Notes);
(iv) the date of maturity of such Additional Notes (which shall be no
later than the end of the Charter Period);
(v) the date from which, and the date or dates on which, interest is
payable (which shall be Interest Payment Dates);
(vi) the terms for the repayment of the principal amount of such
Additional Notes (each regularly scheduled payment of principal shall be on
an Interest Payment Date);
(vii) the terms, if any, as to prepayment or redemption of such
Additional Notes at the option of the Owner Trust, and as to the premium,
if any, payable on any redemption or prepayment of such Additional Notes;
and
(viii) any other terms and agreements in respect thereof provided or
permitted by this Indenture or necessary to specify the terms and
conditions on which such Additional Notes shall be issued.
(d) Such Additional Notes shall be executed by the Owner Trust as
provided in Section 2.01 and deposited with the Indenture Trustee for
authentication and delivery, but before such Additional Notes shall be
authenticated and delivered by the Indenture Trustee, there shall be delivered
to or deposited with the Indenture Trustee the following:
(i) the Request;
(ii) such supplement to this Indenture, duly executed by the Owner
Trust;
(iii) a supplement to the Charter, duly authorized, executed and
delivered by the Charterer and the Owner Trust, providing for adjustments
to the Assigned Hire required to ensure that payments of Assigned Hire will
be adequate to provide for the payment, when due, of all scheduled payments
of principal of, Make-Whole Amount, if any, and interest on the Secured
Notes, including any other Additional Notes, after giving effect to the
issuance of such Additional Notes, together with such instruments of
conveyance, assignment and transfer, if any, necessary to subject such
supplement to the Charter to the Lien and security interest of this
Indenture and to perfect such Lien and security interest subject to no
Liens other than Permitted Liens, and
<PAGE>
13
evidence as to the due recording or filing of each thereof or of financing
or similar statements with respect thereto;
(iv) such instruments of conveyance, assignment and transfer
(including, without limitation, contractors' waivers) duly executed and
delivered by the respective parties thereto, and such evidence of the due
filing thereof or of financing statements with respect thereto, as may be
required to convey to the Owner Trust all property included in such
Modification or Alteration, if any, and to subject such property to the
Lien of this Indenture, subject to no Liens except Permitted Liens;
(v) an amendment to the Ship Mortgage so that it will secure the
Additional Notes or an opinion of counsel that such amendment is not
required;
(vi) if the Head Lease is in effect, if necessary, an amendment to the
Head Lease so that the amount set forth on Schedule 7 thereof on each date
will be greater than the scheduled principal amount of the Secured Notes
including such Additional Notes to be Outstanding on such date;
(vii) originals or certified copies of all corporate actions
necessary for the due and valid issue of such Additional Notes, the due and
valid authorization, execution, delivery and performance by the Owner Trust
of the supplement to this Indenture relating thereto, and the due and valid
authorization, execution, delivery and performance by the Charterer and the
Owner Trust of the supplement to the Charter and the creation of the Lien
and security interest thereon referred to above, all of which corporate
actions shall have been duly obtained and shall be in full force and
effect, together with evidence as to the due occurrence of all such
authorization, execution, delivery and performance;
(viii) documentation, duly executed and delivered by the respective
parties thereto whereby the proposed holders of the Additional Notes agree
to be bound by the terms of the Operative Documents (including, without
limitation, representations and covenants corresponding to those contained
in Section 12.2 of the Participation Agreement);
(ix) an Officer's Certificate of the Charterer certifying (a) as to
the cost of such Modification or Alteration and (b) that all conditions
precedent to the issuance of the Additional Notes contained in this Section
2.08 have been satisfied unless such conditions have been waived in writing
by the Indenture Trustee and the Owner Trust;
(x) such opinions of counsel as are customary in transactions of this
type, including, without limitation, opinions as to the due authorization,
execution, delivery and enforceability of such supplement to this Indenture
and such Additional Notes and
<PAGE>
14
the creation and perfection of the security interest in such Modification
or Alteration (subject to usual or customary exceptions, qualifications and
assumptions), and such other certificates and other documents as may be
reasonably requested by the Indenture Trustee to evidence the validity and
binding effect of such supplement to this Indenture and such Additional
Notes and compliance with this Section 2.08; and
(xi) Rating Agency Confirmation with respect to the issuance of such
Additional Notes.
(e) When the documents referred to in Section 2.08(d) shall have been
delivered to or deposited with the Indenture Trustee and when such Additional
Notes described in the Request and the supplement to this Indenture have been
executed by the Owner Trust as required by this Indenture, the Indenture Trustee
shall authenticate and deliver such Additional Notes in the manner described in
such Request, but only upon payment to the Owner Trust of the sum or sums
specified in such Request, whereupon the Owner Trust shall pay such sum or sums
to the Charterer.
SECTION 2.09. Termination of Interest in Indenture Estate. A Holder
-------------------------------------------
shall have no further interest in, or other right with respect to, the Indenture
Estate upon the payment of all principal of, Make-Whole Amount, if any, and
interest on, any Secured Notes held by such Holder and all other sums payable to
such Holder hereunder with respect to any such Secured Notes under the other
Operative Documents and under such Secured Notes.
SECTION 2.10. Equally and Ratably Secured. Except as otherwise
---------------------------
expressly provided in this Indenture, all Secured Notes, including any
Additional Notes, at any time Outstanding under this Indenture shall be equally
and ratably secured by this Indenture without preference, priority or
distinction on account of the series, date, time of issue or maturity of such
Secured Notes. All Additional Notes at any time Outstanding under this
Indenture shall be equally and ratably secured by this Indenture without
preference, priority or distinction on account of the series, date, time of
issue or maturity of such Additional Notes.
ARTICLE III
REDEMPTION AND REFUNDING
SECTION 3.01. Generally. The Secured Notes may not be redeemed or
---------
prepaid except to the extent and in the manner expressly permitted or required
by this Indenture. Except as otherwise expressly provided in this Indenture,
any amount prepaid in partial redemption of the Secured Notes Outstanding shall
be distributed by the Indenture Trustee to all Holders ratably, without priority
of any Holder over any other Holder, in the
<PAGE>
15
proportion that the principal amount of Secured Notes held by such Holder bears
to the principal amount of all Secured Notes then Outstanding.
SECTION 3.02. Mandatory Casualty Redemption. In the event that (i)
-----------------------------
an Event of Loss shall occur with respect to the Vessel, (ii) the Construction
Contract shall be terminated prior to delivery of the Vessel under circumstances
which would make the Owner Trust eligible for a refund under Section 6(f) of the
Construction Contract or (iii) the Vessel shall not have been delivered to the
Owner Trust by the Builder by the Final Delivery Date, then the Owner Trust
shall redeem, on the date on which Termination Value is paid pursuant to the
Charter (the date of any redemption under this Section 3.02 being herein called
a "Casualty Redemption Date"), the entire unpaid principal amount of the Secured
------------------------
Notes Outstanding on such Casualty Redemption Date at a redemption price equal
to 100% of the unpaid principal amount of the Secured Notes, together with any
accrued and unpaid interest thereon to such Casualty Redemption Date and without
the payment of any Make-Whole Amount or other premium.
SECTION 3.03. Mandatory Early Termination Redemption. (a) In the
--------------------------------------
event that (i) the Construction Contract shall be terminated prior to delivery
of the Vessel under circumstances which would not make the Owner Trust eligible
for a refund under Section 6(f) of the Construction Contract or (ii) the Head
Lease is terminated under circumstances where the (x) Charter is terminated or
(y) the Vessel is sold pursuant to the Head Lease and the purchaser of the
Vessel is not substituted as obligor of the Secured Notes issued thereunder
pursuant to Section 3.04, the Owner Trust shall redeem in whole on the date on
which Termination Value is paid pursuant to the Charter (the date of any
redemption under this Section 3.03(a) being herein called a "Special Termination
-------------------
Redemption Date") the entire unpaid principal amount of the Secured Notes
- ---------------
Outstanding on such Special Termination Redemption Date, at a redemption price
equal to 100% of the unpaid principal amount of the Secured Notes, together with
any accrued and unpaid interest thereon to such Special Termination Redemption
Date plus a premium equal to the Make-Whole Amount, if any.
(b) In the event that the Charter with respect to the Vessel is
terminated pursuant to Article 18 of the Charter, the Owner Trust shall redeem
in whole on the applicable Termination Date (the date if any redemption under
this Section 3.03(b) being herein called a "Termination Redemption Date") the
---------------------------
entire unpaid principal amount of the Secured Notes Outstanding on such
Termination Redemption Date, at a redemption price equal to 100% of such unpaid
principal amount of the Secured Notes, together with any accrued and unpaid
interest thereon to such Termination Redemption Date plus a premium equal to the
Make-Whole Amount, if any, and otherwise without premium.
SECTION 3.04. Assumption of Obligations of Owner Trust. (a) If, in
----------------------------------------
connection with a termination of the Head Lease, the Vessel is sold to another
owner trust (the "Substitute Obligor"), the Substitute Obligor may assume all of
------------------
the rights and obligations
<PAGE>
16
of the Owner Trust under this Indenture and the other Operative Documents to
which the Owner Trust is a party (the date of any such assumption being referred
to hereinafter as the "Substitution Date") and the Secured Notes shall not be
-----------------
redeemed pursuant to Section 3.02 if on or prior to the Substitution Date:
(i) the Indenture Trustee shall have received a certificate executed
by the Charterer, dated the Substitution Date, stating that the Charterer
has paid to the Owner Trust all amounts, if any, required to be paid to the
Owner Trust pursuant to the Trust Agreement and the other Operative
Documents in connection with such assumption and that the Substitute
Obligor has received title to the Vessel, and such substitute owner trust
shall provide to the Indenture Trustee an executed copy of the trust
agreement pursuant to which such substitute owner trust was organized;
(ii) each substitute owner trustee shall have delivered to the
Indenture Trustee the notice required to be delivered pursuant to Section
8.01, together with evidence satisfactory to the Indenture Trustee of such
substitute owner trustee's compliance with Section 10.1 of the Trust
Agreement;
(iii) the Substitute Obligor shall have executed and delivered to the
Indenture Trustee a supplement to this Indenture and the other Operative
Documents, substantially in the form of Exhibit C (the "Substitution Date
-----------------
Agreement"), duly executed by the Substitute Obligor, whereby such
---------
Substitute Obligor shall agree that it is purchasing the Vessel Interest
subject to the mortgage and security interest of this Indenture (or a
mortgage and security interest in the same or substantially identical
terms) on the Vessel Interest in favor of the Indenture Trustee and
assuming the obligations and liabilities of the Owner Trust under the
Indenture, the Secured Notes and each other Operative Document to which the
Owner Trust is a party, as provided in Section 2 of the form of
Substitution Date Agreement attached as Exhibit C;
(iv) the Indenture Trustee shall have received, on or prior to the
Substitution Date, evidence of all filings, recordings and other actions
referred to in the opinion of counsel referred to below;
(v) the Charterer shall have confirmed in writing to the Indenture
Trustee that the Charter remains in full force and effect and the Guarantor
shall have confirmed in writing to the Indenture Trustee that the Parent
Guaranty remains in full force and effect;
(vi) the Substitute Obligor shall have caused to be delivered to the
Indenture Trustee an opinion of counsel to the effect that such assumption
will not have an adverse United States income tax effect on the holders of
the Pass Through
<PAGE>
17
Certificates and such holders will be taxed under United States tax law in
the same manner as if such assumption had not occurred;
(vii) the Substitute Obligor shall have caused to be delivered to the
Indenture Trustee opinions of counsel as are customary for transactions of
this type, subject to usual or customary qualifications, exceptions and
assumptions, and shall include opinions, subject to such qualifications,
exceptions and assumptions, to the effect that, after giving effect to the
Substitution Date Agreement:
(A) on the Substitution Date, this Indenture, as supplemented by
the Substitution Date Agreement and the Secured Notes issued
thereunder constitute the legal, valid and binding obligations of the
Substitute Obligor, enforceable against such Substitute Obligor in
accordance with their terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and by
general principles of equity, and except as limited by applicable laws
which may affect the remedies provided for in this Indenture as so
supplemented, which laws, however, do not in the opinion of such
counsel make the remedies provided for in this Indenture inadequate
for the practical realization of the rights and benefits provided for
in this Indenture as so supplemented;
(B) on the Substitution Date, each of the Charter and Parent
Guarantee, constitutes the legal, valid and binding obligations of the
Charterer, the Substitute Obligor and the Guarantor, as the case may
be, enforceable in accordance with its terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general principles of equity; and
(C) the Lien of this Indenture, including the Ship Mortgage, on
the Vessel, has been accomplished and creates a security interest in
the Indenture Estate and all filings and recordings and other action
necessary or appropriate to perfect the interests of the Indenture
Trustee have been accomplished;
(ix) the Indenture Trustee shall have received Rating Agency
Confirmation with respect to such assumption; and
(x) after giving effect to the substitution no Indenture Event of
Default shall have occurred and be continuing
(b) Upon satisfaction of the conditions and the delivery of such
documents set forth in Section 3.04(a), the Indenture Trustee shall execute and
deliver the Substitution
<PAGE>
18
Date Agreement, and automatically and without the requirement of further action
by any Person, effective as of the Substitution Date, the Owner Trustees and the
Owner Trust shall be released from all of its obligations under this Indenture
in respect of the Secured Notes (other than any obligations or liabilities of
either Owner Trustee in its individual capacity incurred on or prior to the
Substitution Date or arising out of or based upon events occurring on or prior
to the Substitution Date, which obligations and liabilities shall remain the
sole responsibility of such Owner Trustee) and such Substitute Obligor and each
successor owner trustee shall immediately and without further act, be
substituted for and assume all of the respective obligations of the Owner Trust
and the Owner Trustees under this Indenture and the Secured Notes.
SECTION 3.05. Optional Redemption. The Owner Trust may at any time
-------------------
with the prior written consent of the Charterer redeem in whole all Outstanding
Secured Notes at a redemption price equal to 100% of the unpaid principal amount
of the Secured Notes to be redeemed pursuant to this Section 3.05, together with
any accrued and unpaid interest thereon to the date of redemption, plus a
premium equal to the Make-Whole Amount, if any, with respect to the Secured
Notes.
SECTION 3.06. Owner Trust's and Owner Participant's Option to Redeem
------------------------------------------------------
or Purchase Secured Notes. In the event that (a) at any time one or more
- -------------------------
Charter Events of Default shall have occurred and be continuing and such Charter
Event of Default shall have continued for a period of less than 270 days, during
which time the Secured Notes shall not have been accelerated pursuant to Section
5.04, or (b)(i) at any time one or more Charter Events of Default shall have
occurred and be continuing and such Charter Event of Default shall have
continued for a period of 270 days or more during which time the Secured Notes
shall not have been accelerated pursuant to Section 5.04, (ii) the Indenture
Trustee shall have given the Owner Trust or the Owner Participant notice of the
intent to accelerate the Secured Notes pursuant to Section 5.04, (iii) the
Secured Notes shall have been accelerated pursuant to Section 5.04, the Owner
Trust or the Owner Participant may, at its option, give at least 25 days' prior
irrevocable notice to the Indenture Trustee that it will redeem (or purchase in
lieu of redemption) all Secured Notes then Outstanding, which redemption or
purchase shall be at a redemption or purchase price equal to 100% of the unpaid
principal amount of such Secured Notes, together with any accrued and unpaid
interest thereon, plus in the case of any redemption or purchase pursuant to
clause (a) above, a premium equal to the Make-Whole Amount, if any, with respect
to such Secured Note, and on or prior to the Business Day preceding such
Redemption Date, the Owner Trust or the Owner Participant will deposit with the
Indenture Trustee an amount sufficient to redeem or purchase at the applicable
Redemption Price all Secured Notes then Outstanding (including, in the case of a
redemption or purchase pursuant to clause (a) above, a good faith estimate of
the premium computed as provided for herein) plus an amount equal to all other
sums then due and payable to each Loan Participant hereunder, and to pay the
Indenture Trustee all amounts then due it hereunder, which funds shall be held
by the Indenture Trustee as provided in Section 7.04.
<PAGE>
19
Upon the giving such notice and the receipt by the Indenture Trustee of such
deposit, the Indenture Trustee shall deem all instructions received from the
Owner Trustee or the Owner Participant as having been given by the Loan
Participants of 100% of the Outstanding principal amount of Secured Notes for
all purposes of this Indenture. If such notice is given, the Owner Trust
further agrees that it will deposit, or cause to be deposited with the Indenture
Trustee, on or prior to the Business Day preceding the applicable Redemption
Date, whether or not an Indenture Event of Default is then continuing, funds
sufficient, when added to the funds already held by the Indenture Trustee for
such purpose, to redeem or purchase at the applicable Redemption Price
(including the premium actually payable in respect thereof computed as provided
for herein), on such Redemption Date all Secured Notes then Outstanding to pay
all other sums then due and payable to each Loan Participant hereunder and to
pay the Indenture Trustee all amounts then due it hereunder. In the event the
Owner Trust shall have given any such notice to purchase or redeem, unless the
Owner Trustee shall have consented thereto, the Indenture Trustee shall not
during the period from such notice to the Redemption Date specified therein
institute any new remedy or proceeding in respect of any new remedy under this
Indenture, and the Indenture Trustee shall, to the extent the same may be
accomplished without prejudicing the rights of the Indenture Trustee hereunder,
take such actions and forbear from taking actions, in each case sufficient to
maintain the status quo with respect to any pending remedies or proceedings in
respect thereof being then pursued hereunder; provided, however, that in no
event shall the Indenture Trustee sell or assign any portion of the Indenture
Estate during the period from such notice to the Redemption Date specified
therein. In the event the Owner Trust shall have given any such notice to
purchase or redeem, and the Owner Trust has deposited with the Indenture Trustee
the amounts required to be deposited pursuant to this Section 3.06, then on the
Redemption Date, each Loan Participant will be deemed to sell, assign, transfer
and convey to the Owner Trust or its designee (without recourse or warranty of
any kind other than of title to the Secured Notes so conveyed) all of the right,
title and interest of such Loan Participant in and to the Secured Notes held by
such Loan Participant. On and after such Redemption Date, the Indenture Trustee
shall no longer treat the former Loan Participants as the "Loan Participants",
except for purposes of the Loan Participants' right to receive their respective
portions
of the amounts paid to the Indenture Trustee as aforesaid and all other amounts
due to such Loan Participants under the Operative Documents with respect to
acts, events, circumstances or conditions occurring or existing prior to such
Redemption Date, and on such date the Indenture Trustee shall register the
transfer of ownership of the Secured Notes into the name of the Owner Trust or
its designee. If the Owner Trust elects to purchase the Secured Notes under
this Section 3.06, nothing herein, including the use of the terms "Redemption
Date" and "Redemption Price", shall be deemed to result in a redemption of the
Secured Notes.
SECTION 3.07. Deposited Redemption Moneys. Moneys held by the
---------------------------
Indenture Trustee for redemption of any Secured Note issued hereunder as
provided in this Article III shall be held by the Indenture Trustee as a
separate fund in trust for the account of
<PAGE>
20
the respective Holders of the Secured Notes to be redeemed, shall be invested in
accordance with the provisions of Section 7.04 and shall be delivered to them
respectively in accordance with Section 2.03 on the Redemption Date. Any
amounts so held by the Indenture Trustee shall be deemed paid for purposes of
Section 2.09, and promptly after payment of all amounts of principal of, Make-
Whole Amount, if any, and interest on, and all other amounts due and payable
under any such Secured Notes, the Holders thereof shall deliver such Secured
Notes to the Indenture Trustee for cancellation.
SECTION 3.08. Acquisition of Secured Notes. The Owner Trust
----------------------------
covenants that it will not, directly or indirectly, acquire or make any offer to
acquire any Secured Note except pursuant to the provisions of this Indenture.
SECTION 3.09. Condition to Redemption and Refunding. It shall be a
-------------------------------------
condition to any redemption of Secured Notes effected under this Article III
that all amounts of principal of, Make-Whole Amount, if any, and interest on,
and all other amounts then due and payable under the Secured Notes which are to
be the subject of such redemption as well as all other amounts due and payable
to the Holders of such Secured Notes as are to be the subject of such redemption
shall upon completion of such redemption have been paid as specified therein or
herein.
SECTION 3.10. Notice of Certain Redemptions. In connection with a
-----------------------------
redemption of any of the Secured Notes pursuant to Section 3.02, Section 3.03 or
Section 3.05, the Owner Trust shall give irrevocable notice of such redemption
at least 25 days and not more than 60 days prior to the Redemption Date to each
Loan Participant of such Secured Notes to be redeemed, at such Loan
Participant's address appearing in the Note Register; provided, however, that if
such notice of redemption shall be given in connection with the early
termination of the Charter and the proposed sale of the Vessel pursuant to
Article 18 of the Charter, and if the Owner Trust does not sell the Vessel on or
prior to the Redemption Date, then such notice of redemption may be revoked by
the Owner Trust.
Any such notice of redemption shall state:
(i) the Redemption Date;
(ii) the applicable basis for determining the redemption price
pursuant to Section 3.02, 3.03 or Section 3.05 (the "Redemption Price");
----------------
(iii) that on the Redemption Date, the Redemption Price will become
due and payable upon each such Secured Note, and that, if any such Secured
Notes are then Outstanding, interest on such Secured Notes shall cease to
accrue on and after such Redemption Date;
<PAGE>
21
(iv) whether the notice of redemption may be revoked and under what
circumstances; and
(v) the place or places where such Secured Notes are to be surrendered
for payment of the Redemption Price.
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE INDENTURE ESTATE;
ACTIONS UPON VESSEL DELIVERY
SECTION 4.01. Distribution of Hire. (a) Generally. Pursuant to
-------------------- ---------
Article 3(c) of the Charter and subject to Section 5.01(g), prior to an
Indenture Event of Default the Charterer shall pay directly to the Indenture
Trustee and, upon receipt of such amount, the Owner Trust shall pay over to the
Indenture Trustee, that portion of Hire constituting Base Hire, Termination
Value, if any, amounts measured by Termination Value and that portion of
Supplemental Hire payable in respect of premium, if any, and interest on overdue
payments due to the Indenture Trustee or any amounts payable to the Indenture
Trustee pursuant to Section 5.03 (collectively, "Assigned Hire"). Except as
-------------
otherwise provided in Sections 4.01(c) and 4.03, each installment of Assigned
Hire shall be promptly distributed by the Indenture Trustee in accordance with
Section 4.04 on the date such payment is due from the Charterer (or as soon
thereafter as such payment shall be received by the Indenture Trustee) to pay in
full the aggregate amount of the payment or repayment of principal, interest and
other amounts then due under all Secured Notes and such amounts shall be
distributed to the Holders of such Secured Notes ratably, without priority of
one Holder over any other Holder, in the proportion that the amount of such
payment or payments then due under each such Secured Note bears to the aggregate
amount of the payments then due under all such Secured Notes.
(b) Application of Certain Amounts Held by the Indenture Trustee upon
-----------------------------------------------------------------
Certain Defaults. If as a result of any default by the Charterer or the Owner
- ----------------
Participant in the performance of its obligations under any Operative Document,
the Indenture Trustee shall not have received for distribution on any Base Hire
Payment Date (or the Indenture Trustee shall be prevented from distributing on
such date) the full amount then distributable pursuant to Section 4.01(a), the
Indenture Trustee shall, if Section 4.03 is not applicable but subject in any
case to any restrictions contained in Section 4.05, distribute other amounts of
the character referred to in Section 4.05 then held by it or thereafter received
by it to the Holders to the extent necessary to make all distributions then due
pursuant to Section 4.01(a).
<PAGE>
22
(c) Retention of Amounts by the Indenture Trustee. If an Indenture
---------------------------------------------
Event of Default shall have occurred and be continuing, all payments under the
Charter (other than Excepted Payments) or any other Operative Documents will
upon notice to the Charterer become immediately payable by the Charterer to the
Indenture Trustee, and the Indenture Trustee shall withhold any amounts that
would have been otherwise payable directly to the Owner Trust until the earlier
to occur of (i) the first Business Day following the date that is 180 days after
the Indenture Trustee received such amount and (ii) the date that such Indenture
Event of Default is no longer continuing, in which cases described in clauses
(i) and (ii) such amounts shall be distributed to the Owner Trust, unless, prior
thereto, the Secured Notes shall have been declared or otherwise shall have
become immediately due and payable pursuant to Section 5.04 or the Indenture
Trustee shall have given notice to the Owner Trust of its intention to
accelerate the Secured Notes pursuant to the first proviso of Section 5.04 or
the Indenture Trustee (as assignee of the Owner Trust) shall have given notice
of its intent to declare the Charter to be in default in accordance with Article
22 thereof, in which case such amounts shall be distributed by the Indenture
Trustee forthwith in accordance with the terms of Section 4.03.
SECTION 4.02. Certain Distributions. (a) Any payment received by
---------------------
the Indenture Trustee (i) pursuant to Article 14 of the Charter as a result of
the occurrence of an Event of Loss with respect to the Vessel, (ii) upon the
termination or special termination of the Charter with respect to the Vessel
pursuant to Article 18 or 23 of the Charter or (iii) pursuant to Section 3.05,
shall be distributed forthwith in the following order of priority:
first, in the manner provided in clause "first" of Section 4.03;
second, in the manner provided in clause "third" of Section 4.03;
third, in the manner provided in clause "second" of Section 4.03;
fourth, in the manner provided in clause "fourth" of Section 4.03; and
fifth, in the manner provided in clause "fifth" of Section 4.03.
(b) The portion of each payment referred to in this Section 4.02
distributed to a Holder on account of principal or interest on any Secured Note
held by such Holder shall be applied by such Holder in payment of such Secured
Note in accordance with the terms of Section 4.04.
SECTION 4.03. Distribution After Indenture Event of Default. If (a)
---------------------------------------------
an Indenture Event of Default shall have occurred and be continuing, and (b) the
Indenture Trustee (as assignee of the Owner Trust) shall have given notice to
declare the Charter to be in default pursuant to Article 22 thereof, the
Indenture Trustee shall have given notice to the
<PAGE>
23
Owner Trust pursuant to the first proviso of Section 5.04 of its intent to
declare the Secured Notes due and payable or any of the Secured Notes shall have
been declared or otherwise shall have become immediately due and payable
pursuant to Section 5.04, then, to the extent that each such notice or
declaration shall not have been rescinded or the Secured Notes shall remain
immediately due and payable, (i) all amounts then held by the Indenture Trustee
pursuant to Section 4.05 or 4.06 (and not excluded from the operation of this
Section 4.03) or then otherwise held by the Indenture Trustee hereunder or under
any Operative Document (other than amounts held for its own account), and (ii)
all payments and amounts thereafter realized by the Indenture Trustee through
the exercise of remedies hereunder or under any of the agreements assigned or
pledged to the Indenture Trustee under this Indenture or otherwise as trustee
under this Indenture (for purposes of this Section 4.03, all such amounts and
payments held or realized being herein called "proceeds"), other than amounts
--------
expressly paid to it for its own account and other than Excepted Payments, shall
be distributed forthwith by the Indenture Trustee in the following order of
priority:
first, so much of such proceeds as shall be required to reimburse the
Indenture Trustee for any unpaid fees for its services under this Indenture
and any unreimbursed tax, expense (including reasonable legal fees) or
other loss incurred by it (in each case to the extent reimbursable under
the Operative Documents) shall be distributed to the Indenture Trustee for
application to itself;
second, so much of the remaining proceeds as shall be required to
reimburse the then existing or prior Holders for amounts paid or advanced
by the Holders pursuant to Section 6.04 (to the extent not previously
reimbursed), shall be distributed to the then existing and prior Holders as
their respective interests may appear, and if the proceeds remaining are
insufficient to pay all such amounts in full, they shall be distributed
ratably, without priority of any recipient over any other recipient (except
as otherwise expressly provided herein), in the proportion the aggregate
amount due each such Person under this clause "second" bears to the
aggregate amount and interest due all such Persons under this clause
"second";
third, so much of the proceeds remaining as shall be required to pay
in full the aggregate unpaid principal amount of each Secured Note then
Outstanding and Make-Whole Amount, if any, and all accrued but unpaid
interest thereon to the date of distribution, shall be distributed to the
Holder of such Secured Note, and if the proceeds remaining are insufficient
to pay all such amounts in full, they shall be distributed to all Holders
ratably, without priority of any Holder over any other Holder (except as
otherwise expressly provided herein), in the proportion that the aggregate
amount due each such Holder under this clause "third" bears to the
aggregate amount due all such Holders under this clause "third";
<PAGE>
24
fourth, so much of the proceeds remaining as shall be required to pay
to each Holder all other amounts payable pursuant to the indemnification
provisions of Section 13 of the Participation Agreement or pursuant to any
other provision of any Operative Document and secured hereunder to such
Holder or to its predecessors and remaining unpaid shall be distributed to
such Holder for distribution to itself and such predecessors, as their
respective interests may appear, and if the proceeds remaining are
insufficient to pay all such amounts in full, they shall be distributed
ratably, without priority of any Holder over any other Holder (except as
otherwise expressly provided herein), in the proportion that the aggregate
amount due each such Holder under this clause "fourth" bears to the
aggregate amount due all such Holders under this clause "fourth"; and
fifth, the balance, if any, of the proceeds remaining shall be
distributed to the Owner Trust for distribution pursuant to the Trust
Agreement.
All amounts distributed to any Holder pursuant to clause "third" of
this Section 4.03 shall be applied by such Holder in payment of the Secured
Notes held by it in accordance with the terms of Section 4.04.
SECTION 4.04. Application of Payments on Secured Notes. Each payment
----------------------------------------
on a Secured Note shall be applied, first, to the payment of accrued interest on
such Secured Note to the date of such payment, second, to the payment of any
principal on such Secured Note then due thereunder, and third, to the payment of
the installments of principal remaining unpaid on such Secured Note in the
inverse order of the installment due date thereof.
SECTION 4.05. Applications of Payments According to Applicable
------------------------------------------------
Operative Document Provisions. (a) Any payments or amounts (other than
- -----------------------------
Excepted Payments) received by the Indenture Trustee, provision for the
application of which is made in any Operative Document, shall be applied
promptly as provided in such Operative Document, unless (i) in the case of
payments or amounts that would be payable to the Charterer upon satisfaction of
any applicable conditions, a Charter Event of Default shall have occurred and be
continuing at the time the Indenture Trustee receives such payment and the
Indenture Trustee has Actual Knowledge of such Charter Event of Default, in
which case the Indenture Trustee shall hold such payments and amounts as cash
collateral security for the obligations of the Charterer under the Operative
Documents and shall invest such payments and amounts in accordance with the
terms of Section 7.04, and, subject to earlier distribution thereof by the
Indenture Trustee under Section 4.03 if the Charter shall have been declared in
default in accordance with Article 22 thereof, or under Section 4.01(b) (subject
to Section 4.05(b)), such payments and amounts, and the proceeds of any
investment thereof, shall be paid by the Indenture Trustee to the Charterer at
such time as any applicable conditions shall have been satisfied and no Charter
Event of Default shall be continuing, and (ii) in the case of any
<PAGE>
25
other such payments and amounts, an Indenture Event of Default shall have
occurred and be continuing at the time the Indenture Trustee receives such
payment and the Indenture Trustee has Actual Knowledge of such Indenture Event
of Default, in which case the Indenture Trustee shall hold such payment as part
of the Indenture Estate, as cash collateral security hereunder for the
performance of the Indenture Indebtedness and on the earlier of the next
Business Day on which no Indenture Event of Default shall have occurred and be
continuing or the first Business Day occurring more than 180 days after the
receipt of such payment, and, subject to any prior application of such payment
pursuant to Section 4.01(b) or 4.03, the Indenture Trustee shall apply such
payment, and the proceeds of any investment thereof, to the purpose for which it
was made.
(b) Notwithstanding any other provision of this Indenture to the
contrary, and whether or not any such provision refers to this Section 4.05, any
Excepted Payment or other amount expressly provided by the terms of this
Indenture to be paid directly to the Owner Trust or to the Owner Participant
received by the Indenture Trustee shall be paid or distributed immediately by
the Indenture Trustee to the Owner Trust or the Owner Participant, as the case
may be.
SECTION 4.06. Amounts Received for Which No Provision Is Made. (a)
-----------------------------------------------
Any payment received or amounts realized by the Indenture Trustee for which no
provision as to the application thereof is made elsewhere in this Indenture or
any other Operative Document shall be held by the Indenture Trustee as part of
the Indenture Estate in a cash collateral account maintained under Section 7.04,
and (b) all payments received and amounts realized by the Indenture Trustee
under the Charter, including without limitation, Article 14(b) of the Charter,
or otherwise with respect to the Vessel, to the extent received or realized at
any time after payment in full of the principal of and interest on all Secured
Notes issued hereunder, as well as any other amounts remaining as part of or as
proceeds of the Indenture Estate after payment in full of the principal of,
Make-Whole Amount, if any, and interest on all such Secured Notes, shall be
distributed forthwith by the Indenture Trustee in the order of priority set
forth in Section 4.03, omitting clause "third" thereof. The Indenture Trustee
shall give prompt notice to the Owner Trust and each Holder of the receipt of
any moneys by the Indenture Trustee subject to the provisions of this Section
4.06.
SECTION 4.07. Payment Procedures. All amounts which are
------------------
distributable from time to time by the Indenture Trustee to the Owner Trust, the
Owner Participant or any Holder shall be paid by the Indenture Trustee in
immediately available funds promptly after such amounts become immediately
available to it, and the Indenture Trustee shall not be obligated to see to the
application of any such payment made by it. All payments made by the Indenture
Trustee to the Owner Trust or to the Owner Participant shall be made in the
manner and to the address set forth in Schedule 1 to the Participation Agreement
or to such other address as may be specified from time to time by notice to the
Indenture Trustee from the Owner Trust or the Owner Participant.
<PAGE>
26
SECTION 4.08. Application of Payments Under Parent Guaranty. All
---------------------------------------------
payments received by the Indenture Trustee pursuant to the Parent Guaranty shall
be distributed forthwith by the Indenture Trustee in the same order of priority,
and in the same manner, as it would have distributed the payment in respect of
which such payment under the Parent Guaranty was received.
SECTION 4.09 Actions upon Vessel Delivery. On the actual Delivery
----------------------------
Date, the Indenture Trustee shall execute a Supplemental Indenture in the form
of Exhibit D to this Indenture, and otherwise comply with its obligations under
Article 6 of the Charter.
ARTICLE V
COVENANTS OF OWNER TRUST AND THE OWNER TRUSTEES;
CERTAIN AGREEMENTS; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
SECTION 5.01. Covenants of Owner Trust and the Managing Trustee;
--------------------------------------------------
Certain Agreements. (a) Subject to Section 2.02, the Owner Trust will duly and
- ------------------
punctually perform and observe all covenants and conditions to be performed and
observed by it pursuant to the terms of any Operative Document. Except as
permitted by this Indenture or the terms of any Operative Document, the Owner
Trust will take no action and will cooperate with the Indenture Trustee so as to
permit no action to be taken by others which will release, or which may be
construed as releasing, the Owner Trust or the Charterer from any of its or the
Charterer's, as the case may be, obligations or liabilities under any Operative
Document, or which may result in the termination, amendment or modification, or
impair the validity, of any such Operative Document.
(b) If the Owner Trust has Actual Knowledge of any Indenture Event of
Default, Indenture Default, any failure on the part of the Charterer to make any
payment of Assigned Hire when due or Event of Loss, the Owner Trust will give
prompt written notice thereof to the Indenture Trustee, the Charterer and the
Owner Participant if such notice shall not already have been given to such
party. The notice shall set forth in reasonable detail the circumstances of
such default or loss known to the Owner Trust.
(c) At any time and from time to time, upon the reasonable request of
the Indenture Trustee, the Owner Trust shall promptly and duly execute and
deliver any and all such further instruments and documents as the Indenture
Trustee may deem necessary or desirable (and as shall be consistent with the
intent, purposes and provisions hereof) to perfect the Lien of this Indenture,
the Ship Mortgage and the U.K. Security Assignment upon delivery of the Vessel,
to perfect or maintain the Lien of this Indenture, to perfect a first priority
ship mortgage in the Vessel in favor of the Indenture Trustee upon the
termination of
<PAGE>
27
the Head Lease or to obtain for the Indenture Trustee the full benefit of the
specific rights and powers herein granted, conveyed or assigned, or which the
Owner Trust may be or may hereafter be bound to convey or assign to the
Indenture Trustee or to facilitate the performance of the terms of this
Indenture, or the filing, registering or recording of this Indenture, including,
without limitation, the execution and delivery of any financing statement (and
any continuation statement with respect to any such financing statement) or any
other similar document specified in such instructions as may be necessary or
desirable to perfect or maintain the Lien of this Indenture.
(d) The Owner Trust does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants that, except as provided in or
permitted by the other Operative Documents, it will not assign or pledge, so
long as this Indenture shall remain in effect and the Lien of this Indenture
shall not have been released pursuant to Section 6.03 hereof, any of the Owner
Trust's right, title or interest hereby assigned to anyone other than the
Indenture Trustee, and that the Owner Trust will not (other than in respect of
Excepted Payments), except as provided in or permitted by this Indenture or any
other Operative Document, (i) accept any payment from the Charterer, (ii)
terminate or consent to the cancellation or surrender of the Charter or accept
any prepayment of Assigned Hire, or any portion thereof, under the Charter,
(iii) enter into any agreement amending or supplementing any Operative Document,
(iv) execute or grant any waiver or modification of, or consent under, the terms
of any Operative Document, (v) settle or compromise any claim arising under any
Operative Document, or (vi) submit or consent to the submission of any dispute,
difference or other matter arising under or in respect of any Operative Document
to arbitration thereunder.
(e) The Owner Trust does hereby ratify and confirm the Charter, and
does hereby agree the Owner Trust will not, except as provided in or permitted
by this Indenture or the terms of any other Operative Document, take or omit to
take any action, the taking or omission of which might result in an alteration
or impairment of the Charter or any other Operative Document, or of any of the
rights created by the Charter or any Operative Document, or the assignment
hereunder or thereunder, as the case may be.
(f) The Managing Trustee, in its individual capacity and at its own
cost and expense, will promptly take such action as may be necessary to
discharge any Owner Trustee's Lien attributable to it on any of its estate,
right, title or interest in the Trust Estate so pledged or assigned or intended
to be conveyed, pledged or assigned under this Indenture.
(g) Until the release of the security interest in the Indenture Estate
pursuant to Section 6.03, all payments of Assigned Hire shall be made directly
to the Indenture Trustee or in accordance with the Indenture Trustee's
instructions, and the Owner Trust shall give all notices as shall be required to
be given under each Operative Document to direct that such payments be made to
the Indenture Trustee and promptly upon receipt of any such
<PAGE>
28
amount, transfer such amount to the Indenture Trustee for distribution pursuant
to this Indenture; provided, however, that, if an Indenture Event of Default
shall have occurred and is continuing, upon written notice from the Indenture
Trustee to the Charterer, all payments due or to become due under the Charter
and the other Operative Documents to the Owner Trust (other than Excepted
Payments) shall be made directly to the Indenture Trustee or in accordance with
the Indenture Trustee's instructions, and the Owner Trust shall (i) give all
notices as shall be required to be given under each Operative Document to direct
that such payments be made to the Indenture Trustee and (ii) promptly upon
receipt of any and all moneys from time to time received by it constituting part
of the Indenture Estate, transfer such amount to the Indenture Trustee for
distribution pursuant to this Indenture.
(h) An executed counterpart of each amendment or supplement to the
Trust Agreement shall be delivered within 20 Business Days after the execution
thereof to the Indenture Trustee; provided that any amendment or supplement
under which a successor trustee is appointed shall be mailed to the Indenture
Trustee within 10 days after the execution thereof. The Lien of this Indenture
shall not be affected by any amendment or supplement to the Trust Agreement or
by any other action taken under or in respect of the Trust Agreement. Without
the prior written consent of the Indenture Trustee, the Trust Agreement may not
in any event be terminated or revoked by the Owner Participant prior to the
termination of this Indenture. In the case of any appointment of a successor to
any Owner Trustee pursuant to the Trust Agreement or any merger, conversion,
consolidation or transfer of all or substantially all of the corporate trust
business of either Owner Trustee pursuant to the Trust Agreement, the applicable
successor Owner Trustee shall give prompt notice thereof to the Indenture
Trustee.
SECTION 5.02. Indenture Events of Default. An "Indenture Event of
--------------------------- ------------------
Default" means any of the following events (whatever the reason for such
- -------
Indenture Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any
Governmental Rule):
(a) any Charter Event of Default (other than a Charter Event of
Default arising from the failure of the Charterer to make any payment of
Excess Hire or Additional Excess Hire or to make an Excepted Payment unless
the Owner Trust shall elect to make such failure a Charter Event of
Default) shall have occurred and be continuing; or
(b) any payment of principal of, Make-Whole Amount, if any, or
interest on any Secured Note shall not have been made when due and such
default shall continue unremedied for ten Business Days after the same
shall have become due and payable; or
<PAGE>
29
(c) any failure by any of the Owner Trust, the Owner Participant or
the Managing Trustee, in their individual or trust capacities, as the case
may be, to perform or observe in any material respect any covenant or
agreement to be performed or observed by it under this Indenture or any
other Operative Document, (i) which failure shall continue for a period of
30 days after receipt by the Owner Trust, the Owner Participant or the
Managing Trustee of a notice from the Indenture Trustee or the Pass Through
Trustee specifying such failure and requiring it be remedied or (ii) which
failure, if such failure is remediable and the Owner Trust, the Owner
Participant or the Managing Trustee is diligently attempting to remedy such
failure, shall continue for a period of 180 days after such receipt of
written notice thereof; or
(d) any representation or warranty made by the Owner Trust, the Owner
Participant or the Managing Trustee pursuant to Sections 7 or 9, as the
case may be, of the Participation Agreement shall prove to have been
inaccurate in any material respect when made, unless such inaccurate
representation or warranty shall not be material to the recipient at the
time when the notice referred to below shall have been received by the
Owner Trust, the Owner Participant or the Managing Trustee, as the case may
be, or any material adverse impact thereof shall have been cured within 30
days after receipt by the Owner Trust, the Owner Participant or the
Managing Trustee, as the case may be, of a written notice thereof from the
Indenture Trustee; provided that if such material adverse impact is
remediable and the Owner Participant, Owner Trust or the Managing Trustee,
as the case may be, is diligently attempting to remedy such impact, the
Owner Participant, Owner Trust or Managing Trustee shall have 90 days after
such receipt of written notice thereof to remedy such material adverse
impact; or
(e) either of the Owner Trust or the Owner Participant shall commence
a voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to itself or its debts under any bankruptcy,
insolvency, or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of its or any substantial part of its property, or shall consent
to any such relief or to the appointment or taking possession by any such
official or agency in an involuntary case or other proceeding commenced
against it, or shall make a general assignment for the benefit of
creditors, or shall take any corporate action to authorize any of the
foregoing, or an involuntary case or other proceeding shall be commenced
against either of the Owner Trust or the Owner Participant seeking
liquidation, reorganization or other relief with respect to it or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official or agency of its or any substantial
part of its part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for
<PAGE>
30
a period of 90 days, or if, under the provisions of any law providing for
reorganization or winding-up of corporations which may apply to the Owner
Trust or the Owner Participant, any court of competent jurisdiction shall
assume jurisdiction, custody or control of the Indenture Estate, the Owner
Trust or the Owner Participant or of any substantial part of its property
and such jurisdiction, custody or control shall remain in force
unrelinquished, unstayed or unterminated for a period of 90 days.
SECTION 5.03. Certain Rights. (a) If the Charterer shall fail to
--------------
make any payment of Base Hire under the Charter when the same shall become due,
and if such failure of the Charterer to make such payment of Base Hire shall not
constitute the fourth consecutive such failure or the seventh or subsequent
cumulative such failure, then as long as no Indenture Event of Default (other
than arising from a Charter Event of Default not involving any failure to make
any payments to which the Indenture Trustee or any Loan Participant is entitled
hereunder when due) shall have occurred and be continuing, the Owner Trust or
the Owner Participant may (but need not), without consent or concurrence of the
Indenture Trustee or any Holder, pay, in the manner provided in Section 2.03 for
application in accordance with Section 4.01, to the Indenture Trustee, at any
time prior to the day which is the eleventh day subsequent to the expiration of
the grace period provided for in Article 21(1) of the Charter with respect to
the payment of Base Hire (and the Indenture Trustee and the Holders of the
Secured Notes shall not (without the prior written consent of the Owner Trust)
declare the Charter in default pursuant to Article 22 thereof or exercise any of
the rights, powers or remedies pursuant to Article 22 of the Charter or Section
5.04 hereof prior to the occurrence of such later date), an amount equal to the
full amount of such payment of Base Hire, together with any interest due thereon
on account of the delayed payment thereof to the date of such payment in
accordance with Section 2.03(c) hereof, and such payment by the Owner Trust or
the Owner Participant shall be deemed to cure, as of the date of such payment,
any Indenture Event of Default which arose from such failure of the Charterer
(including any Charter Event of Default arising from the Charterer's failure to
pay interest in respect of such overdue Base Hire for the period commencing on
the date of such payment), but such cure shall not relieve the Charterer of any
of its obligations. If the Charterer shall fail to perform or observe any
covenant, condition or agreement to be performed or observed by it under the
Charter or any other Charter Event of Default shall exist (other than the
failure to pay Base Hire), and if (but only if) the performance or observance of
such covenant, condition or agreement or the cure of such Charter Event of
Default can be effected by the payment of money alone (it being understood that
actions such as the obtaining of insurance can be so effected), then as long as
no other Indenture Event of Default (other than those arising from a Charter
Event of Default) shall have occurred and be continuing, the Owner Trust or the
Owner Participant may (but need not), without consent or concurrence of the
Indenture Trustee or any Holder, pay to the Indenture Trustee (or to such other
person as may be entitled to receive the same), at any time prior to the day
which is the later of (x) the eleventh day subsequent to notice of such failure
or such Charter Event of Default by the Indenture Trustee to the Owner Trust or
the Owner Participant and (y) the
<PAGE>
31
eleventh day subsequent to the expiration of the grace period, if any, provided
with respect to such failure or such Charter Event of Default on the part of the
Charterer in Article 21 of the Charter (and the Indenture Trustee shall not
(without the prior written consent of the Owner Trust) declare the Charter in
default pursuant to Article 22 thereof or exercise any of the rights, powers or
remedies pursuant to such Article 22 or Section 5.04 hereof prior to the
occurrence of such later date), all sums necessary to effect the performance or
observance of such covenant or agreement of the Charterer or to cure such
Charter Event of Default, together with any interest due thereon on account of
the delayed payment thereof to the date of such payment, and such payment by the
Owner Trust or the Owner Participant shall be deemed to cure as of the date of
such payment any Indenture Event of Default which arose from such failure of the
Charterer or such Charter Event of Default (including any Charter Event of
Default arising from the Charterer's failure to pay interest in respect of such
overdue payment for the period commencing on the date of such payment), but such
cure shall not relieve the Charterer of any of its obligations.
(b) To the extent of any payment made by the Owner Participant or the
Owner Trust pursuant to Section 5.03(a), the Owner Participant or the Owner
Trust, as the case may be, shall be subrogated to the rights of the Holders
hereunder to receive from the Indenture Trustee the payment of Assigned Hire or
other amount for which such payment was made by the Owner Participant or the
Owner Trust, as the case may be, and the Owner Participant or the Owner Trust,
as the case may be, shall be entitled to receive such payment from the Indenture
Trustee upon receipt thereof by the Indenture Trustee; provided, however, that
no such amount shall be paid to the Owner Participant or the Owner Trust, as the
case may be, unless all principal of and interest on the Secured Notes then due
and payable and any other amounts then due and payable under the Secured Notes
and this Indenture shall have been paid in full and no Indenture Default shall
have occurred and be continuing.
(c) Neither the Owner Trust nor the Owner Participant, upon exercising
cure rights under Section 5.03(a) or rights under Section 6.08(a)(iii) or under
Article 22(a) of the Charter, shall obtain any Lien on any part of the Indenture
Estate or Trust Estate on account of such payment for the costs and expenses
incurred in connection therewith, nor shall any claims of the Owner Trust or the
Owner Participant against the Charterer for the repayment thereof impair the
prior right and security interest of the Indenture Trustee in and to the
Indenture Estate or otherwise related to the Indenture Estate.
(d) If there shall occur an Indenture Event of Default pursuant to
Section 5.02(a) arising as a result of a failure by the Charterer to make any
payment of Assigned Hire when due, the Indenture Trustee shall so notify the
Owner Trust in writing promptly upon such occurrence.
SECTION 5.04. Remedies. (a) If an Indenture Event of Default shall
--------
have occurred and be continuing and so long as the same shall be unremedied,
then and in every
<PAGE>
32
such case the Indenture Trustee, subject to Sections 5.03, 5.04(d), 5.05, 5.09
and 6.08, may exercise any or all of the rights and powers and pursue any and
all of the remedies herein provided or available under applicable law; provided,
however, the Indenture Trustee must give the Owner Trust at least ten Business
Days' (or five Business Days in the case of acceleration of the Secured Notes
other than an automatic acceleration of the Secured Notes as provided in Section
5.04(c)) prior written notice of its intention to exercise remedies pursuant to
this Section 5.04 (it being understood that such notice may be given
concurrently with any notice of default given hereunder or under the Charter and
prior to the expiration of any applicable grace periods). Subject to the
provisions in this Indenture, upon the occurrence and during the continuance of
an Indenture Event of Default, the Indenture Trustee may exercise, subject to
Sections 5.03(a), 5.05, 5.09 and 6.08, all rights and remedies of the Owner
Trust to the exclusion of the Owner Trust under the Charter (other than those
rights and remedies to the extent relating to Excepted Payments), including,
without limitation, the right to take possession of all or any part of the
Indenture Estate and exclude the Owner Trust and all Persons (including the
Charterer, but excluding the U.K. Lessor to the extent of the U.K. Lessor's
rights under the Conditional Sale Agreement) claiming under the Owner Trust
wholly or partly therefrom. In addition to and without limiting the foregoing,
the Indenture Trustee, upon at least 25 days' prior written notice to the Owner
Participant and the Owner Trust, may invoke and exercise the power of sale and
sell any or all of the Indenture Estate in the manner required by law at public
auction, or in any other manner which shall be in accordance with applicable
law, or, in lieu of sale pursuant to the power of sale, the Indenture Estate may
be foreclosed, and the Indenture Trustee has and may exercise all rights and
remedies of a secured party under the Uniform Commercial Code as in effect in
any applicable jurisdiction; provided that (i) notwithstanding any provision
herein to the contrary, the Indenture Trustee shall not sell, assign, transfer
or deliver any of the Indenture Estate or take possession of the Indenture
Estate unless the Secured Notes shall have been accelerated pursuant to Section
5.04(b) or 5.04(c) and (ii) if an Indenture Event of Default has occurred and is
continuing solely by virtue of one or more Charter Events of Default (at a time
when no other Indenture Events of Default shall have occurred and be
continuing), the Indenture Trustee shall not exercise foreclosure remedies under
this Indenture without declaring the Charter to be in default and exercising one
or more material remedies seeking to terminate the Charter, unless exercising
such remedies under the Charter shall be prohibited by law, governmental
authority or court order, in which case the Indenture Trustee shall not exercise
foreclosure remedies under the Indenture until the later of (i) the expiration
of a period of sixty (60) days from the commencement of such prohibition and
(ii) the expiration of an additional period commencing on the day immediately
following the expiration of such 60-day period and ending on the earlier of (x)
the 180th day after the relevant stay or prohibition is imposed, (y) the
occurrence of any additional Indenture Event of Default during such additional
period and (z) rejection of the Charter; provided that such extended period will
not apply unless, on the 60th day following the date upon which such stay or
prohibition becomes effective, all Indenture Events of Default theretofore
existing have been cured (except to the extent arising from the bankruptcy
<PAGE>
33
or similar proceeding giving rise to the applicable stay or similar prohibition)
and to the extent the Owner Trust, as Owner under the Charter, exercises its
right to cure any Charter defaults or Charter Events of Default during such 180-
day period, the exercise of such rights will not limit the cure rights otherwise
available to the Owner under Section 5.03(a). The Indenture Trustee shall
notify the Owner Trust, the Owner Participant and the Charterer as soon as is
reasonably practicable after its commencement of the exercise of any remedy
pursuant to this Section 5.04.
(b) If an Indenture Event of Default (other than an Indenture Event of
Default specified in Section 5.02(e) or an Indenture Event of Default of the
type specified in Section 5.02(a) which arises as a result of any Charter Event
of Default as is specified in Article 21(7) of the Charter) shall have occurred
and be continuing, then, subject to Sections 5.03, 6.02 and 6.08, the Indenture
Trustee may at any time, by five days' written notice to the Owner Trust,
declare all (but not less than all) of the Secured Notes Outstanding to be due
and payable. Upon such declaration, the unpaid principal of all Secured Notes
then Outstanding, together with accrued but unpaid interest thereon, and any
other amounts due thereunder, shall immediately become due and payable without
presentment, demand, protest or notice, all of which are hereby waived.
(c) If an Indenture Event of Default of the type specified in Section
5.02(e), or an Indenture Event of Default of the type specified in Section
5.02(a) which arises as a result of any Charter Event of Default specified in
Article 21(7) of the Charter shall have occurred and be continuing, the
principal of all Secured Notes then Outstanding, together with accrued but
unpaid interest thereon and any other amounts due thereunder, shall become and
be due and payable automatically, without declaration, notice, demand, or any
other action on the part of the Indenture Trustee or any Holder, all of which
are hereby waived. Each of Section 5.04(b) and this Section 5.04(c), however,
is subject to the condition that, if at any time after the principal of the
Secured Notes shall have become due and payable upon a declared or automatic
acceleration thereof as provided herein, and before any judgment or decree for
the payment of the money so due, or any portion thereof, shall be entered, all
overdue payments of interest upon the Secured Notes, the Make-Whole Amount, if
any, and all other amounts payable under the Secured Notes (except the principal
of the Secured Notes which by such acceleration shall have become payable) shall
have been duly paid, and every other Indenture Event of Default with respect to
any covenant or provision of this Indenture shall have been cured, then in every
such case a Majority in Interest of Holders of Notes, by written instrument
filed with the Indenture Trustee, may (but shall not be obligated to) rescind
and annul such declared or automatic acceleration and its consequences; but no
such rescission or annulment shall extend to or affect any subsequent Event of
Default or impair any right consequent thereon.
(d) Notwithstanding any provision in any document or instruction that
purports to require the Indenture Trustee to acquire title to any or all of the
Indenture Estate
<PAGE>
34
upon foreclosure, or pursuant to instructions, the Indenture Trustee shall not
be obligated to acquire any such title unless: (i) the Indenture Trustee is
provided with such security or indemnity as it shall deem satisfactory to it,
(ii) such acquisition of title complies with all applicable Operative Documents,
laws, rules and regulations, which shall be evidenced by an opinion of counsel
to such effect in form and substance satisfactory to the Indenture Trustee and
(iii) the Indenture Trustee shall have obtained such executed certificates,
instruments or other documents, in accordance with its reasonable inquiries or
requests.
SECTION 5.05. Suit; Possession; Title; Sale of Indenture Estate. (a)
-------------------------------------------------
The Owner Trust agrees that, if an Indenture Event of Default shall have
occurred and be continuing and the Indenture Trustee shall be entitled to
exercise remedies hereunder as provided in Section 5.04, the Indenture Trustee
may take possession of all or any part of the Indenture Estate and may exclude
the Owner Trust, and all Persons claiming under the Owner Trust, wholly or
partly therefrom; provided, however, that at least ten Business Days' prior
notice of such taking of possession shall be given to the Owner Trust. If an
Indenture Event of Default shall have occurred and be continuing and the
Indenture Trustee shall be entitled to exercise remedies hereunder as provided
in Section 5.04, at the request of the Indenture Trustee, the Owner Trust shall
promptly execute and deliver to the Indenture Trustee such instruments of title
and other documents as the Indenture Trustee may deem necessary or advisable to
enable the Indenture Trustee or any agent or representative designated by the
Indenture Trustee, at such time or times and place or places as the Indenture
Trustee may specify, to obtain possession of all or any part of the Indenture
Estate to which the Indenture Trustee shall at the time be entitled hereunder.
If the Owner Trust shall for any reason fail to execute and deliver such
instruments and documents after such request by the Indenture Trustee, the
Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee
the right to immediate possession of any property comprising a portion of the
Indenture Estate and requiring the Owner Trust to execute and deliver such
instruments and documents to the Indenture Trustee, or (ii) pursue all or part
of such property wherever it may be found, and the Indenture Trustee may enter
any of the premises where such property or any portion thereof may be or is
supposed to be and search for such property. All expenses of obtaining such
judgment or of pursuing, searching for and taking such property shall, until
paid, be secured by the Lien of this Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may
make, from time to time and at the expense of the Indenture Estate, such
expenditures for maintenance, insurance, repairs, replacements, alterations,
additions and improvements to and of the Indenture Estate as it may deem proper.
In each such case, the Indenture Trustee shall have the right to maintain, use,
operate, store, lease, control or manage the Indenture Estate and to exercise
all rights and power of the Owner Trust relating to the Indenture Estate as the
Indenture Trustee shall deem to be in the best interest of the Holders. The
Indenture Trustee shall be entitled to collect and receive directly all tolls,
rents (including Hire), revenue, issues, income, products and profits of the
Indenture Estate and every part
<PAGE>
35
thereof, other than Excepted Payments. Such tolls, rents (including Hire),
revenues, issues, income, products and profits shall be applied (i) to pay the
expenses of the use, operation, storage, leasing, control, management or
disposition of the Indenture Estate, (ii) to pay the expense of all maintenance,
repairs, replacements, alterations, additions and improvements, (iii) to make
all payments which the Indenture Trustee may be required or may elect to make,
if any, for taxes, assessments, insurance or other proper charges upon the
Indenture Estate or any portion thereof, including without limitation the
employment of engineers and accountants to examine, inspect and make reports
upon the properties and books and records of the Owner Trust, and (iv) to pay
amounts owing in respect of the Secured Notes in accordance with the provisions
thereof and hereof and to make all other payments which the Indenture Trustee
may be required or authorized to make under any provision of this Indenture, as
well as just and reasonable compensation for the services of the Indenture
Trustee and of all Persons properly engaged and employed by the Indenture
Trustee.
(c) The Indenture Trustee or any Holder may be a purchaser of the
Indenture Estate or any portion thereof or any interest therein at any sale
thereof, whether pursuant to foreclosure or power of sale or otherwise. The
Indenture Trustee may apply against the purchase price therefor the amount then
due to it hereunder or under any of the Secured Notes secured hereby and any
Holder may apply against the purchase price therefor the amount then due to it
hereunder or under the Secured Notes held by such Holder, to the extent of such
portion of the purchase price as it would have received had it been entitled to
share in any distribution thereof. The Indenture Trustee or any Holder or any
nominee of any such Holder shall acquire, upon any such purchase, good title to
the property so purchased, free of the Lien of this Indenture and, to the extent
permitted by applicable law, free of all rights of redemption in the Owner Trust
in respect of the property so purchased.
(d) Any sale or other conveyance of any of the Indenture Estate by the
Indenture Trustee made pursuant to the terms of this Indenture or the Charter
shall bind the Holders, Owner Trust and the Owner Participant and shall be
effective to transfer or convey all right, title and interest of the Indenture
Trustee, the Owner Trust, the Holders and the Owner Participant in and to such
Indenture Estate or portion thereof, as the case may be. No purchaser or other
grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such sale or conveyance, or as to the application of
any sale or other proceeds with respect thereto by the Indenture Trustee. In
the event of any such sale, the Owner Trust shall execute any and all such bills
of sale and other documents, and perform and do all other acts and things
requested by the Indenture Trustee in order to permit continuation of such sale
and to effectuate the transfer or conveyance referred to in the first sentence
of this Section 5.05(d). The Owner Trust shall ratify and confirm any such sale
or sales by executing and delivering to the Indenture Trustee or to such
purchaser or purchasers all instruments as may reasonably be requested for such
purpose. Any such sale or sales made hereunder shall operate to divest all the
estate, right, title, interest, claim and demand whatsoever, whether at law or
in equity, of the Owner Trust in and to the properties
<PAGE>
36
and rights so sold, and shall be a perpetual bar both at law and in equity
against the Owner Trust and against any and all persons claiming or who may
claim the same, or any part thereof from, through or under the Owner Trust.
Upon any sale or other disposition of the Indenture Estate by the Indenture
Trustee, the Indenture Trustee will promptly account in writing, in reasonable
detail, to the Owner Trust for the amount of such sale, the costs and expenses
incurred in connection therewith and any surplus proceeds.
(e) The Indenture Trustee shall, as a matter of right, be entitled to
the appointment of a receiver (who may be the Indenture Trustee or any successor
or nominee thereof), at any time after an Indenture Event of Default either
before or after declaring due and payable the principal of all Secured Notes
then Outstanding, together with accrued but unpaid interest thereon and any
other amounts due thereunder, for all or any portion of the Indenture Estate,
whether such receivership be incidental to a proposed sale of the Indenture
Estate or the taking of possession thereof or otherwise, and the Owner Trust
hereby consents to the appointment of such a receiver, and agrees that it will
not oppose any such appointment. Any receiver appointed for all or any portion
of the Indenture Estate shall be entitled in addition to any powers available
under applicable law, to exercise all the rights and powers of the Indenture
Trustee with respect to the Indenture Estate.
(f) To the extent now or at any time hereafter enforceable under
applicable law, the Owner Trust covenants that it will not at any time insist
upon or plead, or in any manner whatsoever claim or take any benefit or
advantage of any stay, extension, moratorium, any exemption from execution or
sale or other similar law or from any law now or hereafter in force providing
for the valuation or appraisement of the Indenture Estate or any part thereof,
prior to any sale or sales thereof to be made pursuant to any provision herein
contained, or prior to any applicable decree, judgment or order of any court of
competent jurisdiction; nor, after such sale or sales, claim or exercise any
right under any statute now or hereafter made or enacted by any state or any
right to have a portion of the Indenture Estate or the security for the Secured
Notes marshalled or otherwise redeem the property so sold or any part thereof,
and hereby expressly waives for itself and on behalf of each and every Person,
except decree or judgment creditors of the Owner Trust acquiring any interest in
or title to the Indenture Estate or any part thereof subsequent to the date of
this Indenture, all benefit and advantage of any such law or laws, and covenants
that it will not invoke or use any such law or laws, but will suffer and permit
the execution of every such power as though no such law or laws had been made or
enacted. Nothing in this Section 5.05(f) shall be deemed to be a waiver by the
Owner Trust of its rights under Section 5.03 hereof.
The Indenture Trustee may maintain such a pleading, or, in any manner
whatsoever, claim or take any benefit or advantage of or from any law now or
hereafter in force even if it does not possess any of the Secured Notes or does
not produce any of them in the proceeding. A delay or omission by the Indenture
Trustee or any Holder in exercising
<PAGE>
37
any right or remedy accruing upon an Indenture Event of Default under this
Indenture shall not impair the right or remedy or constitute a waiver of or
acquiescence in such Indenture Event of Default.
(g) The Indenture Trustee may adjourn from time to time any sale to be
made under or by virtue of this Indenture for such sale or for such adjourned
sale or sales, and, except as otherwise provided by any applicable provision of
law, the Indenture Trustee, without further notice or publication, may make such
sale at the time and place to which the same shall be so adjourned.
(h) Any recovery of any judgment by the Indenture Trustee under the
Secured Notes and any levy of any execution under any such judgment upon the
Indenture Estate shall not affect in any manner or to any extent the security
title and security interest conveyed hereby upon the Indenture Estate or any
part thereof, or any conveyances, powers, rights and remedies of the Indenture
Trustee hereunder, but such conveyances, powers, rights and remedies shall
continue unimpaired as before.
(i) Notwithstanding anything contained herein, so long as any Pass
Through Trustee is a registered Holder, the Indenture Trustee is not authorized
or empowered to acquire title to all or any portion of the Indenture Estate or
take any action with respect to all or any portion of the Indenture Estate so
acquired by it if such acquisition or action would cause the related Pass
Through Trust to fail to qualify as a "grantor trust" for federal income tax
purposes.
SECTION 5.06. Remedies Cumulative. Each and every right, power and
-------------------
remedy provided the Indenture Trustee specifically or otherwise in this
Indenture shall be cumulative and shall be in addition to every right, power and
remedy herein specifically provided or now or hereafter existing at law, in
equity or otherwise. Each and every such right, power and remedy may be
exercised from time to time and as often and in such order as may be deemed
expedient by the Indenture Trustee, and the exercise or the beginning of the
exercise of any such right, power or remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any other right,
power or remedy. No delay or omission by the Indenture Trustee in the exercise
of any right or power or in the pursuit of any remedy shall impair any such
right, power or remedy, or be construed to be a waiver of any Indenture Event of
Default or to be an acquiescence therein.
SECTION 5.07. Discontinuance of Proceedings. In case the Indenture
-----------------------------
Trustee shall have instituted any proceeding to enforce any right, power or
remedy under this Indenture by foreclosure, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee, then and in every such
case the Owner Trust, the Indenture Trustee and the Charterer shall, subject to
any determination in such proceeding, be restored to their
<PAGE>
38
former positions and rights hereunder with respect to the Indenture Estate, and
all right, powers and remedies of the Indenture Trustee shall continue as if no
such proceeding had been instituted.
SECTION 5.08. Waiver of Past Defaults. Upon written instruction of a
-----------------------
Majority in Interest of Holders of Notes, the Indenture Trustee shall waive any
Indenture Event of Default specified in such instruction and its consequences
and, upon any such waiver, such Indenture Event of Default shall cease to exist
for every purpose of this Indenture; provided, however, that no such waiver
shall extend to any subsequent or other Indenture Event of Default or impair any
right or consequence thereof; and provided further, however, that in the absence
of the written instruction of the Holders of all Secured Notes then Outstanding,
the Indenture Trustee shall not waive any Indenture Event of Default arising
from a default (i) in the payment of the principal of or interest on, or other
amounts due under, any Secured Note then Outstanding, or (ii) in respect of a
covenant or provision hereof which, pursuant to the terms of Article IX, cannot
be modified or amended without the consent of each Holder of a Secured Note then
Outstanding.
SECTION 5.09. No Action Contrary to Certain Third Party Rights.
------------------------------------------------
Notwithstanding any other provision of any Operative Document, unless a Charter
Event of Default shall have occurred and be continuing and the Charter shall
have been declared to be in default pursuant to Article 22 thereof, the
Indenture Trustee shall not take or cause to be taken any action contrary to the
Charterer's rights under the Charter, including without limitation the rights of
the Charterer under Article 7 thereof.
SECTION 5.10. Rights of Holders of Secured Notes. Notwithstanding
----------------------------------
any provision herein (including Section 5.11) to the contrary, the Holder of a
Secured Note shall have the absolute and unconditional right to receive payment
from the Indenture Estate of the principal of and interest on such Secured Note
on the dates and as specified in such Secured Note, and to institute suit
against the Owner Trust for the enforcement of any such payment, subject to
Section 2.02, and such right shall not be impaired without the consent of such
Holder.
SECTION 5.11. Limitation on Suits by Holders. A Holder may pursue a
------------------------------
remedy under this Indenture or under a Secured Note only if:
(i) the Holder gives to the Indenture Trustee written notice of a
continuing Indenture Event of Default under this Indenture;
(ii) the Holders of at least 25 percent (25%) of the Outstanding
principal amount of the Secured Notes instruct the Indenture Trustee to
pursue the remedy;
<PAGE>
39
(iii) such Holder or Holders offer to the Indenture Trustee indemnity
satisfactory to the Indenture Trustee against any loss, liability or
expense to be, or which may be, incurred by the Indenture Trustee in
pursuing the remedy;
(iv) the Indenture Trustee does not comply with the request within 60
days after receipt of the instructions and the offer of indemnity; and
(v) during such 60-day period, a Majority in Interest of Holders do
not give the Indenture Trustee an instruction inconsistent with the
request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
ARTICLE VI
DUTIES OF THE INDENTURE TRUSTEE
SECTION 6.01. Certain Actions. If the Indenture Trustee shall have
---------------
Actual Knowledge of any Indenture Event of Default or any Indenture Default or
any failure on the part of the Charterer to make any payment of Assigned Hire
when due or any Event of Loss or other material fact relating to the Indenture
Estate, the Indenture Trustee shall (a) give prompt telephonic notice (promptly
confirmed in writing) to the Owner Trust, the Owner Participant and the
Charterer and (b) within 90 days after obtaining such Actual Knowledge, mail to
each Holder notice of any such Indenture Event of Default unless, in each case,
such Indenture Event of Default has been remedied before the giving of such
notice and the Indenture Trustee has Actual Knowledge of such remedy; provided,
however, that the failure by the Indenture Trustee to provide such notice shall
not invalidate any actions subsequently taken by the Indenture Trustee in
connection with such Indenture Event of Default. Except in the case of a
default in the payment of the principal or interest on any Secured Note, the
Indenture Trustee shall be protected in withholding the notice required under
clause (b) above if and so long as Responsible Officers of the Indenture Trustee
in good faith determine that withholding such notice is in the interest of the
Holders.
SECTION 6.02. Action Upon Instructions. (a) The Indenture Trustee
------------------------
shall, upon the written instruction at any time and from time to time of a
Majority in Interest of Holders of Notes, give such notice, consent or direction
or exercise such right, remedy or power hereunder or under the Charter or any
other agreement constituting part of the Indenture Estate as shall be specified
in such instruction; provided, however, that nothing set forth in this Section
6.02(a) shall entitle the Holders to cause the Indenture Trustee to give any
notice or exercise any right, power or remedy that is not elsewhere authorized
by, or is otherwise restricted or prohibited by, this Indenture. If the
Indenture Trustee shall not have
<PAGE>
40
received instructions as above provided within 20 days after mailing of the
notice pursuant to Section 6.01 to the Holders, the Indenture Trustee may take
such action, or refrain from taking such action, but shall be under no duty to
take or refrain from taking any action, with respect to such Indenture Event of
Default, Event of Loss or fact as it shall determine to be advisable and in the
best interest of the Holders. If the Indenture Trustee receives any
instructions after the expiration of the aforementioned 20-day period, the
Indenture Trustee shall use its best efforts to conform any action being taken
to comply with those instructions.
(b) The Indenture Trustee shall not consent to the assignment by the
Charterer of all or any material portion of its right, title and interest in, to
and under the Charter, except (i) with respect to an assignment permitted under
Section 20(c) of the Charter or (ii) upon the written instruction at any time
and from time to time of a Majority in Interest of Holders of Notes. Nothing
set forth herein shall be construed to permit such assignment without the
consent of the Owner Trust or to adversely affect any right of the Owner Trust.
SECTION 6.03. Release of Lien of Indenture. (a) Release of
---------------------------- ----------
Indenture Estate. Upon satisfaction of the conditions for termination of this
- ----------------
Indenture set forth in Section 10.01, the Indenture Trustee, upon the written
request of the Owner Trust, shall execute and deliver to, or as directed by, the
Owner Trust, all appropriate instruments (in due form for recording or filing)
releasing the Indenture Estate from the Lien of this Indenture, the Ship
Mortgage and the U.K. Security Assignment, and the Indenture Trustee shall pay
all moneys or other properties or proceeds held by it under this Indenture to
the Owner Trust and shall give notice to the Charterer of such payment. The
cost and expense associated with any action taken by the Indenture Trustee
pursuant to the provisions of this Section 6.03(a) shall be borne by the
Charterer.
(b) Release of the Vessel upon Transfer. Upon any transfer by the
-----------------------------------
Owner Trust of the Vessel pursuant to Article 18 or 23 of the Charter or any
retention by the Owner Trust of the Vessel pursuant to Article 18 of the Charter
and receipt by the Indenture Trustee of all amounts of Hire therefor that
constituted a part of the Indenture Estate due and payable by the Charterer and
the concurrent redemption of Secured Notes as set forth in Sections 3.02, 3.03
and 4.02 and the payment of any other amounts then due and owing hereunder, the
Indenture Trustee, upon the written request of the Owner Trust, shall execute
and deliver to, or as directed by, the Owner Trust, all appropriate instruments
(in due form for recording or filing), releasing the Vessel and all other
property relating thereto and then constituting a portion of the Indenture
Estate, as the case may be, from the Lien of this Indenture and the Ship
Mortgage. The cost and expense associated with any action taken by the
Indenture Trustee pursuant to the provisions of this Section 6.03(b) shall be
borne by the Charterer.
(c) Release of Lien upon Full Payment of Secured Notes. Upon payment
--------------------------------------------------
in full of the principal of and interest on and all other amounts due and
payable under the
<PAGE>
41
Secured Notes, and all other amounts due and payable to any Holder or the
Indenture Trustee hereunder or under any other Operative Document, the Indenture
Trustee, upon the written request of the Owner Trust, shall execute and deliver
to, or as directed by, the Owner Trust, all appropriate instruments (in due form
for recording or filing) releasing the Vessel and all other property relating
thereto and then constituting a portion of the Indenture Estate from the Lien of
this Indenture, the Ship Mortgage and the U.K. Security Assignment. The cost
and expense associated with any action taken by the Indenture Trustee pursuant
to the provisions of this Section 6.03(c) shall be borne by the Charterer.
SECTION 6.04. Indemnification. The Indenture Trustee shall not be
---------------
required to take any action or refrain from taking any action instructed to be
taken or refrained from being taken pursuant to Section 6.02 or under Article V
unless the Indenture Trustee shall have been indemnified to the Indenture
Trustee's reasonable satisfaction against any liability (including, without
limitation, environmental liability), cost or expense (including, without
limitation, the reasonable fees and expenses of counsel) which may be incurred
in connection therewith, other than any such liability, cost or expense which
results from the willful misconduct or gross negligence of the Indenture Trustee
and for the failure of the Indenture Trustee to exercise ordinary care in
distributing funds in accordance with the terms of the Operative Documents.
Except with respect to actions required by the first sentence of Section 6.01
hereof, the Indenture Trustee shall be under no obligation to take any action
under this Indenture and nothing contained in this Indenture shall require the
Indenture Trustee to expend or risk the Indenture Trustee's own funds or
otherwise incur any financial liability or any other liability (including,
without limitation, environmental liability) in the performance of any of the
Indenture Trustee's duties hereunder or in the exercise of any of the Indenture
Trustee's rights or powers if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it. The Indenture Trustee shall not be
required to take any action under Section 6.02 or Article V, nor shall any other
provision of this Indenture be deemed to impose a duty on the Indenture Trustee
to take any action, if such Indenture Trustee shall have reasonably determined
or been advised in writing by its counsel that such action is contrary to the
terms hereof or of any other Operative Document, or is contrary to applicable
law.
SECTION 6.05. No Implied Duties. No implied duties or obligations of
-----------------
the Indenture Trustee shall be read into this Indenture.
SECTION 6.06. Duties to Remove Certain Liens. The Indenture Trustee,
------------------------------
in its individual capacity, shall comply with Section 12.4(a) of the
Participation Agreement.
SECTION 6.07. No Action Except Under Operative Documents or
---------------------------------------------
Instructions. The Owner Trust and the Indenture Trustee agree that they will
- ------------
not use, operate, store, lease, control, manage, sell, dispose of or otherwise
deal with the Vessel or
<PAGE>
42
any other part of the Indenture Estate, except (a) in accordance with the terms
of the Charter or the other Operative Documents or the U.K. Documents or (b) in
accordance with the powers granted to, or the authority conferred upon, the
Owner Trust and the Indenture Trustee pursuant to the express terms of this
Indenture and the Trust Agreement.
SECTION 6.08. Certain Rights of the Owner Trust and the Owner
-----------------------------------------------
Participant. Notwithstanding any provision in this Indenture to the contrary:
- -----------
(a) each of the Owner Trust and the Owner Participant shall have the
right, to the exclusion of the Indenture Trustee, whether or not an
Indenture Event of Default is continuing and whether or not the Indenture
Trustee has foreclosed on the Lien of the Indenture, (i) to receive
Excepted Payments, (ii) to demand, collect, sue for or waive any notice of
default with respect to Excepted Payments, (iii) prior to the foreclosure
of the Lien of the Indenture and subject to Section 5.03(c), to declare the
Charter in default in respect of Expected Payments and (iv) to enforce the
payment of Excepted Payments due and payable to it by appropriate judicial
proceedings and to exercise other remedies as provided under any Operative
Document to the extent and with respect to any portion of the Indenture
Estate which shall have been released pursuant to the terms of this
Indenture; provided that the rights referred to in this Section
6.08(a)(iii) and (iv) shall not be deemed to include the exercise of any
remedies provided for in Article 22 of the Charter other than the right to
proceed by appropriate court action or actions, either at law or in equity,
to enforce performance by the Charterer of the applicable covenants or to
recover damages for breach thereof;
(b) at all times prior to the foreclosure of the Lien of the
Indenture, whether or not an Indenture Event of Default is continuing, each
of the Owner Trust and the Owner Participant shall have the right, but not
to the exclusion of the Indenture Trustee, (i) to receive from the
Charterer all notices, financial statements, certificates, opinions of
counsel and other documents and information which the Charterer is
permitted or required to give or furnish to the Owner Trust or the Owner
Participant pursuant to the terms of any Operative Document, (ii) to retain
all rights with respect to liability insurance which Article 16 of the
Charter specifically confers upon the Owner Trust or the Owner Participant,
or other insurance under Article 16 of the Charter purchased for the
benefit of the Owner Trust or the Owner Participant (subject, however to
the provisions of the definition of "Excepted Payments") and (iii) to
exercise inspection rights pursuant to Article 11.6 of the Participation
Agreement and Article 11(b) of the Charter;
(c) so long as no Indenture Event of Default shall have occurred and
be continuing, the Owner Trust shall have the right, to the exclusion of
the Indenture Trustee, to adjust Bareboat Hire other than Assigned Hire;
and
<PAGE>
43
(d) so long as no Indenture Event of Default shall have occurred and be
continuing (subject to Section 9.02), the Owner Trust shall retain (to the
exclusion of the Indenture Trustee) (i) all rights of the "Owner" under the
Charter, other than the Indenture Trustee's right to receive Assigned Hire
and other as set forth in (a), (b) or (c) of this Section 6.08, (ii) all
rights of the "Lessee" under the Head Lease, (iii) all rights of the
"Seller" under the Conditional Sale Agreement and (iv) all rights of the
"Purchaser" under the Construction Contract and the Bill of Sale.
SECTION 6.09. Filing of Financing and Continuation Statements. The
-----------------------------------------------
Indenture Trustee shall, at the expense of the Owner Trust, execute and file any
continuation or similar statement or document delivered to it by the Owner Trust
or the Charterer in a form reasonably satisfactory to the Indenture Trustee and
proper for filing.
SECTION 6.10. Publishing of Notices. The Indenture Trustee will
---------------------
furnish to the Owner Trust and the Owner Participant, promptly upon receipt
thereof, a duplicate or copy of each report, notice, request, demand,
instruction, certificate, financial statement or other instrument furnished to
the Indenture Trustee hereunder or under any other Operative Document.
SECTION 6.11. Taxes; Withholding; Information Reporting. The
-----------------------------------------
Indenture Trustee shall exclude and withhold from each distribution of principal
and interest and other amounts due hereunder or under the Secured Notes any and
all withholding taxes applicable thereto as required by law. The Indenture
Trustee agrees (a) to act as such withholding agent and, in connection
therewith, whenever any present or future taxes or similar charges are required
to be withheld with respect to any amounts payable in respect of the Secured
Notes or otherwise due hereunder, to withhold such taxes or charges and timely
pay the same to the appropriate authority in the name of and on behalf of the
Loan Participants, (b) that it will file any necessary withholding tax returns
or statements when due and (c) that, as promptly as possible after the payment
of such withheld amounts, it will deliver to each Loan Participant appropriate
documentation showing the payment of such withheld amounts, together with such
additional documentary evidence as such Loan Participants may reasonably request
from time to time. The Indenture Trustee agrees to file any other information
reports as it may be required to file under United States law. No withholding
or action with respect thereto shall constitute or give rise to any Indenture
Event of Default or any other claims against the Owner Participant or the Owner
Trust. Any tax withheld by the Indenture Trustee pursuant to this Section 6.11
shall be deemed for all purposes of this Indenture and the Secured Notes to have
been paid to the Holder with respect to which such tax was withheld.
<PAGE>
44
ARTICLE VII
THE INDENTURE TRUSTEE AND THE OWNER TRUSTEE
SECTION 7.01. Acceptance of Trusts and Duties. The Indenture Trustee
-------------------------------
accepts the duties hereby created and applicable to it and agrees to perform the
same upon the terms and conditions set forth in this Indenture and the
Participation Agreement. The Indenture Trustee further agrees to receive and
disburse all moneys constituting part of the Indenture Estate in accordance with
the terms hereof. The Indenture Trustee shall not be answerable or accountable
in its individual capacity under any circumstances, except (a) for its willful
misconduct or gross negligence, (b) for its failure to exercise reasonable care
in safeguarding the security held by it pursuant to the terms hereof, (c) in the
case of the inaccuracy of any representations or warranties made by the
Indenture Trustee in its individual capacity and contained in the Participation
Agreement or any other Operative Document or referred to by reference in Section
7.03 hereof, (d) as provided in Sections 2.03 and 6.06, (e) for any Tax based on
or measured by any fees, commissions or compensation received by it for acting
as trustee hereunder or (f) except as otherwise expressly provided herein for
its failure to use reasonable care in disbursing funds in accordance with the
terms hereof.
SECTION 7.02. Absence of Duties Except as Specified. Except in
-------------------------------------
accordance with written instructions pursuant to Section 6.01 or 6.02, and
except as provided in, and without limiting the generality of, Sections 6.04,
6.05, 6.06 and 6.07, the Indenture Trustee shall have no duty (a) to record or
file the Charter, this Indenture, the Ship Mortgage or any other document, or to
maintain any such recording or filing, or to rerecord or refile any such
document, (b) to effect or maintain any such insurance, whether or not the
Charterer shall be in default with respect thereto, (c) to discharge any Lien of
any kind against any part of the Trust Estate or the Indenture Estate, or (d) to
inspect the Vessel at any time, or to ascertain or inquire as to the performance
or observance of any of the Charterer's covenants pursuant to the terms of the
Charter.
SECTION 7.03. No Representations or Warranties. NONE OF THE MANAGING
--------------------------------
TRUSTEE (IN ITS INDIVIDUAL OR TRUST CAPACITY), THE OWNER TRUST OR THE INDENTURE
TRUSTEE (IN ITS INDIVIDUAL OR TRUST CAPACITY) MAKES (a) ANY REPRESENTATION OR
WARRANTY, WHETHER WRITTEN, ORAL, EXPRESS OR IMPLIED, AS TO THE VALUE, COMPLIANCE
WITH SPECIFICATIONS, DURABILITY, OPERATION, CONSTRUCTION, PERFORMANCE, DESIGN OR
CONDITION OF THE VESSEL OR ANY PART THEREOF, THE MERCHANTABILITY THEREOF OR THE
FITNESS THEREOF FOR ANY PARTICULAR PURPOSE, TITLE TO THE VESSEL OR ANY COMPONENT
OF THE VESSEL, THE QUALITY OF THE MATERIALS OR WORKMANSHIP THEREOF OR CONFORMITY
THEREOF TO SPECIFICATIONS, OR THE PRESENCE OR
<PAGE>
45
ABSENCE OF ANY LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, OR ANY
OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO
THE VESSEL, OR ANY COMPONENT OF THE VESSEL, or (b) any representation or
warranty as to the validity, legality or enforceability of this Indenture, any
of the other Operative Documents or the Secured Notes, or as to the correctness
of any statement contained in any thereof, except as set forth in Sections 9 and
10 of the Participation Agreement and Section 7.4 of the Trust Agreement.
SECTION 7.04. No Segregation of Moneys; No Interest; Investments.
--------------------------------------------------
Any moneys paid to or retained by the Indenture Trustee pursuant to any
provision hereof and not then required to be distributed to the Holders, the
Charterer or the Owner Trust shall be deposited in a separate, interest bearing
cash collateral account; provided that any payments received or applied
hereunder by the Indenture Trustee shall be accounted for by the Indenture
Trustee so that any portion thereof paid or applied pursuant hereto shall be
identifiable as to the source thereof. Any amounts held by the Indenture
Trustee pursuant to the express terms of this Indenture or any other Operative
Document shall be invested and reinvested by the Indenture Trustee from time to
time in Permitted Investments at the direction of (i) the Charterer if such
amounts would be payable to the Charterer upon satisfaction of any applicable
conditions; or (ii) the Owner Participant in the case of the remaining portion
of such amounts; provided, however, that in the event there shall be continuing
any Indenture Event of Default, such directions may be given exclusively by a
Majority in Interest of Holders of Notes. The Indenture Trustee shall have no
liability for any loss resulting from any investment required to be made
hereunder other than by reason of its own willful misconduct or negligence in
failing to comply with such instructions. Any net income or gain realized as a
result of any such investment or reinvestment shall be held as part of the
Indenture Estate and shall be applied by the Indenture Trustee at the same time,
on the same conditions and in the same manner as the amounts in respect of which
such income or gain was realized are required to be distributed in accordance
with the provisions hereof. Any Permitted Investment may be sold or otherwise
reduced to cash (without regard to maturity) by the Indenture Trustee whenever
necessary to make any application as required by the terms of this Indenture or
of any applicable Operative Document.
SECTION 7.05. Reliance; Agents; Advice of Counsel. Neither the Owner
-----------------------------------
Trust nor the Indenture Trustee (in their respective individual or trust
capacities for the purposes of this Section 7.05) shall incur any liability to
anyone in acting upon any signature, instrument, notice, resolution, request,
consent, order, certificate, report, opinion, bond or other document or paper
reasonably believed by it to be genuine and believed by it to be signed by the
proper party or parties. Either of the Owner Trust or the Indenture Trustee may
accept a copy of a resolution of the Board of Directors or other governing body
of any party to the Participation Agreement or other Operative Agreement,
certified by the
<PAGE>
46
Secretary or any Assistant Secretary thereof as duly adopted and in full force
and effect, as conclusive evidence that such resolution has been duly adopted
and that the same is in full force and effect. As to any fact or matter
relating to the Charterer the manner of ascertainment of which is not
specifically described herein, the Owner Trust and the Indenture Trustee may for
all purposes hereof rely on an Officer's Certificate of the relevant party as to
such fact or matter, and such Officer's Certificate shall constitute full
protection to the Owner Trust or the Indenture Trustee (in their individual or
trust capacities), as the case may be, for any action taken or omitted to be
taken by it in good faith in reliance thereon. The Indenture Trustee shall
assume, and shall be fully protected in assuming, that the Owner Trust is
authorized by the Trust Agreement to enter into this Indenture and to take all
action to be taken by the Owner Trust pursuant to the provisions hereof, and
shall not inquire into the authorization of the Owner Trust with respect
thereto. The Owner Trust shall assume, and shall be fully protected in
assuming, that the Indenture Trustee is authorized to enter into this Indenture
and to take all action to be taken by the Indenture Trustee pursuant to the
provisions hereof, and shall not inquire into the authorization of the Indenture
Trustee with respect thereto. In the administration of the trusts hereunder,
the Indenture Trustee may execute any of the trusts or powers hereof and perform
its powers and duties hereunder directly or through agents or attorneys and at
the expense of the Indenture Estate may consult with counsel, accountants and
other skilled Persons to be selected and retained by it, and the Indenture
Trustee shall not be liable for anything done, suffered or omitted in good faith
by it in accordance with the written advice or written opinion of any such
counsel, accountant or other skilled Person acting within such Person's area of
competence (so long as the Indenture Trustee shall have exercised due care in
selecting such Person).
SECTION 7.06. No Compensation from Holders or Indenture Estate.
------------------------------------------------
Notwithstanding any other provision hereof, the Indenture Trustee shall have no
right against the Holders, the Managing Trustee or the Delaware Trustee, in
their respective individual capacities, the Owner Trust, the Owner Participant
or, except as otherwise provided in Section 4.03, the Indenture Estate for any
fee as compensation for its services hereunder.
SECTION 7.07. Right of the Indenture Trustee to Perform Covenants,
----------------------------------------------------
Etc. If the Owner Trust or the Charterer shall fail to make any payment or
- ---
perform any act required to be made or performed by it hereunder or under any
Operative Document to which it is a party or if the Owner Trust or the Charterer
shall fail to release any Lien affecting the Indenture Estate which it is
required to release by the terms of this Indenture or any other Operative
Document to which it is a party, the Indenture Trustee, after notice to and
demand upon the Owner Trust or the Charterer and affording the Owner Trust and
the Charterer a reasonable opportunity to cure, and without waiving or releasing
any obligation or Charter Event of Default, may (but shall be under no
obligation to) at any time thereafter make such payment or perform such act for
the account of and at the expense of the Indenture Estate, and may enter upon
any property for such purpose and take all such action
<PAGE>
47
with respect thereto as, in the Indenture Trustee's opinion, may be necessary or
appropriate therefor. No such entry shall be deemed an eviction. All sums so
paid by the Indenture Trustee and all costs and expenses (including, without
limitation, legal fees and expenses) so incurred, shall constitute additional
indebtedness secured by this Indenture and shall be paid from the Indenture
Estate to the Indenture Trustee on demand. The Indenture Trustee shall not be
liable for any damages resulting from any such payment or action unless such
damages shall be a consequence of willful misconduct or gross negligence on the
part of the Indenture Trustee.
SECTION 7.08. Moneys for Payments in Respect of Notes to be Held in
-----------------------------------------------------
Trust. In case the Holder of any Secured Note shall fail to present the same
- -----
for payment on any date on which the principal thereof becomes payable, the
Indenture Trustee may set aside in trust the moneys then due thereon uninvested
and shall pay such moneys to any Holder of such Secured Note upon due
presentation for surrender thereof in accordance with the provisions of this
Indenture, subject to the provisions of Section 7.09.
SECTION 7.09. Disposition of Moneys Held for Payments of Notes. Any
------------------------------------------------
money set aside under Section 7.08 and not paid to Holders under Section 7.08
shall be held by the Indenture Trustee in trust until the latest of (a) the date
three years after the date of such setting aside, (b) the date all other Holders
(other than other Holders for which the Indenture Trustee is holding such moneys
pursuant to Section 7.08) of the Secured Notes shall have received full payment
of all principal of and interest and other sums payable to them on such Secured
Notes or the Indenture Trustee shall hold (and shall have notified such Persons
that it holds) in trust an amount sufficient to make full payment thereof when
due, and (c) the date the Owner Trust shall have fully performed and observed
all its covenants and obligations contained in this Indenture with respect to
the Secured Notes; and thereafter shall be paid to the Owner Trust by the
Indenture Trustee, who then shall be released from all further liability with
respect to such moneys, and thereafter the Holders of the Secured Notes in
respect of which such moneys were so paid to the Owner Trust shall have no
rights in respect thereof except to obtain payment of such moneys from the Owner
Trust.
ARTICLE VIII
SUCCESSOR TRUSTEES AND ADDITIONAL TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee. In the case of any
---------------------------------
appointment of a successor to either Owner Trustee pursuant to the Trust
Agreement, or any merger, conversion or consolidation or transfer of
substantially all of the corporate trust business of either Owner Trustee, the
Managing Trustee shall give prompt written notice thereof to the Indenture
Trustee.
<PAGE>
48
SECTION 8.02. Resignation of Indenture Trustee; Appointment of
------------------------------------------------
Successor. (a) The Indenture Trustee or any successor thereto may resign at
- ---------
any time without cause by giving at least thirty (30) days prior written notice
to the Owner Trust, the Owner Participant, the Charterer and each Holder, such
resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee as provided in Section 8.02(b). In addition, a
Majority in Interest of Holders of Notes may at any time remove the Indenture
Trustee without cause by an instrument in writing delivered to the Owner Trust,
the Owner Participant, the Charterer and the Indenture Trustee, such removal to
be effective upon the acceptance of the trusteeship by a successor Indenture
Trustee as provided in Section 8.02(b). In the case of the resignation or
removal of the Indenture Trustee, the Owner Trust may appoint a successor
Indenture Trustee. If a successor Indenture Trustee shall not have been
appointed within thirty (30) days of such notice of resignation or removal, the
Indenture Trustee, the Owner Trust, the Owner Participant, the Charterer or a
Majority in Interest of Holders may apply to any court of competent jurisdiction
to appoint a successor Indenture Trustee qualified under Section 8.02(c) to act
until such time, if any, as a successor shall have been appointed as above
provided in this Section 8.02. The successor Indenture Trustee so appointed by
such court shall immediately and without further act be superseded by any
successor Indenture Trustee appointed as above provided in this Section 8.02.
(b) Any successor Indenture Trustee, however appointed, shall execute
and deliver to the Owner Trust and to the predecessor Indenture Trustee (with a
copy to each Holder) an instrument accepting such appointment, and shall give
the Owner Participant, the Holders and the Charterer written notice of such
acceptance. Upon the execution and delivery of such instrument, such successor
Indenture Trustee, without further act, shall become vested with all the
estates, properties, rights, powers and duties of the predecessor Indenture
Trustee hereunder, with like effect as if originally named the Indenture Trustee
herein. Notwithstanding and without limiting the foregoing, the predecessor
Indenture Trustee, upon the written request of the successor Indenture Trustee,
shall execute and deliver an instrument transferring to such successor Indenture
Trustee, upon the trusts herein expressed applicable to it, all the estates,
properties, rights and powers of such predecessor Indenture Trustee, and such
predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over
to such successor Indenture Trustee all moneys or other property then held by
such predecessor Indenture Trustee hereunder.
(c) There shall at all times be an Indenture Trustee hereunder which
shall be a bank or trust company organized and doing business under the laws of
the United States of America or of any state thereof, authorized under such laws
to exercise corporate trust powers, subject to supervision or examination by
federal or state authority, having a combined capital and surplus of at least
$75,000,000. If such bank or trust company publishes reports of condition at
least annually, pursuant to applicable law or to the requirements of the
aforesaid supervising or examining authority, then for purposes hereof
<PAGE>
49
the combined capital and surplus of such bank or trust company shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
condition so published.
(d) Any corporation into which the Indenture Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation to which substantially all the corporate
trust business of the Indenture Trustee may be transferred, shall, subject to
the terms of paragraph (c) of this Section 8.02, be the Indenture Trustee under
this Indenture without further act.
SECTION 8.03. Co-Trustees and Separate Trustees. (a) If, at any
---------------------------------
time, it shall be necessary or prudent in order to conform to any law of any
jurisdiction in which property shall be held subject to the Lien of this
Indenture, the Ship Mortgage and the U.K. Security Assignment, the Indenture
Trustee shall be advised by counsel that it is so necessary or prudent in the
interest of the Holders, or a Majority in Interest of Holders of Notes in
writing shall so request the Indenture Trustee and the Owner Trust, the
Indenture Trustee and the Owner Trust shall execute and deliver all instruments
and agreements necessary or proper either (i) to constitute another bank or
trust company or one or more Persons approved by the Indenture Trustee and the
Owner Trust, either to act as co-trustee or co-trustees of all or any portion of
the Indenture Estate, jointly with the Indenture Trustee originally named herein
or any successor or successors, or to act as separate trustee or trustees of all
or any such portion of the Indenture Estate in each case with such rights,
powers, duties and obligations as may be provided in such supplemental indenture
or such instrument of appointment as the Indenture Trustee or a Majority in
Interest of Holders of Notes may deem necessary or advisable, or (ii) to
clarify, add to or subtract from the rights, powers, duties and obligations
theretofore granted any such additional or separate trustee, subject in each
case to the remaining provisions of this Section 8.03. In the event that the
Owner Trust shall not have joined in the execution of such instruments and
agreements within fifteen (15) days after the receipt of a written request from
the Indenture Trustee to do so, or if an Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee may act under the foregoing
provisions of this Section 8.03 without the concurrence of the Owner Trust; and
the Owner Trust hereby appoints the Indenture Trustee its agent and attorney-in-
fact to act for it under the foregoing provisions of this Section 8.03(a) in
either of such contingencies. The Indenture Trustee may, in such capacity,
execute deliver and perform any such supplemental indenture, or any such
instrument, as may be required for the appointment of any such co-trustee(s) or
separate trustee(s) or for the clarification of, addition to or subtraction from
the rights, powers, duties or obligations theretofore granted to any such co-
trustee(s) or separate trustee(s). In case any co-trustee(s) or separate
trustee(s) appointed under this Section 8.03(a) shall die, become incapable of
acting, resign or be removed, all the assets, property, rights, powers, trusts,
duties and obligations of such co-trustee(s) or separate trustee(s) shall revert
to and shall vest in and may be exercised by the
<PAGE>
50
Indenture Trustee, to the extent permitted by law until a successor, additional
or separate trustee is appointed as provided in this Section 8.03(a).
(b) Every co-trustee and separate trustee hereunder, to the extent
permitted by law and except as otherwise expressly provided in any Operative
Document, shall be appointed and act, and the Indenture Trustee and its
successors shall act, subject to the following provisions and conditions:
(i) the Secured Notes shall be authenticated and delivered by the
Indenture Trustee, and all powers, duties, obligations and rights conferred
upon the Indenture Trustee in respect of the receipt, custody, control,
payment and management of moneys, papers or securities, shall be exercised,
solely by the Indenture Trustee;
(ii) all other rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such co-trustee or co-
trustees or separate trustee or trustees jointly, except to the extent that
under any applicable law or in any jurisdiction in which any particular act
or acts are to be performed, the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations shall be exercised and performed by such co-
trustee or co-trustees or separate trustee or trustees; but subject to the
same limitations in any exercise of his, her or its power and authority as
those to which the Indenture Trustee is subject under the terms of this
Indenture;
(iii) notwithstanding anything herein contained to the contrary, no
power given hereby to, or which it is provided hereby may be exercised by,
any such co-trustee or co-trustees or separate trustee or trustees, shall
be exercised hereunder by such additional trustee or trustees except
jointly with, or with consent in writing of, the Indenture Trustee;
(iv) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder;
(v) the powers of any co-trustee(s) or separate trustee(s) appointed
pursuant to this Section 8.03 shall not in any case exceed those of the
Indenture Trustee hereunder; and
(vi) the Owner Trust and the Indenture Trustee, at any time, by an
instrument in writing executed by them jointly, may remove any such
trustee, and in that case, by an instrument in writing executed by them
jointly, may appoint a successor or successors to such co-trustee or co-
trustees or separate trustee or trustees, as the case may be. In the event
that the Owner Trust shall not have joined
<PAGE>
51
in the execution of any such instrument within fifteen (15) days after the
receipt of a written request from the Indenture Trustee to do so, the
Indenture Trustee shall have the power to remove any such co-trustee or
separate trustee and to appoint a successor co-trustee or separate trustee
without the concurrence of the Owner Trust. In the event that the
Indenture Trustee alone shall have appointed a separate trustee or trustees
or co-trustee or co-trustees as above provided in this Section 8.03, it may
at any time, by an instrument in writing, remove any such separate trustee
or co-trustee, the successor to any such separate trustee or co-trustee so
removed to be appointed by the Owner Trust and the Indenture Trustee, or by
the Indenture Trustee alone, as provided in this Section 8.03.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Indenture Supplements Without Consent of Holders. The
------------------------------------------------
Owner Trust and the Indenture Trustee, without the consent of any Holder and at
any time and from time to time, may enter into one or more amendments or
supplements to this Indenture, in form satisfactory to each of the Owner Trust
and Indenture Trust, for any of the following purposes:
(a) to subject to the Lien of this Indenture additional property
constituting part of the Indenture Estate, including the Vessel upon its
delivery under the Construction Contract, pursuant to a supplement to this
Indenture substantially in the form of Exhibit D to this Indenture;
(b) to correct or amplify the description of any property at any time
subject to the Lien of this Indenture;
(c) to add to the covenants of the Owner Trust for the benefit of the
Holders or to surrender any right or power herein conferred upon the Owner
Trust, the Owner Participant or the Charterer;
(d) to cure any ambiguity, to correct or supplement any provision
herein or in the Secured Notes which may be defective or inconsistent with
any other provisions of this Indenture, provided that such action shall not
adversely affect the interests of any Holder;
<PAGE>
52
(e) to evidence the succession of a new Owner Trustee in accordance
with the Trust Agreement or the succession of a new Indenture Trustee
hereunder or the appointment or removal of any co-trustee or separate
trustee thereunder or hereunder;
(f) to convey, transfer, assign, mortgage or pledge any property to or
with the Indenture Trustee or to make any other provisions with respect to
matters or questions arising hereunder so long as such action shall not
adversely affect the interests of the Loan Participants;
(g) to add to the rights of the Loan Participants;
(h) to include on the Secured Notes any legend as may be required by
law;
(i) to provide for the establishment and issuance of Additional Notes
pursuant to Section 2.08; or
(j) to provide for the substitution of a new owner trust in accordance
with Section 3.04.
SECTION 9.02. Supplements and Amendments to Operative Documents With
------------------------------------------------------
Consent Holders of Notes. (a) Without the consent of a Majority in Interest of
- ------------------------
Holders of Notes, the respective parties to the Charter, the Participation
Agreement, the Trust Agreement, the Head Lease, the Conditional Sale Agreement
and any other Operative Document or U.K. Document included in the Indenture
Estate may not modify, amend or supplement any of such agreements, or give any
consent, waiver, authorization or approval thereunder, for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
thereof or of modifying in any manner the rights of the respective parties
thereunder; provided that, so long as no Indenture Event of Default shall have
occurred and be continuing, such agreements may be modified, amended or
supplemented if the Indenture Trustee determines that any such proposed
modification, amendment or supplement would not adversely affect the interests
of the Holders; provided, however, that the actions specified in Section 9.02(c)
may be taken without the consent of the Indenture Trustee or any Holder.
(b) Except as provided in Section 9.01 or 9.02(c) or 9.02(d), at any
time and from time to time, with the consent of a Majority in Interest of
Holders of Notes and upon the written request of the Owner Trust, the Indenture
Trustee (x) shall execute an amendment or supplement to this Indenture for the
purpose of adding provisions to, or changing in any manner or eliminating any of
the provisions of, this Indenture, or (y) shall execute an amendment or
supplement to, or give a consent, waiver, authorization or approval, for the
purposes of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, the Participation Agreement or (z) shall consent to
any
<PAGE>
53
amendment or supplement to, or give a consent, waiver, authorization or
approval, for the purposes of adding any provisions to, or changing in any
manner or eliminating any of the provisions of, any of the other Operative
Documents or U.K. Document; provided, however, that no such amendment or
supplement to this Indenture, or consent, waiver, authorization, approval,
amendment or supplement to the Participation Agreement or any such other
Operative Document or U.K. Document (whether pursuant to subsection (a) or (c)
of this Section 9.02, and anything in such subsections or elsewhere in this
Indenture to the contrary notwithstanding) shall, without the consent of each
Holder of a Secured Note then Outstanding:
(i) change the stated maturity of the principal of, or any installment
of interest on, or any mandatory or optional repayment, purchase or
redemption provision with respect to, any Secured Note, or change the
principal amount thereof or any other amount payable in respect thereof or
reduce the Make-Whole Amount, if any, or interest thereon, or impair the
right to institute suit for the enforcement of any such payment or change
mandatory or optional prepayment provisions or change the place of payment
where, or the coin or currency in which, any Secured Note or the interest
thereon is payable;
(ii) permit the creation of any Lien on the Indenture Estate not
otherwise permitted hereunder or deprive any Holder of the benefit of the
Lien of this Indenture upon the Indenture Estate for the security of its
Secured Notes;
(iii) change the percentage of the aggregate principal amount of
Secured Notes Outstanding necessary to modify or amend any provision
hereunder or any other Operative Document or to waive compliance therewith;
(iv) modify the definitions of "Indenture Default," "Indenture Event
of Default," "Majority in Interest of Holders of Notes," "Charter Default"
or "Charter Event of Default";
(v) modify the order of priorities in which distributions are to be
made under Article IV;
(vi) reduce the amount or change the time of any payment of Assigned
Hire under the Charter;
(vii) modify, amend or supplement any of the provisions of this
Section 9.02;
<PAGE>
54
(viii) modify, amend or supplement the Charter or the Parent
Guaranty, or consent to any assignment of the Charter (other than an
assignment pursuant to Article 20 of the Charter), in either case releasing
the Charterer or the Guarantor from its respective obligations in respect
of the payment of Assigned Hire payable pursuant to the Charter, or
changing the absolute and unconditional character of such obligations; or
(ix) materially adversely affect any indemnities in favor of any
Holder as provided pursuant to the terms of any Operative Document, except
as may be consented to by each Person adversely affected thereby.
(c) Notwithstanding anything to the contrary contained in Section
9.02(b) (except as provided in the proviso to Section 9.02(b)), (x) without the
necessity of the consent of any of the Holders or the Indenture Trustee, the
Owner Trust may and (y) in the case of clause (iii) of this Section 9.02(c),
without the consent of any of the Holders, the Indenture Trustee may:
(i) so long as no Indenture Event of Default shall have occurred and
be continuing, modify, amend or supplement the Charter, or give any
consent, waiver, authorization or approval with respect thereto, except
that without compliance with Sections 9.02(a) and 9.02(b), the Owner Trust
shall not modify, amend or supplement, or give any consent, waiver,
authorization or approval for the purposes of adding any provisions to or
changing in any manner or eliminating any of the provisions thereof, or of
modifying in any manner the rights of the respective parties thereunder,
with respect to the following provisions of the Charter as originally
executed: Article 2 (if the result thereof would be to shorten the term of
the Charter to a period shorter than the period ending with the maturity
date of the Secured Notes), Articles 3(a) (except to the extent that such
change or modification relates solely to Excess Hire, Bareboat Market Rate,
Excess Hire Rate, Additional Excess Hire or Additional Excess Hire Rate),
3(b), 3(c), (3(e), 3(f) (3g), 5(b), 9, 14, 15, 16, 17, 18, 21, 22, 23 and
Schedule 2 (except to the extent that such change or modification relates
solely to Excess Hire, Bareboat Market Rate, Excess Hire Rate, Additional
Excess Hire or Additional Excess Hire Rate) and any definition of terms
used in the Charter, to the extent that any modification of such definition
would result in a modification of the Charter not permitted pursuant to
this Section 9.02(c); provided that, subject to the next proviso, in the
event an Indenture Event of Default shall have occurred and be continuing,
the Indenture Trustee shall have all rights of the Owner Trust as Owner
under the Charter to modify, amend or supplement the Charter or give any
consent, waiver, authorization or approval thereunder, for the purpose of
adding any provisions to or changing in any manner or eliminating any of
the provisions thereof or of modifying in any manner the rights of the
Owner thereunder; provided further that, without the prior consent of the
Owner Trust, and
<PAGE>
55
subject to the Indenture Trustee's rights to exercise remedies under
Article 22 of the Charter without the prior consent of the Owner Trust,
whether or not an Indenture Event of Default shall have occurred and be
continuing, no such action shall be taken with respect to any of the
provisions of Article 1 (if any modification of a definition contained
therein would result in a modification of the Charter not permitted by this
proviso), 3, 11, 14, 15, 16 (except to increase the amounts or types of
insurance the Charterer must provide thereunder at its expense), 18, 20,
21, 25, 27, 28 and 29 of the Charter, or any other Section of the Charter
(including Section 22 of the Charter) to the extent such action shall
affect the amount or timing of any amounts payable by the Charterer under
the Charter as originally executed (or as subsequently modified with the
consent of the Owner Trust) which, absent the occurrence and continuance of
an Indenture Event of Default, would be distributable to the Owner Trust or
the Owner Participant under Article IV;
(ii) modify, amend or supplement the Trust Agreement, or give any
consent, waiver, authorization or approval with respect thereto, except
that without compliance with Section 9.02(b), the Owner Trust shall not
modify, amend or supplement, or give any consent, waiver, authorization or
approval for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions thereof or of modifying in any
manner the rights of the respective parties thereunder, with respect to the
following provisions of the Trust Agreement as originally executed:
Section 3.2, Section 5.1, Section 9.2, Section 10, Section 11, Section 12.7
and any definition of terms used in the Trust Agreement, to the extent that
any modification of such definition would result in a modification of the
Trust Agreement not permitted pursuant to this Section 9.02(c), and in each
case only to the extent any such action shall adversely impact the
interests of the Holders; and
(iii) modify, amend or supplement the Participation Agreement, or
give any consent, waiver, authorization or approval with respect thereto,
except that without compliance with Section 9.02(a) or Section 9.02(b), the
Owner Trust and the Indenture Trustee shall not modify, amend or
supplement, or give any consent, waiver, authorization or approval for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions thereof or of modifying in any manner the
rights of the respective parties thereunder, with respect to the following
provisions of the Participation Agreement as originally executed: Section
2, Section 4, Section 6, Section 9, Section 11 (other than an amendment to
add to the covenants of the Charterer), Section 12, Section 13 (insofar as
such Section 13 relates to the Indenture Trustee, the Indenture Estate and
the Holders) and, to the extent the Loan Participants would be adversely
affected thereby, Section 14 and Section 15 and any definition of terms
used in the Participation Agreement to the extent that any modification of
such definition would result in a modification of the Participation
Agreement not permitted pursuant to this Section 9.02(c);
<PAGE>
56
(iv) modify, amend or supplement the Construction Contract; provided
that such modification, amendment or supplement does not decrease (except
to a de minimis extent) the Fair Market Sales Value of the Vessel or
decrease the useful life or utility of the Vessel; and
(v) modify, amend or supplement any of said agreements in order to
cure any ambiguity, to correct or supplement any provisions thereof which
may be defective or inconsistent with any other provision thereof or of any
provision of this Indenture, or to make any other provision with respect to
matters or questions arising thereunder or under this Indenture which shall
not be inconsistent with the provisions of this Indenture; provided that
the making of any such other provision shall not adversely affect the
interests of the Holders unless such provision corrects a mistake.
SECTION 9.03. Execution of Indenture Supplement, Amendments, Etc. In
--------------------------------------------------
executing or accepting the additional trusts created by any amendment or
supplement to this Indenture, or any amendment, consent, waiver or other
modification permitted by this Article IX or the modifications thereby of the
trusts created by this Indenture, each of the Indenture Trustee and the Owner
Trust shall be entitled to receive, and (subject to Section 7.01 and Section
7.02) shall be fully protected in relying upon, an opinion of independent
counsel stating that the execution of such amendment or supplement to this
Indenture, or of such amendment, consent, waiver or modification, is authorized
or permitted by this Indenture. Either of the Indenture Trustee or the Managing
Trustee may, but shall not be obligated to, enter into any such amendment or
supplement to this Indenture which affects its own rights, duties or immunities
under this Indenture or otherwise. It shall not be necessary for Holders to
approve the particular form of any proposed amendment or supplement to this
Indenture, or any amendment, consent, waiver or other modification of any other
Operative Document or U.K. Document, but it shall be sufficient if such action
shall approve the substance thereof.
SECTION 9.04. Effect of Indenture Supplement. Upon the execution of
------------------------------
any amendment or supplement to this Indenture pursuant to this Article IX, this
Indenture shall be modified in accordance therewith, and such amendment or
supplement shall form a part of this Indenture for all purposes; and every
Holder of a Secured Note theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 9.05. Reference in Secured Notes to Indenture Supplements.
---------------------------------------------------
Secured Notes authenticated and delivered after the execution of any amendment
or supplement pursuant to this Article IX may, and shall if required by the
Indenture Trustee, bear a notation in form approved by the Indenture Trustee as
to any matter provided for in such amendment or supplement. If the amendment or
supplement to this Indenture shall so provide, new Secured Notes so modified as
to conform, in the opinion of the Indenture Trustee and the Owner Trust, to any
such amendment or supplement may be prepared and
<PAGE>
57
executed by the Owner Trust and authenticated and delivered by the Indenture
Trustee in exchange for outstanding Secured Notes.
SECTION 9.06. Notices of Indenture Supplements and Amendments, Etc.
----------------------------------------------------
Promptly after the execution by the Owner Trust and the Indenture Trustee of any
amendment or supplement to this Indenture, or any amendment, consent, waiver or
other modification pursuant to the provisions hereof, the Indenture Trustee
shall send a conformed copy of such instrument to each Holder, the Charterer,
the Owner Trust and the Owner Participant, but the failure of the Indenture
Trustee to send such a conformed copy shall not impair or affect the validity of
such document.
SECTION 9.07. Charterer Rights. Without the consent of the
----------------
Charterer, no amendment or supplement to this Indenture or amendment, waiver or
other modification of any provision of this Indenture shall alter or modify the
provisions of Section 5.09 or this Section 9.07.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture. This Indenture and the
------------------------
trusts created hereby shall terminate, and this Indenture shall be of no further
force or effect, upon the payment in full of the principal of and interest on
and all other amounts due and payable under all Secured Notes and all other
amounts due and payable to any Holder or the Indenture Trustee hereunder or
under any other Operative Document. The foregoing shall not impair any rights
of a Holder in respect of indemnification or other claims which may be available
against any party under the terms of any other Operative Document. Except as
otherwise provided in the preceding sentence, this Indenture and the trusts
created hereby shall continue in full force and effect in accordance with the
terms hereof.
SECTION 10.02. No Legal Title to Indenture Estate in Holders. No
---------------------------------------------
Holder shall have legal title to any part of the Indenture Estate. No transfer,
by operation of law or otherwise, of any Secured Note or other right, title and
interest of any Holder in and to the Indenture Estate or hereunder shall operate
to terminate this Indenture or entitle such Holder or any successor or
transferee of such Holder to an accounting or to the transfer to it of any legal
title to any part of the Indenture Estate.
SECTION 10.03. Power of Attorney. The Owner Trust does hereby
-----------------
constitute the Indenture Trustee its true and lawful attorney-in-fact,
irrevocably and coupled with the interest of the Indenture Trustee created by
this Indenture, so long as any Secured Notes are Outstanding and so long as
there are any other amounts due hereunder, under any
<PAGE>
58
other Operative Documents, or under the Secured Notes, with full power (in the
name of and as attorney-in-fact for the Owner Trust or otherwise) to ask for,
require, demand and receive any and all moneys and claims for moneys, and all
other property, which now or hereafter constitutes part of the Indenture Estate,
to endorse any checks or other instruments or orders in connection therewith and
to file any claims or to take any action, or to institute any proceedings, which
the Indenture Trustee may deem to be necessary or advisable in the premises.
The Owner Trust has directed the Indenture Trustee to make all necessary
conveyances, assignments, transfers and deliveries of the Indenture Estate and
any rights hereunder pursuant to the provisions of this Indenture, and for that
purpose the Indenture Trustee may execute all necessary instruments of
conveyance, assignment and transfer, and may substitute one or more persons with
like power, and the Owner Trust hereby ratifies and confirms all that the
Indenture Trustee, acting as its attorney, or any such substitute, shall
lawfully do by virtue hereof and whether pursuant to the exercise of any
remedies hereunder or otherwise.
SECTION 10.04. Regarding the Owner Trust and the Owner Trustees. (a)
------------------------------------------------
Except as expressly provided herein, all and each of the representations,
warranties, undertakings and agreements herein made on the part of the Owner
Trust are made and intended not as personal representations, warranties,
undertakings and agreements by or for the purpose or with the intention of
binding the Managing Trustee or the Delaware Trustee personally, but are made
and intended for the purpose of binding only the Trust Estate, and this
Indenture is executed and delivered by the Managing Trustee solely in the
exercise of the powers expressly conferred upon it as trustee under the Trust
Agreement; and no personal liability or responsibility is assumed hereunder by,
or at any time shall be enforceable against, the Managing Trustee or any of its
successors in trust on account of any representation, warranty, undertaking or
agreement hereunder of the Owner Trust, either expressed or implied, all such
personal liability, if any, being expressly waived by the Indenture Trustee;
provided, however, that (i) the Indenture Trustee or any Person claiming by,
through or under it, making claim hereunder, may, subject to the terms and
conditions hereof, look to the Trust Estate for satisfaction of such liability
or responsibility and (ii) the Managing Trustee or its successor in trust, as
applicable, shall be personally liable for its own gross negligence and willful
misconduct and for the matters described in clauses (i) through (v) of the last
sentence of Section 7.4 of the Trust Agreement. Subject to the terms and
conditions hereof, each time a successor Managing Trustee is appointed in
accordance with the terms of the Trust Agreement, such successor Managing
Trustee shall, without further act, succeed to all the rights, duties,
immunities and obligations of the predecessor Managing Trustee hereunder and
under the other Operative Documents, and such predecessor Managing Trustee shall
be released from all further duties and obligations hereunder and under the
other Operative Documents, all without the necessity of any consent or approval
by the Indenture Trustee and without in any way altering the terms of this
Indenture or such other Operative Documents or the obligations of the Indenture
Trustee hereunder or thereunder.
<PAGE>
59
(b) As to the aggregate unpaid principal amount of Secured Notes
Outstanding as of any date, the Owner Trust may rely on an Officer's Certificate
of the Indenture Trustee.
SECTION 10.05. Notices. All communications, notices and consents
-------
provided for in this Indenture shall be in writing and shall be given in person
or by courier or by means of telex, telecopy or other wire transmission (with
request for assurance of receipt in a manner typical with respect to
communications of that type), or mailed by first class mail or overnight
courier, addressed: (a) in the case of the Owner Trust, to the Owner Trust in
care of Deutsche Morgan Grenfell (Cayman) Limited, as Managing Trustee,
Elizabethan Square, P.O. Box 1984, George Town, Grand Cayman, Cayman Islands,
British West Indies, Attention: Managing Director (telephone: (809) 949-8000;
telecopier: (809) 949-8178); (b) in the case of the Indenture Trustee, to State
Street Bank and Trust Company, Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department (telephone: (617)
664-5340; telecopier: (617) 664-5371); and, in the case of all other parties, as
set forth in Schedule I to the Participation Agreement or at such other address
as any such Person may from time to time designate by notice duly given in
accordance with the provisions of this Section 10.05 to the other parties hereto
and shall be deemed given when received by (or when proffered to, if receipt is
not accepted) the party to whom it is addressed.
SECTION 10.06. Severability of Provisions. Any provision of this
--------------------------
Indenture which may be determined by competent authority to be invalid or
unenforceable in such jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable any remaining terms and provisions
hereof, and any such invalidity or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
The parties shall negotiate in good faith to replace such provision with an
appropriate legal provision. To the extent permitted by applicable law, the
parties hereto waive any provision thereof that renders any term or provision
hereof invalid or unenforceable in any respect.
SECTION 10.07. No Oral Modification or Continuing Waivers. No term
------------------------------------------
or provision of this Indenture or the Secured Notes may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party or the person against whom enforcement of the change, waiver,
discharge or termination is sought; and any waiver of the terms hereof or of any
Secured Note shall be effective only in the specific instance and for the
specific purpose given.
SECTION 10.08. Successors and Assigns. All covenants and agreements
----------------------
contained herein shall be binding upon each of the parties hereto and their
respective successors and permitted assigns, and inure to the benefit of each of
the parties hereto and their respective successors and permitted assigns, all as
herein provided. Any request,
<PAGE>
60
notice, direction, consent, waiver or other instrument or action by any Holder
shall bind the successors and assigns of such Holder. This Indenture and the
Indenture Estate shall not be affected by any amendment or supplement to the
Trust Agreement or by any other action taken under or in respect of the Trust
Agreement, except as otherwise provided in or permitted by this Indenture. Each
Holder by its acceptance of a Secured Note agrees to be bound by this Indenture
and all provisions of the Operative Documents applicable to it.
SECTION 10.09. Headings; Table of Contents. The division of this
---------------------------
Indenture into Articles, Sections, subsections and paragraphs, the provision of
a table of contents and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation hereof.
SECTION 10.10. Normal Commercial Relations. Notwithstanding anything
---------------------------
contained in this Indenture to the contrary, any of the Owner Participant, the
Indenture Trustee, the Owner Trust, the Managing Trustee, the Delaware Trustee
or any bank or other affiliate of any such Person may conduct any banking or
other financial transactions and have banking or other commercial relationships
with the Charterer, fully to the same extent as if this Indenture were not in
effect.
SECTION 10.11. Governing Law. THIS INDENTURE SHALL BE GOVERNED BY,
-------------
AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 10.12. Execution. This Indenture may be executed in separate
---------
counterparts by the parties thereto, each of which, when so executed and
delivered, shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 10.13. Security Agreement. This Indenture shall constitute a
------------------
security agreement and, in addition to all other rights of the Indenture Trustee
hereunder, the Indenture Trustee shall have for the benefit of the Holders all
of the rights conferred upon secured parties by the UCC and any other similar
legislation as from time to time in effect in any applicable jurisdiction.
SECTION 10.14. Benefits of Indenture. Nothing in this Indenture,
---------------------
whether express or implied, shall be construed to give to any Person other than
the parties hereto, the Holders and (to the extent expressly provided herein)
the Owner Participant any legal or equitable right, remedy or claim under or in
respect of this Indenture or the Secured Notes, and this Indenture shall be held
for the sole and exclusive benefit of the parties hereto, the Holders and, to
the extent expressly provided herein, the Owner Participant.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
SAMOCO 1234 TRUST,
Owner Trust
By: DEUTSCHE MORGAN GRENFELL
(CAYMAN) LIMITED,
not in its individual capacity, except
as expressly provided herein, but
solely as Managing Trustee
By: /s/ J.H. Gullimare
--------------------------
Name: J.H. Gullimare
Title: Authorized Signatory
STATE STREET BANK AND
TRUST COMPANY,
as Indenture Trustee
By: /s/ Ruth A. Smith
--------------------------
Name: Ruth A. Smith
Title: Vice President
<PAGE>
Appendix A
to Indenture
------------
DEFINITIONS
-----------
Appendix A filed separately.
APP-1
<PAGE>
DESCRIPTION OF VESSEL
---------------------
That certain double hulled, double bottomed, very large crude carrier,
designated as Hull No. 1234, to be constructed by Sumitomo Heavy Industries,
Ltd. in the shipyard of Ishikawajima-Harima Heavy Industries Co., Ltd. in Kure,
Japan, pursuant to the Construction Contract and expected to be delivered in May
1999. The Vessel will have a gross registered tonnage of approximately 160,000
tons, a net registered tonnage of approximately 95,000 tons and a designed
deadweight capacity of approximately 280,000 metric tons.
SCH-1-1
<PAGE>
Exhibit A
to Indenture
------------
FORM OF
SERIES 1996 A-4 SECURED NON-RECOURSE DISCOUNT NOTE
SAMOCO 1234 TRUST
Maturity Date: __________
Registered No. ____________ New York, New York
Date:
Principal Sum at Full Accrual Date: ______$Interest Rate Per Annum: %
Full Accrual Date: ________
The following information is supplied for purposes of Sections 1273
and 1275 of the Internal Revenue Code:
Expected yield to maturity for period Original issue discount under Section
from Issue Date to Maturity Date: 1273 of the Internal Revenue Code
% (rounded to two decimal places), (for each $1,000 principal amount at
compounded semiannually on each the Full Accrual Date and at
_____ and ______, commencing on maturity): $
the Full Accrual Date (computed
after giving effect to (i) the Issue Price (for each $1,000
accretion of original issue discount principal amount at maturity): $
prior to the Full Accrual Date and
(ii) payment of interest on each
______ and ______ from and after the
Full Accrual Date to the Maturity
Date at the rate of interest set
forth above).
SAMOCO 1234 TRUST, a trust created pursuant to the Delaware Business
Trust Act (the "Owner Trust"), of which Deutsche Morgan Grenfell (Cayman)
Limited and Wilmington Trust Company are acting not in their respective
individual capacities but solely as Owner Trustees (the "Owner Trustees") under
that certain Declaration of Agreement of Trust, dated as of November 22, 1996,
among the Owner Participant named therein and the Owner Trustees (the "Trust
Agreement"), for value received hereby promise to pay to State Street Bank and
Trust Company, as Pass Through Trustee (the "Pass Through Trustee") under that
certain 1996-A Pass Through Trust (the "Pass Through Trust") created by the Pass
Through Trust Agreement, dated as of December 19, 1996, as supplemented and
amended by that certain Pass Through Trust Supplement, dated as of December 19,
1996 (as
<PAGE>
supplemented and amended, the "Agreement"), or registered assigns (collectively,
the "Holders"), the principal sum of ___________________ DOLLARS ($___________)
(or, in the event this Secured Note shall be redeemed prior to the Full Accrual
Date specified above, the Accreted Value of this Secured Note as of such date)
in installments on each Interest Payment Date defined below as set forth in
Schedule I hereof with the final installment due and payable on the Maturity
Date specified above and to pay interest on the unpaid principal amount of this
Secured Note accruing from the Full Accrual Date until the principal amount of
this Secured Note shall have been paid in full at the Interest Rate specified
above (based on a 360-day year of twelve 30 day months) and (to the extent not
prohibited by applicable law) to pay interest on any overdue principal at the
Overdue Rate. Subject to Section 2.03(b) of the Indenture (defined below), the
first payment of accrued and unpaid interest on the unpaid principal of this
Secured Note shall be payable on and thereafter on each ________ and
________ in each year (each such date being an "Interest Payment Date"). No
interest shall accrue on the principal amount of this Secured Note prior to the
Full Accrual Date as such amount may be reduced from time to time by the payment
of principal installments thereunder.
This Secured Note shall accrete original issue discount at a rate per
annum, as set forth in Schedule I hereof, such that the yield on this Secured
Note from the date hereof to the Full Accrual Date will equal the semi-annual
bond equivalent rate corresponding to the Interest Rate specified above. The
principal amount of this Secured Note on any date prior to the Full Accrual Date
shall be the Accreted Value, as defined in the Indenture (defined below), and,
from and after the Full Accrual Date, the principal amount of this Secured Note
shall be the full principal sum specified above.
This Secured Note is one of the Secured Notes issued by the Owner
Trust pursuant to the terms of the Trust Indenture, Assignment of Charter and
Head Lease, and Security Agreement, dated as of December 19, 1996 (the
"Indenture"), between the Owner Trust and State Street Bank and Trust Company,
not in its individual capacity but solely as Indenture Trustee thereunder, for
the Holder of this Secured Note and the Holders of all other Secured Notes
Outstanding thereunder (the "Indenture Trustee"). Capitalized terms used in
this Secured Note and not otherwise defined shall have the respective meanings
assigned to them in the Indenture.
Each payment of principal and interest shall be due and payable at the
times, places and in the manner as specified herein and in the Indenture.
Each payment on this Secured Note shall be applied, first, to the
payment of accrued interest on this Secured Note to the date of such payment,
second, to the payment of any principal on this Secured Note then due hereunder,
and third, to the payment of the installments of principal remaining unpaid on
this Secured Note in the inverse order of the maturity thereof.
EXHA-2
<PAGE>
This Secured Note is one of the Owner Trust's Series 1996 A-4 Secured
Notes, which, together with any Additional Notes and any note or notes issued
from time to time in exchange or substitution therefor in accordance with the
terms of the Indenture, are equally and ratably secured by the Indenture, except
as otherwise provided therein. The property of the Owner Trust (excluding
Excepted Payments) included in the Indenture Estate is pledged, assigned or
mortgaged to the Indenture Trustee, to the extent provided in the Indenture, as
security for the payment of the principal of, Make-Whole Amount, if any, and
interest on this Secured Note and all other Secured Notes issued and outstanding
from time to time under the Indenture. Reference is hereby made to the
Indenture for a description of the Indenture Estate, and for a statement of the
rights of the Holder of, and the nature and extent of the security for, this
Secured Note and of the rights of, and the nature and extent of the security
for, the Holders of the other Secured Notes and of certain rights of the Owner
Trust and the Owner Participant, as well as for a statement of the terms and
conditions of the trusts created by the Indenture, to all of which terms and
conditions the Holder agrees by its acceptance of this Secured Note.
This Secured Note is subject to redemption or purchase in whole as
specified in Article III of the Indenture.
In case an Indenture Event of Default shall occur and be continuing,
the unpaid balance of the principal of the Secured Notes, together with all
accrued but unpaid interest, may be declared or may otherwise become due and
payable in the manner and with the effect provided in Article V of the
Indenture.
The Secured Notes are issuable only as registered notes. There shall
be maintained a note register for the purpose of registering transfers and
exchanges of the Secured Notes at the principal corporate trust office of the
Indenture Trustee, or of any successor Indenture Trustee, in the manner provided
in Section 2.05 of the Indenture. The Owner Trust and the Indenture Trustee may
deem and treat the Person in whose name this Secured Note is registered on the
Note Register as the absolute owner hereof (whether or not this Secured Note
shall be overdue) for the purpose of receiving payments of principal, Make Whole
Amount, if any, and interest and for all other purposes, and neither the Owner
Trust nor the Indenture Trustee shall be affected by any notice to the contrary.
All payments of principal, Make-Whole Amount, if any, and interest to
be made by the Owner Trust and, except as otherwise provided in the Operative
Documents, all payments of any other amounts payable by or on behalf of the
Owner Trust under the Secured Notes or under the Indenture, shall be made only
from the income and proceeds from the Indenture Estate, and only to the extent
that the Indenture Trustee shall have received sufficient income and proceeds
from the Indenture Estate to make such payments in accordance with the
Indenture. The Holder, by its acceptance of this Secured Note, agrees that it
will look solely to the income and proceeds from the Indenture Estate to the
extent available for payment as provided in the Indenture, and that none of the
Owner Participant, the Owner Trust, the Managing Trustee, the Delaware Trustee
or the Indenture Trustee
EXHA-3
<PAGE>
(whether in their respective individual or trust capacities) shall be personally
liable to the Indenture Trustee or to the Holder for any amounts payable under
this or any Secured Note, nor, except as specifically provided in the Indenture
or any other Operative Document, for any amounts payable or any liability under
the Indenture.
This Secured Note shall not be valid or become obligatory for any
purpose or be entitled to any security or benefit under the Indenture until the
certificate of authentication hereon shall have been signed by the Indenture
Trustee.
No delay or omission of the Holder to exercise its rights hereunder
shall impair any such right or power or shall be construed to be a waiver of any
Indenture Event of Default or an acquiescence therein. No waiver of any
Indenture Event of Default shall be construed, taken or held to be a waiver of
any other Indenture Event of Default or a waiver, acquiescence in, or consent to
any further or succeeding Indenture Event of Default. The Owner Trust waives
demand, notice and protest in any defense by reason of extension of time for
payment or other indulgence granted by the Holder.
THIS SECURED NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
EXHA-4
<PAGE>
IN WITNESS WHEREOF, the Owner Trust has caused this Secured Note to be
duly executed.
Date:
SAMOCO 1234 TRUST
Owner Trust
By: DEUTSCHE MORGAN GRENFELL, (CAYMAN)
LIMITED, not in its individual
capacity, but solely as Managing
Trustee under the Trust Agreement
By:
-----------------------
Authorized Officer
EXHA-5
<PAGE>
Certificate of Authentication
-----------------------------
This Secured Note is one of the Series 1996 A-4 Secured Notes due
_______________ of SAMOCO 1234 TRUST, the Owner Trust as described in the
within-mentioned Indenture.
STATE STREET BANK AND
TRUST COMPANY, not in its individual
capacity, but soley as Indenture Trustee
By:
-----------------------
Authorized Signatory
EXHA-6
<PAGE>
Schedule I to
Exhibit A to
Indenture
---------
SERIES 1996 A-4 SECURED NON-RECOURSE DISCOUNT NOTE
SAMOCO 1234 TRUST
Payment Aggregate Payment
Interest Payment Date Percentage Amount
- --------------------- ---------- ------
EXHA-7
<PAGE>
Exhibit B-1
to Indenture
------------
SERIES 1996 A-4 SECURED NON-RECOURSE DISCOUNT NOTE
SAMOCO 1234 TRUST
Payment Aggregate Payment
Regular Distribution Date Percentage Amount
- ------------------------- ---------- ------
July 2, 1997 -- --
January 2, 1998 -- --
July 2, 1998 -- --
January 2, 1999 -- --
July 2, 1999 -- --
January 2, 2000 0.38800992% $ 899,795.00
July 2, 2000 0.40153213% 931,153.00
January 2, 2001 0.41552523% 963,603.00
July 2, 2001 0.43000647% 997,185.00
January 2, 2002 0.44499224% 1,031,937.00
July 2, 2002 0.46050022% 1,067,900.00
January 2, 2003 0.47654851% 1,105,116.00
July 2, 2003 0.49315610% 1,143,629.00
January 2, 2004 0.51034282% 1,183,485.00
July 2, 2004 0.52812807% 1,224,729.00
January 2, 2005 0.54653342% 1,267,411.00
July 2, 2005 0.56557999% 1,311,580.00
January 2, 2006 0.58529064% 1,357,289.00
July 2, 2006 0.60568780% 1,404,590.00
January 2, 2007 0.62679603% 1,453,540.00
July 2, 2007 0.64863993% 1,504,196.00
January 2, 2008 0.67124493% 1,556,617.00
July 2, 2008 0.69463821% 1,610,866.00
January 2, 2009 0.71884605% 1,667,004.00
July 2, 2009 0.74389780% 1,725,099.00
January 2, 2010 0.76982277% 1,785,219.00
July 2, 2010 0.79665114% 1,847,434.00
January 2, 2011 0.82441440% 1,911,817.00
July 2, 2011 0.85314532% 1,978,444.00
January 2, 2012 0.88287753% 2,047,393.00
July 2, 2012 0.91364554% 2,118,744.00
January 2, 2013 0.94548599% 2,192,582.00
July 2, 2013 0.97843639% 2,268,994.00
January 2, 2014 1.01253471% 2,348,068.00
July 2, 2014 1.04782191% 2,429,899.00
January 2, 2015 1.08433851% 2,514,581.00
July 2, 2015 1.12212764% 2,602,214.00
January 2, 2016 1.16123372% 2,692,901.00
July 2, 2016 1.20170246% 2,786,748.00
January 2, 2017 1.24358215% 2,883,867.00
July 2, 2017 1.28692152% 2,984,371.00
EXHB-1
<PAGE>
Exhibit B-2
to Indenture
------------
Issuance of Series 1996 A-4 Secured Notes
-----------------------------------------
The issuance of the Series 1996 A-4 Secured Notes issued hereunder shall be
issued to and shall be payable to the Pass Through Trustee under the Pass
Through Trust Agreement with respect to the grantor trust created thereby, in
each case as set forth below:
Mobil Corporation 1996 A Pass Through Trust:
6.97% Certificates due July 2, 2017
EXHB-2
<PAGE>
Exhibit C
to Indenture
------------
FORM OF SUBSTITUTION DATE SUPPLEMENT
SUBSTITUTION DATE AGREEMENT dated as of (this
"Substitution Agreement"), among [ ], a trust created
pursuant to (the "Substitute Obligor") under the [Substitute Trust Agreement]
------------------
(as defined below), SAMOCO 1234 Trust, a trust created pursuant to the Delaware
Business Trust Act (the "Owner Trust") under a Declaration of Agreement of Trust
dated as of November 22, 1996, as amended, among Deutsche Morgan Grenfell
(Cayman) Limited, Wilmington Trust Company and SAMOCO LLC, a Cayman Islands
limited life company, as owner participant, MOBIL MARINE FINANCE COMPANY I INC.,
as Charterer, STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust
company, not in its individual capacity, except as expressly provided in the
Indenture, but solely as Indenture Trustee (the "Indenture Trustee"), and STATE
-----------------
STREET BANK AND TRUST COMPANY, as Pass Through Trustee, who each being duly
sworn did declare and say as follows.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, terms used herein and not otherwise defined shall have the
respective meanings assigned to them in the Indenture;
WHEREAS, the Substitute Obligor was organized pursuant to a Declaration
and Agreement of Trust dated (the "Substitute Trust
----------------
Agreement"), among , as managing trustee
- ---------
(together with its permitted successors and assigns, the "Managing Trustee"),[
----------------
], as Delaware trustee (together with its permitted successors and assigns, the
"Delaware Trustee"), each acting not individually, except as otherwise provided
----------------
herein (when acting in such individual capacities, the "
Trust Company" and "Delaware Trust Company", respectively), but solely as
- ------------- ----------------------
trustees for the Substitute Obligor (the Managing Trustee and the Delaware
Trustee, collectively in such capacities being, the "Owner Trustees" and each
--------------
individually, an "Owner Trustee"), and
-------------
, as owner participant (the "Owner Participant") as amended and supplemented;
-----------------
and
WHEREAS, the Owner Trust desires to sell, and the Substitute Obligor
desires to purchase all of the Owner Trust's beneficial interest in the Vessel
Interest created under the Operative Documents.
<PAGE>
WHEREAS, the Indenture provides for the execution and delivery of a
supplement substantially in the form of this Substitution Agreement, which
supplement shall provide for certain matters relating to the assumption by the
Substitute Obligor of the obligations of the Owner Trust pursuant to Section
3.04 of the Indenture;
NOW, THEREFORE, the parties hereto agree as follows:
1. As of the date of this Substitution Agreement (the "Substitution
Date"), the Owner Trust hereby irrevocably sells, assigns , transfers and
conveys to the Substitute Obligor all of Owner Trust's right, title and interest
in and to the Vessel Interest.
2. The Substitute Obligor hereby (a) accepts the foregoing assignment,
(b) confirms that it is purchasing the Vessel Interest subject to the security
interest and Lien of the Indenture and ratifies the security interest and Lien
which the Owner Trust granted to the Indenture Trustee pursuant to the Granting
Clause of the Indenture in all of the Owner Trust's right, title and interest in
and to the Indenture Estate and (b) explicitly agrees that it is acquiring the
Vessel Interest, and all property relating thereto, constituting a portion of
the Indenture Estate, subject to such security interest and Lien, which shall
remain in full force and effect until the Lien of the Indenture on the Vessel is
discharged in accordance with the terms thereof, and the Indenture Trustee
acknowledges that the Charter and the obligations of Owner Trust thereunder as
the Charterer have been terminated, except as specifically provided for therein.
3. Effective as of the Substitution Date, each party hereto agrees
that the Substitute Obligor shall be deemed to be a party to the Indenture, the
Secured Notes and each other Operative Document to which the Owner Trust is a
party, and all references to the Owner Trust in the Indenture, the Secured Notes
and each other Operative Document shall be deemed to be references to the
Substitute Obligor; provided, however, that any obligations or liabilities of
the Managing Trustee or the Delaware Trustee in its individual capacities
incurred on or prior to the Substitution Date or arising out of or based upon
events occurring on or prior to the Substitution Date, shall remain the
responsibility of the Owner Trust.
4. This Substitution Agreement shall be construed as supplemental to
the Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference in this Substitution Agreement.
5. Representations and Warranties of Owner Trust. Owner Trust hereby
---------------------------------------------
represents and warrants to the Substitute Obligor and the Indenture Trustee as
follows:
(a) Organization and Good Standing. Owner Trust is a trust duly
------------------------------
organized, validly existing and in good standing under the Delaware Business
Trust Act.
EXHC-2
<PAGE>
(b) Power and Authority. Owner Trust has full corporate power and
-------------------
authority to execute, deliver and perform this Substitution Agreement and to
consummate the transactions contemplated hereby.
(c) Due Authorization. This Substitution Agreement has been duly
-----------------
authorized, executed and delivered by the Owner Trust, and assuming due
authorization, execution and delivery by the Substitute Obligor and the
Indenture Trustee, constitutes a legal, valid and binding obligation of the
Owner Trust, enforceable against it in accordance with its terms except as such
enforcement may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general applicability
affecting the enforcement of creditors' rights or by general principles of
equity.
(d) Compliance with Law. Neither the execution, delivery or
-------------------
performance by the Owner Trust of this Substitution Agreement nor compliance
with the terms and provisions hereof, conflicts or will conflict with or will
result in a breach or violation of any of the terms, conditions or provisions of
any law including, without limitation, the Securities Act of 1933, as amended,
and any law, governmental rule or regulation applicable to the Owner Trust.
6. Representations and Warranties of Substitute Obligor. The
----------------------------------------------------
Substitute Obligor hereby represents and warrants to the Owner Trust and the
Indenture Trustee as follows:
(a) Organization and Good Standing. The Substitute Obligor is a trust
------------------------------
duly organized and validly existing under the Delaware Business Trust Act.
(b) Power and Authority. The Substitute Obligor has full trust power
-------------------
and authority to execute, deliver and perform this Substitution Agreement and to
consummate the transactions contemplated hereby.
(c) Due Authorization. This Substitution Agreement has been duly
-----------------
authorized, executed and delivered by the Substitute Obligor and, assuming the
due authorization, execution and delivery thereof by the Owner Trust and the
Indenture Trustee, constitutes the legal, valid and binding obligation of the
Substitute Obligor, enforceable against it in accordance with its terms, except
as such enforcement may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general applicability
affecting the enforcement of creditors' rights or by general principles of
equity.
(d) Compliance with Law. Neither the execution, delivery or
-------------------
performance by the Substitute Obligor of this Substitution Agreement nor
compliance with the terms and provisions hereof, conflicts or will conflict with
or will result in a breach or violation of any of the terms, conditions or
provisions of any law, governmental rule or regulation applicable to Substitute
Obligor.
EXHC-3
<PAGE>
(e) Investment Intent. Substitute Obligor is acquiring the Vessel
-----------------
Interest for its own account for investment and with no present intention of
distributing or reselling such Vessel Interest or any part thereof other than a
transfer to an affiliate of the Substitute Obligor or a transfer to another
person in compliance with the provisions of the Securities Act of 1933, as
amended, and the Operative Documents.
7. Counterparts. This Substitution Agreement may be executed in one
------------
or more counterparts, each of which shall be deemed as original, but all of
which together shall constitute one and the same instrument.
8. Successors and Assigns. The terms of this Substitution Agreement
----------------------
shall be binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns.
9. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
10. Amendment. No waiver, modification or amendment of any provision
---------
of this Substitution Agreement shall be effective unless it is in writing and
signed by the party against which it is sought to be enforced.
11. Further Assurances. Each party agrees that from time to time
------------------
after the date hereof, it shall execute and deliver or cause to be executed and
delivered such instruments, documents and papers, and take all such further
action as may be reasonably required in order to consummate fully the purposes
of this Substitution Agreement and to implement the transactions contemplated
hereby.
EXHC-4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Substitution
Agreement to be duly executed and delivered on the day and year first above
written.
SAMOCO 1234 TRUST, Owner Trust
By: DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED, not
in its individual capacity, except as
expressly provided in the Indenture, but
solely as Managing Trustee of the Owner Trust
By:
-----------------------
Title:
[ ], Substitute
Obligor
By:[ ],
not in its individual capacity, except as
expressly provided herein and in the
Indenture, but solely as Managing Trustee of
the Substitute Obligor
By:
-----------------------
Title:
STATE STREET BANK AND TRUST COMPANY, Indenture
Trustee
By:
-----------------------
Title:
MOBIL MARINE FINANCE COMPANY I INC., as Charterer
By:
-------------------------
Title:
EXHC-5
<PAGE>
STATE STREET BANK AND TRUST COMPANY, as Pass
Through Trustee
By:
-----------------------
Title:
EXHC-6
<PAGE>
Exhibit D
to Indenture
------------
FORM OF TRUST INDENTURE, ASSIGNMENT OF
CHARTER AND HEAD LEASE AND SECURITY AGREEMENT
SUPPLEMENT NO. ____
This TRUST INDENTURE, ASSIGNMENT OF CHARTER AND HEAD LEASE AND
SECURITY AGREEMENT SUPPLEMENT NO. ____, dated _________________ (this "Indenture
Supplement") between DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED, a Cayman Islands
banking corporation, and WILMINGTON TRUST COMPANY, a Delaware banking
corporation, not in their individual capacities, but solely as Owner Trustees
(the "Owner Trustees") of SAMOCO 1234 TRUST, a trust created under the
Declaration of Agreement of Trust pursuant to the Delaware Business Trust Act
(the "Owner Trust") and STATE STREET BANK AND TRUST COMPANY, a Massachusetts
-----------
trust company, not in its individual capacity, except as expressly provided
herein, but solely as Indenture Trustee (the "Indenture Trustee").
-----------------
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, terms used herein and not otherwise defined shall have the
respective meanings assigned to them in the Indenture; and
WHEREAS, the Indenture provides for the execution and delivery of one
or more supplements substantially in the form of this Indenture Supplement,
which supplement shall describe the property from time to time included in the
Indenture Estate;
NOW, THEREFORE, THIS INDENTURE SUPPLEMENT WITNESSETH that, to secure
(i) the prompt payment of the principal of, Make-Whole Amount, if any, and
interest on all Secured Notes from time to time Outstanding under the Indenture
and of all other amounts payable to the Holders (whether as Holders or Loan
Participants) thereunder, under the Secured Notes and under the other Operative
Documents, (ii) the performance and observance by the Owner Trust of all of the
provisions, covenants and agreements contained in the Participation Agreement,
in the Secured Notes and in the other Operative Documents for the benefit of the
Indenture Trustee or the Holders therein, and (iii) the performance and
observance by the Owner Participant of its covenants and agreements contained in
the Operative Documents (the obligations described in the above clauses (i),
(ii) and (iii), collectively, the "Indenture Indebtedness"), and for the uses
and purposes and subject to the terms and provisions thereof, and in
consideration of the premises and of the covenants herein contained and of the
acceptance of the Secured Notes by the Holders thereof:
<PAGE>
GRANTING CLAUSE
---------------
The Owner Trust, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to secure the payment
and performance of the Indenture Indebtedness, hereby presently irrevocably
mortgages, hypothecates and pledges unto the Indenture Trustee and creates to
and for the benefit of the Indenture Trustee, a security interest in and
mortgage lien on all of the right, title and interest of the Owner Trust in, to
and under all of the property, rights, interests, and privileges described on
Exhibit I hereto now owned or in the future acquired by the Owner Trust or in
which the Owner Trust now has or may in the future acquire any estate, right,
title or interest (collectively, the "Additional Property"),
TO HAVE AND TO HOLD the aforesaid Additional Property unto the
Indenture Trustee, its successors and assigns, for the benefit and security of
the Holders, without any priority of any Secured Note over any other, and for
the uses and purposes and subject to the terms and provisions set forth in the
Indenture.
This Indenture Supplement shall be construed as supplemental to the
Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference in this Indenture Supplement and is hereby ratified,
approved and confirmed. From and after the date hereof, the Indenture Estate
shall include the Additional Property along with the all other property, rights
and interest granted to the Indenture Trustee under the Granting Clause of the
Indenture and the Additional Property shall be subject to the Lien of the
Indenture.
This Indenture Supplement may be executed by the Owner Trust and the
Indenture Trustee in separate counterparts, each of which, when so executed and
delivered, shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
THIS INDENTURE SUPPLEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
EXHD-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
Supplement to be duly executed, all as of the date first written above.
SAMOCO 1234 TRUST, as Owner Trust
By: DEUTSCHE MORGAN GRENFELL
(CAYMAN) LIMITED, not in its individual
capacity, except as expressly provided
herein, but solely as Owner Trustee
By:
-----------------------------
Title:
STATE STREET BANK AND TRUST COMPANY,
Indenture Trustee
By:
------------------------------
Title:
EXHD-3
<PAGE>
Description of Additional Property. Exhibit I to
Exhibit D
to Indenture
------------
EXHD-4
<PAGE>
EXHIBIT E
TO INDENTURE
------------
FORM OF FIRST SHIP MORTGAGE
Dated ______________
by
______________________
Shipowner and Mortgagor
to
______________________
Mortgagee
VLCC ______
<PAGE>
TABLE OF CONTENTS
Page No.
-------
ARTICLE IREPRESENTATIONS OF THE SHIPOWNER........................ -4-
(1) Organization........................................... -4-
(2) Documentation.......................................... -4-
ARTICLE IICOVENANTS OF THE SHIPOWNER............................. -4-
(1) Maintenance of Entity Status........................... -4-
(2) Liens.................................................. -4-
(3) Maintenance of Mortgage................................ -5-
ARTICLE III EVENTS OF DEFAULT AND REMEDIES...................... -5-
(1) Event of Default....................................... -5-
(2) Remedies............................................... -5-
(3) Conveyance after Sale.................................. -7-
(4) Shipowner Barred....................................... -7-
(5) Arrest By Third Party.................................. -7-
(6) Powers of the Mortgagee................................ -8-
(7) Application of Proceeds................................ -8-
(8) No Exclusivity......................................... -8-
ARTICLE IV SUNDRY PROVISIONS.................................... -8-
(1) Recording.............................................. -8-
(2) Successors and Assigns................................. -8-
(3) Agents................................................. -9-
(4) Notices................................................ -9-
(5) Governing Law.......................................... -9-
(6) Termination of U.K. Documents.......................... -9-
EXHIBIT 1 Indenture (with attached Appendix A and Exhibits A-E)
EXHIBIT 2 Article 21 of the Charter
EXHE-i
<PAGE>
THIS FIRST SHIP MORTGAGE, made and dated ____________, by (a)
____________________________________ (the "Shipowner"), with an address at
________________________________________________________________, created by the
__________________________ dated as of ______________, as amended and restated
as of _______________ (the "___________"), with the _________________ named
therein, and duly qualified as a _______________ foreign maritime entity, in
favor of (b) _____________________________________________, not in its
individual capacity but solely as Indenture Trustee (the "Mortgagee") under a
Trust Indenture, Assignment of Charter and Head Lease and Security Agreement,
dated as of ____________ (the "Indenture") between the Shipowner and the
Mortgagee.
WHEREAS:
A. The Shipowner is the registered owner of the Republic of
__________________ flag VLCC "_____" (the "Vessel"), Official No. __________, of
______ gross tons and _____ net tons, duly documented in the name of the
Shipowner under the laws and flag of the Republic of _____________ with her home
port at the port of ________.
B. Pursuant to the terms of the Indenture, the Shipowner has issued
and sold to the Pass Through Trustee (as defined in the Indenture) its Series
1996-A Secured Notes dated _______________ (the "Secured Notes") in the initial
principal amount of U.S.____________. The form of the Indenture (together with
Appendix A, Definitions, and Exhibits A-E (including the form of the Secured
Notes)) is attached hereto as Exhibit 1 and hereby made a part hereof as though
set forth fully herein. The term "Indenture" as used in this Mortgage shall
mean the Indenture and Appendix A (Definitions) and Exhibit A (Form of Secured
Notes) as attached hereto and as each may be amended, supplemented or modified
from time to time.
C. The Shipowner has entered into a demise charter (as the same may
be amended, supplemented or modified from time to time, the "Charter") with
_________________ (the "Charterer") respecting the Vessel pursuant to which the
Charterer has covenanted and agreed with the Shipowner, inter alia, to operate,
maintain, and insure the Vessel. The form of Article 21 of the Charter defining
Charter Events of Default is attached hereto as Exhibit 2 and hereby made a part
hereof as though set forth fully herein.
D. The Shipowner has entered into a ______________________________
(the "Conditional Sale Agreement") dated _____________ with the financial
institution named therein (the "U.K. Lessor") pursuant to which the U.K. Lessor
has been granted certain rights respecting the Vessel. The U.K. Lessor has
demise chartered the Vessel to the Shipowner pursuant to a U.K. Head Lease dated
______________ (the "Head Lease").
EXHE-1
<PAGE>
E. To secure payment of principal of, interest on, Make-Whole Amount,
if any, and any other amounts which may become due to the Mortgagee or the
holders of Secured Notes pursuant to the terms of the Indenture, the Secured
Notes and the other Operative Documents, the Shipowner has duly authorized the
execution, delivery and recording of this First Ship Mortgage under and pursuant
to the laws of the __________________. Notwithstanding anything contained
herein to the contrary the rights granted to the Indenture Trustee hereunder are
subject and subordinate to the rights of the U.K. Lessor under the Conditional
Sale Agreement and the Head Lease so long as either document is in full force
and effect.
F. Terms used herein and not otherwise defined herein are used as
defined in, or by reference in, the Indenture.
NOW, THEREFORE, THIS MORTGAGE, WITNESSETH:
That in consideration of the premises and other valuable
consideration, the receipt whereof is hereby acknowledged, and in order to
secure the payment of principal of, interest on, Make-Whole Amount, if any,
respecting the Secured Notes, and all other amounts which may become due under
the Indenture or hereunder (collectively, the "Indebtedness hereby secured) and
to secure the performance and observance of and compliance with the covenants,
terms and conditions herein and in the Secured Notes and the Indenture
contained, the Shipowner has granted, conveyed, mortgaged, pledged, assigned,
transferred, set over and confirmed and does by these presents grant, convey,
mortgage, pledge, assign, transfer, set over and confirm unto the Mortgagee, its
successors and assigns, the whole of the Vessel which term shall include all of
the boilers, engines, machinery, bowsprits, masts, spars, sails, rigging, boats,
anchors, cables, apparel, furniture, fitting, equipment and all other
appurtenances to the Vessel appertaining or belonging, whether now owned or
hereafter acquired, whether on board or not, and all additions, improvements and
replacements hereafter made in or to the Vessel, or any part thereof, or in or
to the equipment and appurtenances aforesaid, but excluding any leased
equipment;
SUBJECT AND SUBORDINATE to the rights of the U.K. Lessor under the
Conditional Sale Agreement and the Head Lease so long as either document is in
full force and effect;
TO HAVE AND TO HOLD the same unto the Mortgagee, its successors and
assigns, to its and its successors' and assigns' own use and behoof forever;
PROVIDED only, and the condition of these presents is such that if the
Shipowner, or its successors or assigns, shall pay or cause to be paid to the
Mortgagee the Indebtedness hereby secured as and when the same shall become due
and payable in accordance with the terms of this Mortgage, the Secured Notes and
the Indenture, and shall perform, observe and comply with the covenants, terms
and conditions in this Mortgage and
EXHE-2
<PAGE>
in the Secured Notes and the Indenture contained, expressed or implied, to be
performed, observed or complied with, by and on the part of the Shipowner, then
these presents and the rights hereunder shall cease, determine and be void;
otherwise to be and remain in full force and effect.
ARTICLE I
REPRESENTATIONS OF THE SHIPOWNER
(1) Organization. The Shipowner is a trust created under the
------------
_________________________, duly organized and validly existing in good standing
under the laws of the State of Delaware and is duly qualified as a
_______________ foreign maritime entity. _______________________________ is
Managing Trustee of the Shipowner.
(2) Documentation. The Vessel is, and the Shipowner covenants that
-------------
it will remain, duly documented in the name of the Shipowner as owner thereof
under the laws and flag of the _______________________, free and clear of all
Liens and encumbrances except Permitted Liens, which include but are not limited
to, the rights of the U.K. Lessor under the Conditional Sale Agreement and the
Head Lease, so long as either document is in full force and effect.
ARTICLE II
COVENANTS OF THE SHIPOWNER
(1) Maintenance of Entity Status. The Shipowner covenants that it
----------------------------
will remain duly qualified as a _________________ foreign maritime entity.
(2) Liens. Neither the Shipowner, the Charterer or any other
-----
charterer, the master of the Vessel nor any other Person has or shall have any
right, power or authority to create, incur or permit to be placed or imposed
upon the Vessel any Lien whatsoever, other than the Lien of this Mortgage and
Permitted Liens.
(3) Maintenance of Mortgage. The Shipowner (or the Charterer under
-----------------------
the Charter) shall, at its expense and at no cost to the Mortgagee, comply with
and satisfy all of the provisions of the laws and flag of the
______________________, in order to establish, record and maintain this Mortgage
as a mortgage thereunder on the Vessel except to the extent provided by the
Indenture.
EXHE-3
<PAGE>
ARTICLE III
EVENTS OF DEFAULT AND REMEDIES
(1) Event of Default. An Indenture Event of Default shall constitute
----------------
an event of default hereunder.
(2) Remedies. If an Indenture Event of Default shall have occurred
--------
and be continuing, subject to the provisions of Article III, Section (2)(g)
hereof and the Indenture, (x) the Mortgagee shall have the rights and remedies
provided in the Indenture, (y) the Mortgagee shall have all of the rights and
remedies provided mortgagees under the laws of the __________________ and, in
addition, (z) the Mortgagee may:
(a) Enforce and exercise all or any of its rights and powers as a
first mortgagee at law, in equity, or in admiralty;
(b) Exercise all the rights and remedies in foreclosure and otherwise
given to mortgagees by the laws of the ____________________________, or by the
applicable laws of any jurisdiction where the Vessel may be found, and initiate
and prosecute such other judicial, extra-judicial, or administrative proceedings
as it may consider appropriate to recover any or all sums due, or declared due,
on the Indebtedness hereby secured out of the Vessel, with the right to enforce
payment of said sum against any assets of the Indenture Estate, and in
connection therewith obtain a decree ordering the sale of the Vessel in
accordance with Section 2(e) of this Article III;
(c) Have a receiver of the Vessel appointed as a matter of right in
any suit hereunder (and any such receiver may have the rights of the Mortgagee
set forth in, or by reference in, this Article III);
(d) Take possession of the Vessel, with or without legal proceedings,
at any place where the Vessel may be found (and the Shipowner, the Charterer or
other Person in possession of the Vessel shall forthwith surrender possession of
the Vessel to the Mortgagee on demand), and the Mortgagee shall have the right,
but shall not be obligated, to manage, insure, maintain, repair, employ, lay up,
hold, charter, lease, operate or otherwise use the Vessel for such period and
under such terms as it may reasonably deem most expedient for its interest,
accounting only for the net profits, if any, arising from such use and charging
against all receipts from such use of the Vessel, all reasonable charges and
expenses in connection with such use;
(e) Sell the Vessel at private sale, on such terms and conditions as
it deems best, free of any claim of the Shipowner and, except as provided by
law, any other Person excluding the U.K. Lessor, upon advance notice of twenty-
five (25) consecutive days published in a newspaper authorized to publish legal
notices of that kind in New York, New York, and by sending notice of such sale
no later than the date of first publication, by
EXHE-4
<PAGE>
telegraph, cable, telecopy or telex, to the Shipowner as provided in Section
10.05 of the Indenture. Any such sale may be held at such place and at such
time as the Mortgagee by notice may have specified, or may be adjourned by the
Mortgagee from time to time by announcement at the time and place appointed for
such sale or for such adjourned sale, and without further notice or publication
the Mortgagee may make any such sale at the time and place to which the same
shall be so adjourned. Any such sale may be conducted without bringing the
Vessel to the place designated for such sale. The Mortgagee or any holder of a
Secured Note may become the purchaser at any such sale, and shall have the right
to credit on the purchase price any and all sums of money due in respect of the
Secured Notes and any other Indebtedness hereby secured;
(f) Accept a conveyance of title to, and to take without legal
process (and the Shipowner or other Person in possession shall forthwith
surrender possession to the Mortgagee), the whole or any part of the Vessel
wherever the same may be, and to take possession of and hold the same; and
(g) Notwithstanding anything contained herein to the contrary, the
rights and remedies granted to the Mortgagee under this Mortgage or by relevant
law shall not be exercised in such a manner as to interfere with or prejudice
the rights of the U.K. Lessor under the Conditional Sale Agreement or the Head
Lease. Without restricting the generality of the foregoing, so long as the Head
Lease is in full force and effect, the Mortgagee shall not, without the prior
written consent of the U.K. Lessor, exercise any remedy resulting in an in rem
judicial sale of the Vessel.
In addition, so long as the Charter is in effect and no Charter Event
of Default shall have occurred, the Mortgagee shall not, without the prior
written consent of the Charterer exercise any remedy resulting in an in rem
judicial sale of the Vessel.
(3) Conveyance after Sale. Subject to the provisions of Article III,
---------------------
Section (2)(g) hereof, the Shipowner hereby irrevocably appoints the Mortgagee
the true and lawful attorney of the Shipowner, in its name and stead, to make
all necessary transfers of the whole or any part of the Vessel in connection
with a sale, use or other disposition pursuant to Section 2 of Article III
hereof, and for that purpose to execute all necessary instruments of assignment
and transfer. Nevertheless, the Shipowner shall, if so requested by the
Mortgagee, ratify and confirm any sale, assignment, transfer or delivery by
executing and delivering such proper bill of sale, assignment, conveyance,
instrument of transfer or other instrument as may be designated in such request.
(4) Shipowner Barred. A sale of the Vessel made pursuant hereto
----------------
whether under the power of sale hereby granted or any judicial proceedings,
shall operate to divest all right, title and interest of any nature whatsoever
of the Shipowner therein and thereto, and shall bar the Shipowner, its
successors and assigns, and, subject to the provisions of Article III, Section
2(g) hereof, all Persons claiming by, through or under them. No purchaser shall
be bound to inquire whether notice has been given or whether any Indenture Event
of Default
EXHE-5
<PAGE>
or event of default hereunder has occurred, or as to the propriety of the sale,
or as to application of the proceeds thereof.
(5) Arrest By Third Party. (a) Subject to the provisions of Article
---------------------
III, Section (2)(g) hereof and any rights of the Charterer (including under
Article 7 of the Charter), in the event that an Indenture Event of Default shall
have occurred and be continuing and the Vessel shall be arrested or detained by
a marshal or other officer of any court of law, equity or admiralty jurisdiction
in any country of the world or by any government or other authority and shall
not be released from arrest or detention within thirty (30) days from the date
of arrest or detention, the Shipowner hereby authorizes the Mortgagee, in the
name of the Shipowner, to apply for and receive possession of and to take
possession of the Vessel with all of the rights and powers that the Shipowner
might have, possess and exercise in any such event. This authorization is
irrevocable.
(b) Subject to the provisions of Article III, Section (2)(g) hereof
and any rights of the Charterer, in the event that an Indenture Event of Default
(including Article 7 of the Charter), shall have occurred and be continuing, the
Shipowner irrevocably authorizes the Mortgagee or its appointees (with full
power of substitution) to appear in the name of the Shipowner in any court of
any country or nation of the world where a suit is pending against the Vessel
because of or on account of any alleged lien or claim against the Vessel from
which the Vessel shall not have been released in accordance with Article 15 of
the Charter.
(6) Powers of the Mortgagee. Subject to the provisions of Article
-----------------------
III, Section (2)(g) hereof, the Mortgagee is hereby appointed as attorney-in-
fact of the Shipowner, during the continuance of any Indenture Event of Default,
and upon compliance with the terms of the Indenture, in the name of the
Shipowner to demand, collect, receive, compromise and sue for, so far as may be
permitted by law, all freights, hire, earnings, issues, revenues, compensation,
income and profits of the Vessel, and all amounts due from underwriters under
any insurance thereon as payment of losses or as return premiums or otherwise,
salvage awards and recoveries, recoveries in general average or otherwise, and
to make, give and execute in the name of the Shipowner acquittances, receipts,
releases or other discharges for the same, whether under seal or otherwise, and
to endorse and accept in the name of the Shipowner all checks, notes, drafts,
warrants, agreements and all other instruments in writing with respect to the
foregoing.
(7) Application of Proceeds. Any monies collected by the Mortgagee
-----------------------
pursuant to any sale of the Vessel or other enforcement of any of its rights
hereunder on account of the occurrence of an Indenture Event of Default shall be
distributed in accordance with the provisions of Section 4.03 of the Indenture.
(8) No Exclusivity. Subject to the provisions of Article III,
--------------
Section (2)(g) hereof, no right or remedy herein conferred upon or reserved to
the Mortgagee is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given
EXHE-6
<PAGE>
hereunder or under the Indenture or now or hereafter existing at law, in equity,
in admiralty, by statute or otherwise. The assertion or employment of any right
or remedy hereunder or otherwise shall not prevent the concurrent or subsequent
assertion or employment of any other right or remedy hereunder or otherwise.
ARTICLE IV
SUNDRY PROVISIONS
(1) Recording. For the purposes of recording this First Ship
---------
Mortgage as required by the __________________________________, as amended, the
total amount of this Mortgage is (i) ______________________________________ and
(ii) interest, Make-Whole Amount, if any, and performance of mortgage covenants.
The discharge amount is the same as the total amount.
(2) Successors and Assigns. All the covenants, promises,
----------------------
stipulations and agreements of the Shipowner contained in this Mortgage shall
bind the Shipowner, its successors and assignees, and shall inure to the benefit
of the Mortgagee, its successors and assigns.
(3) Agents. Wherever and whenever herein any right, power or
------
authority is granted or given to the Mortgagee, such right, power or authority
may be exercised in all cases by the Mortgagee or such agent or agents as it may
appoint; and the authorized acts of such agent or agents when taken shall
constitute the act of the Mortgagee hereunder.
(4) Notices. Any notice or demand or other communication to the
-------
Shipowner or the Mortgagee under this Mortgage shall be made in accordance with
Section 10.05 of the Indenture.
(5) Governing Law. The provisions of this Mortgage shall, with
-------------
respect to its validity, effect, recordation and enforcement, be governed by and
construed in accordance with the applicable laws of the
__________________________.
(6) Termination of U.K. Documents. If the Conditional Sale Agreement
-----------------------------
and the Head Lease shall cease to be in full force and effect, this Mortgage
shall be read and construed as though such documents were not mentioned herein.
In such event, (a) to the extent permitted by applicable law, this Mortgage
shall succeed to the position of a first preferred ship mortgage, and the
Mortgagee shall have all of the rights of a mortgagee of a first preferred ship
mortgage, or (b) at the request of the Mortgagee, the Shipowner shall execute,
deliver and cause to be recorded, at the Shipowner's expense, in favor of the
Indenture Trustee a first preferred ship mortgage containing substantially
similar provisions to those of this Mortgage.
EXHE-7
<PAGE>
IN WITNESS WHEREOF, the Shipowner has caused this Mortgage to be duly
executed by its authorized representative the day and year first above written.
_____________________________
not in its individual capacity but
solely as the Managing Trustee
By:_____________________
Name:
Title: Attorney-in-Fact
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of December, 1996, before me personally appeared
________________, known to me, and known to be the person who executed the
foregoing instrument, who, being by me duly sworn, did depose and say that he
resides at _______________________________; that he is Attorney-in-Fact of
__________________________________________________________, not in its
individual capacity but solely as the Managing Trustee of the ______________,
the party described in and which executed the foregoing instrument; that he
signed his name thereto by authority of a power of attorney issued by said Trust
and he further acknowledged such mortgage is the free act and deed of such
Trust.
____________________________
Notary Public
[For use in the ______________________]
EXHE-8
<PAGE>
Exhibit 99.1
================================================================================
VLCC CHARTER PARTY
dated as of
December 19, 1996
among
SAMOCO RAVEN TRUST,
a trust created pursuant to the Delaware Business Trust Act
under the Declaration and Agreement of Trust
dated as of November 22, 1996,
by the Owner Participant,
Owner
and
MOBIL MARINE FINANCE COMPANY I INC.
Charterer
________________________________________________________________________________
Charter of VLCC M/V RAVEN
================================================================================
AS SET FORTH IN ARTICLE 20 OF THIS CHARTER PARTY, CERTAIN OF THE RIGHT, TITLE
AND INTEREST OF THE OWNER IN AND TO THIS CHARTER PARTY HAS BEEN ASSIGNED TO AND
IS SUBJECT TO A SECURITY INTEREST IN FAVOR OF STATE STREET BANK AND TRUST
COMPANY, AS INDENTURE TRUSTEE, UNDER THE TRUST INDENTURE, ASSIGNMENT OF CHARTER
AND HEAD LEASE, AND SECURITY AGREEMENT DATED AS OF DECEMBER 19, 1996 BETWEEN THE
OWNER TRUST AND THE INDENTURE TRUSTEE, AS SUCH INDENTURE MAY BE AMENDED,
MODIFIED OR SUPPLEMENTED FROM TIME TO TIME IN ACCORDANCE WITH THE PROVISIONS
THEREOF. THIS CHARTER PARTY HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. TO THE
EXTENT, IF ANY, THAT THIS CHARTER PARTY CONSTITUTES CHATTEL PAPER (AS SUCH TERM
IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN THIS CHARTER PARTY MAY BE CREATED THROUGH
THE TRANSFER OF POSSESSION OF ANY EXECUTED COUNTERPART OTHER THAN THE ORIGINAL
EXECUTED COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART THAT CONTAINS
THE RECEIPT THEREFOR EXECUTED BY THE INDENTURE TRUSTEE ON OR IMMEDIATELY
FOLLOWING THE SIGNATURE PAGE THEREOF.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1.
Definitions................................................. 1
-----------
ARTICLE 2.
Effective Date and Charter Period........................... 2
---------------------------------
ARTICLE 3.
Hire........................................................ 2
----
(a) Bareboat Hire............................................... 2
-------------
(b) Supplemental Hire........................................... 2
-----------------
(c) Base Hire................................................... 2
---------
(d) Excess Hire and Additional Excess Hire...................... 3
--------------------------------------
(e) Method of Payment........................................... 3
-----------------
(f) Late Payment................................................ 3
------------
(g) Minimum Payment............................................. 3
---------------
ARTICLE 4.
Description of the Vessel; Documentation.................... 4
----------------------------------------
ARTICLE 5.
Owner's Warranties and Representations and Certain
--------------------------------------------------
Charterer Undertakings.......................................... 4
----------------------
ARTICLE 6.
Delivery Date............................................... 5
-------------
(a) Delivery............................................... 5
--------
ARTICLE 7.
Quiet Enjoyment; Use and Trade of the Vessel............... 5
--------------------------------------------
ARTICLE 8.
Condition Upon Delivery..................................... 6
-----------------------
ARTICLE 9.
Net Charter................................................. 7
-----------
ARTICLE 10.
Manning..................................................... 8
-------
ii
<PAGE>
ARTICLE 11.
Maintenance; Inspection....................................... 9
-----------------------
(a) Maintenance................................................... 9
-----------
(b) Inspection.................................................... 10
----------
(c) Certain Operating Costs....................................... 10
-----------------------
ARTICLE 12.
Fuel, Lubricants, Water, Stores, Equipment
and Spare Replacement Parts................................. 11
---------------------------
ARTICLE 13.
Vessel Modification........................................... 12
(a) Required Modifications........................................ 12
----------------------
(b) Optional Modifications........................................ 12
----------------------
(c) Title to Modifications........................................ 13
----------------------
(d) Payment for Modifications and Replacement
-----------------------------------------
Components.................................................... 14
----------
(e) Replacement of Components; Removal of Property................ 14
----------------------------------------------
(f) Exemption from Certain Modification........................... 15
-----------------------------------
(g) Sharing in cost of Modification............................... 15
-------------------------------
ARTICLE 14.
Event of Loss................................................. 16
-------------
(a) Notice of Event of Loss....................................... 16
-----------------------
(b) Payment of Termination Value, Etc............................. 16
---------------------------------
(c) Application of Other Payments upon the
--------------------------------------
Occurrence of an Event of Loss................................ 17
------------------------------
(d) Application of Payments Not Relating to an
------------------------------------------
Event of Loss................................................. 17
-------------
(e) Application During Charter Event of Default................... 17
-------------------------------------------
ARTICLE 15.
Liens............................................................ 17
(a) Owner's Liens................................................ 17
-------------
(b) Charterer Liens............................................... 17
---------------
(c) Copy of Documents on Board Vessel............................. 18
---------------------------------
(d) Identification of Vessel...................................... 18
------------------------
(e) Lien on Cargoes............................................... 19
---------------
ARTICLE 16.
Insurance..................................................... 19
---------
(a) Coverage...................................................... 19
--------
(b) Additional Insurance.......................................... 19
--------------------
(c) Certain Terms of Insurance.................................... 20
--------------------------
(d) Notice of Accidents........................................... 21
-------------------
iii
<PAGE>
(e) Application of Proceeds of Insurance.......................... 21
------------------------------------
(f) Application During Charter Event of Default................... 21
-------------------------------------------
ARTICLE 17.
Requisition................................................... 22
-----------
ARTICLE 18.
Early Termination............................................. 22
-----------------
(a) Decision...................................................... 22
--------
(b) Notice of Termination......................................... 22
---------------------
(c) Sale of Vessel Interest; Termination Payment.................. 23
--------------------------------------------
(d) Continuation of Charter Party................................. 24
-----------------------------
(e) Retention of Vessel Interest by Owner......................... 24
-------------------------------------
(f) Termination of Head Lease..................................... 25
-------------------------
ARTICLE 19.
Redelivery.................................................... 25
----------
(a) Redelivery.................................................... 25
----------
(b) Redelivery Condition.......................................... 25
--------------------
(c) Charter Extension............................................. 26
-----------------
ARTICLE 20.
Assignment by Owners; Subcharters............................. 26
---------------------------------
(a) General....................................................... 26
-------
(b) Security...................................................... 26
--------
(c) Assignment.................................................... 27
----------
(d) Subcharters................................................... 28
-----------
ARTICLE 21.
Charter Event of Default...................................... 29
------------------------
ARTICLE 22.
Remedies...................................................... 32
--------
(a) In General.................................................... 32
----------
(b) Continuing Obligations........................................ 34
----------------------
(c) Remedies Cumulative........................................... 35
-------------------
(d) No Consequential Damages...................................... 35
------------------------
ARTICLE 23.
Special Termination........................................... 35
-------------------
(a) Special Termination Events.................................... 36
--------------------------
(b) Termination.................................................. 36
-----------
(c) Termination upon Termination of Head Lease.................... 36
------------------------------------------
iv
<PAGE>
ARTICLE 24.
Vessel Plans and Drawings..................................... 36
-------------------------
ARTICLE 25.
Wreck Removal................................................. 37
-------------
ARTICLE 26.
General Average............................................... 37
---------------
ARTICLE 27.
Salvage....................................................... 37
-------
ARTICLE 28.
Notices....................................................... 37
-------
ARTICLE 29.
Applicable Law; Miscellaneous................................. 38
-----------------------------
(a) Governing Law; Disputes....................................... 38
-----------------------
(b) Complete Agreement............................................ 38
------------------
(c) Amendments.................................................... 38
----------
(d) Severability of Provisions.................................... 38
--------------------------
(e) Headings...................................................... 38
--------
(f) Counterpart Execution......................................... 39
---------------------
(g) Successors and Assigns........................................ 39
----------------------
(h) Investment of Security Funds.................................. 39
----------------------------
(i) Immunities; Satisfaction of Undertakings;
Successor Owner Trustee....................................... 39
-----------------------
(j) Performance of Obligations to Indenture
---------------------------------------
Trustee and Holders........................................... 40
-------------------
(k) True Lease.................................................... 41
----------
(l) Survival of Agreements........................................ 41
----------------------
SCHEDULES
Appendix A Definitions
Schedule 1 Description of Vessel; Owner's Cost
Schedule 2 Bareboat Hire
Schedule 3 Termination Values
v
<PAGE>
BAREBOAT CHARTER PARTY
----------------------
AGREEMENT made as of the 19th day of December, 1996 between SAMOCO
RAVEN TRUST, a trust created pursuant to the Delaware Business Trust Act
(hereinafter called "Owner"), having an office and authorized to conduct
business at Elizabethan Square, Grand Cayman, Cayman Islands and created under
the Declaration and Agreement of Trust, under which Deutsche Morgan Grenfell
(Cayman) Limited, a Cayman Islands banking corporation is the Managing Trustee
(together with its permitted successors and assigns, the "Managing Trustee")
(the Managing Trustee acting not individually, but solely as trustee for the
Owner Trust, being the "Owner Trustee"), and Mobil Marine Finance Company I
Inc., a Delaware corporation having an office and place of business at 3225
Gallows Road, Fairfax, VA 22037 (hereinafter called "Charterer"), whereby Owner
will let and demise and Charterer will hire the very large crude carrier
identified in Schedule 1 (hereinafter called the "Vessel").
WHEREAS, Owner has acquired title to the Vessel;
WHEREAS, Owner has entered into a Conditional Sale Agreement dated
November 25, 1996 with the U.K. Lessor providing for the sale of the Vessel on
the terms stated therein to the U.K. Lessor;
WHEREAS, Owner has entered into the Head Lease with the U.K. Lessor
pursuant to which the U.K. Lessor's interest in the Vessel has been let to the
Owner for the U.K. Lease Term; and
WHEREAS, Owner wishes to subject its interests in the Vessel,
including such interests under the Conditional Sale Agreement and the Head
Lease, to a charter in favor of the Charterer upon the terms set forth herein;
NOW THEREFORE, in consideration of $1.00 in hand paid and other good
and valuable consideration the receipt of which is hereby acknowledged, the
parties hereby agree as follows:
ARTICLE 1.
Definitions
-----------
For the purposes hereof, capitalized terms used herein (including
those used in the preamble and in the foregoing recitals) and not otherwise
defined herein shall have the meanings assigned to them in Appendix A, which
Appendix A shall for all purposes constitute part of this Charter Party and
shall be subject to amendment in accordance with the terms hereof. References
in this Charter Party to
<PAGE>
Articles, subarticles, clauses, Schedules, Appendices and Exhibits are to
Articles, subarticles and clauses of, and Schedules, Appendices and Exhibits to,
this Charter Party unless otherwise indicated.
ARTICLE 2.
Effective Date and Charter Period
---------------------------------
Owner agrees to let and demise and Charterer agrees to hire all of
Owner's right, title and interest in the Vessel upon the terms and conditions
set forth in this Agreement for the Charter Period. As of the Charter
Termination Date, the Vessel shall, except as otherwise expressly provided
herein, be redelivered to Owner or its designee pursuant to the terms of Article
19. This Agreement shall be binding and effective immediately upon execution
hereof notwithstanding any failure of the Delivery Date to occur.
ARTICLE 3.
Hire
----
(a) Bareboat Hire. Charterer shall pay to Owner, as charter hire for
-------------
the Vessel Interest, Bareboat Hire in installments with respect to each Rate
Period during the Charter Period on the dates and in the amounts provided in
Articles 3(c) and (d). Each installment of Bareboat Hire shall be in arrears.
Bareboat Hire with respect to any charter entered into pursuant to Article 19(c)
following the expiration of this Charter Party shall be payable as provided in
Article 19(c).
(b) Supplemental Hire. Charterer shall pay to Owner, for its own
-----------------
account, or to the Person entitled thereto, as provided herein or in any other
Operative Document, any and all Supplemental Hire promptly as the same shall
become due and payable. As part of Supplemental Hire hereunder, Charterer shall
pay the Make-Whole Amount, if any, payable upon any redemption of the Secured
Notes under the Indenture as and when such Make-Whole Amount is due, provided
--------
that Charterer shall not be required to pay any Make-Whole Amount in respect of
the redemption or purchase of the Secured Notes pursuant to Section 3.06 of the
Indenture.
(c) Base Hire. Base Hire shall be payable to Owner semi-annually in
---------
arrears on the Base Hire Payment Dates in the amounts and commencing on the date
set forth in Schedule 2. Under no circumstances shall the Bareboat Hire for any
Rate Period be lower than the Base Hire for such Rate Period.
2
<PAGE>
(d) Excess Hire and Additional Excess Hire. Payment of Excess Hire
---------------------------------------
and Additional Excess Hire shall be payable to Owner or in accordance with its
instructions, semi-annually in arrears on February 1 and August 1 of each year
following the applicable Rate Period. The amount of Excess Hire and Additional
Excess Hire shall be determined in accordance with Schedule 2A.
(e) Method of Payment. Subject to Article 20(b), all Bareboat Hire
-----------------
and Supplemental Hire payable to Owner shall be paid to the Owner's account
specified in Schedule 1 to the Participation Agreement or to such other Person
or account at such other place as Owner shall specify in writing to the
Charterer at least five Business Days prior to the due date thereof. All
Supplemental Hire payable to any Person other than Owner pursuant to any
Operative Document shall be paid directly to such Person as provided in such
Operative Document. Each payment of Hire shall be made by Charterer in
immediately available funds, on or before 12:00 noon, local time at the place of
receipt, on the scheduled date on which such payment shall be due, unless such
scheduled date shall not be a Business Day in which case such payment shall be
due and payable on the next succeeding Business Day with the same force and
effect as if made on such scheduled date and (provided such payment is made on
such next succeeding Business Day) no interest shall accrue on the amount of
such payment from and after such scheduled date.
(f) Late Payment. If any Hire shall not be paid when due, Charterer
------------
shall pay to Owner (or, in the case of Supplemental Hire, to Owner for its own
account or to the Person entitled thereto as provided herein or in any other
Operative Document), as Supplemental Hire, interest (to the extent permitted by
law) on such overdue amount from and including the due date thereof to but
excluding the date of payment thereof (unless payment is made after 12:00 noon,
local time at the place of receipt, in which event such date of payment shall be
included) at the Overdue Rate.
(g) Minimum Payment. Notwithstanding any other provision of this
---------------
Charter Party or any other Operative Document, (a) the amount of Base Hire
payable on each Base Hire Payment Date, shall be at least equal to the aggregate
amount of scheduled principal and accrued interest due and payable on the
Secured Notes Outstanding on such Base Hire Payment Date and (b) the amount of
Termination Value as of any date, together with any Base Hire payable hereunder
on such date, shall be at least equal to the aggregate amount of principal and
accrued interest which would be due and payable on the Secured Notes Outstanding
on such date.
3
<PAGE>
ARTICLE 4.
Description of the Vessel; Documentation
----------------------------------------
(a) Description of Vessel. The Vessel has a gross registered tonnage
---------------------
of approximately 160,000 tons, a net registered tonnage of approximately 95,000
tons, a designed deadweight capacity of approximately 280,000 metric tons, and
otherwise will conform to the description set forth in Schedule 1.
(b) Documentation. As of the Delivery Date the Vessel shall be
-------------
registered under the laws of the Marshall Islands or under the laws of such
other country as the Owner and Charterer may agree which is not materially less
favorable to the holder of Secured Notes; and Charterer shall, throughout the
Charter Period maintain, at its cost, said documentation. Owner shall, at the
request of Charterer, immediately execute or file all documents necessary to
maintain such documentation and to effect any name change(s). Charterer may, at
any time, instruct Owner to change the name of the Vessel, it being understood
that all costs for changing the Vessel's name shall be payable by Charterer.
ARTICLE 5.
Owner's Warranties and Representations and Certain Charterer Undertakings
-------------------------------------------------------------------------
(a) Owner's Representations. intentionally omitted.
-----------------------
(b) Indenture. Charterer has acquainted itself with all terms,
---------
conditions and provisions of the Indenture. Charterer undertakes that during
the Charter Period it will comply with all such instructions or directions in
regard to the employment, insurances, repairs and maintenance of the Vessel set
forth in the Indenture or as may be directed from time to time during the
Charter Period by the Indenture Trustee in conformity with the Indenture.
(c) U.K. Documents. Charterer has acquainted itself with all terms,
--------------
conditions and provisions of the Head Lease and the other U.K. Documents. To
the extent there are any obligations imposed on Owner under the Head Lease other
than obligations to pay rentals, termination amounts, and related adjustments
under Articles 7, 8, 18, 19, 21, 22 of the Head Lease and the Financial Schedule
thereto that are not imposed on Charterer hereunder, Charterer shall take such
action as may be required to permit the Lessor to perform, or shall itself
perform, such obligations to the extent necessary to keep the Head Lease in full
force and effect. Nothing in this Article 5(c) shall create a separate
obligation of
4
<PAGE>
Charterer to perform any of the covenants contained in the Head Lease except to
the extent expressly required in the preceding sentence.
ARTICLE 6.
Delivery Date
-------------
(a) Delivery. Owner shall deliver and demise the Vessel to Charterer
---------
and Charterer shall accept the delivery and demise of the Vessel immediately
upon execution of this Charter Party, such delivery and acceptance to be
conclusively evidenced by Charterer's execution of the Protocol of Delivery and
Acceptance.
ARTICLE 7.
Quiet Enjoyment; Use and Trade of the Vessel
--------------------------------------------
(a) Quiet Enjoyment. The Owner warrants that, unless a Charter Event
---------------
of Default shall have occurred and be continuing and this Charter Party shall
have been declared to be in default pursuant to Article 22(a), the Charterer
shall at all times during the Charter Period be entitled to the quiet use and
enjoyment of the benefits of the Vessel Interest, including the right to
uninterrupted possession and use of the Vessel but subject to the rights of the
parties to the U.K. Financing Documents, and the Owner shall not save as
provided under the U.K. Financing Documents take or permit any Person lawfully
claiming by, through or under it to take any action which interferes with such
quiet use or enjoyment or such possession or use or the rights of any
subcharterer or assignee to such quiet use or enjoyment or such possession or
use under any subcharter or assignment permitted hereunder (including, without
limitation, the rights of MSCL under the Initial Subcharter).
(b) Use of Vessel. During the Charter Period, Charterer shall have
-------------
the full use of the Vessel and may employ it worldwide in any lawful trades
permitted by U.S. and Marshall Islands laws and regulations, subject to the
limits of then current Institute Warranties and Clauses, carrying such lawful
cargoes as Charterer, Permitted Subcharterer or their authorized agents may
direct.
ARTICLE 8.
Condition Upon Delivery
-----------------------
(a) Disclaimer of Warranties. Neither Owner nor Owner Participant
------------------------
makes any representations or warranties whether written, oral or implied, with
respect to the Vessel
5
<PAGE>
Interest, the Vessel, or any part thereof, except as expressly set forth in
Section 7 or 9 of the Participation Agreement or in any Officer's Certificate of
the Owner Trust or the Owner Participant, in each case delivered pursuant to the
Participation Agreement. As between Owner and Charterer, execution by Charterer
of this Charter Party and the Protocol of Delivery and Acceptance shall be
conclusive proof of Charterer's acceptance of the Vessel and the Vessel Interest
for all purposes hereof and of the commencement of the Charter Period with
respect thereto and that the Vessel and the Vessel Interest are satisfactory to
the Charterer in all respects. CHARTERER ACKNOWLEDGES THAT OWNER IS NOT A
MANUFACTURER OR DEALER IN SHIPS OR THE COMPONENTS THEREOF AND OWNER CHARTERS AND
CHARTERER TAKES THE VESSEL AND THE VESSEL INTEREST AND EACH PART THEREOF AS IS
AND WHERE IS, AND NEITHER OWNER NOR OWNER PARTICIPANT SHALL BE DEEMED TO HAVE
MADE, AND OWNER HEREBY DISCLAIMS, ANY REPRESENTATION OR WARRANTY OTHER THAN
THOSE REFERRED TO IN THE SECOND PRECEDING SENTENCE, EITHER EXPRESS OR IMPLIED,
AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE DESIGN OR
CONDITION OF THE VESSEL OR ANY PART THEREOF, THE MERCHANTABILITY THEREOF OR THE
FITNESS THEREOF FOR ANY PARTICULAR PURPOSE, THE ABILITY OF THE VESSEL TO PERFORM
ANY FUNCTION, TITLE TO THE VESSEL OR ANY PART THEREOF, THE QUALITY OF THE
MATERIALS OR WORKMANSHIP THEREOF OR CONFORMITY THEREOF TO SPECIFICATIONS, OR THE
PRESENCE OR ABSENCE OF ANY LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE.
CHARTERER CONFIRMS THAT IT HAS SELECTED THE VESSEL AND EACH PART THEREOF ON THE
BASIS OF ITS OWN JUDGMENT AND EXPRESSLY DISCLAIMS RELIANCE IN CONNECTION WITH
SUCH SELECTION UPON ANY STATEMENTS, REPRESENTATIONS OR WARRANTIES MADE BY OWNER
OR OWNER PARTICIPANT. The provisions of this Article have been negotiated and,
except as expressly set forth in Sections 7 and 9 of the Participation Agreement
or in any Officer's Certificate of the Owner Trust or Owner Participant, the
foregoing provisions are intended to be a complete exclusion and negation of any
representation or warranty by Owner or Owner Participant, express or implied,
with respect to this Charter Party, the Vessel, the Vessel Interest or any part
thereof that may arise pursuant to any law now or hereafter in effect or
otherwise. Nothing contained in this Article shall be construed as a waiver of
any warranty or other claim against any manufacturer, supplier, dealer, vendor,
contractor, subcontractor or installer, including the Builder.
(b) Enforcement of Warranties. Owner hereby appoints and constitutes
-------------------------
MOSAT its agent and attorney-in-fact during the Charter Period to assert and
enforce, from time to time, in its sole discretion, in the name and for the
account of Owner and Charterer, as their interests may appear, but in all cases
at no cost or expense to Owner, subject to the provisions of the applicable
Supervisory Agreement, whatever claims and rights Owner may have as the owner of
the Vessel
6
<PAGE>
Interest against any manufacturer or vendor of the Vessel or any Component of
the Vessel; provided, however, that if this Charter Party shall have been
-------- -------
declared in default pursuant to Article 22, such power of attorney shall, at the
option of Owner, terminate and Owner may assert, at Charterer's expense, such
claims and rights.
ARTICLE 9.
Net Charter
-----------
This is a net bareboat charter and, notwithstanding any other
provision of this Charter Party, the obligation of Charterer to pay Hire
hereunder shall be absolute and unconditional and shall not be affected by any
circumstance of any character, including, without limitation: (a) counterclaim,
setoff, deduction, defense, abatement, suspension, deferment, diminution or
reduction; (b) any defect in the condition, design, quality or fitness for use
of the Vessel, or any part thereof or interest therein or the failure of the
Builder to construct or deliver the Vessel; (c) any damage to, removal,
abandonment, salvage, loss, scrapping or destruction of or any requisition or
taking of, the Vessel Interest, the Vessel or any part thereof or interest
therein; (d) any restriction, prevention, interruption or curtailment of or
interference with any use, operation or possession of the Vessel Interest, the
Vessel or any part thereof or interest therein, including, without limitation,
as a result of a termination of or default under the Head Lease, the Conditional
Sale Agreement or any other U.K. Document; (e) any defect in, or any Lien on,
title to the Vessel Interest, the Vessel or any part thereof or interest
therein; (f) any change, waiver, extension, indulgence or other action or
omission in respect of any obligation or liability of Charterer or Owner; (g)
any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to Charterer, the
Indenture Trustee, Owner, Owner Participant, any Loan Participant, any Holder or
any other Person, or any action taken with respect to this Charter Party by any
trustee or receiver of any Person mentioned above, or by any court; (h) any
claim that Charterer has or might have against any Person, including, without
limitation, the Indenture Trustee, any Loan Participant, Owner, Owner
Participant, Managing Trustee or any Holder (but this Article 9 shall not
constitute a waiver of any such claim); (i) any failure on the part of Owner,
the Indenture Trustee, Owner Participant, Managing Trustee or any Loan
Participant to perform or comply with any of the terms hereof or of any other
agreement; (j) any invalidity or unenforceability or disaffirmance of this
Charter Party or any provision hereof or any of the other Operative Documents or
any provision of any thereof, whether against or by Charterer or otherwise; or
(k) any other occurrence whatsoever, whether
7
<PAGE>
similar or dissimilar to the foregoing, whether or not Charterer shall have
notice or knowledge of any of the foregoing. Except as expressly provided
herein, Charterer, to the extent permitted by law, waives all rights now or
hereafter conferred by statute or otherwise to quit, terminate or surrender this
Charter Party, or to any diminution or reduction of Assigned Hire payable by
Charterer hereunder. All payments by Charterer of Base Hire and Termination
Value (or amounts payable by reference thereto) and other Assigned Hire made
hereunder as required hereby shall be final absent manifest error, and Charterer
shall not seek to recover any such payment or any part thereof for any reason
whatsoever absent manifest error. If this Charter Party shall be terminated in
whole or in part for any reason whatsoever Charterer shall, except as expressly
provided herein, nonetheless pay to Owner (or, in the case of Supplemental Hire,
to the Person entitled to such Supplemental Hire as specified herein or in the
appropriate Operative Document) an amount equal to each payment of Assigned Hire
at the time and in the manner that such payment would have become due and
payable under the terms of this Charter Party if it had not been terminated in
whole or in part. Nothing contained in this Article 9 shall be construed as (a)
a guaranty of (i) the value of the Vessel Interest or the Vessel upon the
expiration or termination of the Charter Period or (ii) the useful life of the
Vessel or (iii) payment of any of the Secured Notes or (b) a prohibition of
assertion of any claim against any manufacturer, supplier, dealer, vendor,
contractor, subcontractor or installer with respect to the Vessel or (c) a
waiver by Charterer of its right to assert and sue upon any claims it may have
against any other Person in one or more separate actions.
ARTICLE 10.
Manning
-------
Solely as between Owner and Charterer, the master, officers and crew
of the Vessel and all other persons at any time during the Charter Period on
board the Vessel shall be deemed to be engaged and employed exclusively by
Charterer or Permitted Subcharterers and shall be deemed to be and remain the
Charterer's or Permitted Subcharterers' servants, navigating and working the
Vessel solely on behalf of and at the risk of the Charterer or such Permitted
Subcharterers. Owner shall not have any interest in any hire, freight or
salvage moneys earned by the Vessel or received by Charterer or any Permitted
Subcharterer.
8
<PAGE>
ARTICLE 11.
Maintenance; Inspection
-----------------------
(a) Maintenance. During the Charter Period, Charterer shall at its
-----------
expense maintain and preserve the Vessel in such condition as will entitle it to
maintain the same classification and rating of American Bureau of Shipping
(hereinafter called the "Classification Society") as when delivered to Charterer
under this Charter Party. Charterer at its expense shall furnish to Owner a
copy of all reports and certificates issued by the Classification Society
evidencing the maintenance of such classification and safety standards, and
Charterer will provide Owner with an annual Confirmation of Class Certificate
during each year of the Charter Period. The application or implementation of
all requirements of the Classification Society, including changes or additions
thereto, shall be for Charterer's account, except as provided for in Article
12(d). At all times during the Charter Period, Charterer shall, at its own
expense, operate and maintain (or cause the Permitted Subcharterer to operate
and maintain) the Vessel in accordance with MOSAT's established maintenance,
rebuild and repair programs (and without discriminating against the Vessel based
on the leased status of the Vessel Interest or otherwise) so as to keep the
Vessel (i) in good working order and condition, ordinary wear and tear excepted
and (ii) in compliance in all material respects with all applicable Governmental
Rules and Governmental Actions and the requirements of the Classification
Society; provided, however, that the Charterer shall not be obligated to comply
-------- -------
with any Governmental Rule or Governmental Action (A) whose application or
validity is being contested diligently and in good faith by appropriate
proceedings, (B) compliance with which shall have been excused or exempted by a
nonconforming use permit, waiver, extension or forbearance exempting it from
such Governmental Rule or Governmental Action but only to the extent that the
Charterer's noncompliance is in accordance therewith, (C) if good faith efforts
and appropriate steps are being taken to comply (in which case such compliance
shall be effected prior to the date the Vessel is to be returned to Owner
hereunder), or (D) if failure of compliance (individually and in the aggregate
with all other instances of continuing noncompliance by Charterer) would result
in no material adverse consequences to Charterer, so long as, in the case of
each of clauses (A) through (D) of this proviso, neither such failure of
compliance nor such contest shall result in any material risk or danger of (1)
the sale, forfeiture or loss of any material part of or interest in the Vessel
or the Vessel Interest, the Trust Estate or the Indenture Estate or title
thereto, (2) any interference with the payment of Hire when due, or (3) the
imposition of any criminal liability on the part of, or any other material
adverse effect on, Owner, Owner Participant, the Trust Estate,
9
<PAGE>
the Indenture Estate or the Vessel Interest. Charterer shall have the right to
make such repairs to the Vessel as it deems advisable in its sole discretion,
subject to compliance with the express provisions of this Charter Party. Owner
shall have no obligation to maintain, alter, repair, rebuild or replace the
Vessel or any part thereof, and Charterer expressly waives (to the extent
legally permitted to do so) the right to perform any such action at the expense
of Owner pursuant to any law at any time in effect. During the Charter Period,
Charterer shall keep and maintain (or cause to be kept and maintained) proper
books and records relating to all services rendered and all funds expended for
operation, maintenance, repair and replacement of the Vessel and the
acquisition, construction or installation of all Components, Replacement
Components and Modifications, all in accordance with customary practices in the
oil tanker industry.
(b) Inspection. During the Charter Period, Owner shall have the right
----------
at any time, on reasonable notice, to inspect the Vessel in order to ascertain
whether the Vessel is being properly repaired and maintained. Charterer shall
also permit Owner to inspect the Vessel's logs whenever requested, on reasonable
notice, and shall promptly furnish Owner with information in such detail as may
reasonably be requested regarding any material casualties or oil pollution
incidents involving the Vessel. During the Charter Period, Indenture Trustee
shall have the same right to inspect the Vessel and the related books and
records, provided that, unless an Event of Default shall have occurred and be
continuing, such inspection shall be not more often than once per year.
(c) Certain Operating Costs. The provisions of Articles 11 to 13 as
------------------------
to the costs of maintaining, operating and modifying the Vessel and of Article
5(c) as to the costs of maintaining the Head Lease in force shall be without
prejudice to the calculation of Daily Operating Costs in accordance with the
terms of clause (vii) of Schedule 2B and without prejudice to the obligation of
the Owner to comply with the provisions of Articles 12 and 16 of the Joint
Venture Agreement.
ARTICLE 12.
Fuel, Lubricants, Water, Stores,
Equipment and Spare Replacement Parts
-------------------------------------
(a) Fuel and Lubricants. In the event the Vessel is redelivered to
-------------------
Owner or its designee at the expiration of this Charter Party, on the date of
such redelivery (hereinafter the "Redelivery Date"), Owner or its designee shall
accept and pay Charterer the latter's actual costs for such fuel, unbroached
lubricating oil, unused lubricating oil
10
<PAGE>
in storage tanks and unbroached consumable stores as then remain on board the
Vessel.
(b) Use of Equipment and Appurtenances. Charterer shall have the use,
----------------------------------
without extra cost, of such equipment, outfit, appurtenances, as are on board
the Vessel on the Delivery Date. Such items or their substantial equivalent
shall be returned to Owner or its designee on the Redelivery Date in the same
good order and condition as when received, reasonable wear and tear excepted.
Charterer shall have the use, without extra cost, of spare and replacement parts
as are on board the Vessel on the Delivery Date. The same or their substantial
equivalent shall be returned to Owner or its designee on the Redelivery Date in
the same good condition as when received, reasonable wear and tear excepted.
(c) Spares and Replacement Parts. Subject to Article 13 below, during
----------------------------
the Charter Period, Charterer shall, at its expense and on its time, provide
such additional equipment, outfit, tools, spare and replacement parts, crockery
and linen as may be required for Charterer's operation of the Vessel. Spare and
replacement parts ordered for, but not delivered to, the Vessel by or for Owner
on or before the Delivery Date, or the same or the substantial equivalent of
such spare and replacement parts ordered by or for Charterer on or before the
Redelivery Date shall be taken over and paid for, respectively, by Charterer or
Owner, as the case may be, when delivered to the Vessel; and such equipment
shall remain the property of, respectively, the Charterer or Owner as the case
may be. The foregoing shall not apply to spare and replacement parts ordered
for the pumps, gear and equipment described in Article 13(b).
(d) Certificate of Master. For the purposes of Article 12(a), the
---------------------
certificate of the master of the Vessel shall in the absence of manifest error
be binding on Charterer and Owner as to the inventory fuel, unbroached
lubricating oil, unused lubricating oil in storage tanks and unbroached
consumable stores on board the Vessel at the Delivery Date and Redelivery Date;
and said inventories shall be used to determine the sums, if any, owing to
Builder on behalf of Owner or Charterer pursuant to Article 12(a) on the
Delivery Date and Redelivery Date, respectively, which sums shall be due and
payable to Owner or Charterer, as the case may be, in United States Dollars on
presentation of the respective party's invoice.
11
<PAGE>
ARTICLE 13.
Vessel Modification
(a) Required Modifications. At all times during the Charter Period,
----------------------
Charterer shall make (or cause to be made) all Severable and Nonseverable
Modifications to the Vessel as may be required from time to time to meet the
requirements of clause (ii) of Article 11(a) or to maintain any insurance
coverage required by Article 16 (subject to the qualifications set forth in such
Article) unless Charterer shall have elected to terminate this Charter Party
pursuant to Article 18 or unless the Charterer shall have made the election
provided in Article 13(f). Charterer shall complete (or cause to be completed)
all such Modifications in a good and workmanlike manner, with reasonable
dispatch and in a manner (but only to the extent practicable in the case of
Modifications to the Vessel required pursuant to clause (ii) of Article 11(a) or
to maintain any insurance coverage required by Article 16) which does not
decrease except to a de minimis extent the Fair Market Sales Value of the Vessel
-- -------
or decrease the remaining useful life or utility of the Vessel or cause the
Vessel to become "limited use property" within the meaning of Revenue Procedure
76-30.
(b) Optional Modifications. Charterer may, at no expense to Owner,
----------------------
make (or cause or allow to be made) such other Severable and Nonseverable
Modifications to the Vessel not required by Article 11(a), including the
installation of pumps, gear and equipment in addition to that on board as of the
Delivery Date, as do not decrease the Fair Market Sales Value (except to a de
--
minimis extent) of the Vessel or decrease the remaining useful life or cause the
- -------
Vessel to become "limited use property" within the meaning of Revenue Procedure
76-30.
(c) Title to Modifications; Purchase Option for Severable
-----------------------------------------------------
Modifications. (i) Title to all Severable Modifications to the Vessel not
- -------------
required by any Governmental Rule or Governmental Action and not financed by
Owner through the issuance of Additional Notes shall vest in Charterer or any
Person designated by Charterer. Charterer may remove (or allow to be removed)
any such Severable Modification prior to or, subject to Article 13(c)(iii), upon
the expiration of the Charter Period.
(ii) Title to (x) Severable Modifications to the Vessel required by
any Governmental Rule or Governmental Action, (y) Nonseverable Modifications to
the Vessel, and (z) Modifications financed through the issuance of Additional
Notes shall vest in Owner free and clear of all Liens except Permitted Liens.
12
<PAGE>
(iii) Owner shall have the option, at the expiration of the Charter
Period, to purchase any Severable Modifications to the Vessel (x) which was not
required by any Governmental Rule or Governmental Action and which was not
financed by the issuance of Additional Notes, (y) title to which is in Charterer
or any Affiliate of Charterer on the last day of the Charter Period and (z)
which is necessary for the economic operation of the Vessel and which is not
commercially available for purchase by Owner, at a purchase price equal to the
Fair Market Sales Value of such Severable Modification as of such date; provided
--------
that any Severable Modification to the Vessel not removed by such date and as to
which Charterer has not provided Owner prior to such date written notice to the
effect that it is intended that such Severable Modification shall be removed
shall, to the extent of Charterer's (or its Affiliate's) interest therein, be
deemed transferred to Owner without further act or payment. On or prior to the
90th day prior to the expiration of the Charter Period, Charterer shall provide
Owner with notice of such Severable Modifications that it intends to remove.
Owner may exercise its option to purchase such Severable Modifications by
written notice to such effect delivered to Charterer at least 30 days prior to
expiration of the Charter Period. Owner and Charterer shall attempt to agree
upon the Fair Market Sales Value of such Severable Modification as of the
expiration of the Charter Period. If Owner and Charterer shall fail to agree
within 15 days after such written notice, such Fair Market Sales Value of any
such Severable Modification shall be determined by the Appraisal Procedure. If
Owner shall have exercised its option to purchase any Severable Modification to
the Vessel pursuant to this Article 13(c)(iii), Charterer, if requested by
Owner, shall furnish (or cause to be furnished) to Owner a bill of sale or
assignment, in form and substance reasonably satisfactory to Owner, conveying
the right, title and interest of Charterer (or its Affiliate) in and to such
Severable Modification, free and clear of all Liens (other than Permitted Liens
described in clauses (a), (b), (f) and (g) of the definition thereof), to Owner.
(d) Payment for Modifications and Replacement Components. (i)
----------------------------------------------------
Charterer shall be permitted at any time to finance the cost of any Severable
Modification to the Vessel not required by any Governmental Rule or Governmental
Action, directly or indirectly, including, without limitation, on a third party
ownership basis.
(ii) Charterer may with the written consent of Owner Participant seek
financing for the cost of any Modification (including any alterations to the
Vessel pursuant to Article 15 of the Construction Contract) to the Vessel by the
issuance of Additional Notes pursuant to Section 2.08 of the Indenture.
Charterer shall first provide Owner and Owner Participant with
13
<PAGE>
written notice of such Modification at least 30 days prior to the date of such
proposed financing.
(e) Replacement of Components; Removal of Property. (i) In the
----------------------------------------------
ordinary course of maintenance, service, repair or testing during the Charter
Period, any Component or Replacement Component may be removed and replaced with
a Replacement Component and, upon such replacement, Charterer (or its designee)
shall be entitled to retain the amount of the net proceeds of any sale or
disposition of any such removed Component or Replacement Component. Any such
Replacement Components shall be free and clear of all Liens, except Permitted
Liens, and in as good operating condition as, and with a value, utility and
useful life at least equal to, the Components or Replacement Components
replaced, assuming such replaced Components or Replacement Components were in at
least the condition and repair required to be maintained hereunder. Immediately
upon any Replacement Component becoming incorporated in the Vessel without
further act, (x) title to such Replacement Component thereupon shall vest in
Owner and Owner's interest therein shall be subject to the Lien of the
Indenture, (y) such Replacement Component shall become subject to this Charter
Party and Owner's interest therein shall be deemed a part of the Vessel Interest
for all purposes hereof to the same extent as the Component or Replacement
Component it replaced and (z) title to such removed Component or Replacement
Component shall vest in Charterer or such Person as shall be designated by
Charterer, free and clear of all rights of Owner and the Indenture Trustee and
shall no longer be deemed a Component or a Replacement Component hereunder.
14
<PAGE>
(ii) If, at any time during the Charter Period, Charterer shall
conclude that any property included in the Vessel is obsolete, redundant or
unnecessary and can be removed without diminishment of the value or utility of
the Vessel or reduction of the remaining useful life of the Vessel and without
causing the Vessel to become "limited use property" within the meaning of
Revenue Procedure 76-30, Charterer may remove (or allow to be removed) such
property and upon such removal, without further act, title to such property
shall vest in Charterer or in such Person as shall be designated by Charterer,
free of the Lien of the Indenture; provided that Charterer shall pay to Owner an
--------
amount equal to any net proceeds from any sale or other disposition of any items
of such property thereafter removed to the extent such net proceeds so allocated
after the Closing Date exceed, in the aggregate, Five hundred thousand dollars
($500,000) (provided that Charterer shall have no obligation to sell or
--------
otherwise dispose of (or cause to be sold or disposed) such property).
(f) Exemption from Certain Modifications. Notwithstanding the
------------------------------------
provisions of Article 13(a), if in the reasonable estimation of Charterer any
Severable or Nonseverable Modification that would otherwise be required
hereunder by reason of Governmental Rules exceeds $1,000,000 multiplied by the
Inflation Factor for the date of such estimate, Charterer may, by notice to the
Owner, elect not to make such Modification provided the failure to make such
Modification will not prevent economic operation of the Vessel in jurisdictions
and between ports not affected by such Governmental Rules, provided, further,
-------- -------
the failure to make such modification shall not result in any material risk or
danger of (1) the sale, forfeiture or loss of any material part of or interest
in the Vessel or the Vessel Interest, the Trust Estate or the Indenture Estate
or title thereto, (2) any interference with the payment of Hire when due or (3)
the imposition of any criminal liability on the part of, or any other material
adverse effect on, Owner, Owner Participant, the Trust Estate, the Indenture
Estate or the Vessel Interest.
(g) Sharing in Cost of Modifications. Charterer shall be entitled to
--------------------------------
recover from Owner Participant its share of the cost of any Modification
determined in accordance with Article 11 of the Joint Venture Agreement,
provided that no failure of Owner Participant to pay such reimbursement shall
constitute a default under this Charter Party, reduce the obligations or rights
of Charterer or Owner hereunder or affect the continued validity and
enforceability of this Charter Party in any manner.
15
<PAGE>
ARTICLE 14.
Event of Loss
-------------
(a) Notice of Event of Loss. If there shall occur an Event of Loss,
-----------------------
Charterer shall promptly notify Owner and the Indenture Trustee of the
occurrence thereof and the Termination Value Determination Date on which the
Termination Value will be paid.
(b) Payment of Termination Value, Etc. If an Event of Loss shall
----------------------------------
occur, Charterer shall pay to Owner as compensation for such Event of Loss, on
the date which is the latest Termination Value Determination Date occurring not
later than 180 days after the date of such Event of Loss, the Termination Value
as of such Termination Value Determination Date. Charterer shall pay,
simultaneously therewith, (i) all Bareboat Hire due and owing prior to the date
of such payment, (ii) all Supplemental Hire due and owing on or prior to the
date of such payment, (iii) if such Termination Value Determination Date is a
Base Hire Payment Date, all Base Hire payable on such Base Hire Payment Date,
and (iv) all Excess Hire or Additional Excess Hire accrued through such
Termination Value Determination Date, whereupon (A) this Charter Party and the
obligations of Charterer hereunder shall terminate as of the date of such
payment and (B) Owner shall hold all right, title and interest of Owner in and
to the Vessel Interest, in accordance with the provisions of the Joint Venture
Agreement, and shall apply all proceeds thereof to the reimbursement of all
amounts paid by Charterer in respect of Termination Value, together with
interest thereon at the Debt Rate from the date of payment, and (C) Owner shall,
at Charterer's expense, take such actions under Section 6.03 of the Indenture as
Charterer may reasonably request.
(c) Application of Other Payments upon the Occurrence of an Event of
----------------------------------------------------------------
Loss. Any amounts of condemnation or requisition proceeds received at any time
- ----
by Owner, the Indenture Trustee or Charterer as a result of the occurrence of an
Event of Loss shall be divided between Charterer and Owner as their respective
interests may appear and the amount paid to Owner shall reduce the amount that
Charterer is required to pay to Owner (but not below zero) pursuant to Article
14(b) or, if the amount payable pursuant to Article 14(b) has already been paid
by Charterer, Charterer shall be entitled to retain out of the amounts otherwise
payable to Owner pursuant to this Article 14(c), the amount that would have been
applied in reduction of the amount payable by Charterer under Article 14(b).
(d) Application of Payments Not Relating to an Event of Loss.
--------------------------------------------------------
Payments (except for payments under insurance
16
<PAGE>
policies described in Article 16) received at any time by Owner, the Indenture
Trustee or Charterer from any Governmental Authority or other Person with
respect to any destruction, damage, loss, condemnation, confiscation, theft or
seizure of or requisition of title to or use of the Vessel Interest or any part
thereof not constituting an Event of Loss shall be paid over to Charterer or as
it may direct and all such amounts paid to Charterer shall be retained by
Charterer.
(e) Application During Charter Event of Default. Notwithstanding the
-------------------------------------------
foregoing provisions of this Article 14, so long as any Charter Event of Default
shall have occurred and be continuing, any amount (except for payments under
insurance policies described in Article 16) that otherwise would be payable to
or for the account of, or that otherwise would be retained by, Charterer
pursuant to this Article 14 shall be paid to Owner (or to the Indenture Trustee
so long as this Charter Party is subject to the Lien of the Indenture) as
security for the obligations of Charterer under this Charter Party and, subject
to the Indenture, applied against Charterer's payment obligations hereunder when
and as they become due and payable and, at such time thereafter as no Charter
Event of Default shall be continuing, such amount shall, to the extent not
theretofore applied as provided herein or in the Indenture, be paid promptly to
Charterer or as it may direct.
ARTICLE 15.
Liens
-----
(a) Owner's Liens. In addition to the undertakings and warranties in
-------------
Articles 4 and 5 and in the Participation Agreement concerning absence of
Owner's Liens upon delivery of the Vessel to Charterer hereunder, Owner warrants
that throughout the Charter Period Owner will not cause the Vessel or the Vessel
Interest to incur any Owner's Liens whatsoever; and Owner will defend, indemnify
and hold Charterer harmless with respect to any such Owner's Liens and/or
charters, and will promptly take, at its own expense, such actions as may be
required to discharge any Owner's Lien prohibited by this Article 15(a).
(b) Charterer Liens. Charterer will not, directly or indirectly,
---------------
create, incur, assume or suffer to exist any Liens on or with respect to all or
any part of the Vessel or the Vessel Interest, title thereto or any interest
therein, other than Permitted Liens, and Charterer promptly, at its own expense,
will take such actions as may be necessary duly to discharge any such Lien not
excepted above. Neither Charterer, the Master, the Vessel nor any third party
has or shall have any right, power or authority to create, incur or
17
<PAGE>
permit to be placed or imposed upon the Vessel, its freights, profits or hire,
or the Vessel Interest any Lien whatsoever other than Permitted Liens.
(c) Copy of Documents on Board Vessel. During the Charter Period,
---------------------------------
Charterer agrees to carry a true copy of this Charter Party, the Head Lease and
the Ship Mortgage with the Vessel's papers on board the Vessel and to exhibit
the same to any person having business with the Vessel which may give rise to a
maritime lien upon the Vessel or to the sale, conveyance, mortgage or lease
thereof and on demand to any representative of the Owner.
(d) Identification of Vessel. At all times during the Charter Period,
------------------------
Charterer shall cause to be placed and kept prominently displayed in the
Master's Cabin and the chart room of the Vessel a notice, framed under glass,
printed in plain type of such size that the paragraph of reading matter thereof
shall cover a space not less than six inches wide by nine inches high, reading
as follows:
"NOTICE OF MORTGAGE AND CHARTER"
This vessel is owned by Deutsche Morgan Grenfell (Cayman) Limited, not in
its individual capacity but solely as Managing Trustee of [Name of Owner]
under the Declaration and Agreement of Trust dated as of November 22, 1996,
is under demise charter to [Name of Charterer] pursuant to a Bareboat
Charter Party, dated as of December 19, 1996, and is covered by a first
Ship Mortgage dated December 19, 1996 in favor of State Street Bank and
Trust Company, as Indenture Trustee. Said bareboat charter and mortgage
provide that no person shall create, incur or permit to be placed or
imposed upon this vessel any lien or encumbrance whatsoever except as
expressly permitted therein. A copy of said bareboat charter and mortgage
are carried on this vessel and must be exhibited on demand to any person
having business with this vessel."
Such notice shall be changed to reflect the identity of any successor Owner or
successor Indenture Trustee. Neither Owner nor Charterer shall take any action
or omit to take any action during the Charter Period that would (i) cause the
Vessel to cease to be documented as a vessel pursuant to the laws of the
Marshall Islands, (ii) cause the Ship Mortgage on the Vessel to cease to be a
first Ship Mortgage under the laws of the Marshall Islands, or (iii) cause the
Vessel to cease to be entitled to the same classification that the Vessel had
from the Classification Society on the Closing Date (subject to any reduction in
classification resulting from the age of the Vessel). Except as otherwise
directed by Owner, Charterer
18
<PAGE>
shall prevent the name of any Person other than that of Charterer, MSCL, the
Guarantor, or any Affiliate of any thereof from being placed on any part of the
Vessel as a designation that reasonably might be interpreted as a claim of
ownership or right to possession or use thereof.
(e) Lien on Cargoes. Owner will have a lien upon all cargoes and sub-
---------------
freights belonging to Charterer and any Bill of Lading freights for all claims
under this Charter Party.
ARTICLE 16.
Insurance
---------
(a) Coverage. At all times during the Charter Period Charterer shall,
--------
at its own cost and expense, carry and maintain with respect to the Vessel (i)
insurance with respect to the Vessel against marine and hull risks in such
amounts and in such forms as is consistent with the practice of the Charterer's
Affiliates engaged in maritime transportation for other vessels owned or leased
by such Affiliates and (ii) public liability, including personal injury and
property damage and comprehensive general liability insurance against claims,
including, without limitation, environmental claims arising out of or connected
with the possession, use, leasing, operation or condition of the Vessel in such
amounts and in such forms as is consistent with the practice of the Charterer's
Affiliates engaged in maritime transportation for other vessels similar to the
Vessel owned or leased by such Affiliates. The insurance required under clause
(i) or (ii) of this Article 16(a) may be subject to deductible amounts and self-
insured retentions as is consistent with the practice of the Charterer's
Affiliates engaged in maritime transportation for other vessels similar to the
Vessel owned or leased by such Affiliates. Such insurance may be carried under
blanket policies maintained by or on behalf of the Charterer so long as such
policies otherwise comply with the provisions of this Article 16, and may be
carried by insurers that are Affiliates of the Charterer.
(b) Additional Insurance. Nothing in this Article 16 shall prohibit
--------------------
Owner or Charterer from placing any additional insurance that Owner or Charterer
desires, at the expense of the party desiring such additional insurance,
covering the Vessel, or the Vessel Interest, or the Owner or the Charterer with
respect to the Vessel or the Vessel Interest, provided however that any such
insurance shall not exceed the amount permitted by warranties or other
conditions contained in the insurances effected pursuant to the preceding
provisions of this Article 16 without the consent of the relevant insurers.
19
<PAGE>
(c) Certain Terms of Insurance. Any insurance carried in accordance
--------------------------
with this Article 16, to the extent the following can be effected without in the
case of clauses d. and e. Charterer or any Permitted Subcharterer incurring any
material incremental costs in connection therewith, provide in the policy or by
special endorsement that:
a. Owner, the Owner Participant, the Indenture Trustee and the Pass
Through Trustee are included as additional insureds and that no such Person
shall have any obligation or liability for payment of premiums;
b. the insurer thereunder waives all rights of subrogation against
Owner, the Indenture Trustee, the Owner Participant and the Pass Through
Trustee, and waives any right of set-off and counterclaim and any other
right to deduction whether by attachment or otherwise;
c. such insurance shall be primary without right of contribution of
any other insurance carried by or on behalf of Owner, the Indenture
Trustee, the Owner Participant and the Pass Through Trustee;
d. the respective interests of Owner, the Indenture Trustee, the Pass
Through Trustee, and the Owner Participant under all insurance policies
required hereunder shall not be invalidated by any action or inaction of
Charterer or any other Person (other than, with respect to any such
insured, such insured) and such insurance shall insure Owner, the Indenture
Trustee, the Pass Through Trustee, and the Owner Participant as their
interests may appear, regardless of any breach or violation of any
warranty, declaration or condition contained in such policies by Charterer
or any other Person (other than, with respect to any such insured, such
insured);
e. if the insurers cancel such insurance for any reason whatsoever
or any materially adverse change is made in policy terms or conditions, or
if such insurance is allowed to lapse for nonpayment of premium, such
cancellation, change or lapse shall not be effective as to Owner, the Owner
Participant, the Pass Through Trustee or the Indenture Trustee for thirty
days after receipt by Owner, the Owner Participant, the Pass Through
Trustee or the Indenture Trustee, respectively, of written notice from such
insurers of such cancellation, change or lapse; and
f. with respect to all liability insurance, in as much as the
policies are written to cover more than one insured, all terms, conditions,
insuring agreements and
20
<PAGE>
endorsements, with the exception of the limits of liability shall operate
in the same manner as if there were a separate policy covering each
insured.
(d) Notice of Accidents. Charterer shall promptly furnish the Owner
-------------------
and the Indenture Trustee with full information regarding any casualties or
other accidents or damages to the Vessel involving an amount in excess of Five
Million United States Dollars (U.S. $5,000,000).
(e) Application of Proceeds of Insurance. All insurance proceeds in
------------------------------------
respect of insurance maintained by Charterer hereunder with respect to the
Vessel under Article 16(a)(i) and payable under circumstances not constituting
an Event of Loss shall be payable to Charterer. All insurance proceeds (up to
an amount not exceeding the applicable Termination Value) in respect of
insurance maintained by Charterer hereunder with respect to the Vessel under
Article 16(a)(i) and payable as the result of an Event of Loss will be paid to
the Owner (or, subject to the provisions of the Head Lease, to the Indenture
Trustee so long as this Charter Party is subject to the Lien of the Indenture)
and shall be applied in reduction of Charterer's obligation to pay Termination
Value and the other amounts payable under Article 14 hereof in connection with
such Event of Loss, if not already paid by Charterer, or, if already paid by
Charterer, shall be applied to reimburse Charterer for its payment of such
Termination Value and the other amounts payable under Article 14 hereof, and the
balance, if any, of such payments remaining thereafter will be paid over to, or
retained by, Charterer.
(f) Application During Charter Event of Default. Notwithstanding the
-------------------------------------------
foregoing provisions of this Article 16, so long as any Charter Event of Default
shall have occurred and be continuing, any amount referred to in this Article 16
that otherwise would be payable to or for the account of, or that otherwise
would be retained by, Charterer pursuant to this Article 16 shall be paid to
Owner (or, subject to the provisions of the Head Lease, to the Indenture Trustee
so long as this Charter Party is subject to the Lien of the Indenture) as
security for the obligations of Charterer under this Charter Party and, subject
to the Indenture, shall be applied against Charterer's payment obligations
hereunder when and as they become due and payable and, at such time thereafter
as no Charter Event of Default shall be continuing, such amount shall, to the
extent not theretofore applied as provided herein or in the Indenture, be paid
promptly to Charterer or as it may direct.
21
<PAGE>
ARTICLE 17.
Requisition
-----------
Requisition (not involving title) of the Vessel for use by any
Government during the Charter Period not constituting an Event of Loss shall not
terminate this Charter Party and Charterer shall remain liable for the
performance of its obligations hereunder.
ARTICLE 18.
Early Termination.
-----------------
(a) Decision. If Charterer shall determine in good faith that the
--------
continuation of the Charter Party is uneconomic by reason of the cost of
compliance with Governmental Rules or Governmental Actions , or by reason of
indemnity payments required to be made to any Person under the Charter Party or
the Participation Agreement, then Charterer may elect to terminate this Charter
Party with respect to the Vessel Interest in accordance with this Article 18 on
any Termination Value Determination Date.
(b) Notice of Termination. In order to exercise its right to
---------------------
terminate this Charter Party as provided in this Article 18, Charterer shall
provide Owner with (i) notice in writing at least 90 days but not more than 545
days prior to the Termination Value Determination Date as of which Charterer is
electing to terminate this Charter Party with respect to the Vessel Interest
(the "Termination Date"), such notice to specify (a) the Termination Date, and
----------------
(b) the Termination Value as of the Termination Date, and (ii) an Officer's
Certificate of Charterer as to the determination referred to in Article 18(a)
and stating that such termination will not violate the provisions of the Head
Lease. Unless Owner shall have elected to retain the Vessel Interest pursuant
to Article 18(e), Charterer may, at its option by written notice to Owner at any
time prior to the 30th day prior to the Termination Date, revoke any such notice
of termination, in which event this Charter Party shall not terminate and the
reasonable out-of-pocket expenses incurred by Owner, Owner Participant and the
Indenture Trustee in connection therewith shall be borne by Charterer; provided,
--------
however, that Charterer shall have no obligation to so reimburse Owner or Owner
- -------
Participant if such notice of revocation is given (or deemed to have been given
pursuant to the penultimate sentence of Article 18(e)) as a result of Owner's
failure to make the payments required to be made by it under Article 18(e)).
(c) Sale of Vessel Interest; Termination Payment. If Charterer shall
--------------------------------------------
have made a Termination Election, Charterer
22
<PAGE>
shall, subject to Article 18(f) as agent for Owner, use reasonable efforts to
solicit bids for the cash purchase of the Vessel Interest on the Termination
Date. Owner may also solicit bids for the cash purchase of the Vessel Interest
on the Termination Date independent of Charterer. Charterer and Owner, as the
case may be, shall certify to the other in writing the amount and terms of each
bid received by it and the name and address of the Person submitting such bid.
Subject to Article 18(e), in the event that Charterer or Owner shall have
obtained any such bids from any Person other than Charterer or an Affiliate of
Charterer, Owner shall sell the Vessel Interest on the Termination Date to such
Person which shall have submitted the highest bona fide cash bid. Upon payment
---- ----
to Owner of the purchase price in immediately available funds (and all other
amounts due pursuant to the next sentence) on the Termination Date, Owner shall
sell to the highest bona fide bidder all right, title and interest of Owner in
---- ----
and to the Vessel Interest as is and where is, free and clear of Owner's Liens
and Owner Participant's Liens but otherwise without representation or warranty.
This Charter Party and the obligations of Charterer hereunder shall terminate
concurrently with such sale and such payment. As a condition to the sale of the
Vessel Interest pursuant to the second preceding sentence, Charterer shall pay
on the Termination Date to Owner, in immediately available funds, (i) an amount
equal to the excess, if any, of (A) the Termination Value as of the Termination
Date over (B) the proceeds of such sale net of the reasonable out-of-pocket
expenses incurred by Owner and the Owner Participant in connection with such
sale, (ii) all Bareboat Hire due and owing prior to the Termination Date (iii)
if the Termination Date is a Base Hire Payment Date, Base Hire payable on the
Termination Date, (iv) all Supplemental Hire due and owing on or prior to the
Termination Date, including any premium payable with respect to the redemption
of the Secured Notes and (v) all Excess Hire or Additional Excess Hire secured
through the Termination Date. On the Termination Date, Owner shall, at
Charterer's expense, execute and deliver to such Person a bill of sale or
assignment and such other instruments, documents and opinions as such Person or
Charterer may reasonably request to evidence the valid consummation of such
transfer and shall, at Charterer's expense, take such actions under Article 6.03
of the Indenture as Charterer may reasonably request.
(d) Continuation of Charter Party. In the event that (i) Charterer
------------------------------
shall have exercised its right to revoke its notice of termination pursuant to
Article 18(b) or (ii) the highest bona fide bidder under Article 18(c) shall
---- ----
have failed to purchase the Vessel Interest pursuant to Article 18(c), then,
unless Owner shall have retained the Vessel Interest pursuant to Article 18(e),
this Charter Party shall remain in full force and effect.
23
<PAGE>
(e) Retention of Vessel Interest by Owner. If Charterer shall have
-------------------------------------
made a Termination Election with respect to the Vessel Interest, Owner may elect
to retain rather than sell the Vessel Interest pursuant to Article 18(c) by
giving irrevocable notice to Charterer and the Indenture Trustee no earlier than
45 nor later than 30 days prior to the Termination Date. If Owner so elects to
retain the Vessel Interest, on the Termination Date (a) Owner shall pay to the
Indenture Trustee an amount equal to the unpaid principal amount of, and accrued
and unpaid interest on, together with premium, if any, in respect of the Secured
Notes then Outstanding to the date of payment, and (b) Charterer shall pay to
Owner or the Person entitled thereto as provided in the Operative Documents (i)
all Bareboat Hire due and owing on or prior to the Termination Date, (ii) all
Supplemental Hire due and owing on or prior to the Termination Date, but
Charterer shall not be required to pay any amounts pursuant to Article 18(c),
(iii) if the Termination Date is a Base Hire Payment Date, all Base Hire payable
on the Termination Date and (iv) all Excess Hire or Additional Excess Hire
accrued to the Termination Date. Upon payment of the amounts due pursuant to
clause (b) of the preceding sentence, this Charter Party and the obligations of
Charterer hereunder shall terminate, and Owner shall, at Charterer's expense,
execute and deliver to Charterer on the Termination Date such instruments as
Charterer shall reasonably request to evidence the termination of this Charter
Party. In the event Owner fails to pay the amounts specified in clause (a) of
the second sentence of this Article 18(e) or Charterer fails to pay the amounts
specified in clause (b) of such sentence, Charterer shall be deemed to have
revoked its notice of termination pursuant to Article 18(b). If Owner shall
fail to perform any of its obligations pursuant to this Article 18(e) and as a
result thereof this Charter Party shall not be terminated on a proposed
Termination Date, Owner shall thereafter no longer be entitled to exercise its
election to retain the Vessel Interest upon any subsequent Termination Election
pursuant to this Article 18 and Charterer may at its option at any time
thereafter submit a new termination notice pursuant to Article 18(b).
24
<PAGE>
(f) Termination of Head Lease. In the event that the Head Lease shall
-------------------------
have terminated in circumstances where the U.K. Lessor is obliged to conclude
the sale of the Vessel or its rights under the Conditional Sale Agreement, the
parties shall have no obligation under Article 18(c), and any proceeds from such
sale to which the Owner is entitled shall be applied against the obligations of
the Charterer in respect of the payment of Termination Value under Article 14 or
23(b), as applicable.
ARTICLE 19.
Redelivery
----------
(a) Redelivery. Not less than 30 days prior to the expiration of the
----------
Charter Period, Charterer shall, except as provided in Articles 18 and 19(c)
deliver to Owner notice in writing of the port anywhere in the world chosen in
Charterer's discretion (the "Redelivery Port") at which the Vessel will be
available for redelivery at the end of the Charter Period. At the request of
the Charterer, the Charter Period shall be extended for such time as may be
required for the Vessel to complete the voyage in progress at the date of
expiration of the Charter Period and to discharge its cargo, in which event the
Charterer shall pay hire for such extension at the same rate per day as in
effect for the last Rate Period during the unextended Charter Period. At the
expiration of the Charter Period, except as provided in Articles 18 and 19(c),
Charterer shall, at its own expense, redeliver the Vessel to Owner at the
Redelivery Port and Charterer's obligation to pay additional Bareboat Hire in
respect of periods thereafter shall cease. Charterer shall, at its own expense,
and at Owner's request redocument the Vessel in the name of Owner or in such
other name as the Owner may direct under the laws of the Marshall Islands if the
Vessel is not then documented under the laws of the Marshall Islands.
(b) Redelivery Condition. Charterer shall redeliver the Vessel in the
--------------------
same class (except for changes in class resulting from the age of the Vessel),
free of recommendations affecting class (with class and trading certificates and
continuous machinery and survey cycle up to date and unextended) and in the same
good order and condition as existed at the time of delivery to Charterer, normal
wear and tear not affecting class excepted. Charterer agrees that at the time
of such redelivery, the Vessel Interest shall be charter free and free and clear
of all Liens, (except any Permitted Liens, it being understood that Charterer
will promptly and diligently cause any such Permitted Liens other than Owner's
Liens and Owner Participant's Liens to be discharged), shall include all
Modifications made hereunder, except those removed by Charterer to the extent
permitted hereby.
25
<PAGE>
(c) Charter Extension. Notwithstanding the provisions of clauses (a)
-----------------
and (b) of this Article 19, Charterer may by notice delivered to Owner not less
than 60 days prior to the expiration of the Charter Period require Owner to
enter into a charter of the Vessel with an Affiliate of Charterer commencing
immediately upon the expiration of the Charter Period for a period of one year,
renewable annually for up to six additional years, at a charter rate
equal to the Bareboat Market Rate determined in accordance with Schedule 2B and
otherwise upon terms and conditions set forth in the pro forma Bareboat Charter
set forth in a schedule to the Joint Venture Agreement, with such changes as the
Charterer and Owner may agree.
ARTICLE 20.
Assignment by Owners; Subcharters
---------------------------------
(a) General. Except as set forth in Article 20(b) or in the last
-------
sentence of Article 29(i), Owner may not assign, transfer or encumber this
Charter Party or all or any part of its interests and rights hereunder except in
connection with the exercise of remedies by Owner following a declaration by
Owner pursuant to Article 22 that this Charter Party is in default.
(b) Security. In order to secure the indebtedness evidenced by the
--------
Secured Notes and certain other obligations as provided in the Indenture, the
Indenture provides, among other things, for the assignment by Owner to the
Indenture Trustee of its right, title and interest in, to and under this Charter
Party to the extent set forth in the Indenture, and for the creation of a
mortgage and security interest in the Vessel Interest in favor of the Indenture
Trustee. The Charterer hereby consents to such assignment and to the creation
of such mortgage and security interest pursuant to the terms and provisions of
the Indenture and to any assignment or other transfer which may occur pursuant
to the exercise of any remedy set forth in the Indenture. The Charterer (i)
acknowledges that such assignment, mortgage and security interest provide for
the exercise by the Indenture Trustee of some or all rights of Owner hereunder
to give any consents, approvals, waivers, notices or the like, to make any
demands or the like or to take any other discretionary action hereunder, but
only in accordance with the Indenture, (ii) acknowledges receipt of an executed
counterpart of the Indenture as in effect on the date hereof and (iii) agrees
that, to the extent provided in the Indenture, the Indenture Trustee shall have
all the rights of Owner hereunder and, in exercising any right or performing any
obligation of Owner hereunder, shall be subject to the terms hereof. The
Charterer will furnish to the Indenture Trustee counterparts
26
<PAGE>
of all notices, certificates, opinions or other documents of any kind required
to be delivered hereunder by the Charterer to Owner. Notwithstanding any other
provision herein, so long as any Secured Notes remain Outstanding, Owner hereby
directs, and the Charterer agrees that, all Base Hire, Termination Value and
other amounts payable hereunder and specified pursuant to Section 4.01 of the
Indenture shall be paid directly to the Indenture Trustee at its account
specified in Schedule 1 to the Participation Agreement or to such other account
as may be specified in writing by the Indenture Trustee to the Charterer at
least 5 Business Days prior to the due date thereof. Upon the Charterer
receiving notice or obtaining actual knowledge that an Indenture Event of
Default shall have occurred and be continuing, Charterer shall make all payments
of Hire and Supplemental Hire (other than Excepted Payments) directly to the
Indenture Trustee at such account. The right of the Indenture Trustee to
receive all such payments shall not be subject to any defense, counterclaim,
setoff or other right or claim of any kind which the Charterer may be able to
assert against Owner or the Owner Participant in an action brought by any
thereof on this Charter Party or otherwise.
(c) Assignments. Charterer may, without the consent of any party to
-----------
the Participation Agreement, at any time and from time to time, assign this
Charter Party and its interests and rights hereunder to any Person so long as,
(i) after giving effect to such assignment, the Guaranty shall remain in full
force and effect and shall constitute a full and unconditional guaranty of the
obligations of the assignee hereunder to the same extent as the guaranty of
Charterer's obligations hereunder prior to giving effect to any such assignment,
(ii) no Specified Charter Event of Default shall be continuing on the date any
such assignment to any Affiliate of Charterer is effected and no Charter Event
of Default shall be continuing on the date such assignment to any other Person
is effected, and (iii) such assignment shall not result in any Tax on Owner or
the Owner Participant that is not indemnified in accordance with the provisions
of Section 13 of the Participation Agreement or of an indemnity agreement
tendered by Charterer and reasonably satisfactory to the Owner and Owner
Participant or subject Owner or the Owner Participant to regulation by any
Governmental Authority to which Owner or the Owner Participant would not have
been subject but for such assignment, (iv) such assignment shall not result in
the violation of any Governmental Rules, including the U.S. Securities Act of
1933, as amended, or the Head Lease, (v) such assignee shall have validly
assumed the obligations of the Charterer under each of the Operative Documents
to which it is a party and under the Pass-through Trust Supplement, (vi) such
assignment will not result in an adverse tax consequence to the holders of the
Pass Though Certificates and (vii) Charterer shall have delivered to Owner an
opinion of
27
<PAGE>
counsel as to the satisfaction of the preceding clauses (i) through (vi).
(d) Subcharters. Charterer may, without the consent of any party to
-----------
the Participation Agreement, at any time and from time to time, subcharter the
Vessel Interest to another Person (including, without limitation, to MSCL
pursuant to the Initial Subcharter); provided that (i) such subcharter shall be
--------
expressly subject and subordinate to this Charter Party (and such subcharter
shall contain a provision providing that any subcharter permitted thereunder
shall be so subject and subordinate) and shall in no event continue beyond the
Charter Period, (ii) Charterer shall remain primarily liable under this Charter
Party and all terms and conditions hereof and of the other Operative Documents
shall be complied with as though no such subcharter was in existence, (iii) the
Guaranty shall remain in full force and effect, (iv) such subcharter shall not
result in any Tax on Owner or the Owner Participant that is not indemnified in
accordance with the provisions of Section 13 of the Participation Agreement or
of an indemnity agreement tendered by Charterer and reasonably satisfactory to
the Owner and Owner Participant or subject Owner or the Owner Participant to
regulation by any Governmental Authority to which Owner or the Owner Participant
would not have been subject but for such subcharter, (v) no Specified Charter
Event of Default shall be continuing at the commencement of such subcharter,
(vi) Charterer shall give prompt written notice to Owner of any subcharter or
sub-subcharter of the Vessel Interest, and (vii) any such subcharter with a term
in excess of six (6) months shall be approved by Owner prior to its execution.
Owner acknowledges that on the Closing Date Charterer will subcharter the Vessel
Interest to MSCL pursuant to the Initial Subcharter. Any subcharterer under a
subcharter permitted hereunder may sub-subcharter the Vessel Interest to another
Person under a sub-subcharter that otherwise complies with the provisions
hereunder applicable to a subcharter hereunder.
ARTICLE 21.
Charter Event of Default
------------------------
The term "Charter Event of Default", wherever used herein, shall mean
------------------------
any of the following events (whatever the reason for such Charter Event of
Default and whether it shall be voluntary or involuntary, or come about or be
effected by operation of law, or be pursuant to or in compliance with any
judgment, decree or order of any court or any Governmental Rule or Governmental
Action):
28
<PAGE>
(1) Charterer shall fail to make any payment of Assigned Hire within
10 Business Days after the date the same becomes due; or
(2) Charterer shall fail to pay Supplemental Hire or make any other
payment (other than (i) Assigned Hire or (ii) any Excess Hire or any
Additional Excess Hire or any Excepted Payment (unless Owner elects to have
such failure to make such payment of Excess Hire or any Additional Excess
Hire or such failure to make an Excepted Payment constitute a Charter Event
of Default)) required to be made by Charterer under this Charter Party or
under any other Operative Document for more than 15 Business Days after
Charterer has received written notice from Owner or the Indenture Trustee
stating that such payment is due; or
(3) Charterer shall fail in any material respect to perform or observe
any other material covenant or agreement to be performed or observed by it
under this Charter Party or any other Operative Document (other than any
covenant or agreement to pay Excess Hire or any Additional Excess Hire or
make an Excepted Payment) and such failure shall continue for a period of
thirty (30) days after receipt by Charterer of a written notice from Owner
or the Indenture Trustee specifying such failure and requiring it to be
remedied; provided, however, that the continuation of any such failure for
-------- -------
such period of thirty (30) days or such longer period (not to exceed 365
days) after receipt of such notice shall not constitute a Charter Event of
Default so long as (i) such failure is curable or correctable and (ii)
Charterer is diligently pursuing the cure or correction of such failure; or
(4) the Guarantor shall fail in any material respect to perform or
observe any covenant or agreement to be performed or observed by it under
the Guaranty (other than any covenant or agreement in respect of
Charterer's obligations under the Operative Documents) and such failure
shall continue for a period of thirty (30) days after receipt by the
Guarantor of a written notice from Owner or the Indenture Trustee
specifying such failure and requiring it to be remedied; provided, however,
-------- -------
that the continuation of any such failure for such period of thirty (30)
days or such longer period (not to exceed 365 days) after receipt of such
notice shall not constitute a Charter Event of Default so long as (i) such
failure is curable or correctable and (ii) the Guarantor is diligently
pursuing the cure or correction of such failure; or
(5) any material representation or warranty made by Charterer in
Section 5 of the Participation Agreement or
29
<PAGE>
in any Officer's Certificate of Charterer delivered pursuant to the
Participation Agreement shall prove to have been inaccurate in any material
respect when made, unless such inaccuracy shall not be material to the
recipient at the time when the notice referred to below shall have been
received by Charterer or any material adverse impact thereof shall have
been cured or corrected within thirty (30) days after receipt by Charterer
of a written notice thereof from Owner or the Indenture Trustee; provided,
--------
however, that the continuation of any such inaccuracy for such period of
-------
thirty (30) days or such longer period (not to exceed 365 days) after
receipt of such notice shall not constitute a Charter Event of Default so
long as (i) any material adverse impact of such inaccuracy is curable or
correctable and (ii) Charterer is diligently pursuing the cure or
correction of such material adverse impact; or
(6) any material representation or warranty made by the Guarantor in
the Guaranty or in any Officer's Certificate of the Guarantor delivered
pursuant to the Participation Agreement shall prove to have been inaccurate
in any material respect when made, unless such inaccuracy shall not be
material to the recipient at the time when the notice referred to below
shall have been received by the Guarantor or any material adverse impact
thereof shall have been cured or corrected within thirty (30) days after
receipt by Charterer of a written notice thereof from Owner or the
Indenture Trustee; provided, however, that the continuation of any such
-------- -------
inaccuracy for such period of thirty (30) days or such longer period (not
to exceed 365 days) after receipt of such notice shall not constitute a
Charter Event of Default so long as (i) any material adverse impact of such
inaccuracy is curable or correctable and (ii) the Guarantor is diligently
pursuing the cure or correction of such material adverse impact; or
(7) Charterer or the Guarantor shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, or shall consent to any such relief
or to the appointment or taking possession by any such official or agency
in an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall take any
corporate action to authorize any of the foregoing, or an involuntary case
or other proceeding shall be commenced against Charterer or the Guarantor
seeking
30
<PAGE>
liquidation, reorganization or other relief with respect to it or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official or agency of it or any substantial part
of its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of ninety (90) days; or
(8) the Guaranty shall cease to be in full force and effect or to be
the valid, binding and enforceable agreement of the Guarantor; or
(9) Charterer shall fail to maintain (or cause to be maintained) the
insurance required by Article 16 and such failure shall continue for a
period of thirty (30) days following receipt of notice from the Indenture
Trustee or Owner specifying such failure and requiring such failure to be
remedied;
provided, however, that notwithstanding anything to the contrary contained in
- -------- -------
this Article 21, any failure of Charterer to perform or observe any covenant or
agreement specified in Article 21(3) shall not constitute a Charter Event of
Default if such failure is caused solely by reason of any event that constitutes
an Event of Loss (or any event which with lapse of time would constitute an
Event of Loss) so long as Charterer is continuing to comply with all the
applicable terms of Article 14.
ARTICLE 22.
Remedies
--------
(a) In General. Upon the occurrence of any Charter Event of Default
----------
and so long as the same shall be continuing, Owner, at its option, may declare
this Charter Party to be in default by written notice to such effect given to
Charterer (provided that this Charter Party shall be deemed to have been
declared in default without the necessity of such written notice upon the
occurrence of any Event of Default described in paragraph (7) of Article 21),
and at any time thereafter, provided such Charter Event of Default shall be
continuing, Owner may, to the extent permitted by applicable Governmental Rules,
exercise one or more of the following remedies, as Owner in its sole discretion
shall elect:
(i) Owner, by notice to Charterer, may rescind or terminate this
Charter Party;
(ii) whether or not this Charter Party has been terminated, Owner
may, after the Delivery Date, demand
31
<PAGE>
that Charterer, and upon the written demand of Owner, Charterer shall,
surrender the Vessel promptly to Owner in the manner and condition required
by, and otherwise in accordance with the provisions of, this Charter Party
as if the Vessel were being returned at the end of the Charter Period and
Owner shall not be liable for the reimbursement of Charterer for any costs
and expenses incurred by Charterer in connection therewith;
(iii) Owner may (whether or not Owner has taken possession thereof)
sell all or any portion of the Vessel Interest at public or private sale,
as Owner may determine, free and clear of any rights of Charterer with
respect thereto and without any duty to account to Charterer with respect
to such sale or any proceeds with respect thereto (except to the extent
required by paragraph (v) or (vi) of this Article 22(a) if Owner shall
elect to exercise its rights thereunder), in which event Charterer's
obligation to pay Bareboat Hire with respect to the interest sold accruing
after the date of such sale shall be terminated (except to the extent that
Bareboat Hire is to be included in computations under paragraph (v) or (vi)
of this Article 22(a) if Owner shall elect to exercise its rights
thereunder);
(iv) Owner may hold or lease to others all or a portion of the Vessel
Interest, as Owner in its sole discretion may determine, free and clear of
any rights of Charterer with respect thereto and without any duty to
account to Charterer with respect to such action or inaction or for any
proceeds with respect to such action or inaction, except that Charterer's
obligation to pay Bareboat Hire after Charterer shall have been deprived of
use of all or a portion of the Vessel pursuant to this paragraph (iv) shall
be reduced by the net proceeds, if any, received by Owner from chartering
all or a portion of the Vessel Interest to any Person other than Charterer
for the same periods or any portion thereof;
(v) whether or not Owner shall have exercised or thereafter at any
time shall exercise its rights under paragraph (i), (ii), (iii) or (iv) of
this Article 22(a), Owner may demand, by written notice to Charterer
specifying a payment date which shall be a Termination Value Determination
Date not earlier than 10 Business Days after the date of such notice, that
Charterer pay to Owner, and Charterer shall pay to Owner, on such specified
payment date, as liquidated damages for loss of a bargain and not as a
penalty (in lieu of Bareboat Hire accruing on or after such specified
payment date), any unpaid Bareboat Hire due and owing on or prior to such
specified payment date (but excluding any Bareboat Hire payable in advance
on such payment date) and any unpaid
32
<PAGE>
Supplemental Hire (to whomsoever payable) due and owing on or prior to the
date of such payment plus whichever of the following amounts Owner, in its
sole discretion, shall specify in such notice (together with interest on
such amount at the Overdue Rate from such specified payment date to the
date of actual payment):
a. an amount equal to the excess, if any, of Termination Value
for the Vessel Interest as of such specified payment date over the
Fair Market Sales Value of the Vessel Interest as of such specified
payment date (or the last day of the Charter Period, if earlier); or
b. an amount equal to Termination Value for the Vessel Interest
determined as of such specified payment date, and, in this event, upon
full payment by Charterer of all sums due hereunder, Owner shall be
obligated to transfer, without recourse, representation or warranty
(other than the absence of Owner Participant's Liens and Owner's
Liens) the Vessel Interest (including if the Vessel has been sold
pursuant to the Head Lease or otherwise, any proceeds or right to the
proceeds the Owner may have) to Charterer, as is and where is,
whereupon this Charter Party and Charterer's obligations hereunder
shall terminate. Owner shall, at Charterer's expense, execute and
deliver to Charterer a bill of sale or assignment and such other
instruments, documents and opinions as Charterer may reasonably
request to evidence the valid consummation of such transfer and shall,
at Charterer's expense, take such actions under Section 6.03 of the
Indenture as Charterer may reasonably request;
(vi) if Owner shall have sold all of the Vessel Interest pursuant to
paragraph (iii) of this Article 22(a) or other right of sale, Owner, in
lieu of exercising its rights under paragraph (v) of this Article 22(a),
may, if it shall so elect, demand that Charterer pay to Owner and Charterer
shall pay to Owner on the date of such sale, as liquidated damages for loss
of a bargain and not as a penalty (in lieu of Bareboat Hire accruing on or
after the next Base Hire Payment Date following the date of such sale), any
unpaid Bareboat Hire due and owing or accrued on or prior to such next Base
Hire Payment Date (but excluding any Base Hire payable in advance on such
Base Hire Payment Date) and any other Supplemental Hire due and owing on or
prior to such next Base Hire Payment Date plus the amount of any
deficiency between Termination Value for the Vessel Interest, computed as
of such next Base Hire Payment Date, and the
33
<PAGE>
proceeds of such sale, together with interest at the Overdue Rate plus 3%
on the amount of such Hire, from the due date or dates thereof, and on the
amount of such deficiency from the date of such sale, until the date of
actual payment; or
(vii) Subject to Article 22(d), Owner may exercise any other right or
remedy that may be available to it under applicable law or proceed by
appropriate court action to enforce the terms hereof or to recover damages
for the breach hereof.
(b) Continuing Obligations. No rescission or termination of this
----------------------
Charter Party, in whole or in part, or repossession of the Vessel Interest or
exercise of any remedy under Article 22(a) shall, except as specifically
provided herein, relieve Charterer of any of its liabilities and obligations
hereunder. Charterer shall be liable (i) for all reasonable legal fees and
other reasonable costs and expenses incurred by Owner, the Owner Participant,
each Loan Participant or the Indenture Trustee by reason of the occurrence of
any Charter Event of Default or the exercise of Owner's remedies with respect
thereto, including all costs and expenses reasonably incurred in placing the
Vessel in the condition required by Article 19 and (ii) except as otherwise
provided herein, for any and all other accrued and unpaid Hire due hereunder
before, after or during the exercise of any of the foregoing remedies. At any
sale of the Vessel Interest or any part thereof pursuant to Article 22(a),
Owner, the Owner Participant, each Loan Participant, or the Indenture Trustee
may bid for and purchase such property.
(c) Remedies Cumulative. To the extent permitted by applicable law
-------------------
and except as provided herein, no remedy under Article 22(a) is intended to be
exclusive, but each shall be cumulative and in addition to any other remedy
provided under Article 22(a) or otherwise available to Owner at law or in
equity. No express or implied waiver by Owner of any Charter Party Default or
Charter Event of Default shall in any way be, or be construed to be, a waiver of
any future or subsequent Charter Party Default or Charter Event of Default. The
failure or delay of Owner in exercising any rights granted it hereunder upon the
occurrence of any of the contingencies set forth herein shall not constitute a
waiver of any such right upon the continuation or recurrence of any such
contingencies or similar contingencies and any single or partial exercise of any
particular right by Owner shall not exhaust the same or constitute a waiver of
any other right provided herein. To the extent permitted by applicable law,
Charterer hereby waives any rights now or hereafter conferred by statute or
otherwise which may enable it to cancel, quit or surrender this Charter Party,
except as otherwise provided herein, or which may require Owner to sell, lease
or otherwise
34
<PAGE>
use the Vessel Interest in mitigation of Owner's damages as set forth in Article
22(a) or which may limit or modify any of Owner's rights and remedies provided
in Article 22(a).
(d) No Consequential Damages. Notwithstanding any other provision of
-------------------------
this Charter Party, the Charterer shall not be liable to Owner for any claim for
loss of profits, for any reduction in the amount of Excess Hire or Additional
Excess Hire payable in accordance with Article 3, or for any other consequential
damages by reason of any failure of the Charterer to comply with the provisions
of this Charter Party, including Articles 11, 12 and 13.
ARTICLE 23.
Special Termination
-------------------
(a) Special Termination Events. The occurrence of the following will
---------------------------
constitute a Special Termination Event: (i) title to the Vessel shall be
required to be transferred to the U.K. Lessor or its designee in circumstances
where there has been no assumption of the obligations of Owner in accordance
with Section 3.04 of the Indenture, or (ii) termination of the Charter Period
pursuant to Article 23(c).
(b) Termination. Forthwith upon the occurrence of a Special
------------
Termination Event, Charterer shall give notice of such event to Owner and
Indenture Trustee, and Charterer shall on the next Termination Value
Determination Date occurring not less than 25 days following the giving of such
notice pay to Owner (A) the Termination Value as of the Termination Value
Determination Date, (B) all Bareboat Hire due and owing prior to the date of
such payment, (C) all Supplemental Hire due and owing on or prior to the date of
such payment, which shall include the applicable Make-Whole Amount, if any,
payable upon the redemption of the Secured Notes under the Indenture, (D) if
such Termination Value Determination Date is a Base Hire Payment Date, all Base
Hire payable on such Base Hire Payment Date, and (E) all Excess Hire or
Additional Excess Hire accrued through such Termination Value Determination Date
whereupon Owner shall surrender to Charterer subject to the rights of the U.K.
Lessor, without representation or warranty except as to the absence of Owner's
Liens and Owner Participants' Liens, all of its right title and interest in the
Construction Contract and the Vessel Interest, whereupon this Charter Party
shall terminate, and Charterer shall have no further obligation thereunder. The
Interest so surrendered shall be held and disposed of in accordance with the
last paragraph of Article 5 of the Joint Venture Agreement.
(c) Termination upon Termination of Head Lease. Unless otherwise
-------------------------------------------
agreed by the U.K. Lessor with the consent of the Charterer, the Charter Period
shall automatically
35
<PAGE>
terminate on the date falling ten days after the termination of the leasing of
the Vessel under the Head Lease or, if later, the completion of the then current
voyage of the Vessel and the discharge of any cargo therefor.
ARTICLE 24.
Vessel Plans and Drawings
-------------------------
Owner shall supply and deliver to Charterer a full description of the
Vessel and copies of all documents, plans and drawings required for the proper
operation and maintenance of the Vessel on or before the Delivery Date.
36
<PAGE>
ARTICLE 25.
Wreck Removal
-------------
In the event of the Vessel becoming a wreck or obstruction to
navigation, Charterer shall indemnify Owner against any sums whatsoever which
Owner shall become liable to pay and shall pay in consequence of the Vessel
becoming a wreck or obstruction to navigation.
ARTICLE 26.
General Average
---------------
General Average, if any, shall be adjusted according to the York-
Antwerp Rules 1974 or any subsequent modification thereof current at the time of
the casualty. Bareboat Hire will not contribute to General Average.
ARTICLE 27.
Salvage
-------
All salvage services rendered by the Vessel during the Charter Period
shall be for the benefit of Charterer. Charterer shall satisfy salvage claims
of the crew and any other expenses incurred in connection with such salvage
services.
ARTICLE 28.
Notices.
-------
All communications, notices and consents provided for in this Charter
Party shall be in writing and given in person or by courier or by means of
telecopy or other electronic transmission (with provision for assurance of
receipt in a manner typical with respect to communications of that type), or
mailed by registered or certified first class mail, return receipt requested,
addressed to the respective addresses set forth in Schedule 1 to the
Participation Agreement, or in each case at such other address as the Person
entitled thereto shall from time to time designate by notice in writing to
Charterer and Owner. All such communications, notices and consents given in
such manner shall be deemed given when received by (or when proffered to, if
receipt is refused) the party to whom it is addressed.
37
<PAGE>
ARTICLE 29.
Applicable Law; Miscellaneous
-----------------------------
(a) Governing Law; Disputes. This Charter Party shall be governed by
-----------------------
and construed in accordance with the laws of the State of New York. Subject to
Section 9.02 of the Indenture, Owner and Charterer will negotiate in good faith
to resolve any differences and disputes. Failing agreement, any and all
differences and disputes of whatsoever nature arising out of this Charter Party
shall be decided by the U.S. Federal Courts for the Southern District of New
York, to the jurisdiction of which courts Owner and Charterer hereby submit for
the purpose of adjudication of such disputes. The parties hereby authorize
service of process in connection with any court proceedings to be commenced
pursuant to this Article 29 to be made at the addresses referred to in Article
28.
(b) Complete Agreement. This Charter Party (including any document(s)
------------------
incorporated by reference herein and/or annexed hereto) is intended by the
parties to constitute the final expression of their agreement regarding the
bareboat chartering of the Vessel and is the complete and exclusive statement of
the terms under which the bareboat chartering is undertaken.
(c) Amendments. No amendment, supplement, supplement, modification,
----------
waiver or discharge of any term in this Charter Party shall be valid unless
agreed in writing and executed by both Owner and Charterer and, if required by
Section 9.02 of the Indenture, by the Indenture Trustee.
(d) Severability of Provisions. Any provision of this Charter Party
--------------------------
which may be determined by competent authority to be invalid or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without invalidating or rendering
unenforceable any remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto hereby waive any provision of law which
renders any provision hereof invalid or unenforceable in any respect.
(e) Headings. The division of this Charter Party into sections, the
--------
provision of a table of contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Charter Party.
(f) Counterpart Execution. This Charter Party may be executed in any
---------------------
number of counterparts and by each of the
38
<PAGE>
parties hereto on separate counterparts, all such counterparts together
constituting but one and the same instrument, with the counterpart containing
the receipt therefor executed by the Indenture Trustee on or immediately
following the signature page thereof being deemed the "original executed
counterpart" and all other counterparts being deemed duplicates. For purposes
of recordation, Owner and Charterer agree that certain information set forth on
Schedules 1 through 4 may be omitted from the counterpart presented for filing.
(g) Successors and Assigns. This Charter Party, including the terms
----------------------
and provisions hereof, shall be binding upon Owner and Charterer and their
respective successors and assigns and inure to the benefit of Owner and
Charterer and their respective successors and permitted assigns.
(h) Investment of Security Funds. Any amounts held by Owner as
----------------------------
security hereunder that would be payable to Charterer upon satisfaction of any
applicable conditions shall be invested and reinvested by Owner (or, so long as
this Charter Party shall be subject to the Lien of the Indenture, the Indenture
Trustee), from time to time in Permitted Investments at the written direction of
Charterer. Owner shall have no liability for any loss resulting from any
investment required to be made other than by reason of its willful misconduct or
gross negligence. Any net income or gain realized as a result of any such
investment or reinvestment shall be applied by Owner at the same time, on the
same conditions and in the same manner as the amounts in respect of which such
income or gain was realized are required to be distributed in accordance with
the provisions hereof, or of any other Operative Document pursuant to which such
amounts were required to be held. Charterer shall be responsible for any net
loss realized as a result of any such investment or reinvestment and shall
reimburse Owner (or the Indenture Trustee, as the case may be) therefor on
demand. Any Permitted Investment may be sold or otherwise reduced to cash
(without regard to maturity) by Owner whenever necessary to make any application
as required by the terms of this Charter Party or of any applicable Operative
Document.
(i) Immunities; Satisfaction of Undertakings; Successor Owner Trustee.
-----------------------------------------------------------------
Except as expressly provided herein, all and each of the representations,
warranties, undertakings and agreements herein made on the part of Owner are
made and intended not as personal representations, warranties, undertakings and
agreements by or for the purpose or with the intention of binding the Managing
Trustee personally but are made and intended for the purpose of binding only the
Trust Estate, and this Charter Party is executed and delivered by the Managing
Trustee solely in the exercise of the powers expressly conferred upon it as
trustee under the Trust
39
<PAGE>
Agreement; and no personal liability or responsibility is assumed hereunder by,
or at any time shall be enforceable against, the Managing Trustee or any
successor in trust on account of any representation, warranty, undertaking or
agreement hereunder of Owner, either expressed or implied, all such personal
liability, if any, being expressly waived by Charterer; provided, however, that
-------- -------
(a) Charterer or any Person claiming by, through or under it, making claim
hereunder, may subject to the terms and conditions hereof, look to the Trust
Estate for satisfaction of such liability or responsibility and (b) the Managing
Trustee or its successor in trust, as applicable, shall be personally liable for
its own gross negligence and willful misconduct and for the matters described in
clauses (i) through (v) of the last sentence of Section 7.2 of the Trust
Agreement. Subject to the terms and conditions hereof, each time a successor
Managing Trustee is appointed in accordance with the terms of the Trust
Agreement, such successor Managing Trustee shall, without further act, succeed
to all the rights, duties, immunities and obligations of its predecessor
Managing Trustee hereunder and under the other Operative Documents, and the
predecessor Managing Trustee shall be released from all further duties and
obligations hereunder and under the other Operative Documents, all without the
necessity of any consent or approval by Charterer and without in any way
altering the terms of this Charter Party or such other Operative Documents or
the obligations of Charterer hereunder or thereunder. Charterer, at its
expense, upon receipt of written notice of the appointment of a successor
Managing Trustee in accordance with the Operative Documents, promptly shall make
such modifications and changes to reflect such appointment as reasonably shall
be requested by such successor Managing Trustee in such insurance policies,
schedules, certificates and other instruments relating to the Vessel Interest or
this Charter Party or the other Operative Documents, all in form and substance
reasonably satisfactory to such successor Managing Trustee.
(j) Performance of Obligations to Indenture Trustee and Holders.
-----------------------------------------------------------
After this Charter Party shall no longer be subject to the Lien of the
Indenture, the provisions of this Charter Party which require or permit any
action by, any consent, approval or authorization of, the furnishing of any
document, paper or information to, or the performance of any other obligation
to, the Indenture Trustee or any Holder shall not be effective, and the Sections
hereof containing such provisions shall be read as though there were no such
references to any such requirements or permissions.
(k) True Lease. This Charter Party is intended as and shall
----------
constitute an agreement of lease or charter and nothing herein shall be
construed as conveying to Charterer any right, title or interest in or to the
Vessel Interest
40
<PAGE>
other than as charterer hereunder, it being expressly understood by the parties
hereto that the foregoing does not constitute a covenant, representation or
warranty of Charterer.
(l) Survival of Agreements. The representations, warranties,
----------------------
covenants and indemnities of the parties provided for in the Operative
Documents, and the parties' obligations under any and all thereof, shall survive
the execution and delivery of this Charter Party, the Investment by Owner
Participant and the purchase of the Secured Notes by the Loan Participant, any
disposition of any interest of the Owner Participant or Owner in the Vessel, and
shall be and continue in effect notwithstanding any investigation made by any of
such parties and the fact that compliance with any of the other terms,
provisions or conditions of any of the Operative Documents shall have been
waived.
41
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Charter Party to be
duly executed as of the 19th day of December, 1996.
SAMOCO RAVEN TRUST
By: Deutsche Morgan Grenfell
(Cayman) Limited, not in its
individual capacity, but solely
as Managing Trustee under the
Trust Agreement
By: /s/ James Baird
---------------------------
Name: James Baird
Title: Attorney in Fact
Mobil Marine Finance Company I Inc.
By: /s/ R.E. Sliwinski
----------------------------
Name: R.E. Sliwinski
Title: Authorized Signatory
42
<PAGE>
Raven
SCHEDULE 1
----------
Vessel: M/V Raven
Owner's Cost: $95,000,000
Builder: Sumitomo Heavy Industries, Ltd.
Scheduled Delivery Date: December 19, 1996
Charter Expiration Date: January 2, 2015
U.K. Lease Term: December 20, 2021
U.K. Lessor: Abbey National December Leasing (4) Limited
<PAGE>
Exhibit 99.2
================================================================================
VLCC CHARTER PARTY
dated as of
December 19, 1996
among
DUMOCO EAGLE TRUST,
a trust created pursuant to the Delaware Business Trust Act
under the Declaration and Agreement of Trust
dated as of November 22, 1996,
by the Owner Participant,
Owner
and
MOBIL MARINE FINANCE COMPANY II INC.
Charterer
________________________________________________________________________________
Charter of VLCC M/V EAGLE
================================================================================
AS SET FORTH IN ARTICLE 20 OF THIS CHARTER PARTY, CERTAIN OF THE RIGHT, TITLE
AND INTEREST OF THE OWNER IN AND TO THIS CHARTER PARTY HAS BEEN ASSIGNED TO AND
IS SUBJECT TO A SECURITY INTEREST IN FAVOR OF STATE STREET BANK AND TRUST
COMPANY, AS INDENTURE TRUSTEE, UNDER THE TRUST INDENTURE, ASSIGNMENT OF CHARTER
AND HEAD LEASE, AND SECURITY AGREEMENT DATED AS OF DECEMBER 19, 1996 BETWEEN THE
OWNER TRUST AND THE INDENTURE TRUSTEE, AS SUCH INDENTURE MAY BE AMENDED,
MODIFIED OR SUPPLEMENTED FROM TIME TO TIME IN ACCORDANCE WITH THE PROVISIONS
THEREOF. THIS CHARTER PARTY HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. TO THE
EXTENT, IF ANY, THAT THIS CHARTER PARTY CONSTITUTES CHATTEL PAPER (AS SUCH TERM
IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN THIS CHARTER PARTY MAY BE CREATED THROUGH
THE TRANSFER OF POSSESSION OF ANY EXECUTED COUNTERPART OTHER THAN THE ORIGINAL
EXECUTED COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART THAT CONTAINS
THE RECEIPT THEREFOR EXECUTED BY THE INDENTURE TRUSTEE ON OR IMMEDIATELY
FOLLOWING THE SIGNATURE PAGE THEREOF.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1. Definitions........................... 1
ARTICLE 2. Effective Date and Charter Period..... 2
ARTICLE 3. Hire.................................. 2
(a) Bareboat Hire................................ 2
(b) Supplemental Hire............................ 2
(c) Base Hire and Additional Base Hire........... 2
(d) Excess Hire and Additional Excess Hire....... 3
(e) Method of Payment............................ 3
(f) Late Payment................................. 3
(g) Minimum Payment.............................. 3
ARTICLE 4. Description of the Vessel;
Documentation......................... 4
ARTICLE 5. Owner's Warranties and Representations
and Certain Charterer Undertakings.... 4
ARTICLE 6. Delivery Date......................... 5
(a) Delivery..................................... 5
(b) Delivery Conditions.......................... 5
(c) Determination to Accept Delivery............. 7
(d) Notice of Delivery........................... 7
ARTICLE 7. Quiet Enjoyment; Use and Trade of the
Vessel................................ 8
ARTICLE 8. Condition Upon Delivery............... 8
ARTICLE 9. Net Charter........................... 10
ARTICLE 10. Manning............................... 11
ARTICLE 11. Maintenance; Inspection............... 11
(a) Maintenance.................................. 11
(b) Inspection................................... 13
(c) Daily Operating Costs........................ 13
ARTICLE 12. Fuel, Lubricants, Water, Stores,
Equipment and Spare Replacement Parts. 13
ARTICLE 13. Vessel Modification.................... 15
(a) Required Modifications........................ 15
ii
<PAGE>
(b) Optional Modifications...................... 15
(c) Title to Modifications...................... 15
(d) Payment for Modifications and Replacement
Components.................................. 16
(e) Replacement of Components; Removal of
Property.................................... 17
ARTICLE 14. Event of Loss........................... 18
(a) Notice of Event of Loss..................... 18
(b) Payment of Termination Value, Etc........... 18
(c) Application of Other Payments upon the
Occurrence of an Event of Loss.............. 19
(d) Application of Payments Not Relating to an
Event of Loss............................... 19
(e) Application During Charter Event of Default. 19
ARTICLE 15. Liens................................... 20
(a) Owner's Liens............................... 20
(b) Charterer Liens............................. 20
(c) Copy of Documents on Board Vessel........... 20
(d) Identification of Vessel.................... 20
(e) Lien on Cargoes............................. 21
ARTICLE 16. Insurance............................... 21
(a) Coverage.................................... 21
(b) Additional Insurance........................ 22
(c) Certain Terms of Insurance.................. 22
(d) Notice of Accidents......................... 23
(e) Application of Proceeds of Insurance........ 23
(f) Application During Charter Event of Default. 24
ARTICLE 17. Requisition............................. 24
ARTICLE 18. Early Termination....................... 24
(a) Decision.................................... 24
(b) Notice of Termination....................... 25
(c) Sale of Vessel Interest; Termination Payment 25
(d) Continuation of Charter Party............... 26
(e) Retention of Vessel Interest by Owner....... 26
ARTICLE 19. Redelivery.............................. 27
ARTICLE 20. Assignment by Owners; Subcharters....... 28
ARTICLE 21. Charter Event of Default................ 31
ARTICLE 22. Remedies................................ 34
(a) In General.................................. 34
iii
<PAGE>
(b) Continuing Obligations...................... 36
(c) Remedies Cumulative......................... 37
(d) No Consequential Damages.................... 37
ARTICLE 23. Special Termination..................... 37
(a) Special Termination Events.................. 37
(b) Termination................................. 38
(c) Termination upon Termination of Head Lease.. 38
ARTICLE 24. Vessel Plans and Drawings............... 39
ARTICLE 25. Wreck Removal........................... 39
ARTICLE 26. General Average......................... 39
ARTICLE 27. Salvage................................. 39
ARTICLE 28. Notices................................. 39
ARTICLE 29. Applicable Law; Miscellaneous........... 40
(a) Governing Law; Disputes..................... 40
(b) Complete Agreement.......................... 40
(c) Amendments.................................. 40
(d) Severability of Provisions.................. 40
(e) Headings.................................... 41
(f) Counterpart Execution....................... 41
(g) Successors and Assigns...................... 41
(h) Investment of Security Funds................ 41
(i) Immunities; Satisfaction of Undertakings;
Successor Owner Trustee..................... 42
(j) Performance of Obligations to Indenture
Trustee and Holders......................... 42
(k) True Lease.................................. 43
(l) Survival of Agreements...................... 43
SCHEDULES
Appendix A Definitions
Schedule 1 Description of Vessel; Owner's Cost
Schedule 2 Bareboat Hire
Schedule 3 Termination Values
iv
<PAGE>
BAREBOAT CHARTER PARTY
----------------------
AGREEMENT made as of the 19th day of December, 1996 between DUMOCO
EAGLE TRUST, a trust created pursuant to the Delaware Business Trust Act
(hereinafter called "Owner"), having an office and authorized to conduct
business at Elizabethan Square, Grand Cayman, Cayman Islands and created under
the Declaration and Agreement of Trust, under which Deutsche Morgan Grenfell
(Cayman) Limited, a Cayman Islands banking corporation is the Managing Trustee
(together with its permitted successors and assigns, the "Managing Trustee")
(the Managing Trustee acting not individually, but solely as trustee for the
Owner Trust, being the "Owner Trustee"), and Mobil Marine Finance Company II
Inc., a Delaware corporation having an office and place of business at 3225
Gallows Road, Fairfax, VA 22037 (hereinafter called "Charterer"), whereby Owner
will let and demise and Charterer will hire the very large crude carrier
identified in Schedule 1 (hereinafter called the "Vessel").
WHEREAS, Owner has acquired title to the Vessel;
WHEREAS, Owner has entered into a Conditional Sale Agreement dated
November 25, 1996 with the U.K. Lessor providing for the sale of the Vessel on
the terms stated therein to the U.K. Lessor;
WHEREAS, Owner has entered into the Head Lease with the U.K. Lessor
pursuant to which the U.K. Lessor's interest in the Vessel has been let to the
Owner for the U.K. Lease Term; and
WHEREAS, Owner wishes to subject its interests in the Vessel,
including such interests under the Conditional Sale Agreement and the Head
Lease, to a charter in favor of the Charterer upon the terms set forth herein;
NOW THEREFORE, in consideration of $1.00 in hand paid and other good
and valuable consideration the receipt of which is hereby acknowledged, the
parties hereby agree as follows:
ARTICLE 1.
Definitions
-----------
For the purposes hereof, capitalized terms used herein (including
those used in the preamble and in the foregoing recitals) and not otherwise
defined herein shall have the meanings assigned to them in Appendix A, which
Appendix A shall for all purposes constitute part of this Charter Party and
shall be subject to amendment in accordance with the terms hereof. References
in this Charter Party to
<PAGE>
Articles, subarticles, clauses, Schedules, Appendices and Exhibits are to
Articles, subarticles and clauses of, and Schedules, Appendices and Exhibits to,
this Charter Party unless otherwise indicated.
ARTICLE 2.
Effective Date and Charter Period
---------------------------------
Owner agrees to let and demise and Charterer agrees to hire all of
Owner's right, title and interest in the Vessel upon the terms and conditions
set forth in this Agreement for the Charter Period. As of the Charter
Termination Date, the Vessel shall, except as otherwise expressly provided
herein, be redelivered to Owner or its designee pursuant to the terms of Article
19. This Agreement shall be binding and effective immediately upon execution
hereof notwithstanding any failure of the Delivery Date to occur.
ARTICLE 3.
Hire
----
(a) Bareboat Hire. Charterer shall pay to Owner, as charter hire for
-------------
the Vessel Interest, Bareboat Hire in installments with respect to each Rate
Period during the Charter Period on the dates and in the amounts provided in
Articles 3(c) and (d). Each installment of Bareboat Hire shall be in arrears.
Bareboat Hire with respect to any charter entered into pursuant to Article 19(c)
following the expiration of this Charter Party shall be payable as provided in
Article 19(c).
(b) Supplemental Hire. Charterer shall pay to Owner, for its own
-----------------
account, or to the Person entitled thereto, as provided herein or in any other
Operative Document, any and all Supplemental Hire promptly as the same shall
become due and payable. As part of Supplemental Hire hereunder, Charterer shall
pay the Make-Whole Amount, if any, payable upon any redemption of the Secured
Notes under the Indenture as and when such Make-Whole Amount is due, provided
--------
that Charterer shall not be required to pay any Make-Whole Amount in respect of
the redemption or purchase of the Secured Notes pursuant to Section 3.06 of the
Indenture.
(c) Base Hire. Base Hire shall be payable to Owner semi-annually in
---------
arrears on the Base Hire Payment Dates in the amounts and commencing on the date
set forth in Schedule 2. Under no circumstances shall the Bareboat Hire for any
Rate Period be lower than the Base Hire for such Rate Period.
2
<PAGE>
(d) Excess Hire and Additional Excess Hire. Payment of Excess Hire
---------------------------------------
and Additional Excess Hire shall be payable to Owner or in accordance with its
instructions, semi-annually in arrears on February 1 and August 1 of each year
following the applicable Rate Period. The amount of Excess Hire and Additional
Excess Hire shall be determined in accordance with Schedule 2A.
(e) Method of Payment. Subject to Article 20(b), all Bareboat Hire
-----------------
and Supplemental Hire payable to Owner shall be paid to the Owner's account
specified in Schedule 1 to the Participation Agreement or to such other Person
or account at such other place as Owner shall specify in writing to the
Charterer at least five Business Days prior to the due date thereof. All
Supplemental Hire payable to any Person other than Owner pursuant to any
Operative Document shall be paid directly to such Person as provided in such
Operative Document. Each payment of Hire shall be made by Charterer in
immediately available funds, on or before 12:00 noon, local time at the place of
receipt, on the scheduled date on which such payment shall be due, unless such
scheduled date shall not be a Business Day in which case such payment shall be
due and payable on the next succeeding Business Day with the same force and
effect as if made on such scheduled date and (provided such payment is made on
such next succeeding Business Day) no interest shall accrue on the amount of
such payment from and after such scheduled date.
(f) Late Payment. If any Hire shall not be paid when due, Charterer
------------
shall pay to Owner (or, in the case of Supplemental Hire, to Owner for its own
account or to the Person entitled thereto as provided herein or in any other
Operative Document), as Supplemental Hire, interest (to the extent permitted by
law) on such overdue amount from and including the due date thereof to but
excluding the date of payment thereof (unless payment is made after 12:00 noon,
local time at the place of receipt, in which event such date of payment shall be
included) at the Overdue Rate.
(g) Minimum Payment. Notwithstanding any other provision of this
---------------
Charter Party or any other Operative Document, (a) the amount of Base Hire
payable on each Base Hire Payment Date, shall be at least equal to the aggregate
amount of scheduled principal and accrued interest due and payable on the
Secured Notes Outstanding on such Base Hire Payment Date and (b) the amount of
Termination Value as of any date, together with any Base Hire payable hereunder
on such date, shall be at least equal to the aggregate amount of principal and
accrued interest which would be due and payable on the Secured Notes Outstanding
on such date.
3
<PAGE>
ARTICLE 4.
Description of the Vessel; Documentation
----------------------------------------
(a) Description of Vessel. The Vessel has a gross registered tonnage
---------------------
of approximately 160,000 tons, a net registered tonnage of approximately 95,000
tons, a designed deadweight capacity of approximately 280,000 metric tons, and
otherwise will conform to the description set forth in Schedule 1.
(b) Documentation. As of the Delivery Date the Vessel shall be
-------------
registered under the laws of the Marshall Islands or under the laws of such
other country as the Owner and Charterer may agree which is not materially less
favorable to the holder of Secured Notes; and Charterer shall, throughout the
Charter Period maintain, at its cost, said documentation. Owner shall, at the
request of Charterer, immediately execute or file all documents necessary to
maintain such documentation and to effect any name change(s). Charterer may, at
any time, instruct Owner to change the name of the Vessel, it being understood
that all costs for changing the Vessel's name shall be payable by Charterer.
ARTICLE 5.
Owner's Warranties and Representations and Certain Charterer Undertakings
-------------------------------------------------------------------------
(a) Intentionally omitted.
(b) Indenture. Charterer has acquainted itself with all terms,
---------
conditions and provisions of the Indenture. Charterer undertakes that during
the Charter Period it will comply with all such instructions or directions in
regard to the employment, insurances, repairs and maintenance of the Vessel set
forth in the Indenture or as may be directed from time to time during the
Charter Period by the Indenture Trustee in conformity with the Indenture.
(c) U.K. Documents. Charterer has acquainted itself with all terms,
--------------
conditions and provisions of the Head Lease and the other U.K. Documents. To
the extent there are any obligations imposed on Owner under the Head Lease other
than obligations to pay rentals, termination amounts, and related adjustments
under Articles 7, 8, 18, 19, 21, 22 of the Head Lease and the Financial Schedule
thereto that are not imposed on Charterer hereunder, Charterer shall take such
action as may be required to permit the Lessor to perform, or shall itself
perform, such obligations to the extent necessary to keep the Head Lease in full
force and effect. Nothing in this Article 5(c) shall create a separate
obligation of
4
<PAGE>
Charterer to perform any of the covenants contained in the Head Lease except to
the extent expressly required in the preceding sentence.
ARTICLE 6.
Delivery Date
-------------
(a) Delivery. Owner shall deliver and demise the Vessel to Charterer
---------
and Charterer shall accept the delivery and demise of the Vessel immediately
upon execution of this Charter Party, such delivery and acceptance to be
conclusively evidenced by Charterer's execution of the Protocol of Delivery and
Acceptance.
ARTICLE 7.
Quiet Enjoyment; Use and Trade of the Vessel
--------------------------------------------
(a) Quiet Enjoyment. The Owner warrants that, unless a Charter Event
---------------
of Default shall have occurred and be continuing and this Charter Party shall
have been declared to be in default pursuant to Article 22(a), the Charterer
shall at all times during the Charter Period be entitled to the quiet use and
enjoyment of the benefits of the Vessel Interest, including the right to
uninterrupted possession and use of the Vessel but subject to the rights of the
parties to the U.K. Financing Documents, and the Owner shall not save as
provided under the U.K. Financing Documents take or permit any Person lawfully
claiming by, through or under it to take any action which interferes with such
quiet use or enjoyment or such possession or use or the rights of any
subcharterer or assignee to such quiet use or enjoyment or such possession or
use under any subcharter or assignment permitted hereunder (including, without
limitation, the rights of MSCL under the Initial Subcharter).
(b) Use of Vessel. During the Charter Period, Charterer shall have
-------------
the full use of the Vessel and may employ it worldwide in any lawful trades
permitted by U.S. and Marshall Islands laws and regulations, subject to the
limits of then current Institute Warranties and Clauses, carrying such lawful
cargoes as Charterer, Permitted Subcharterer or their authorized agents may
direct.
ARTICLE 8.
Condition Upon Delivery
-----------------------
(a) Disclaimer of Warranties. Neither Owner nor Owner Participant
------------------------
makes any representations or warranties whether written, oral or implied, with
respect to the Vessel
5
<PAGE>
Interest, the Vessel, or any part thereof, except as expressly set forth in
Section 7 or 9 of the Participation Agreement or in any Officer's Certificate of
the Owner Trust or the Owner Participant, in each case delivered pursuant to the
Participation Agreement. As between Owner and Charterer, execution by Charterer
of this Charter Party and the Protocol of Delivery and Acceptance shall be
conclusive proof of Charterer's acceptance of the Vessel and the Vessel Interest
for all purposes hereof and of the commencement of the Charter Period with
respect thereto and that the Vessel and the Vessel Interest are satisfactory to
the Charterer in all respects. CHARTERER ACKNOWLEDGES THAT OWNER IS NOT A
MANUFACTURER OR DEALER IN SHIPS OR THE COMPONENTS THEREOF AND OWNER CHARTERS AND
CHARTERER TAKES THE VESSEL AND THE VESSEL INTEREST AND EACH PART THEREOF AS IS
AND WHERE IS, AND NEITHER OWNER NOR OWNER PARTICIPANT SHALL BE DEEMED TO HAVE
MADE, AND OWNER HEREBY DISCLAIMS, ANY REPRESENTATION OR WARRANTY OTHER THAN
THOSE REFERRED TO IN THE SECOND PRECEDING SENTENCE, EITHER EXPRESS OR IMPLIED,
AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE DESIGN OR
CONDITION OF THE VESSEL OR ANY PART THEREOF, THE MERCHANTABILITY THEREOF OR THE
FITNESS THEREOF FOR ANY PARTICULAR PURPOSE, THE ABILITY OF THE VESSEL TO PERFORM
ANY FUNCTION, TITLE TO THE VESSEL OR ANY PART THEREOF, THE QUALITY OF THE
MATERIALS OR WORKMANSHIP THEREOF OR CONFORMITY THEREOF TO SPECIFICATIONS, OR THE
PRESENCE OR ABSENCE OF ANY LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE.
CHARTERER CONFIRMS THAT IT HAS SELECTED THE VESSEL AND EACH PART THEREOF ON THE
BASIS OF ITS OWN JUDGMENT AND EXPRESSLY DISCLAIMS RELIANCE IN CONNECTION WITH
SUCH SELECTION UPON ANY STATEMENTS, REPRESENTATIONS OR WARRANTIES MADE BY OWNER
OR OWNER PARTICIPANT. The provisions of this Article have been negotiated and,
except as expressly set forth in Sections 7 and 9 of the Participation Agreement
or in any Officer's Certificate of the Owner Trust or Owner Participant, the
foregoing provisions are intended to be a complete exclusion and negation of any
representation or warranty by Owner or Owner Participant, express or implied,
with respect to this Charter Party, the Vessel, the Vessel Interest or any part
thereof that may arise pursuant to any law now or hereafter in effect or
otherwise. Nothing contained in this Article shall be construed as a waiver of
any warranty or other claim against any manufacturer, supplier, dealer, vendor,
contractor, subcontractor or installer, including the Builder.
(b) Enforcement of Warranties. Owner hereby appoints and constitutes
-------------------------
MOSAT its agent and attorney-in-fact during the Charter Period to assert and
enforce, from time to time, in its sole discretion, in the name and for the
account of Owner and Charterer, as their interests may appear, but in all cases
at no cost or expense to Owner, subject to the provisions of the applicable
Supervisory Agreement, whatever claims and rights Owner may have as the owner of
the Vessel
6
<PAGE>
Interest against any manufacturer or vendor of the Vessel or any Component of
the Vessel; provided, however, that if this Charter Party shall have been
-------- -------
declared in default pursuant to Article 22, such power of attorney shall, at the
option of Owner, terminate and Owner may assert, at Charterer's expense, such
claims and rights.
ARTICLE 9.
Net Charter
-----------
This is a net bareboat charter and, notwithstanding any other
provision of this Charter Party, the obligation of Charterer to pay Hire
hereunder shall be absolute and unconditional and shall not be affected by any
circumstance of any character, including, without limitation: (a) counterclaim,
setoff, deduction, defense, abatement, suspension, deferment, diminution or
reduction; (b) any defect in the condition, design, quality or fitness for use
of the Vessel, or any part thereof or interest therein or the failure of the
Builder to construct or deliver the Vessel; (c) any damage to, removal,
abandonment, salvage, loss, scrapping or destruction of or any requisition or
taking of, the Vessel Interest, the Vessel or any part thereof or interest
therein; (d) any restriction, prevention, interruption or curtailment of or
interference with any use, operation or possession of the Vessel Interest, the
Vessel or any part thereof or interest therein, including, without limitation,
as a result of a termination of or default under the Head Lease, the Conditional
Sale Agreement or any other U.K. Document; (e) any defect in, or any Lien on,
title to the Vessel Interest, the Vessel or any part thereof or interest
therein; (f) any change, waiver, extension, indulgence or other action or
omission in respect of any obligation or liability of Charterer or Owner; (g)
any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to Charterer, the
Indenture Trustee, Owner, Owner Participant, any Loan Participant, any Holder or
any other Person, or any action taken with respect to this Charter Party by any
trustee or receiver of any Person mentioned above, or by any court; (h) any
claim that Charterer has or might have against any Person, including, without
limitation, the Indenture Trustee, any Loan Participant, Owner, Owner
Participant, Managing Trustee or any Holder (but this Article 9 shall not
constitute a waiver of any such claim); (i) any failure on the part of Owner,
the Indenture Trustee, Owner Participant, Managing Trustee or any Loan
Participant to perform or comply with any of the terms hereof or of any other
agreement; (j) any invalidity or unenforceability or disaffirmance of this
Charter Party or any provision hereof or any of the other Operative Documents or
any provision of any thereof, whether against or by Charterer or otherwise; or
(k) any other occurrence whatsoever, whether
7
<PAGE>
similar or dissimilar to the foregoing, whether or not Charterer shall have
notice or knowledge of any of the foregoing. Except as expressly provided
herein, Charterer, to the extent permitted by law, waives all rights now or
hereafter conferred by statute or otherwise to quit, terminate or surrender this
Charter Party, or to any diminution or reduction of Assigned Hire payable by
Charterer hereunder. All payments by Charterer of Base Hire and Termination
Value (or amounts payable by reference thereto) and other Assigned Hire made
hereunder as required hereby shall be final absent manifest error, and Charterer
shall not seek to recover any such payment or any part thereof for any reason
whatsoever absent manifest error. If this Charter Party shall be terminated in
whole or in part for any reason whatsoever Charterer shall, except as expressly
provided herein, nonetheless pay to Owner (or, in the case of Supplemental Hire,
to the Person entitled to such Supplemental Hire as specified herein or in the
appropriate Operative Document) an amount equal to each payment of Assigned Hire
at the time and in the manner that such payment would have become due and
payable under the terms of this Charter Party if it had not been terminated in
whole or in part. Nothing contained in this Article 9 shall be construed as (a)
a guaranty of (i) the value of the Vessel Interest or the Vessel upon the
expiration or termination of the Charter Period or (ii) the useful life of the
Vessel or (iii) payment of any of the Secured Notes or (b) a prohibition of
assertion of any claim against any manufacturer, supplier, dealer, vendor,
contractor, subcontractor or installer with respect to the Vessel or (c) a
waiver by Charterer of its right to assert and sue upon any claims it may have
against any other Person in one or more separate actions.
ARTICLE 10.
Manning
-------
Solely as between Owner and Charterer, the master, officers and crew
of the Vessel and all other persons at any time during the Charter Period on
board the Vessel shall be deemed to be engaged and employed exclusively by
Charterer or Permitted Subcharterers and shall be deemed to be and remain the
Charterer's or Permitted Subcharterers' servants, navigating and working the
Vessel solely on behalf of and at the risk of the Charterer or such Permitted
Subcharterers. Owner shall not have any interest in any hire, freight or
salvage moneys earned by the Vessel or received by Charterer or any Permitted
Subcharterer.
8
<PAGE>
ARTICLE 11.
Maintenance; Inspection
-----------------------
(a) Maintenance. During the Charter Period, Charterer shall at its
-----------
expense maintain and preserve the Vessel in such condition as will entitle it to
maintain the same classification and rating of American Bureau of Shipping
(hereinafter called the "Classification Society") as when delivered to Charterer
under this Charter Party. Charterer at its expense shall furnish to Owner a
copy of all reports and certificates issued by the Classification Society
evidencing the maintenance of such classification and safety standards, and
Charterer will provide Owner with an annual Confirmation of Class Certificate
during each year of the Charter Period. The application or implementation of
all requirements of the Classification Society, including changes or additions
thereto, shall be for Charterer's account, except as provided for in Article
12(d). At all times during the Charter Period, Charterer shall, at its own
expense, operate and maintain (or cause the Permitted Subcharterer to operate
and maintain) the Vessel in accordance with MOSAT's established maintenance,
rebuild and repair programs (and without discriminating against the Vessel based
on the leased status of the Vessel Interest or otherwise) so as to keep the
Vessel (i) in good working order and condition, ordinary wear and tear excepted
and (ii) in compliance in all material respects with all applicable Governmental
Rules and Governmental Actions and the requirements of the Classification
Society; provided, however, that the Charterer shall not be obligated to comply
-------- -------
with any Governmental Rule or Governmental Action (A) whose application or
validity is being contested diligently and in good faith by appropriate
proceedings, (B) compliance with which shall have been excused or exempted by a
nonconforming use permit, waiver, extension or forbearance exempting it from
such Governmental Rule or Governmental Action but only to the extent that the
Charterer's noncompliance is in accordance therewith, (C) if good faith efforts
and appropriate steps are being taken to comply (in which case such compliance
shall be effected prior to the date the Vessel is to be returned to Owner
hereunder), or (D) if failure of compliance (individually and in the aggregate
with all other instances of continuing noncompliance by Charterer) would result
in no material adverse consequences to Charterer, so long as, in the case of
each of clauses (A) through (D) of this proviso, neither such failure of
compliance nor such contest shall result in any material risk or danger of (1)
the sale, forfeiture or loss of any material part of or interest in the Vessel
or the Vessel Interest, the Trust Estate or the Indenture Estate or title
thereto, (2) any interference with the payment of Hire when due, or (3) the
imposition of any criminal liability on the part of, or any other material
adverse effect on, Owner, Owner Participant, the Trust Estate,
9
<PAGE>
the Indenture Estate or the Vessel Interest. Charterer shall have the right to
make such repairs to the Vessel as it deems advisable in its sole discretion,
subject to compliance with the express provisions of this Charter Party. Owner
shall have no obligation to maintain, alter, repair, rebuild or replace the
Vessel or any part thereof, and Charterer expressly waives (to the extent
legally permitted to do so) the right to perform any such action at the expense
of Owner pursuant to any law at any time in effect. During the Charter Period,
Charterer shall keep and maintain (or cause to be kept and maintained) proper
books and records relating to all services rendered and all funds expended for
operation, maintenance, repair and replacement of the Vessel and the
acquisition, construction or installation of all Components, Replacement
Components and Modifications, all in accordance with customary practices in the
oil tanker industry.
(b) Inspection. During the Charter Period, Owner shall have the right
----------
at any time, on reasonable notice, to inspect the Vessel in order to ascertain
whether the Vessel is being properly repaired and maintained. Charterer shall
also permit Owner to inspect the Vessel's logs whenever requested, on reasonable
notice, and shall promptly furnish Owner with information in such detail as may
reasonably be requested regarding any material casualties or oil pollution
incidents involving the Vessel. During the Charter Period, Indenture Trustee
shall have the same right to inspect the Vessel and the related books and
records, provided that, unless an Event of Default shall have occurred and be
continuing, such inspection shall be not more often than once per year.
(c) Certain Operating Costs. The provisions of Articles 11 to 13 as
------------------------
to the costs of maintaining, operating and modifying the Vessel and of Article
5(c) as to the costs of maintaining the Head Lease in force shall be without
prejudice to the calculation of Daily Operating Costs in accordance with the
terms of clause (vii) of Schedule 2B and without prejudice to the obligation of
the Owner to comply with the provisions of Articles 12 and 16 of the Joint
Venture Agreement.
ARTICLE 12.
Fuel, Lubricants, Water, Stores,
Equipment and Spare Replacement Parts
-------------------------------------
(a) Fuel and Lubricants. In the event the Vessel is redelivered to
-------------------
Owner or its designee at the expiration of this Charter Party, on the date of
such redelivery (hereinafter the "Redelivery Date"), Owner or its designee shall
accept and pay Charterer the latter's actual costs for such fuel, unbroached
lubricating oil, unused lubricating oil in storage tanks and
10
<PAGE>
unbroached consumable stores as then remain on board the Vessel.
(b) Use of Equipment and Appurtenances. Charterer shall have the use,
----------------------------------
without extra cost, of such equipment, outfit, appurtenances, as are on board
the Vessel on the Delivery Date. Such items or their substantial equivalent
shall be returned to Owner or its designee on the Redelivery Date in the same
good order and condition as when received, reasonable wear and tear excepted.
Charterer shall have the use, without extra cost, of spare and replacement parts
as are on board the Vessel on the Delivery Date. The same or their substantial
equivalent shall be returned to Owner or its designee on the Redelivery Date in
the same good condition as when received, reasonable wear and tear excepted.
(c) Spares and Replacement Parts. Subject to Article 13 below, during
----------------------------
the Charter Period, Charterer shall, at its expense and on its time, provide
such additional equipment, outfit, tools, spare and replacement parts, crockery
and linen as may be required for Charterer's operation of the Vessel. Spare and
replacement parts ordered for, but not delivered to, the Vessel by or for Owner
on or before the Delivery Date, or the same or the substantial equivalent of
such spare and replacement parts ordered by or for Charterer on or before the
Redelivery Date shall be taken over and paid for, respectively, by Charterer or
Owner, as the case may be, when delivered to the Vessel; and such equipment
shall remain the property of, respectively, the Charterer or Owner as the case
may be. The foregoing shall not apply to spare and replacement parts ordered
for the pumps, gear and equipment described in Article 13(b).
(d) Certificate of Master. For the purposes of Article 12(a), the
---------------------
certificate of the master of the Vessel shall in the absence of manifest error
be binding on Charterer and Owner as to the inventory fuel, unbroached
lubricating oil, unused lubricating oil in storage tanks and unbroached
consumable stores on board the Vessel at the Delivery Date and Redelivery Date;
and said inventories shall be used to determine the sums, if any, owing to
Builder on behalf of Owner or Charterer pursuant to Article 12(a) on the
Delivery Date and Redelivery Date, respectively, which sums shall be due and
payable to Owner or Charterer, as the case may be, in United States Dollars on
presentation of the respective party's invoice.
11
<PAGE>
ARTICLE 13.
Vessel Modification
(a) Required Modifications. At all times during the Charter Period,
----------------------
Charterer shall make (or cause to be made) all Severable and Nonseverable
Modifications to the Vessel as may be required from time to time to meet the
requirements of clause (ii) of Article 11(a) or to maintain any insurance
coverage required by Article 16 (subject to the qualifications set forth in such
Article) unless Charterer shall have elected to terminate this Charter Party
pursuant to Article 18 or unless the Charterer shall have made the election
provided in Article 13(f). Charterer shall complete (or cause to be completed)
all such Modifications in a good and workmanlike manner, with reasonable
dispatch and in a manner (but only to the extent practicable in the case of
Modifications to the Vessel required pursuant to clause (ii) of Article 11(a) or
to maintain any insurance coverage required by Article 16) which does not
decrease except to a de minimis extent the Fair Market Sales Value of the Vessel
-- -------
or decrease the remaining useful life or utility of the Vessel or cause the
Vessel to become "limited use property" within the meaning of Revenue Procedure
76-30.
(b) Optional Modifications. Charterer may, at no expense to Owner,
----------------------
make (or cause or allow to be made) such other Severable and Nonseverable
Modifications to the Vessel not required by Article 11(a), including the
installation of pumps, gear and equipment in addition to that on board as of the
Delivery Date, as do not decrease the Fair Market Sales Value (except to a de
--
minimis extent) of the Vessel or decrease the remaining useful life or cause the
- -------
Vessel to become "limited use property" within the meaning of Revenue Procedure
76-30.
(c) Title to Modifications; Purchase Option for Severable
-----------------------------------------------------
Modifications. (i) Title to all Severable Modifications to the Vessel not
- -------------
required by any Governmental Rule or Governmental Action and not financed by
Owner through the issuance of Additional Notes shall vest in Charterer or any
Person designated by Charterer. Charterer may remove (or allow to be removed)
any such Severable Modification prior to or, subject to Article 13(c)(iii), upon
the expiration of the Charter Period.
(ii) Title to (x) Severable Modifications to the Vessel required by
any Governmental Rule or Governmental Action, (y) Nonseverable Modifications to
the Vessel, and (z) Modifications financed through the issuance of Additional
Notes shall vest in Owner free and clear of all Liens except Permitted Liens.
12
<PAGE>
(iii) Owner shall have the option, at the expiration of the Charter
Period, to purchase any Severable Modifications to the Vessel (x) which was not
required by any Governmental Rule or Governmental Action and which was not
financed by the issuance of Additional Notes, (y) title to which is in Charterer
or any Affiliate of Charterer on the last day of the Charter Period and (z)
which is necessary for the economic operation of the Vessel and which is not
commercially available for purchase by Owner, at a purchase price equal to the
Fair Market Sales Value of such Severable Modification as of such date; provided
--------
that any Severable Modification to the Vessel not removed by such date and as to
which Charterer has not provided Owner prior to such date written notice to the
effect that it is intended that such Severable Modification shall be removed
shall, to the extent of Charterer's (or its Affiliate's) interest therein, be
deemed transferred to Owner without further act or payment. On or prior to the
90th day prior to the expiration of the Charter Period, Charterer shall provide
Owner with notice of such Severable Modifications that it intends to remove.
Owner may exercise its option to purchase such Severable Modifications by
written notice to such effect delivered to Charterer at least 30 days prior to
expiration of the Charter Period. Owner and Charterer shall attempt to agree
upon the Fair Market Sales Value of such Severable Modification as of the
expiration of the Charter Period. If Owner and Charterer shall fail to agree
within 15 days after such written notice, such Fair Market Sales Value of any
such Severable Modification shall be determined by the Appraisal Procedure. If
Owner shall have exercised its option to purchase any Severable Modification to
the Vessel pursuant to this Article 13(c)(iii), Charterer, if requested by
Owner, shall furnish (or cause to be furnished) to Owner a bill of sale or
assignment, in form and substance reasonably satisfactory to Owner, conveying
the right, title and interest of Charterer (or its Affiliate) in and to such
Severable Modification, free and clear of all Liens (other than Permitted Liens
described in clauses (a), (b), (f) and (g) of the definition thereof), to Owner.
(d) Payment for Modifications and Replacement Components. (i)
----------------------------------------------------
Charterer shall be permitted at any time to finance the cost of any Severable
Modification to the Vessel not required by any Governmental Rule or Governmental
Action, directly or indirectly, including, without limitation, on a third party
ownership basis.
(ii) Charterer may with the written consent of Owner Participant seek
financing for the cost of any Modification (including any alterations to the
Vessel pursuant to Article 15 of the Construction Contract) to the Vessel by the
issuance of Additional Notes pursuant to Section 2.08 of the Indenture.
Charterer shall first provide Owner and Owner Participant with
13
<PAGE>
written notice of such Modification at least 30 days prior to the date of such
proposed financing.
(e) Replacement of Components; Removal of Property. (i) In the
----------------------------------------------
ordinary course of maintenance, service, repair or testing during the Charter
Period, any Component or Replacement Component may be removed and replaced with
a Replacement Component and, upon such replacement, Charterer (or its designee)
shall be entitled to retain the amount of the net proceeds of any sale or
disposition of any such removed Component or Replacement Component. Any such
Replacement Components shall be free and clear of all Liens, except Permitted
Liens, and in as good operating condition as, and with a value, utility and
useful life at least equal to, the Components or Replacement Components
replaced, assuming such replaced Components or Replacement Components were in at
least the condition and repair required to be maintained hereunder. Immediately
upon any Replacement Component becoming incorporated in the Vessel without
further act, (x) title to such Replacement Component thereupon shall vest in
Owner and Owner's interest therein shall be subject to the Lien of the
Indenture, (y) such Replacement Component shall become subject to this Charter
Party and Owner's interest therein shall be deemed a part of the Vessel Interest
for all purposes hereof to the same extent as the Component or Replacement
Component it replaced and (z) title to such removed Component or Replacement
Component shall vest in Charterer or such Person as shall be designated by
Charterer, free and clear of all rights of Owner and the Indenture Trustee and
shall no longer be deemed a Component or a Replacement Component hereunder.
(ii) If, at any time during the Charter Period, Charterer shall
conclude that any property included in the Vessel is obsolete, redundant or
unnecessary and can be removed without diminishment of the value or utility of
the Vessel or reduction of the remaining useful life of the Vessel and without
causing the Vessel to become "limited use property" within the meaning of
Revenue Procedure 76-30, Charterer may remove (or allow to be removed) such
property and upon such removal, without further act, title to such property
shall vest in Charterer or in such Person as shall be designated by Charterer,
free of the Lien of the Indenture; provided that Charterer shall pay to Owner an
--------
amount equal to any net proceeds from any sale or other disposition of any items
of such property thereafter removed to the extent such net proceeds so allocated
after the Closing Date exceed, in the aggregate, Five hundred thousand dollars
($500,000) (provided that Charterer shall have no obligation to sell or
--------
otherwise dispose of (or cause to be sold or disposed) such property).
14
<PAGE>
(f) Exemption from Certain Modifications. Notwithstanding the
------------------------------------
provisions of Article 13 (a), if in the reasonable estimation of Charterer any
Severable or Nonseverable Modification that would otherwise be required
hereunder by reason of Governmental Rules exceeds $1,000,000 multiplied by the
Inflation Factor for the date of such estimate, Charterer may, by notice to the
Owner, elect not to make such Modification provided the failure to make such
Modification will not prevent economic operation of the Vessel in jurisdictions
and between ports not affected by such Governmental Rules, provided, further,
-------- -------
the failure to make such modification shall not result in any material risk or
danger of (1) the sale, forfeiture or loss of any material part of or interest
in the Vessel or the Vessel Interest, the Trust Estate or the Indenture Estate
or title thereto, (2) any interference with the payment of Hire when due or (3)
the imposition of any criminal liability on the part of, or any other material
adverse effect on, Owner, Owner Participant, the Trust Estate, the Indenture
Estate or the Vessel Interest.
(g) Sharing in Cost of Modifications. Charterer shall be entitled to
--------------------------------
recover from Owner Participant its share of the cost of any Modification
determined in accordance with Article 11 of the Joint Venture Agreement,
provided that no failure of Owner Participant to pay such reimbursement shall
constitute a default under this Charter Party, reduce the obligations or rights
of Charterer or Owner hereunder or affect the continued validity and
enforceability of this Charter Party in any manner.
ARTICLE 14.
Event of Loss
-------------
(a) Notice of Event of Loss. If there shall occur an Event of Loss,
-----------------------
Charterer shall promptly notify Owner and the Indenture Trustee of the
occurrence thereof and the Termination Value Determination Date on which the
Termination Value will be paid.
(b) Payment of Termination Value, Etc. If an Event of Loss shall
----------------------------------
occur, Charterer shall pay to Owner as compensation for such Event of Loss, on
the date which is the latest Termination Value Determination Date occurring not
later than 180 days after the date of such Event of Loss, the Termination Value
as of such Termination Value Determination Date. Charterer shall pay,
simultaneously therewith, (i) all Bareboat Hire due and owing prior to the date
of such payment, (ii) all Supplemental Hire due and owing on or prior to the
date of such payment, (iii) if such Termination Value Determination Date is a
Base Hire Payment Date, all Base Hire
15
<PAGE>
payable on such Base Hire Payment Date, and (iv) all Excess Hire or Additional
Excess Hire accrued through such Termination Value Determination Date, whereupon
(A) this Charter Party and the obligations of Charterer hereunder shall
terminate as of the date of such payment and (B) Owner shall hold all right,
title and interest of Owner in and to the Vessel Interest, in accordance with
the provisions of the Joint Venture Agreement, and shall apply all proceeds
thereof to the reimbursement of all amounts paid by Charterer in respect of
Termination Value, together with interest thereon at the Debt Rate from the date
of payment, and (C) Owner shall, at Charterer's expense, take such actions under
Section 6.03 of the Indenture as Charterer may reasonably request.
(c) Application of Other Payments upon the Occurrence of an Event of
----------------------------------------------------------------
Loss. Any amounts of condemnation or requisition proceeds received at any time
- ----
by Owner, the Indenture Trustee or Charterer as a result of the occurrence of an
Event of Loss shall be divided between Charterer and Owner as their respective
interests may appear and the amount paid to Owner shall reduce the amount that
Charterer is required to pay to Owner (but not below zero) pursuant to Article
14(b) or, if the amount payable pursuant to Article 14(b) has already been paid
by Charterer, Charterer shall be entitled to retain out of the amounts otherwise
payable to Owner pursuant to this Article 14(c), the amount that would have been
applied in reduction of the amount payable by Charterer under Article 14(b).
(d) Application of Payments Not Relating to an Event of Loss.
--------------------------------------------------------
Payments (except for payments under insurance policies described in Article 16)
received at any time by Owner, the Indenture Trustee or Charterer from any
Governmental Authority or other Person with respect to any destruction, damage,
loss, condemnation, confiscation, theft or seizure of or requisition of title to
or use of the Vessel Interest or any part thereof not constituting an Event of
Loss shall be paid over to Charterer or as it may direct and all such amounts
paid to Charterer shall be retained by Charterer.
(e) Application During Charter Event of Default. Notwithstanding the
-------------------------------------------
foregoing provisions of this Article 14, so long as any Charter Event of Default
shall have occurred and be continuing, any amount (except for payments under
insurance policies described in Article 16) that otherwise would be payable to
or for the account of, or that otherwise would be retained by, Charterer
pursuant to this Article 14 shall be paid to Owner (or to the Indenture Trustee
so long as this Charter Party is subject to the Lien of the Indenture) as
security for the obligations of Charterer under this Charter Party and, subject
to the Indenture, applied against Charterer's payment obligations hereunder when
and as they become due and payable and, at such time thereafter as no
16
<PAGE>
Charter Event of Default shall be continuing, such amount shall, to the extent
not theretofore applied as provided herein or in the Indenture, be paid promptly
to Charterer or as it may direct.
ARTICLE 15.
Liens
-----
(a) Owner's Liens. In addition to the undertakings and warranties in
-------------
Articles 4 and 5 and in the Participation Agreement concerning absence of
Owner's Liens upon delivery of the Vessel to Charterer hereunder, Owner warrants
that throughout the Charter Period Owner will not cause the Vessel or the Vessel
Interest to incur any Owner's Liens whatsoever; and Owner will defend, indemnify
and hold Charterer harmless with respect to any such Owner's Liens and/or
charters, and will promptly take, at its own expense, such actions as may be
required to discharge any Owner's Lien prohibited by this Article 15(a).
(b) Charterer Liens. Charterer will not, directly or indirectly,
---------------
create, incur, assume or suffer to exist any Liens on or with respect to all or
any part of the Vessel or the Vessel Interest, title thereto or any interest
therein, other than Permitted Liens, and Charterer promptly, at its own expense,
will take such actions as may be necessary duly to discharge any such Lien not
excepted above. Neither Charterer, the Master, the Vessel nor any third party
has or shall have any right, power or authority to create, incur or permit to be
placed or imposed upon the Vessel, its freights, profits or hire, or the Vessel
Interest any Lien whatsoever other than Permitted Liens.
(c) Copy of Documents on Board Vessel. During the Charter Period,
---------------------------------
Charterer agrees to carry a true copy of this Charter Party, the Head Lease and
the Ship Mortgage with the Vessel's papers on board the Vessel and to exhibit
the same to any person having business with the Vessel which may give rise to a
maritime lien upon the Vessel or to the sale, conveyance, mortgage or lease
thereof and on demand to any representative of the Owner.
(d) Identification of Vessel. At all times during the Charter Period,
------------------------
Charterer shall cause to be placed and kept prominently displayed in the
Master's Cabin and the chart room of the Vessel a notice, framed under glass,
printed in plain type of such size that the paragraph of reading matter thereof
shall cover a space not less than six inches wide by nine inches high, reading
as follows:
"NOTICE OF MORTGAGE AND CHARTER"
17
<PAGE>
This vessel is owned by Deutsche Morgan Grenfell (Cayman) Limited, not in
its individual capacity but solely as Managing Trustee of [Name of Owner]
under the Declaration and Agreement of Trust dated as of November 22, 1996,
is under demise charter to [Name of Charterer] pursuant to a Bareboat
Charter Party, dated as of December 19, 1996, and is covered by a first
Ship Mortgage dated December 19, 1996 in favor of State Street Bank and
Trust Company, as Indenture Trustee. Said bareboat charter and mortgage
provide that no person shall create, incur or permit to be placed or
imposed upon this vessel any lien or encumbrance whatsoever except as
expressly permitted therein. A copy of said bareboat charter and mortgage
are carried on this vessel and must be exhibited on demand to any person
having business with this vessel."
Such notice shall be changed to reflect the identity of any successor Owner or
successor Indenture Trustee. Neither Owner nor Charterer shall take any action
or omit to take any action during the Charter Period that would (i) cause the
Vessel to cease to be documented as a vessel pursuant to the laws of the
Marshall Islands, (ii) cause the Ship Mortgage on the Vessel to cease to be a
first Ship Mortgage under the laws of the Marshall Islands, or (iii) cause the
Vessel to cease to be entitled to the same classification that the Vessel had
from the Classification Society on the Closing Date (subject to any reduction in
classification resulting from the age of the Vessel). Except as otherwise
directed by Owner, Charterer shall prevent the name of any Person other than
that of Charterer, MSCL, the Guarantor, or any Affiliate of any thereof from
being placed on any part of the Vessel as a designation that reasonably might be
interpreted as a claim of ownership or right to possession or use thereof.
(e) Lien on Cargoes. Owner will have a lien upon all cargoes and sub-
---------------
freights belonging to Charterer and any Bill of Lading freights for all claims
under this Charter Party.
ARTICLE 16.
Insurance
---------
(a) Coverage. At all times during the Charter Period Charterer shall,
--------
at its own cost and expense, carry and maintain with respect to the Vessel (i)
insurance with respect to the Vessel against marine and hull risks in such
amounts and in such forms as is consistent with the practice of the Charterer's
Affiliates engaged in maritime transportation for other vessels owned or leased
by such Affiliates and (ii)
18
<PAGE>
public liability, including personal injury and property damage and
comprehensive general liability insurance against claims, including, without
limitation, environmental claims arising out of or connected with the
possession, use, leasing, operation or condition of the Vessel in such amounts
and in such forms as is consistent with the practice of the Charterer's
Affiliates engaged in maritime transportation for other vessels similar to the
Vessel owned or leased by such Affiliates. The insurance required under clause
(i) or (ii) of this Article 16(a) may be subject to deductible amounts and self-
insured retentions as is consistent with the practice of the Charterer's
Affiliates engaged in maritime transportation for other vessels similar to the
Vessel owned or leased by such Affiliates. Such insurance may be carried under
blanket policies maintained by or on behalf of the Charterer so long as such
policies otherwise comply with the provisions of this Article 16, and may be
carried by insurers that are Affiliates of the Charterer.
(b) Additional Insurance. Nothing in this Article 16 shall prohibit
--------------------
Owner or Charterer from placing any additional insurance that Owner or Charterer
desires, at the expense of the party desiring such additional insurance,
covering the Vessel, or the Vessel Interest, or the Owner or the Charterer with
respect to the Vessel or the Vessel Interest, provided however that any such
insurance shall not exceed the amount permitted by warranties or other
conditions contained in the insurances effected pursuant to the preceding
provisions of this Article 16 without the consent of the relevant insurers.
(c) Certain Terms of Insurance. Any insurance carried in accordance
--------------------------
with this Article 16, to the extent the following can be effected without in the
case of clauses d. and e. Charterer or any Permitted Subcharterer incurring any
material incremental costs in connection therewith, provide in the policy or by
special endorsement that:
a. Owner, the Owner Participant, the Indenture Trustee and the Pass
Through Trustee are included as additional insureds and that no such Person
shall have any obligation or liability for payment of premiums;
b. the insurer thereunder waives all rights of subrogation against
Owner, the Indenture Trustee, the Owner Participant and the Pass Through
Trustee, and waives any right of set-off and counterclaim and any other
right to deduction whether by attachment or otherwise;
c. such insurance shall be primary without right of contribution of
any other insurance carried by or on
19
<PAGE>
behalf of Owner, the Indenture Trustee, the Owner Participant and the Pass
Through Trustee;
d. the respective interests of Owner, the Indenture Trustee, the Pass
Through Trustee, and the Owner Participant under all insurance policies
required hereunder shall not be invalidated by any action or inaction of
Charterer or any other Person (other than, with respect to any such
insured, such insured) and such insurance shall insure Owner, the Indenture
Trustee, the Pass Through Trustee, and the Owner Participant as their
interests may appear, regardless of any breach or violation of any
warranty, declaration or condition contained in such policies by Charterer
or any other Person (other than, with respect to any such insured, such
insured);
e. if the insurers cancel such insurance for any reason whatsoever
or any materially adverse change is made in policy terms or conditions, or
if such insurance is allowed to lapse for nonpayment of premium, such
cancellation, change or lapse shall not be effective as to Owner, the Owner
Participant, the Pass Through Trustee or the Indenture Trustee for thirty
days after receipt by Owner, the Owner Participant, the Pass Through
Trustee or the Indenture Trustee, respectively, of written notice from such
insurers of such cancellation, change or lapse; and
f. with respect to all liability insurance, in as much as the
policies are written to cover more than one insured, all terms, conditions,
insuring agreements and endorsements, with the exception of the limits of
liability shall operate in the same manner as if there were a separate
policy covering each insured.
(d) Notice of Accidents. Charterer shall promptly furnish the Owner
-------------------
and the Indenture Trustee with full information regarding any casualties or
other accidents or damages to the Vessel involving an amount in excess of Five
Million United States Dollars (U.S. $5,000,000).
(e) Application of Proceeds of Insurance. All insurance proceeds in
------------------------------------
respect of insurance maintained by Charterer hereunder with respect to the
Vessel under Article 16(a)(i) and payable under circumstances not constituting
an Event of Loss shall be payable to Charterer. All insurance proceeds (up to
an amount not exceeding the applicable Termination Value) in respect of
insurance maintained by Charterer hereunder with respect to the Vessel under
Article 16(a)(i) and payable as the result of an Event of Loss will be paid to
the Owner (or, subject to the provisions of the Head Lease, to the Indenture
Trustee so long as this Charter Party
20
<PAGE>
is subject to the Lien of the Indenture) and shall be applied in reduction of
Charterer's obligation to pay Termination Value and the other amounts payable
under Article 14 hereof in connection with such Event of Loss, if not already
paid by Charterer, or, if already paid by Charterer, shall be applied to
reimburse Charterer for its payment of such Termination Value and the other
amounts payable under Article 14 hereof, and the balance, if any, of such
payments remaining thereafter will be paid over to, or retained by, Charterer.
(f) Application During Charter Event of Default. Notwithstanding the
-------------------------------------------
foregoing provisions of this Article 16, so long as any Charter Event of Default
shall have occurred and be continuing, any amount referred to in this Article 16
that otherwise would be payable to or for the account of, or that otherwise
would be retained by, Charterer pursuant to this Article 16 shall be paid to
Owner (or, subject to the provisions of the Head Lease, to the Indenture Trustee
so long as this Charter Party is subject to the Lien of the Indenture) as
security for the obligations of Charterer under this Charter Party and, subject
to the Indenture, shall be applied against Charterer's payment obligations
hereunder when and as they become due and payable and, at such time thereafter
as no Charter Event of Default shall be continuing, such amount shall, to the
extent not theretofore applied as provided herein or in the Indenture, be paid
promptly to Charterer or as it may direct.
ARTICLE 17.
Requisition
-----------
Requisition (not involving title) of the Vessel for use by any
Government during the Charter Period not constituting an Event of Loss shall not
terminate this Charter Party and Charterer shall remain liable for the
performance of its obligations hereunder.
ARTICLE 18.
Early Termination.
-----------------
(a) Decision. If Charterer shall determine in good faith that the
--------
continuation of the Charter Party is uneconomic by reason of the cost of
compliance with Governmental Rules or Governmental Actions , or by reason of
indemnity payments required to be made to any Person under the Charter Party or
the Participation Agreement, then Charterer may elect to terminate this Charter
Party with respect to the Vessel
21
<PAGE>
Interest in accordance with this Article 18 on any Termination Value
Determination Date.
(b) Notice of Termination. In order to exercise its right to
---------------------
terminate this Charter Party as provided in this Article 18, Charterer shall
provide Owner with (i) notice in writing at least 90 days but not more than 545
days prior to the Termination Value Determination Date as of which Charterer is
electing to terminate this Charter Party with respect to the Vessel Interest
(the "Termination Date"), such notice to specify (a) the Termination Date, and
----------------
(b) the Termination Value as of the Termination Date, and (ii) an Officer's
Certificate of Charterer as to the determination referred to in Article 18(a)
and stating that such termination will not violate the provisions of the Head
Lease. Unless Owner shall have elected to retain the Vessel Interest pursuant
to Article 18(e), Charterer may, at its option by written notice to Owner at any
time prior to the 30th day prior to the Termination Date, revoke any such notice
of termination, in which event this Charter Party shall not terminate and the
reasonable out-of-pocket expenses incurred by Owner, Owner Participant and the
Indenture Trustee in connection therewith shall be borne by Charterer; provided,
--------
however, that Charterer shall have no obligation to so reimburse Owner or Owner
- -------
Participant if such notice of revocation is given (or deemed to have been given
pursuant to the penultimate sentence of Article 18(e)) as a result of Owner's
failure to make the payments required to be made by it under Article 18(e)).
(c) Sale of Vessel Interest; Termination Payment. If Charterer shall
--------------------------------------------
have made a Termination Election, Charterer shall, subject to Article 18(f) as
agent for Owner, use reasonable efforts to solicit bids for the cash purchase of
the Vessel Interest on the Termination Date. Owner may also solicit bids for
the cash purchase of the Vessel Interest on the Termination Date independent of
Charterer. Charterer and Owner, as the case may be, shall certify to the other
in writing the amount and terms of each bid received by it and the name and
address of the Person submitting such bid. Subject to Article 18(e), in the
event that Charterer or Owner shall have obtained any such bids from any Person
other than Charterer or an Affiliate of Charterer, Owner shall sell the Vessel
Interest on the Termination Date to such Person which shall have submitted the
highest bona fide cash bid. Upon payment to Owner of the purchase price in
---- ----
immediately available funds (and all other amounts due pursuant to the next
sentence) on the Termination Date, Owner shall sell to the highest bona fide
---- ----
bidder all right, title and interest of Owner in and to the Vessel Interest as
is and where is, free and clear of Owner's Liens and Owner Participant's Liens
but otherwise without representation or warranty. This Charter Party and the
obligations of Charterer hereunder shall terminate concurrently with such sale
and such payment. As a
22
<PAGE>
condition to the sale of the Vessel Interest pursuant to the second preceding
sentence, Charterer shall pay on the Termination Date to Owner, in immediately
available funds, (i) an amount equal to the excess, if any, of (A) the
Termination Value as of the Termination Date over (B) the proceeds of such sale
net of the reasonable out-of-pocket expenses incurred by Owner and the Owner
Participant in connection with such sale, (ii) all Bareboat Hire due and owing
prior to the Termination Date (iii) if the Termination Date is a Base Hire
Payment Date, Base Hire payable on the Termination Date, (iv) all Supplemental
Hire due and owing on or prior to the Termination Date, including any premium
payable with respect to the redemption of the Secured Notes and (v) all Excess
Hire or Additional Excess Hire secured through the Termination Date. On the
Termination Date, Owner shall, at Charterer's expense, execute and deliver to
such Person a bill of sale or assignment and such other instruments, documents
and opinions as such Person or Charterer may reasonably request to evidence the
valid consummation of such transfer and shall, at Charterer's expense, take such
actions under Article 6.03 of the Indenture as Charterer may reasonably request.
(d) Continuation of Charter Party. In the event that (i) Charterer
------------------------------
shall have exercised its right to revoke its notice of termination pursuant to
Article 18(b) or (ii) the highest bona fide bidder under Article 18(c) shall
---- ----
have failed to purchase the Vessel Interest pursuant to Article 18(c), then,
unless Owner shall have retained the Vessel Interest pursuant to Article 18(e),
this Charter Party shall remain in full force and effect.
(e) Retention of Vessel Interest by Owner. If Charterer shall have
-------------------------------------
made a Termination Election with respect to the Vessel Interest, Owner may elect
to retain rather than sell the Vessel Interest pursuant to Article 18(c) by
giving irrevocable notice to Charterer and the Indenture Trustee no earlier than
45 nor later than 30 days prior to the Termination Date. If Owner so elects to
retain the Vessel Interest, on the Termination Date (a) Owner shall pay to the
Indenture Trustee an amount equal to the unpaid principal amount of, and accrued
and unpaid interest on, together with premium, if any, in respect of the Secured
Notes then Outstanding to the date of payment, and (b) Charterer shall pay to
Owner or the Person entitled thereto as provided in the Operative Documents (i)
all Bareboat Hire due and owing on or prior to the Termination Date, (ii) all
Supplemental Hire due and owing on or prior to the Termination Date, but
Charterer shall not be required to pay any amounts pursuant to Article 18(c),
(iii) if the Termination Date is a Base Hire Payment Date, all Base Hire payable
on the Termination Date and (iv) all Excess Hire or Additional Excess Hire
accrued to the Termination Date. Upon payment of the amounts due pursuant to
clause (b) of the preceding sentence, this Charter Party and
23
<PAGE>
the obligations of Charterer hereunder shall terminate, and Owner shall, at
Charterer's expense, execute and deliver to Charterer on the Termination Date
such instruments as Charterer shall reasonably request to evidence the
termination of this Charter Party. In the event Owner fails to pay the amounts
specified in clause (a) of the second sentence of this Article 18(e) or
Charterer fails to pay the amounts specified in clause (b) of such sentence,
Charterer shall be deemed to have revoked its notice of termination pursuant to
Article 18(b). If Owner shall fail to perform any of its obligations pursuant
to this Article 18(e) and as a result thereof this Charter Party shall not be
terminated on a proposed Termination Date, Owner shall thereafter no longer be
entitled to exercise its election to retain the Vessel Interest upon any
subsequent Termination Election pursuant to this Article 18 and Charterer may at
its option at any time thereafter submit a new termination notice pursuant to
Article 18(b).
(f) Termination of Head Lease. In the event that the Head Lease shall
-------------------------
have terminated in circumstances where the U.K. Lessor is obliged to conclude
the sale of the Vessel or its rights under the Conditional Sale Agreement, the
parties shall have no obligation under Article 18(c), and any proceeds from such
sale to which the Owner is entitled shall be applied against the obligations of
the Charterer in respect of the payment of Termination Value under Article 14 or
23(b), as applicable.
ARTICLE 19.
Redelivery
----------
(a) Redelivery. Not less than 30 days prior to the expiration of the
----------
Charter Period, Charterer shall, except as provided in Articles 18 and 19(c)
deliver to Owner notice in writing of the port anywhere in the world chosen in
Charterer's discretion (the "Redelivery Port") at which the Vessel will be
available for redelivery at the end of the Charter Period. At the request of
the Charterer, the Charter Period shall be extended for such time as may be
required for the Vessel to complete the voyage in progress at the date of
expiration of the Charter Period and to discharge its cargo, in which event the
Charterer shall pay hire for such extension at the same rate per day as in
effect for the last Rate Period during the unextended Charter Period. At the
expiration of the Charter Period, except as provided in Articles 18 and 19(c),
Charterer shall, at its own expense, redeliver the Vessel to Owner at the
Redelivery Port and Charterer's obligation to pay additional Bareboat Hire in
respect of periods thereafter shall cease. Charterer shall, at its own expense,
and at Owner's request redocument the Vessel in the name of Owner or in such
other name as the Owner may direct
24
<PAGE>
under the laws of the Marshall Islands if the Vessel is not then documented
under the laws of the Marshall Islands.
(b) Redelivery Condition. Charterer shall redeliver the Vessel in the
--------------------
same class (except for changes in class resulting from the age of the Vessel),
free of recommendations affecting class (with class and trading certificates and
continuous machinery and survey cycle up to date and unextended) and in the same
good order and condition as existed at the time of delivery to Charterer, normal
wear and tear not affecting class excepted. Charterer agrees that at the time
of such redelivery, the Vessel Interest shall be charter free and free and clear
of all Liens, (except any Permitted Liens, it being understood that Charterer
will promptly and diligently cause any such Permitted Liens other than Owner's
Liens and Owner Participant's Liens to be discharged), shall include all
Modifications made hereunder, except those removed by Charterer to the extent
permitted hereby.
(c) Charter Extension. Notwithstanding the provisions of clauses (a)
-----------------
and (b) of this Article 19, Charterer may by notice delivered to Owner not less
than 60 days prior to the expiration of the Charter Period require Owner to
enter into a charter of the Vessel with an Affiliate of Charterer commencing
immediately upon the expiration of the Charter Period for a period of one year,
renewable annually for up to six additional years, at a charter rate
equal to the Bareboat Market Rate determined in accordance with Schedule 2B and
otherwise upon terms and conditions set forth in the pro forma Bareboat Charter
set forth in a schedule to the Joint Venture Agreement, with such changes as the
Charterer and Owner may agree.
ARTICLE 20.
Assignment by Owners; Subcharters
---------------------------------
(a) General. Except as set forth in Article 20(b) or in the last
-------
sentence of Article 29(i), Owner may not assign, transfer or encumber this
Charter Party or all or any part of its interests and rights hereunder except in
connection with the exercise of remedies by Owner following a declaration by
Owner pursuant to Article 22 that this Charter Party is in default.
(b) Security. In order to secure the indebtedness evidenced by the
--------
Secured Notes and certain other obligations as provided in the Indenture, the
Indenture provides, among other things, for the assignment by Owner to the
Indenture Trustee of its right, title and interest in, to and under this Charter
Party to the extent set forth in the Indenture, and
25
<PAGE>
for the creation of a mortgage and security interest in the Vessel Interest in
favor of the Indenture Trustee. The Charterer hereby consents to such
assignment and to the creation of such mortgage and security interest pursuant
to the terms and provisions of the Indenture and to any assignment or other
transfer which may occur pursuant to the exercise of any remedy set forth in the
Indenture. The Charterer (i) acknowledges that such assignment, mortgage and
security interest provide for the exercise by the Indenture Trustee of some or
all rights of Owner hereunder to give any consents, approvals, waivers, notices
or the like, to make any demands or the like or to take any other discretionary
action hereunder, but only in accordance with the Indenture, (ii) acknowledges
receipt of an executed counterpart of the Indenture as in effect on the date
hereof and (iii) agrees that, to the extent provided in the Indenture, the
Indenture Trustee shall have all the rights of Owner hereunder and, in
exercising any right or performing any obligation of Owner hereunder, shall be
subject to the terms hereof. The Charterer will furnish to the Indenture
Trustee counterparts of all notices, certificates, opinions or other documents
of any kind required to be delivered hereunder by the Charterer to Owner.
Notwithstanding any other provision herein, so long as any Secured Notes remain
Outstanding, Owner hereby directs, and the Charterer agrees that, all Base Hire,
Termination Value and other amounts payable hereunder and specified pursuant to
Section 4.01 of the Indenture shall be paid directly to the Indenture Trustee at
its account specified in Schedule 1 to the Participation Agreement or to such
other account as may be specified in writing by the Indenture Trustee to the
Charterer at least 5 Business Days prior to the due date thereof. Upon the
Charterer receiving notice or obtaining actual knowledge that an Indenture Event
of Default shall have occurred and be continuing, Charterer shall make all
payments of Hire and Supplemental Hire (other than Excepted Payments) directly
to the Indenture Trustee at such account. The right of the Indenture Trustee to
receive all such payments shall not be subject to any defense, counterclaim,
setoff or other right or claim of any kind which the Charterer may be able to
assert against Owner or the Owner Participant in an action brought by any
thereof on this Charter Party or otherwise.
(c) Assignments. Charterer may, without the consent of any party to
-----------
the Participation Agreement, at any time and from time to time, assign this
Charter Party and its interests and rights hereunder to any Person so long as,
(i) after giving effect to such assignment, the Guaranty shall remain in full
force and effect and shall constitute a full and unconditional guaranty of the
obligations of the assignee hereunder to the same extent as the guaranty of
Charterer's obligations hereunder prior to giving effect to any such assignment,
(ii) no Specified Charter Event of Default shall
26
<PAGE>
be continuing on the date any such assignment to any Affiliate of Charterer is
effected and no Charter Event of Default shall be continuing on the date such
assignment to any other Person is effected, and (iii) such assignment shall not
result in any Tax on Owner or the Owner Participant that is not indemnified in
accordance with the provisions of Section 13 of the Participation Agreement or
of an indemnity agreement tendered by Charterer and reasonably satisfactory to
the Owner and Owner Participant or subject Owner or the Owner Participant to
regulation by any Governmental Authority to which Owner or the Owner Participant
would not have been subject but for such assignment, (iv) such assignment shall
not result in the violation of any Governmental Rules, including the U.S.
Securities Act of 1933, as amended, or the Head Lease, (v) such assignee shall
have validly assumed the obligations of the Charterer under each of the
Operative Documents to which it is a party and under the Pass-through Trust
Supplement, (vi) such assignment will not result in an adverse tax consequence
to the holders of the Pass Though Certificates and (vii) Charterer shall have
delivered to Owner an opinion of counsel as to the satisfaction of the preceding
clauses (i) through (vi).
(d) Subcharters. Charterer may, without the consent of any party to
-----------
the Participation Agreement, at any time and from time to time, subcharter the
Vessel Interest to another Person (including, without limitation, to MSCL
pursuant to the Initial Subcharter); provided that (i) such subcharter shall be
--------
expressly subject and subordinate to this Charter Party (and such subcharter
shall contain a provision providing that any subcharter permitted thereunder
shall be so subject and subordinate) and shall in no event continue beyond the
Charter Period, (ii) Charterer shall remain primarily liable under this Charter
Party and all terms and conditions hereof and of the other Operative Documents
shall be complied with as though no such subcharter was in existence, (iii) the
Guaranty shall remain in full force and effect, (iv) such subcharter shall not
result in any Tax on Owner or the Owner Participant that is not indemnified in
accordance with the provisions of Section 13 of the Participation Agreement or
of an indemnity agreement tendered by Charterer and reasonably satisfactory to
the Owner and Owner Participant or subject Owner or the Owner Participant to
regulation by any Governmental Authority to which Owner or the Owner Participant
would not have been subject but for such subcharter, (v) no Specified Charter
Event of Default shall be continuing at the commencement of such subcharter,
(vi) Charterer shall give prompt written notice to Owner of any subcharter or
sub-subcharter of the Vessel Interest, and (vii) any such subcharter with a term
in excess of six (6) months shall be approved by Owner prior to its execution.
Owner acknowledges that on the Closing Date Charterer will subcharter the Vessel
Interest to MSCL pursuant to the Initial Subcharter. Any
27
<PAGE>
subcharterer under a subcharter permitted hereunder may sub-subcharter the
Vessel Interest to another Person under a sub-subcharter that otherwise complies
with the provisions hereunder applicable to a subcharter hereunder.
ARTICLE 21.
Charter Event of Default
------------------------
The term "Charter Event of Default", wherever used herein, shall mean
------------------------
any of the following events (whatever the reason for such Charter Event of
Default and whether it shall be voluntary or involuntary, or come about or be
effected by operation of law, or be pursuant to or in compliance with any
judgment, decree or order of any court or any Governmental Rule or Governmental
Action):
(1) Charterer shall fail to make any payment of Assigned Hire within
10 Business Days after the date the same becomes due; or
(2) Charterer shall fail to pay Supplemental Hire or make any other
payment (other than (i) Assigned Hire or (ii) any Excess Hire or any
Additional Excess Hire or any Excepted Payment (unless Owner elects to have
such failure to make such payment of Excess Hire or any Additional Excess
Hire or such failure to make an Excepted Payment constitute a Charter Event
of Default)) required to be made by Charterer under this Charter Party or
under any other Operative Document for more than 15 Business Days after
Charterer has received written notice from Owner or the Indenture Trustee
stating that such payment is due; or
(3) Charterer shall fail in any material respect to perform or observe
any other material covenant or agreement to be performed or observed by it
under this Charter Party or any other Operative Document (other than any
covenant or agreement to pay Excess Hire or any Additional Excess Hire or
make an Excepted Payment) and such failure shall continue for a period of
thirty (30) days after receipt by Charterer of a written notice from Owner
or the Indenture Trustee specifying such failure and requiring it to be
remedied; provided, however, that the continuation of any such failure for
-------- -------
such period of thirty (30) days or such longer period (not to exceed 365
days) after receipt of such notice shall not constitute a Charter Event of
Default so long as (i) such failure is curable or correctable and (ii)
Charterer is diligently pursuing the cure or correction of such failure; or
28
<PAGE>
(4) the Guarantor shall fail in any material respect to perform or
observe any covenant or agreement to be performed or observed by it under
the Guaranty (other than any covenant or agreement in respect of
Charterer's obligations under the Operative Documents) and such failure
shall continue for a period of thirty (30) days after receipt by the
Guarantor of a written notice from Owner or the Indenture Trustee
specifying such failure and requiring it to be remedied; provided, however,
-------- -------
that the continuation of any such failure for such period of thirty (30)
days or such longer period (not to exceed 365 days) after receipt of such
notice shall not constitute a Charter Event of Default so long as (i) such
failure is curable or correctable and (ii) the Guarantor is diligently
pursuing the cure or correction of such failure; or
(5) any material representation or warranty made by Charterer in
Section 5 of the Participation Agreement or in any Officer's Certificate of
Charterer delivered pursuant to the Participation Agreement shall prove to
have been inaccurate in any material respect when made, unless such
inaccuracy shall not be material to the recipient at the time when the
notice referred to below shall have been received by Charterer or any
material adverse impact thereof shall have been cured or corrected within
thirty (30) days after receipt by Charterer of a written notice thereof
from Owner or the Indenture Trustee; provided, however, that the
-------- -------
continuation of any such inaccuracy for such period of thirty (30) days or
such longer period (not to exceed 365 days) after receipt of such notice
shall not constitute a Charter Event of Default so long as (i) any material
adverse impact of such inaccuracy is curable or correctable and (ii)
Charterer is diligently pursuing the cure or correction of such material
adverse impact; or
(6) any material representation or warranty made by the Guarantor in
the Guaranty or in any Officer's Certificate of the Guarantor delivered
pursuant to the Participation Agreement shall prove to have been inaccurate
in any material respect when made, unless such inaccuracy shall not be
material to the recipient at the time when the notice referred to below
shall have been received by the Guarantor or any material adverse impact
thereof shall have been cured or corrected within thirty (30) days after
receipt by Charterer of a written notice thereof from Owner or the
Indenture Trustee; provided, however, that the continuation of any such
-------- -------
inaccuracy for such period of thirty (30) days or such longer period (not
to exceed 365 days) after receipt of such notice shall not constitute a
Charter Event of Default so long as (i) any material adverse impact of such
inaccuracy is
29
<PAGE>
curable or correctable and (ii) the Guarantor is diligently pursuing the
cure or correction of such material adverse impact; or
(7) Charterer or the Guarantor shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, or shall consent to any such relief
or to the appointment or taking possession by any such official or agency
in an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall take any
corporate action to authorize any of the foregoing, or an involuntary case
or other proceeding shall be commenced against Charterer or the Guarantor
seeking liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official or agency of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of ninety
(90) days; or
(8) the Guaranty shall cease to be in full force and effect or to be
the valid, binding and enforceable agreement of the Guarantor; or
(9) Charterer shall fail to maintain (or cause to be maintained) the
insurance required by Article 16 and such failure shall continue for a
period of thirty (30) days following receipt of notice from the Indenture
Trustee or Owner specifying such failure and requiring such failure to be
remedied;
provided, however, that notwithstanding anything to the contrary contained in
- -------- -------
this Article 21, any failure of Charterer to perform or observe any covenant or
agreement specified in Article 21(3) shall not constitute a Charter Event of
Default if such failure is caused solely by reason of any event that constitutes
an Event of Loss (or any event which with lapse of time would constitute an
Event of Loss) so long as Charterer is continuing to comply with all the
applicable terms of Article 14.
30
<PAGE>
ARTICLE 22.
Remedies
--------
(a) In General. Upon the occurrence of any Charter Event of Default
----------
and so long as the same shall be continuing, Owner, at its option, may declare
this Charter Party to be in default by written notice to such effect given to
Charterer (provided that this Charter Party shall be deemed to have been
declared in default without the necessity of such written notice upon the
occurrence of any Event of Default described in paragraph (7) of Article 21),
and at any time thereafter, provided such Charter Event of Default shall be
continuing, Owner may, to the extent permitted by applicable Governmental Rules,
exercise one or more of the following remedies, as Owner in its sole discretion
shall elect:
(i) Owner, by notice to Charterer, may rescind or terminate this
Charter Party;
(ii) whether or not this Charter Party has been terminated, Owner
may, after the Delivery Date, demand that Charterer, and upon the written
demand of Owner, Charterer shall, surrender the Vessel promptly to Owner in
the manner and condition required by, and otherwise in accordance with the
provisions of, this Charter Party as if the Vessel were being returned at
the end of the Charter Period and Owner shall not be liable for the
reimbursement of Charterer for any costs and expenses incurred by Charterer
in connection therewith;
(iii) Owner may (whether or not Owner has taken possession thereof)
sell all or any portion of the Vessel Interest at public or private sale,
as Owner may determine, free and clear of any rights of Charterer with
respect thereto and without any duty to account to Charterer with respect
to such sale or any proceeds with respect thereto (except to the extent
required by paragraph (v) or (vi) of this Article 22(a) if Owner shall
elect to exercise its rights thereunder), in which event Charterer's
obligation to pay Bareboat Hire with respect to the interest sold accruing
after the date of such sale shall be terminated (except to the extent that
Bareboat Hire is to be included in computations under paragraph (v) or (vi)
of this Article 22(a) if Owner shall elect to exercise its rights
thereunder);
(iv) Owner may hold or lease to others all or a portion of the Vessel
Interest, as Owner in its sole discretion may determine, free and clear of
any rights of Charterer with respect thereto and without any duty to
account to Charterer with respect to such action or inaction or for any
proceeds with respect to such action
31
<PAGE>
or inaction, except that Charterer's obligation to pay Bareboat Hire after
Charterer shall have been deprived of use of all or a portion of the Vessel
pursuant to this paragraph (iv) shall be reduced by the net proceeds, if
any, received by Owner from chartering all or a portion of the Vessel
Interest to any Person other than Charterer for the same periods or any
portion thereof;
(v) whether or not Owner shall have exercised or thereafter at any
time shall exercise its rights under paragraph (i), (ii), (iii) or (iv) of
this Article 22(a), Owner may demand, by written notice to Charterer
specifying a payment date which shall be a Termination Value Determination
Date not earlier than 10 Business Days after the date of such notice, that
Charterer pay to Owner, and Charterer shall pay to Owner, on such specified
payment date, as liquidated damages for loss of a bargain and not as a
penalty (in lieu of Bareboat Hire accruing on or after such specified
payment date), any unpaid Bareboat Hire due and owing on or prior to such
specified payment date (but excluding any Bareboat Hire payable in advance
on such payment date) and any unpaid Supplemental Hire (to whomsoever
payable) due and owing on or prior to the date of such payment plus
whichever of the following amounts Owner, in its sole discretion, shall
specify in such notice (together with interest on such amount at the
Overdue Rate from such specified payment date to the date of actual
payment):
a. an amount equal to the excess, if any, of Termination Value
for the Vessel Interest as of such specified payment date over the
Fair Market Sales Value of the Vessel Interest as of such specified
payment date (or the last day of the Charter Period, if earlier); or
b. an amount equal to Termination Value for the Vessel Interest
determined as of such specified payment date, and, in this event, upon
full payment by Charterer of all sums due hereunder, Owner shall be
obligated to transfer, without recourse, representation or warranty
(other than the absence of Owner Participant's Liens and Owner's
Liens) the Vessel Interest (including if the Vessel has been sold
pursuant to the Head Lease or otherwise, any proceeds or right to the
proceeds the Owner may have) to Charterer, as is and where is,
whereupon this Charter Party and Charterer's obligations hereunder
shall terminate. Owner shall, at Charterer's expense, execute and
deliver to Charterer a bill of sale or assignment and such other
instruments, documents and opinions as Charterer may reasonably
request to evidence the
32
<PAGE>
valid consummation of such transfer and shall, at Charterer's expense,
take such actions under Section 6.03 of the Indenture as Charterer may
reasonably request;
(vi) if Owner shall have sold all of the Vessel Interest pursuant to
paragraph (iii) of this Article 22(a) or other right of sale, Owner, in
lieu of exercising its rights under paragraph (v) of this Article 22(a),
may, if it shall so elect, demand that Charterer pay to Owner and Charterer
shall pay to Owner on the date of such sale, as liquidated damages for loss
of a bargain and not as a penalty (in lieu of Bareboat Hire accruing on or
after the next Base Hire Payment Date following the date of such sale), any
unpaid Bareboat Hire due and owing or accrued on or prior to such next Base
Hire Payment Date (but excluding any Base Hire payable in advance on such
Base Hire Payment Date) and any other Supplemental Hire due and owing on or
prior to such next Base Hire Payment Date plus the amount of any
deficiency between Termination Value for the Vessel Interest, computed as
of such next Base Hire Payment Date, and the proceeds of such sale,
together with interest at the Overdue Rate plus 3% on the amount of such
Hire, from the due date or dates thereof, and on the amount of such
deficiency from the date of such sale, until the date of actual payment; or
(vii) Subject to Article 22(d), Owner may exercise any other right or
remedy that may be available to it under applicable law or proceed by
appropriate court action to enforce the terms hereof or to recover damages
for the breach hereof.
(b) Continuing Obligations. No rescission or termination of this
----------------------
Charter Party, in whole or in part, or repossession of the Vessel Interest or
exercise of any remedy under Article 22(a) shall, except as specifically
provided herein, relieve Charterer of any of its liabilities and obligations
hereunder. Charterer shall be liable (i) for all reasonable legal fees and
other reasonable costs and expenses incurred by Owner, the Owner Participant,
each Loan Participant or the Indenture Trustee by reason of the occurrence of
any Charter Event of Default or the exercise of Owner's remedies with respect
thereto, including all costs and expenses reasonably incurred in placing the
Vessel in the condition required by Article 19 and (ii) except as otherwise
provided herein, for any and all other accrued and unpaid Hire due hereunder
before, after or during the exercise of any of the foregoing remedies. At any
sale of the Vessel Interest or any part thereof pursuant to Article 22(a),
Owner, the Owner Participant, each Loan Participant, or the Indenture Trustee
may bid for and purchase such property.
33
<PAGE>
(c) Remedies Cumulative. To the extent permitted by applicable law
-------------------
and except as provided herein, no remedy under Article 22(a) is intended to be
exclusive, but each shall be cumulative and in addition to any other remedy
provided under Article 22(a) or otherwise available to Owner at law or in
equity. No express or implied waiver by Owner of any Charter Party Default or
Charter Event of Default shall in any way be, or be construed to be, a waiver of
any future or subsequent Charter Party Default or Charter Event of Default. The
failure or delay of Owner in exercising any rights granted it hereunder upon the
occurrence of any of the contingencies set forth herein shall not constitute a
waiver of any such right upon the continuation or recurrence of any such
contingencies or similar contingencies and any single or partial exercise of any
particular right by Owner shall not exhaust the same or constitute a waiver of
any other right provided herein. To the extent permitted by applicable law,
Charterer hereby waives any rights now or hereafter conferred by statute or
otherwise which may enable it to cancel, quit or surrender this Charter Party,
except as otherwise provided herein, or which may require Owner to sell, lease
or otherwise use the Vessel Interest in mitigation of Owner's damages as set
forth in Article 22(a) or which may limit or modify any of Owner's rights and
remedies provided in Article 22(a).
(d) No Consequential Damages. Notwithstanding any other provision of
-------------------------
this Charter Party, the Charterer shall not be liable to Owner for any claim for
loss of profits, for any reduction in the amount of Excess Hire or Additional
Excess Hire payable in accordance with Article 3, or for any other consequential
damages by reason of any failure of the Charterer to comply with the provisions
of this Charter Party, including Articles 11, 12 and 13.
ARTICLE 23.
Special Termination
-------------------
(a) Special Termination Events. The occurrence of the following will
---------------------------
constitute a Special Termination Event: (i) title to the Vessel shall be
required to be transferred to the U.K. Lessor or its designee in circumstances
where there has been no assumption of the obligations of Owner in accordance
with Section 3.04 of the Indenture, or (ii) termination of the Charter Period
pursuant to Article 23(c).
(b) Termination. Forthwith upon the occurrence of a Special
------------
Termination Event, Charterer shall give notice of such event to Owner and
Indenture Trustee, and Charterer shall on the next Termination Value
Determination Date occurring not less than 25 days following the giving of such
notice pay to Owner (A) the Termination Value as of the Termination Value
Determination Date, (B) all Bareboat Hire due and owing prior
34
<PAGE>
to the date of such payment, (C) all Supplemental Hire due and owing on or prior
to the date of such payment, which shall include the applicable Make-Whole
Amount, if any, payable upon the redemption of the Secured Notes under the
Indenture, (D) if such Termination Value Determination Date is a Base Hire
Payment Date, all Base Hire payable on such Base Hire Payment Date, and (E) all
Excess Hire or Additional Excess Hire accrued through such Termination Value
Determination Date whereupon Owner shall surrender to Charterer subject to the
rights of the U.K. Lessor, without representation or warranty except as to the
absence of Owner's Liens and Owner Participants' Liens, all of its right title
and interest in the Construction Contract and the Vessel Interest, whereupon
this Charter Party shall terminate, and Charterer shall have no further
obligation thereunder. The Interest so surrendered shall be held and disposed
of in accordance with the last paragraph of Article 5 of the Joint Venture
Agreement.
(c) Termination upon Termination of Head Lease. Unless otherwise
-------------------------------------------
agreed by the U.K. Lessor with the consent of the Charterer, the Charter Period
shall automatically terminate on the date falling ten days after the termination
of the leasing of the Vessel under the Head Lease or, if later, the completion
of the then current voyage of the Vessel and the discharge of any cargo
therefor.
ARTICLE 24.
Vessel Plans and Drawings
-------------------------
Owner shall supply and deliver to Charterer a full description of the
Vessel and copies of all documents, plans and drawings required for the proper
operation and maintenance of the Vessel on or before the Delivery Date.
ARTICLE 25.
Wreck Removal
-------------
In the event of the Vessel becoming a wreck or obstruction to
navigation, Charterer shall indemnify Owner against any sums whatsoever which
Owner shall become liable to pay and shall pay in consequence of the Vessel
becoming a wreck or obstruction to navigation.
35
<PAGE>
ARTICLE 26.
General Average
---------------
General Average, if any, shall be adjusted according to the York-
Antwerp Rules 1974 or any subsequent modification thereof current at the time of
the casualty. Bareboat Hire will not contribute to General Average.
ARTICLE 27.
Salvage
-------
All salvage services rendered by the Vessel during the Charter Period
shall be for the benefit of Charterer. Charterer shall satisfy salvage claims
of the crew and any other expenses incurred in connection with such salvage
services.
ARTICLE 28.
Notices.
-------
All communications, notices and consents provided for in this Charter
Party shall be in writing and given in person or by courier or by means of
telecopy or other electronic transmission (with provision for assurance of
receipt in a manner typical with respect to communications of that type), or
mailed by registered or certified first class mail, return receipt requested,
addressed to the respective addresses set forth in Schedule 1 to the
Participation Agreement, or in each case at such other address as the Person
entitled thereto shall from time to time designate by notice in writing to
Charterer and Owner. All such communications, notices and consents given in
such manner shall be deemed given when received by (or when proffered to, if
receipt is refused) the party to whom it is addressed.
ARTICLE 29.
Applicable Law; Miscellaneous
-----------------------------
(a) Governing Law; Disputes. This Charter Party shall be governed by
-----------------------
and construed in accordance with the laws of the State of New York. Subject to
Section 9.02 of the Indenture, Owner and Charterer will negotiate in good faith
to resolve any differences and disputes. Failing agreement, any and all
differences and disputes of whatsoever nature arising out of this Charter Party
shall be decided by the U.S. Federal Courts for the Southern District of New
York, to the
36
<PAGE>
jurisdiction of which courts Owner and Charterer hereby submit for the purpose
of adjudication of such disputes. The parties hereby authorize service of
process in connection with any court proceedings to be commenced pursuant to
this Article 29 to be made at the addresses referred to in Article 28.
(b) Complete Agreement. This Charter Party (including any document(s)
------------------
incorporated by reference herein and/or annexed hereto) is intended by the
parties to constitute the final expression of their agreement regarding the
bareboat chartering of the Vessel and is the complete and exclusive statement of
the terms under which the bareboat chartering is undertaken.
(c) Amendments. No amendment, supplement, supplement, modification,
----------
waiver or discharge of any term in this Charter Party shall be valid unless
agreed in writing and executed by both Owner and Charterer and, if required by
Section 9.02 of the Indenture, by the Indenture Trustee.
(d) Severability of Provisions. Any provision of this Charter Party
--------------------------
which may be determined by competent authority to be invalid or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without invalidating or rendering
unenforceable any remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto hereby waive any provision of law which
renders any provision hereof invalid or unenforceable in any respect.
(e) Headings. The division of this Charter Party into sections, the
--------
provision of a table of contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Charter Party.
(f) Counterpart Execution. This Charter Party may be executed in any
---------------------
number of counterparts and by each of the parties hereto on separate
counterparts, all such counterparts together constituting but one and the same
instrument, with the counterpart containing the receipt therefor executed by the
Indenture Trustee on or immediately following the signature page thereof being
deemed the "original executed counterpart" and all other counterparts being
deemed duplicates. For purposes of recordation, Owner and Charterer agree that
certain information set forth on Schedules 1 through 4 may be omitted from the
counterpart presented for filing.
37
<PAGE>
(g) Successors and Assigns. This Charter Party, including the terms
----------------------
and provisions hereof, shall be binding upon Owner and Charterer and their
respective successors and assigns and inure to the benefit of Owner and
Charterer and their respective successors and permitted assigns.
(h) Investment of Security Funds. Any amounts held by Owner as
----------------------------
security hereunder that would be payable to Charterer upon satisfaction of any
applicable conditions shall be invested and reinvested by Owner (or, so long as
this Charter Party shall be subject to the Lien of the Indenture, the Indenture
Trustee), from time to time in Permitted Investments at the written direction of
Charterer. Owner shall have no liability for any loss resulting from any
investment required to be made other than by reason of its willful misconduct or
gross negligence. Any net income or gain realized as a result of any such
investment or reinvestment shall be applied by Owner at the same time, on the
same conditions and in the same manner as the amounts in respect of which such
income or gain was realized are required to be distributed in accordance with
the provisions hereof, or of any other Operative Document pursuant to which such
amounts were required to be held. Charterer shall be responsible for any net
loss realized as a result of any such investment or reinvestment and shall
reimburse Owner (or the Indenture Trustee, as the case may be) therefor on
demand. Any Permitted Investment may be sold or otherwise reduced to cash
(without regard to maturity) by Owner whenever necessary to make any application
as required by the terms of this Charter Party or of any applicable Operative
Document.
(i) Immunities; Satisfaction of Undertakings; Successor Owner Trustee.
-----------------------------------------------------------------
Except as expressly provided herein, all and each of the representations,
warranties, undertakings and agreements herein made on the part of Owner are
made and intended not as personal representations, warranties, undertakings and
agreements by or for the purpose or with the intention of binding the Managing
Trustee personally but are made and intended for the purpose of binding only the
Trust Estate, and this Charter Party is executed and delivered by the Managing
Trustee solely in the exercise of the powers expressly conferred upon it as
trustee under the Trust Agreement; and no personal liability or responsibility
is assumed hereunder by, or at any time shall be enforceable against, the
Managing Trustee or any successor in trust on account of any representation,
warranty, undertaking or agreement hereunder of Owner, either expressed or
implied, all such personal liability, if any, being expressly waived by
Charterer; provided, however, that (a) Charterer or any Person claiming by,
-------- -------
through or under it, making claim hereunder, may subject to the terms and
conditions hereof, look to the Trust Estate for satisfaction of such liability
or responsibility and (b) the Managing Trustee or its successor in trust, as
38
<PAGE>
applicable, shall be personally liable for its own gross negligence and willful
misconduct and for the matters described in clauses (i) through (v) of the last
sentence of Section 7.2 of the Trust Agreement. Subject to the terms and
conditions hereof, each time a successor Managing Trustee is appointed in
accordance with the terms of the Trust Agreement, such successor Managing
Trustee shall, without further act, succeed to all the rights, duties,
immunities and obligations of its predecessor Managing Trustee hereunder and
under the other Operative Documents, and the predecessor Managing Trustee shall
be released from all further duties and obligations hereunder and under the
other Operative Documents, all without the necessity of any consent or approval
by Charterer and without in any way altering the terms of this Charter Party or
such other Operative Documents or the obligations of Charterer hereunder or
thereunder. Charterer, at its expense, upon receipt of written notice of the
appointment of a successor Managing Trustee in accordance with the Operative
Documents, promptly shall make such modifications and changes to reflect such
appointment as reasonably shall be requested by such successor Managing Trustee
in such insurance policies, schedules, certificates and other instruments
relating to the Vessel Interest or this Charter Party or the other Operative
Documents, all in form and substance reasonably satisfactory to such successor
Managing Trustee.
(j) Performance of Obligations to Indenture Trustee and Holders.
-----------------------------------------------------------
After this Charter Party shall no longer be subject to the Lien of the
Indenture, the provisions of this Charter Party which require or permit any
action by, any consent, approval or authorization of, the furnishing of any
document, paper or information to, or the performance of any other obligation
to, the Indenture Trustee or any Holder shall not be effective, and the Sections
hereof containing such provisions shall be read as though there were no such
references to any such requirements or permissions.
(k) True Lease. This Charter Party is intended as and shall
----------
constitute an agreement of lease or charter and nothing herein shall be
construed as conveying to Charterer any right, title or interest in or to the
Vessel Interest other than as charterer hereunder, it being expressly understood
by the parties hereto that the foregoing does not constitute a covenant,
representation or warranty of Charterer.
(l) Survival of Agreements. The representations, warranties,
----------------------
covenants and indemnities of the parties provided for in the Operative
Documents, and the parties' obligations under any and all thereof, shall survive
the execution and delivery of this Charter Party, the Investment by Owner
Participant and the purchase of the Secured Notes by the Loan
39
<PAGE>
Participant, any disposition of any interest of the Owner Participant or Owner
in the Vessel, and shall be and continue in effect notwithstanding any
investigation made by any of such parties and the fact that compliance with any
of the other terms, provisions or conditions of any of the Operative Documents
shall have been waived.
40
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Charter Party to be
duly executed as of the 19th day of December , 1996.
DUMOCO EAGLE TRUST
By: Deutsche Morgan Grenfell
(Cayman) Limited, not in its
individual capacity, but solely
as Managing Trustee
By: /s/ James Baird
--------------------------
Name: James Baird
Title: Attorney in Fact
Mobil Marine Finance Company II Inc.
By: /s/ R.E. Sliwinski
---------------------------
Name: R.E. Sliwinski
Title: Authorized Signatory
41
<PAGE>
SCHEDULE 1
----------
Vessel: M/V Eagle
Owner's Cost: $82,500,000
Builder: Sumitomo Heavy Industries, Ltd.
Scheduled Delivery Date: December 19, 1996
Charter Expiration Date: January 2, 2013
U.K. Lease Term: December 20, 2019
U.K. Lessor: Abbey National December Leasing (4) Limited
<PAGE>
Exhibit 99.3
================================================================================
VLCC CHARTER PARTY
dated as of
December 19, 1996
among
SAMOCO 1233 TRUST,
a trust created pursuant to the Delaware Business Trust Act
under the Declaration and Agreement of Trust
dated as of November 22, 1996,
by the Owner Participant,
Owner
and
MOBIL MARINE FINANCE COMPANY I INC.
Charterer
________________________________________________________________________________
Charter of Hull No. 1233
================================================================================
AS SET FORTH IN ARTICLE 20 OF THIS CHARTER PARTY, CERTAIN OF THE RIGHT, TITLE
AND INTEREST OF THE OWNER IN AND TO THIS CHARTER PARTY HAS BEEN ASSIGNED TO AND
IS SUBJECT TO A SECURITY INTEREST IN FAVOR OF STATE STREET BANK AND TRUST
COMPANY, AS INDENTURE TRUSTEE, UNDER THE TRUST INDENTURE, ASSIGNMENT OF CHARTER
AND HEAD LEASE, AND SECURITY AGREEMENT DATED AS OF DECEMBER 19, 1996 BETWEEN THE
OWNER TRUST AND THE INDENTURE TRUSTEE, AS SUCH INDENTURE MAY BE AMENDED,
MODIFIED OR SUPPLEMENTED FROM TIME TO TIME IN ACCORDANCE WITH THE PROVISIONS
THEREOF. THIS CHARTER PARTY HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. TO THE
EXTENT, IF ANY, THAT THIS CHARTER PARTY CONSTITUTES CHATTEL PAPER (AS SUCH TERM
IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN THIS CHARTER PARTY MAY BE CREATED THROUGH
THE TRANSFER OF POSSESSION OF ANY EXECUTED COUNTERPART OTHER THAN THE ORIGINAL
EXECUTED COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART THAT CONTAINS
THE RECEIPT THEREFOR EXECUTED BY THE INDENTURE TRUSTEE ON OR IMMEDIATELY
FOLLOWING THE SIGNATURE PAGE THEREOF.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1. Definitions........................... 1
ARTICLE 2. Effective Date and Charter Period..... 2
ARTICLE 3. Hire.................................. 2
(a) Bareboat Hire............................... 2
(b) Supplemental Hire........................... 2
(c) Base Hire and Additional Base Hire.......... 2
(d) Excess Hire and Additional Excess Hire...... 3
(e) Method of Payment........................... 3
(f) Late Payment................................ 3
(g) Minimum Payment............................. 3
ARTICLE 4. Description of the Vessel;
Documentation......................... 4
ARTICLE 5. Owner's Warranties and Representations
and Certain Charterer Undertakings.... 4
ARTICLE 6. Delivery Date......................... 5
(a) Delivery................................... 5
(b) Delivery Conditions........................ 5
(c) Determination to Accept Delivery........... 7
(d) Notice of Delivery......................... 7
ARTICLE 7. Quiet Enjoyment; Use and Trade of the
Vessel................................ 8
ARTICLE 8. Condition Upon Delivery............... 8
ARTICLE 9. Net Charter........................... 10
ARTICLE 10. Manning............................... 11
ARTICLE 11. Maintenance; Inspection............... 11
(a) Maintenance................................ 11
(b) Inspection................................. 13
(c) Daily Operating Costs...................... 13
ARTICLE 12. Fuel, Lubricants, Water, Stores,
Equipment and Spare Replacement Parts.. 13
ARTICLE 13. Vessel Modification.................... 15
(a) Required Modifications...................... 15
ii
<PAGE>
(b) Optional Modifications...................... 15
(c) Title to Modifications...................... 15
(d) Payment for Modifications and Replacement
Components.................................. 16
(e) Replacement of Components; Removal of
Property.................................... 17
ARTICLE 14. Event of Loss........................... 18
(a) Notice of Event of Loss..................... 18
(b) Payment of Termination Value, Etc........... 18
(c) Application of Other Payments upon the
Occurrence of an Event of Loss.... 19
(d) Application of Payments Not Relating to an
Event of Loss............................... 19
(e) Application During Charter Event of Default. 19
ARTICLE 15. Liens................................... 20
(a) Owner's Liens............................... 20
(b) Charterer Liens............................. 20
(c) Copy of Documents on Board Vessel........... 20
(d) Identification of Vessel.................... 20
(e) Lien on Cargoes............................. 21
ARTICLE 16. Insurance............................... 21
(a) Coverage.................................... 21
(b) Additional Insurance........................ 22
(c) Certain Terms of Insurance.................. 22
(d) Notice of Accidents......................... 23
(e) Application of Proceeds of Insurance........ 23
(f) Application During Charter Event of Default. 24
ARTICLE 17. Requisition............................. 24
ARTICLE 18. Early Termination....................... 24
(a) Decision.................................... 24
(b) Notice of Termination....................... 25
(c) Sale of Vessel Interest; Termination Payment 25
(d) Continuation of Charter Party............... 26
(e) Retention of Vessel Interest by Owner....... 26
ARTICLE 19. Redelivery.............................. 27
ARTICLE 20. Assignment by Owners; Subcharters....... 28
ARTICLE 21. Charter Event of Default................ 31
ARTICLE 22. Remedies................................ 34
(a) In General.................................. 34
iii
<PAGE>
(b) Continuing Obligations...................... 36
(c) Remedies Cumulative......................... 37
(d) No Consequential Damages.................... 37
ARTICLE 23. Special Termination...................... 37
(a) Special Termination Events.................. 37
(b) Termination................................. 38
(c) Termination upon Termination of Head Lease.. 38
ARTICLE 24. Vessel Plans and Drawings................ 39
ARTICLE 25. Wreck Removal............................ 39
ARTICLE 26. General Average.......................... 39
ARTICLE 27. Salvage.................................. 39
ARTICLE 28. Notices.................................. 39
ARTICLE 29. Applicable Law; Miscellaneous............ 40
(a) Governing Law; Disputes..................... 40
(b) Complete Agreement.......................... 40
(c) Amendments.................................. 40
(d) Severability of Provisions.................. 40
(e) Headings.................................... 41
(f) Counterpart Execution....................... 41
(g) Successors and Assigns...................... 41
(h) Investment of Security Funds................ 41
(i) Immunities; Satisfaction of Undertakings;
Successor Owner Trustee..................... 42
(j) Performance of Obligations to Indenture
Trustee and Holders......................... 42
(k) True Lease.................................. 43
(l) Survival of Agreements...................... 43
SCHEDULES
Appendix A Definitions
Schedule 1 Description of Vessel; Owner's Cost
Schedule 2 Bareboat Hire
Schedule 3 Termination Values
iv
<PAGE>
BAREBOAT CHARTER PARTY
----------------------
AGREEMENT made as of the 19th day of December, 1996 between SAMOCO
1233 TRUST, a trust created pursuant to the Delaware Business Trust Act
(hereinafter called "Owner"), having an office and authorized to conduct
business at Elizabethan Square, Grand Cayman, Cayman Islands and created under
the Declaration and Agreement of Trust, under which Deutsche Morgan Grenfell
(Cayman) Limited, a Cayman Islands banking corporation is the Managing Trustee
(together with its permitted successors and assigns, the "Managing Trustee")
(the Managing Trustee acting not individually, but solely as trustee for the
Owner Trust, being the "Owner Trustee"), and Mobil Marine Finance Company I
Inc., a Delaware corporation having an office and place of business at 3225
Gallows Road, Fairfax, VA 22037 (hereinafter called "Charterer"), whereby Owner
will let and demise and Charterer will hire the very large crude carrier
identified in Schedule 1 (hereinafter called the "Vessel").
WHEREAS, Owner has contracted to acquire title to the Vessel;
WHEREAS, Owner has entered into a Conditional Sale Agreement dated
November 25, 1996 with the U.K. Lessor providing for the sale of the Vessel on
the terms stated therein to the U.K. Lessor;
WHEREAS, Owner has entered into the Head Lease with the U.K. Lessor
pursuant to which the U.K. Lessor's interest in the Vessel has been let to the
Owner for the U.K. Lease Term; and
WHEREAS, Owner wishes to subject its interests in the Vessel,
including such interests under the Conditional Sale Agreement and the Head
Lease, to a charter in favor of the Charterer upon the terms set forth herein;
NOW THEREFORE, in consideration of $1.00 in hand paid and other good
and valuable consideration the receipt of which is hereby acknowledged, the
parties hereby agree as follows:
ARTICLE 1.
Definitions
-----------
For the purposes hereof, capitalized terms used herein (including
those used in the preamble and in the foregoing recitals) and not otherwise
defined herein shall have the meanings assigned to them in Appendix A, which
Appendix A shall for all purposes constitute part of this Charter Party and
shall be subject to amendment in accordance
<PAGE>
with the terms hereof. References in this Charter Party to Articles,
subarticles, clauses, Schedules, Appendices and Exhibits are to Articles,
subarticles and clauses of, and Schedules, Appendices and Exhibits to, this
Charter Party unless otherwise indicated.
ARTICLE 2.
Effective Date and Charter Period
---------------------------------
Owner agrees to let and demise and Charterer agrees to hire all of
Owner's right, title and interest in the Vessel upon the terms and conditions
set forth in this Agreement for the Charter Period. As of the Charter
Termination Date, the Vessel shall, except as otherwise expressly provided
herein, be redelivered to Owner or its designee pursuant to the terms of Article
19. This Agreement shall be binding and effective immediately upon execution
hereof notwithstanding any failure of the Delivery Date to occur.
ARTICLE 3.
Hire
----
(a) Bareboat Hire. Charterer shall pay to Owner, as charter hire for
-------------
the Vessel Interest, Bareboat Hire in installments with respect to each Rate
Period during the Charter Period on the dates and in the amounts provided in
Articles 3(c) and (d). Each installment of Bareboat Hire shall be in arrears.
Bareboat Hire with respect to any charter entered into pursuant to Article 19(c)
following the expiration of this Charter Party shall be payable as provided in
Article 19(c).
(b) Supplemental Hire. Charterer shall pay to Owner, for its own
-----------------
account, or to the Person entitled thereto, as provided herein or in any other
Operative Document, any and all Supplemental Hire promptly as the same shall
become due and payable. As part of Supplemental Hire hereunder, Charterer shall
pay the Make-Whole Amount, if any, payable upon any redemption of the Secured
Notes under the Indenture as and when such Make-Whole Amount is due, provided
--------
that Charterer shall not be required to pay any Make-Whole Amount in respect of
the redemption or purchase of the Secured Notes pursuant to Section 3.06 of the
Indenture.
(c) Base Hire. Base Hire shall be payable to Owner semi-annually in
---------
arrears on the Base Hire Payment Dates in the amounts and commencing on the date
set forth in Schedule 2. Under no circumstances shall the Bareboat Hire for any
Rate Period be lower than the Base Hire for such Rate Period.
2
<PAGE>
(d) Excess Hire and Additional Excess Hire. Payment of Excess Hire
---------------------------------------
and Additional Excess Hire shall be payable to Owner or in accordance with its
instructions, semi-annually in arrears on February 1 and August 1 of each year
following the applicable Rate Period. The amount of Excess Hire and Additional
Excess Hire shall be determined in accordance with Schedule 2A.
(e) Method of Payment. Subject to Article 20(b), all Bareboat Hire
-----------------
and Supplemental Hire payable to Owner shall be paid to the Owner's account
specified in Schedule 1 to the Participation Agreement or to such other Person
or account at such other place as Owner shall specify in writing to the
Charterer at least five Business Days prior to the due date thereof. All
Supplemental Hire payable to any Person other than Owner pursuant to any
Operative Document shall be paid directly to such Person as provided in such
Operative Document. Each payment of Hire shall be made by Charterer in
immediately available funds, on or before 12:00 noon, local time at the place of
receipt, on the scheduled date on which such payment shall be due, unless such
scheduled date shall not be a Business Day in which case such payment shall be
due and payable on the next succeeding Business Day with the same force and
effect as if made on such scheduled date and (provided such payment is made on
such next succeeding Business Day) no interest shall accrue on the amount of
such payment from and after such scheduled date.
(f) Late Payment. If any Hire shall not be paid when due, Charterer
------------
shall pay to Owner (or, in the case of Supplemental Hire, to Owner for its own
account or to the Person entitled thereto as provided herein or in any other
Operative Document), as Supplemental Hire, interest (to the extent permitted by
law) on such overdue amount from and including the due date thereof to but
excluding the date of payment thereof (unless payment is made after 12:00 noon,
local time at the place of receipt, in which event such date of payment shall be
included) at the Overdue Rate.
(g) Minimum Payment. Notwithstanding any other provision of this
---------------
Charter Party or any other Operative Document, (a) the amount of Base Hire
payable on each Base Hire Payment Date, shall be at least equal to the aggregate
amount of scheduled principal and accrued interest due and payable on the
Secured Notes Outstanding on such Base Hire Payment Date and (b) the amount of
Termination Value as of any date, together with any Base Hire payable hereunder
on such date, shall be at least equal to the aggregate amount of principal and
accrued interest which would be due and payable on the Secured Notes Outstanding
on such date.
3
<PAGE>
ARTICLE 4.
Description of the Vessel; Documentation
----------------------------------------
(a) Description of Vessel. The Vessel will be built by the Builder and
---------------------
at the Delivery Yard shown on Schedule 1 in accordance with the Construction
Contract which calls for delivery thereof on or prior to the scheduled delivery
date shown on Schedule 1. The Vessel will have a gross registered tonnage of
approximately 160,000 tons, a net registered tonnage of approximately 95,000
tons, a designed deadweight capacity of approximately 280,000 metric tons, and
otherwise will conform to the description set forth in Schedule 1.
(b) Documentation. As of the Delivery Date the Vessel shall be
-------------
registered under the laws of the Marshall Islands or under the laws of such
other country as the Owner and Charterer may agree which is not materially less
favorable to the holder of Secured Notes; and Charterer shall, throughout the
Charter Period maintain, at its cost, said documentation. Owner shall, at the
request of Charterer, immediately execute or file all documents necessary to
maintain such documentation and to effect any name change(s). Charterer may, at
any time, instruct Owner to change the name of the Vessel, it being understood
that all costs for changing the Vessel's name shall be payable by Charterer.
ARTICLE 5.
Owner's Warranties and Representations and Certain Charterer Undertakings
-------------------------------------------------------------------------
(a) Owner's Representations. Owner represents and warrants that as of
-----------------------
the Delivery Date (i) legal title in the Vessel will be held by Owner, (ii)
unless the Head Lease shall have been terminated, Owner shall be the lessee
under the Head Lease, which shall be in full force and effect, (iii) Owner's
rights to the Vessel shall be subject to no Owner's Liens, and (iv) the
description of the Vessel set forth herein will be true and accurate in all
material respects.
(b) Indenture. Charterer has acquainted itself with all terms,
---------
conditions and provisions of the Indenture. Charterer undertakes that during
the Charter Period it will comply with all such instructions or directions in
regard to the employment, insurances, repairs and maintenance of the Vessel set
forth in the Indenture or as may be directed from time to time during the
Charter Period by the Indenture Trustee in conformity with the Indenture.
(c) U.K. Documents. Charterer has acquainted itself with all terms,
--------------
conditions and provisions of the Head
4
<PAGE>
Lease and the other U.K. Documents. To the extent there are any obligations
imposed on Owner under the Head Lease other than obligations to pay rentals,
termination amounts, and related adjustments under Articles 7, 8, 18, 19, 21, 22
of the Head Lease and the Financial Schedule thereto that are not imposed on
Charterer hereunder, Charterer shall take such action as may be required to
permit the Lessor to perform, or shall itself perform, such obligations to the
extent necessary to keep the Head Lease in full force and effect. Nothing in
this Article 5(c) shall create a separate obligation of Charterer to perform any
of the covenants contained in the Head Lease except to the extent expressly
required in the preceding sentence.
ARTICLE 6.
Delivery Date
-------------
(a) Delivery. Owner shall deliver and demise the Vessel to
---------
Charterer, and Charterer shall accept the delivery and demise of the Vessel
immediately upon delivery of the Vessel by the Builder on the Delivery Date at
the Delivery Yard, such delivery and acceptance to be conclusively evidenced by
Charterer's execution of the Protocol of Delivery and Acceptance.
(b) Delivery Conditions. Satisfaction of the following in all
--------------------
material respects on or prior to the Delivery Date shall be a condition to the
occurrence of the Delivery Date:
(i) the Owner Trust shall have paid the Builder any additional amount
then due under the Construction Contract out of funds available to it for
the purpose as contemplated by the Operative Documents;
(ii) the Owner Trust (or the Charterer on behalf of the Owner Trust)
shall have accepted delivery of the Vessel from the Builder and in evidence
thereof shall have executed a Protocol of Delivery and Acceptance;
(iii) unless the U.K. Documents shall have theretofore been
terminated, the Owner Trust shall have delivered possession and use of the
Vessel to the U.K. Lessor under the Conditional Sale Agreement and shall
have accepted possession and use of the Vessel under the Head Lease;
(iv) the Charterer shall have accepted delivery of the Vessel under
the Charter and in evidence thereof shall have executed and delivered to
the Owner Trust a Protocol of Delivery and Acceptance;
5
<PAGE>
(v) the Charterer shall have caused title to the Vessel to be
registered in the name of the Owner Trust in the Marshall Islands (or other
jurisdiction designated by Charterer acceptable to the Owner Participant
and not materially less favorable to the holder of the Secured Note);
(vi) the Owner Trust shall have executed and delivered to the
Indenture Trustee the Ship Mortgage in the form attached to the Indenture
with such changes thereto as the Owner Trust and the Indenture Trustee may
agree and are not materially adverse to the holder of the Secured Note and
the Charterer shall have caused the Ship Mortgage to be filed and recorded
in the registry of the Marshall Islands or, if applicable, the appropriate
registry of such other jurisdiction in which the Vessel has been
registered;
(vii) the Charterer shall have caused to be accomplished all other
filings, recordings or other action that are reasonably feasible and
necessary or desirable to establish the Owner Trust's right, title and
interest in and to the Vessel Interest, and to perfect the mortgage lien on
and security interest in the Indenture Estate created by the Indenture and
the Ship Mortgage;
(viii) on or prior to the Delivery Date, insurance complying in all
respects with the provisions of Section 13.1 of the Charter shall be in
full force and effect and the Owner Participant, the Pass Through Trustee
and the Indenture Trustee shall have received a certificate of an
independent insurance broker or consultant, which broker or consultant may
be the Charterer's independent insurance broker or consultant, dated the
Delivery Date, setting forth the insurance obtained by or on behalf of the
Charterer in accordance with Section 13.1(a) of the Charter and as then in
effect, stating that such insurance is in full force and effect and that
all premiums then due thereon have been paid and an Officer's Certificate
of the Charterer, dated the Delivery Date, stating that such insurance
complies in all respects with the provisions of such Section 13.1(a); and
(ix) Charterer shall have caused to be delivered to the other parties
hereto favorable opinions of counsel as to the matters referred to in
clauses 2.12(v), (vi) and (vii).
Any of such conditions may be amended or waived by agreement of the Owner and
the Charterer subject, in the case of any such amendment or waiver that would be
adverse to the
6
<PAGE>
interests of the holders of Secured Notes in any material respect, to the prior
consent of the Indenture Trustee.
(c) Determination to Accept Delivery. Nothing in this Article 6
---------------------------------
shall affect in any way the rights of MOSAT in accordance with Article 5 of the
Joint Venture Agreement or in accordance with the Contract of Assignment and
Supervisory Agreement both dated June 28, 1996 related to the Construction
Contract, to determine when and whether to accept delivery of the Vessel.
(d) Notice of Delivery. Owner will provide Charterer with the
-------------------
earliest possible notification of the intended Delivery Date, and shall confirm
this information fifteen (15) days, seven (7) days and three (3) days prior to
the Delivery Date; provided that the failure to provide any such notice shall
not otherwise affect Charterer's obligations hereunder.
ARTICLE 7.
Quiet Enjoyment; Use and Trade of the Vessel
--------------------------------------------
(a) Quiet Enjoyment. The Owner warrants that, unless a Charter Event
---------------
of Default shall have occurred and be continuing and this Charter Party shall
have been declared to be in default pursuant to Article 22(a), the Charterer
shall at all times during the Charter Period be entitled to the quiet use and
enjoyment of the benefits of the Vessel Interest, including the right to
uninterrupted possession and use of the Vessel but subject to the rights of the
parties to the U.K. Financing Documents, and the Owner shall not save as
provided under the U.K. Financing Documents take or permit any Person lawfully
claiming by, through or under it to take any action which interferes with such
quiet use or enjoyment or such possession or use or the rights of any
subcharterer or assignee to such quiet use or enjoyment or such possession or
use under any subcharter or assignment permitted hereunder (including, without
limitation, the rights of MSCL under the Initial Subcharter).
(b) Use of Vessel. During the Charter Period, Charterer shall have
-------------
the full use of the Vessel and may employ it worldwide in any lawful trades
permitted by U.S. and Marshall Islands laws and regulations, subject to the
limits of then current Institute Warranties and Clauses, carrying such lawful
cargoes as Charterer, Permitted Subcharterer or their authorized agents may
direct.
7
<PAGE>
ARTICLE 8.
Condition Upon Delivery
-----------------------
(a) Disclaimer of Warranties. Neither Owner nor Owner Participant
------------------------
makes any representations or warranties whether written, oral or implied, with
respect to the Vessel Interest, the Vessel, or any part thereof, except as
expressly set forth in Section 7 or 9 of the Participation Agreement or in any
Officer's Certificate of the Owner Trust or the Owner Participant, in each case
delivered pursuant to the Participation Agreement. As between Owner and
Charterer, execution by Charterer of this Charter Party and the Protocol of
Delivery and Acceptance shall be conclusive proof of Charterer's acceptance of
the Vessel and the Vessel Interest for all purposes hereof and of the
commencement of the Charter Period with respect thereto and that the Vessel and
the Vessel Interest are satisfactory to the Charterer in all respects.
CHARTERER ACKNOWLEDGES THAT OWNER IS NOT A MANUFACTURER OR DEALER IN SHIPS OR
THE COMPONENTS THEREOF AND OWNER CHARTERS AND CHARTERER TAKES THE VESSEL AND THE
VESSEL INTEREST AND EACH PART THEREOF AS IS AND WHERE IS, AND NEITHER OWNER NOR
OWNER PARTICIPANT SHALL BE DEEMED TO HAVE MADE, AND OWNER HEREBY DISCLAIMS, ANY
REPRESENTATION OR WARRANTY OTHER THAN THOSE REFERRED TO IN THE SECOND PRECEDING
SENTENCE, EITHER EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING,
WITHOUT LIMITATION, THE DESIGN OR CONDITION OF THE VESSEL OR ANY PART THEREOF,
THE MERCHANTABILITY THEREOF OR THE FITNESS THEREOF FOR ANY PARTICULAR PURPOSE,
THE ABILITY OF THE VESSEL TO PERFORM ANY FUNCTION, TITLE TO THE VESSEL OR ANY
PART THEREOF, THE QUALITY OF THE MATERIALS OR WORKMANSHIP THEREOF OR CONFORMITY
THEREOF TO SPECIFICATIONS, OR THE PRESENCE OR ABSENCE OF ANY LATENT OR OTHER
DEFECTS, WHETHER OR NOT DISCOVERABLE. CHARTERER CONFIRMS THAT IT HAS SELECTED
THE VESSEL AND EACH PART THEREOF ON THE BASIS OF ITS OWN JUDGMENT AND EXPRESSLY
DISCLAIMS RELIANCE IN CONNECTION WITH SUCH SELECTION UPON ANY STATEMENTS,
REPRESENTATIONS OR WARRANTIES MADE BY OWNER OR OWNER PARTICIPANT. The
provisions of this Article have been negotiated and, except as expressly set
forth in Sections 7 and 9 of the Participation Agreement or in any Officer's
Certificate of the Owner Trust or Owner Participant, the foregoing provisions
are intended to be a complete exclusion and negation of any representation or
warranty by Owner or Owner Participant, express or implied, with respect to this
Charter Party, the Vessel, the Vessel Interest or any part thereof that may
arise pursuant to any law now or hereafter in effect or otherwise. Nothing
contained in this Article shall be construed as a waiver of any warranty or
other claim against any manufacturer, supplier, dealer, vendor, contractor,
subcontractor or installer, including the Builder.
8
<PAGE>
(b) Enforcement of Warranties. Owner hereby appoints and constitutes
-------------------------
MOSAT its agent and attorney-in-fact during the Charter Period to assert and
enforce, from time to time, in its sole discretion, in the name and for the
account of Owner and Charterer, as their interests may appear, but in all cases
at no cost or expense to Owner, subject to the provisions of the applicable
Supervisory Agreement, whatever claims and rights Owner may have as the owner of
the Vessel Interest against any manufacturer or vendor of the Vessel or any
Component of the Vessel; provided, however, that if this Charter Party shall
-------- -------
have been declared in default pursuant to Article 22, such power of attorney
shall, at the option of Owner, terminate and Owner may assert, at Charterer's
expense, such claims and rights.
ARTICLE 9.
Net Charter
-----------
This is a net bareboat charter and, notwithstanding any other
provision of this Charter Party, the obligation of Charterer to pay Hire
hereunder shall be absolute and unconditional and shall not be affected by any
circumstance of any character, including, without limitation: (a) counterclaim,
setoff, deduction, defense, abatement, suspension, deferment, diminution or
reduction; (b) any defect in the condition, design, quality or fitness for use
of the Vessel, or any part thereof or interest therein or the failure of the
Builder to construct or deliver the Vessel; (c) any damage to, removal,
abandonment, salvage, loss, scrapping or destruction of or any requisition or
taking of, the Vessel Interest, the Vessel or any part thereof or interest
therein; (d) any restriction, prevention, interruption or curtailment of or
interference with any use, operation or possession of the Vessel Interest, the
Vessel or any part thereof or interest therein, including, without limitation,
as a result of a termination of or default under the Head Lease, the Conditional
Sale Agreement or any other U.K. Document; (e) any defect in, or any Lien on,
title to the Vessel Interest, the Vessel or any part thereof or interest
therein; (f) any change, waiver, extension, indulgence or other action or
omission in respect of any obligation or liability of Charterer or Owner; (g)
any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to Charterer, the
Indenture Trustee, Owner, Owner Participant, any Loan Participant, any Holder or
any other Person, or any action taken with respect to this Charter Party by any
trustee or receiver of any Person mentioned above, or by any court; (h) any
claim that Charterer has or might have against any Person, including, without
limitation, the Indenture Trustee, any Loan Participant, Owner, Owner
Participant, Managing Trustee or any Holder (but this Article 9 shall not
constitute a waiver of
9
<PAGE>
any such claim); (i) any failure on the part of Owner, the Indenture Trustee,
Owner Participant, Managing Trustee or any Loan Participant to perform or comply
with any of the terms hereof or of any other agreement; (j) any invalidity or
unenforceability or disaffirmance of this Charter Party or any provision hereof
or any of the other Operative Documents or any provision of any thereof, whether
against or by Charterer or otherwise; or (k) any other occurrence whatsoever,
whether similar or dissimilar to the foregoing, whether or not Charterer shall
have notice or knowledge of any of the foregoing. Except as expressly provided
herein, Charterer, to the extent permitted by law, waives all rights now or
hereafter conferred by statute or otherwise to quit, terminate or surrender this
Charter Party, or to any diminution or reduction of Assigned Hire payable by
Charterer hereunder. All payments by Charterer of Base Hire and Termination
Value (or amounts payable by reference thereto) and other Assigned Hire made
hereunder as required hereby shall be final absent manifest error, and Charterer
shall not seek to recover any such payment or any part thereof for any reason
whatsoever absent manifest error. If this Charter Party shall be terminated in
whole or in part for any reason whatsoever Charterer shall, except as expressly
provided herein, nonetheless pay to Owner (or, in the case of Supplemental Hire,
to the Person entitled to such Supplemental Hire as specified herein or in the
appropriate Operative Document) an amount equal to each payment of Assigned Hire
at the time and in the manner that such payment would have become due and
payable under the terms of this Charter Party if it had not been terminated in
whole or in part. Nothing contained in this Article 9 shall be construed as (a)
a guaranty of (i) the value of the Vessel Interest or the Vessel upon the
expiration or termination of the Charter Period or (ii) the useful life of the
Vessel or (iii) payment of any of the Secured Notes or (b) a prohibition of
assertion of any claim against any manufacturer, supplier, dealer, vendor,
contractor, subcontractor or installer with respect to the Vessel or (c) a
waiver by Charterer of its right to assert and sue upon any claims it may have
against any other Person in one or more separate actions.
ARTICLE 10.
Manning
-------
Solely as between Owner and Charterer, the master, officers and crew
of the Vessel and all other persons at any time during the Charter Period on
board the Vessel shall be deemed to be engaged and employed exclusively by
Charterer or Permitted Subcharterers and shall be deemed to be and remain the
Charterer's or Permitted Subcharterers' servants, navigating and working the
Vessel solely on behalf of and at
10
<PAGE>
the risk of the Charterer or such Permitted Subcharterers. Owner shall not have
any interest in any hire, freight or salvage moneys earned by the Vessel or
received by Charterer or any Permitted Subcharterer.
ARTICLE 11.
Maintenance; Inspection
-----------------------
(a) Maintenance. During the Charter Period, Charterer shall at its
-----------
expense maintain and preserve the Vessel in such condition as will entitle it to
maintain the same classification and rating of American Bureau of Shipping
(hereinafter called the "Classification Society") as when delivered to Charterer
under this Charter Party. Charterer at its expense shall furnish to Owner a
copy of all reports and certificates issued by the Classification Society
evidencing the maintenance of such classification and safety standards, and
Charterer will provide Owner with an annual Confirmation of Class Certificate
during each year of the Charter Period. The application or implementation of
all requirements of the Classification Society, including changes or additions
thereto, shall be for Charterer's account, except as provided for in Article
12(d). At all times during the Charter Period, Charterer shall, at its own
expense, operate and maintain (or cause the Permitted Subcharterer to operate
and maintain) the Vessel in accordance with MOSAT's established maintenance,
rebuild and repair programs (and without discriminating against the Vessel based
on the leased status of the Vessel Interest or otherwise) so as to keep the
Vessel (i) in good working order and condition, ordinary wear and tear excepted
and (ii) in compliance in all material respects with all applicable Governmental
Rules and Governmental Actions and the requirements of the Classification
Society; provided, however, that the Charterer shall not be obligated to comply
-------- -------
with any Governmental Rule or Governmental Action (A) whose application or
validity is being contested diligently and in good faith by appropriate
proceedings, (B) compliance with which shall have been excused or exempted by a
nonconforming use permit, waiver, extension or forbearance exempting it from
such Governmental Rule or Governmental Action but only to the extent that the
Charterer's noncompliance is in accordance therewith, (C) if good faith efforts
and appropriate steps are being taken to comply (in which case such compliance
shall be effected prior to the date the Vessel is to be returned to Owner
hereunder), or (D) if failure of compliance (individually and in the aggregate
with all other instances of continuing noncompliance by Charterer) would result
in no material adverse consequences to Charterer, so long as, in the case of
each of clauses (A) through (D) of this proviso, neither such failure of
compliance nor such contest shall result in any material risk or danger of (1)
the sale, for-
11
<PAGE>
feiture or loss of any material part of or interest in the Vessel or the Vessel
Interest, the Trust Estate or the Indenture Estate or title thereto, (2) any
interference with the payment of Hire when due, or (3) the imposition of any
criminal liability on the part of, or any other material adverse effect on,
Owner, Owner Participant, the Trust Estate, the Indenture Estate or the Vessel
Interest. Charterer shall have the right to make such repairs to the Vessel as
it deems advisable in its sole discretion, subject to compliance with the
express provisions of this Charter Party. Owner shall have no obligation to
maintain, alter, repair, rebuild or replace the Vessel or any part thereof, and
Charterer expressly waives (to the extent legally permitted to do so) the right
to perform any such action at the expense of Owner pursuant to any law at any
time in effect. During the Charter Period, Charterer shall keep and maintain
(or cause to be kept and maintained) proper books and records relating to all
services rendered and all funds expended for operation, maintenance, repair and
replacement of the Vessel and the acquisition, construction or installation of
all Components, Replacement Components and Modifications, all in accordance with
customary practices in the oil tanker industry.
(b) Inspection. During the Charter Period, Owner shall have the right
----------
at any time, on reasonable notice, to inspect the Vessel in order to ascertain
whether the Vessel is being properly repaired and maintained. Charterer shall
also permit Owner to inspect the Vessel's logs whenever requested, on reasonable
notice, and shall promptly furnish Owner with information in such detail as may
reasonably be requested regarding any material casualties or oil pollution
incidents involving the Vessel. During the Charter Period, Indenture Trustee
shall have the same right to inspect the Vessel and the related books and
records, provided that, unless an Event of Default shall have occurred and be
continuing, such inspection shall be not more often than once per year.
(c) Certain Operating Costs. The provisions of Articles 11 to 13 as
------------------------
to the costs of maintaining, operating and modifying the Vessel and of Article
5(c) as to the costs of maintaining the Head Lease in force shall be without
prejudice to the calculation of Daily Operating Costs in accordance with the
terms of clause (vii) of Schedule 2B and without prejudice to the obligation of
the Owner to comply with the provisions of Articles 12 and 16 of the Joint
Venture Agreement.
ARTICLE 12.
Fuel, Lubricants, Water, Stores,
Equipment and Spare Replacement Parts
-------------------------------------
12
<PAGE>
(a) Fuel and Lubricants. On or as soon as possible following the
-------------------
Delivery Date, Charterer agrees to pay or cause to be paid to Builder in
accordance with the provisions of Article 4 of the Joint Venture Agreement, the
amount payable under Section 6(d)(iii) of the Shipbuilding Contract for such
fuel, unbroached lubricating oil, unused lubricating oil in storage tanks, and
unbroached consumable stores as may be aboard the Vessel as of the Delivery
Date. In the event the Vessel is redelivered to Owner or its designee at the
expiration of this Charter Party, on the date of such redelivery (hereinafter
the "Redelivery Date"), Owner or its designee shall accept and pay Charterer the
latter's actual costs for such fuel, unbroached lubricating oil, unused
lubricating oil in storage tanks and unbroached consumable stores as then remain
on board the Vessel.
(b) Use of Equipment and Appurtenances. Charterer shall have the use,
----------------------------------
without extra cost, of such equipment, outfit, appurtenances, as are on board
the Vessel on the Delivery Date. Such items or their substantial equivalent
shall be returned to Owner or its designee on the Redelivery Date in the same
good order and condition as when received, reasonable wear and tear excepted.
Charterer shall have the use, without extra cost, of spare and replacement parts
as are on board the Vessel on the Delivery Date. The same or their substantial
equivalent shall be returned to Owner or its designee on the Redelivery Date in
the same good condition as when received, reasonable wear and tear excepted.
(c) Spares and Replacement Parts. Subject to Article 13 below, during
----------------------------
the Charter Period, Charterer shall, at its expense and on its time, provide
such additional equipment, outfit, tools, spare and replacement parts, crockery
and linen as may be required for Charterer's operation of the Vessel. Spare and
replacement parts ordered for, but not delivered to, the Vessel by or for Owner
on or before the Delivery Date, or the same or the substantial equivalent of
such spare and replacement parts ordered by or for Charterer on or before the
Redelivery Date shall be taken over and paid for, respectively, by Charterer or
Owner, as the case may be, when delivered to the Vessel; and such equipment
shall remain the property of, respectively, the Charterer or Owner as the case
may be. The foregoing shall not apply to spare and replacement parts ordered
for the pumps, gear and equipment described in Article 13(b).
(d) Certificate of Master. For the purposes of Article 12(a), the
---------------------
certificate of the master of the Vessel shall in the absence of manifest error
be binding on Charterer and Owner as to the inventory fuel, unbroached
lubricating oil, unused lubricating oil in storage tanks and unbroached
consumable stores on board the Vessel at the Delivery Date and Redelivery Date;
and said inventories shall be used to
13
<PAGE>
determine the sums, if any, owing to Builder on behalf of Owner or Charterer
pursuant to Article 12(a) on the Delivery Date and Redelivery Date,
respectively, which sums shall be due and payable to Owner or Charterer, as the
case may be, in United States Dollars on presentation of the respective party's
invoice.
ARTICLE 13.
Vessel Modification
(a) Required Modifications. At all times during the Charter Period,
----------------------
Charterer shall make (or cause to be made) all Severable and Nonseverable
Modifications to the Vessel as may be required from time to time to meet the
requirements of clause (ii) of Article 11(a) or to maintain any insurance
coverage required by Article 16 (subject to the qualifications set forth in such
Article) unless Charterer shall have elected to terminate this Charter Party
pursuant to Article 18 or unless the Charterer shall have made the election
provided in Article 13(f). Charterer shall complete (or cause to be completed)
all such Modifications in a good and workmanlike manner, with reasonable
dispatch and in a manner (but only to the extent practicable in the case of
Modifications to the Vessel required pursuant to clause (ii) of Article 11(a) or
to maintain any insurance coverage required by Article 16) which does not
decrease except to a de minimis extent the Fair Market Sales Value of the Vessel
-- -------
or decrease the remaining useful life or utility of the Vessel or cause the
Vessel to become "limited use property" within the meaning of Revenue Procedure
76-30.
(b) Optional Modifications. Charterer may, at no expense to Owner,
----------------------
make (or cause or allow to be made) such other Severable and Nonseverable
Modifications to the Vessel not required by Article 11(a), including the
installation of pumps, gear and equipment in addition to that on board as of the
Delivery Date, as do not decrease the Fair Market Sales Value (except to a de
--
minimis extent) of the Vessel or decrease the remaining useful life or cause the
- -------
Vessel to become "limited use property" within the meaning of Revenue Procedure
76-30.
(c) Title to Modifications; Purchase Option for Severable
-----------------------------------------------------
Modifications. (i) Title to all Severable Modifications to the Vessel not
- -------------
required by any Governmental Rule or Governmental Action and not financed by
Owner through the issuance of Additional Notes shall vest in Charterer or any
Person designated by Charterer. Charterer may remove (or allow to be removed)
any such Severable Modification prior to or, subject to Article 13(c)(iii), upon
the expiration of the Charter Period.
14
<PAGE>
(ii) Title to (x) Severable Modifications to the Vessel required by
any Governmental Rule or Governmental Action, (y) Nonseverable Modifications to
the Vessel, and (z) Modifications financed through the issuance of Additional
Notes shall vest in Owner free and clear of all Liens except Permitted Liens.
(iii) Owner shall have the option, at the expiration of the Charter
Period, to purchase any Severable Modifications to the Vessel (x) which was not
required by any Governmental Rule or Governmental Action and which was not
financed by the issuance of Additional Notes, (y) title to which is in Charterer
or any Affiliate of Charterer on the last day of the Charter Period and (z)
which is necessary for the economic operation of the Vessel and which is not
commercially available for purchase by Owner, at a purchase price equal to the
Fair Market Sales Value of such Severable Modification as of such date; provided
--------
that any Severable Modification to the Vessel not removed by such date and as to
which Charterer has not provided Owner prior to such date written notice to the
effect that it is intended that such Severable Modification shall be removed
shall, to the extent of Charterer's (or its Affiliate's) interest therein, be
deemed transferred to Owner without further act or payment. On or prior to the
90th day prior to the expiration of the Charter Period, Charterer shall provide
Owner with notice of such Severable Modifications that it intends to remove.
Owner may exercise its option to purchase such Severable Modifications by
written notice to such effect delivered to Charterer at least 30 days prior to
expiration of the Charter Period. Owner and Charterer shall attempt to agree
upon the Fair Market Sales Value of such Severable Modification as of the
expiration of the Charter Period. If Owner and Charterer shall fail to agree
within 15 days after such written notice, such Fair Market Sales Value of any
such Severable Modification shall be determined by the Appraisal Procedure. If
Owner shall have exercised its option to purchase any Severable Modification to
the Vessel pursuant to this Article 13(c)(iii), Charterer, if requested by
Owner, shall furnish (or cause to be furnished) to Owner a bill of sale or
assignment, in form and substance reasonably satisfactory to Owner, conveying
the right, title and interest of Charterer (or its Affiliate) in and to such
Severable Modification, free and clear of all Liens (other than Permitted Liens
described in clauses (a), (b), (f) and (g) of the definition thereof), to Owner.
(d) Payment for Modifications and Replacement Components. (i)
----------------------------------------------------
Charterer shall be permitted at any time to finance the cost of any Severable
Modification to the Vessel not required by any Governmental Rule or Governmental
Action, directly or indirectly, including, without limitation, on a third party
ownership basis.
15
<PAGE>
(ii) Charterer may with the written consent of Owner Participant seek
financing for the cost of any Modification (including any alterations to the
Vessel pursuant to Article 15 of the Construction Contract) to the Vessel by the
issuance of Additional Notes pursuant to Section 2.08 of the Indenture.
Charterer shall first provide Owner and Owner Participant with written notice of
such Modification at least 30 days prior to the date of such proposed financing.
(e) Replacement of Components; Removal of Property. (i) In the
----------------------------------------------
ordinary course of maintenance, service, repair or testing during the Charter
Period, any Component or Replacement Component may be removed and replaced with
a Replacement Component and, upon such replacement, Charterer (or its designee)
shall be entitled to retain the amount of the net proceeds of any sale or
disposition of any such removed Component or Replacement Component. Any such
Replacement Components shall be free and clear of all Liens, except Permitted
Liens, and in as good operating condition as, and with a value, utility and
useful life at least equal to, the Components or Replacement Components
replaced, assuming such replaced Components or Replacement Components were in at
least the condition and repair required to be maintained hereunder. Immediately
upon any Replacement Component becoming incorporated in the Vessel without
further act, (x) title to such Replacement Component thereupon shall vest in
Owner and Owner's interest therein shall be subject to the Lien of the
Indenture, (y) such Replacement Component shall become subject to this Charter
Party and Owner's interest therein shall be deemed a part of the Vessel Interest
for all purposes hereof to the same extent as the Component or Replacement
Component it replaced and (z) title to such removed Component or Replacement
Component shall vest in Charterer or such Person as shall be designated by
Charterer, free and clear of all rights of Owner and the Indenture Trustee and
shall no longer be deemed a Component or a Replacement Component hereunder.
(ii) If, at any time during the Charter Period, Charterer shall
conclude that any property included in the Vessel is obsolete, redundant or
unnecessary and can be removed without diminishment of the value or utility of
the Vessel or reduction of the remaining useful life of the Vessel and without
causing the Vessel to become "limited use property" within the meaning of
Revenue Procedure 76-30, Charterer may remove (or allow to be removed) such
property and upon such removal, without further act, title to such property
shall vest in Charterer or in such Person as shall be designated by Charterer,
free of the Lien of the Indenture; provided that Charterer shall pay to Owner an
--------
amount equal to any net proceeds from any sale or other disposition of any items
of such property thereafter removed to the extent such net proceeds so allocated
after the Closing Date exceed, in
16
<PAGE>
the aggregate, Five hundred thousand dollars ($500,000) (provided that
--------
Charterer shall have no obligation to sell or otherwise dispose of (or cause to
be sold or disposed) such property).
(f) Exemption from Certain Modifications. Notwithstanding the
------------------------------------
provisions of Article 13 (a), if in the reasonable estimation of Charterer any
Severable or Nonseverable Modification that would otherwise be required
hereunder by reason of Governmental Rules exceeds $1,000,000 multiplied by the
Inflation Factor for the date of such estimate, Charterer may, by notice to the
Owner, elect not to make such Modification provided the failure to make such
Modification will not prevent economic operation of the Vessel in jurisdictions
and between ports not affected by such Governmental Rules, provided, further,
-------- -------
the failure to make such modification shall not result in any material risk or
danger of (1) the sale, forfeiture or loss of any material part of or interest
in the Vessel or the Vessel Interest, the Trust Estate or the Indenture Estate
or title thereto, (2) any interference with the payment of Hire when due or (3)
the imposition of any criminal liability on the part of, or any other material
adverse effect on, Owner, Owner Participant, the Trust Estate, the Indenture
Estate or the Vessel Interest.
(g) Sharing in Cost of Modifications. Charterer shall be entitled to
--------------------------------
recover from Owner Participant its share of the cost of any Modification
determined in accordance with Article 11 of the Joint Venture Agreement,
provided that no failure of Owner Participant to pay such reimbursement shall
constitute a default under this Charter Party, reduce the obligations or rights
of Charterer or Owner hereunder or affect the continued validity and
enforceability of this Charter Party in any manner.
ARTICLE 14.
Event of Loss
-------------
(a) Notice of Event of Loss. If there shall occur an Event of Loss,
-----------------------
Charterer shall promptly notify Owner and the Indenture Trustee of the
occurrence thereof and the Termination Value Determination Date on which the
Termination Value will be paid.
(b) Payment of Termination Value, Etc. If an Event of Loss shall
----------------------------------
occur, Charterer shall pay to Owner as compensation for such Event of Loss, on
the date which is the latest Termination Value Determination Date occurring not
later than 180 days after the date of such Event of Loss, the Termination Value
as of such Termination Value Determination
17
<PAGE>
Date. Charterer shall pay, simultaneously therewith, (i) all Bareboat Hire due
and owing prior to the date of such payment, (ii) all Supplemental Hire due and
owing on or prior to the date of such payment, (iii) if such Termination Value
Determination Date is a Base Hire Payment Date, all Base Hire payable on such
Base Hire Payment Date, and (iv) all Excess Hire or Additional Excess Hire
accrued through such Termination Value Determination Date, whereupon (A) this
Charter Party and the obligations of Charterer hereunder shall terminate as of
the date of such payment and (B) Owner shall hold all right, title and interest
of Owner in and to the Vessel Interest, in accordance with the provisions of the
Joint Venture Agreement, and shall apply all proceeds thereof to the
reimbursement of all amounts paid by Charterer in respect of Termination Value,
together with interest thereon at the Debt Rate from the date of payment, and
(C) Owner shall, at Charterer's expense, take such actions under Section 6.03 of
the Indenture as Charterer may reasonably request.
(c) Application of Other Payments upon the Occurrence of an Event of
----------------------------------------------------------------
Loss. Any amounts of condemnation or requisition proceeds received at any time
- ----
by Owner, the Indenture Trustee or Charterer as a result of the occurrence of an
Event of Loss shall be divided between Charterer and Owner as their respective
interests may appear and the amount paid to Owner shall reduce the amount that
Charterer is required to pay to Owner (but not below zero) pursuant to Article
14(b) or, if the amount payable pursuant to Article 14(b) has already been paid
by Charterer, Charterer shall be entitled to retain out of the amounts otherwise
payable to Owner pursuant to this Article 14(c), the amount that would have been
applied in reduction of the amount payable by Charterer under Article 14(b).
(d) Application of Payments Not Relating to an Event of Loss.
--------------------------------------------------------
Payments (except for payments under insurance policies described in Article 16)
received at any time by Owner, the Indenture Trustee or Charterer from any
Governmental Authority or other Person with respect to any destruction, damage,
loss, condemnation, confiscation, theft or seizure of or requisition of title to
or use of the Vessel Interest or any part thereof not constituting an Event of
Loss shall be paid over to Charterer or as it may direct and all such amounts
paid to Charterer shall be retained by Charterer.
(e) Application During Charter Event of Default. Notwithstanding the
-------------------------------------------
foregoing provisions of this Article 14, so long as any Charter Event of Default
shall have occurred and be continuing, any amount (except for payments under
insurance policies described in Article 16) that otherwise would be payable to
or for the account of, or that otherwise would be retained by, Charterer
pursuant to this Article 14 shall be paid to Owner (or to the Indenture Trustee
so long as
18
<PAGE>
this Charter Party is subject to the Lien of the Indenture) as security for the
obligations of Charterer under this Charter Party and, subject to the Indenture,
applied against Charterer's payment obligations hereunder when and as they
become due and payable and, at such time thereafter as no Charter Event of
Default shall be continuing, such amount shall, to the extent not theretofore
applied as provided herein or in the Indenture, be paid promptly to Charterer or
as it may direct.
ARTICLE 15.
Liens
-----
(a) Owner's Liens. In addition to the undertakings and warranties in
-------------
Articles 4 and 5 and in the Participation Agreement concerning absence of
Owner's Liens upon delivery of the Vessel to Charterer hereunder, Owner warrants
that throughout the Charter Period Owner will not cause the Vessel or the Vessel
Interest to incur any Owner's Liens whatsoever; and Owner will defend, indemnify
and hold Charterer harmless with respect to any such Owner's Liens and/or
charters, and will promptly take, at its own expense, such actions as may be
required to discharge any Owner's Lien prohibited by this Article 15(a).
(b) Charterer Liens. Charterer will not, directly or indirectly,
---------------
create, incur, assume or suffer to exist any Liens on or with respect to all or
any part of the Vessel or the Vessel Interest, title thereto or any interest
therein, other than Permitted Liens, and Charterer promptly, at its own expense,
will take such actions as may be necessary duly to discharge any such Lien not
excepted above. Neither Charterer, the Master, the Vessel nor any third party
has or shall have any right, power or authority to create, incur or permit to be
placed or imposed upon the Vessel, its freights, profits or hire, or the Vessel
Interest any Lien whatsoever other than Permitted Liens.
(c) Copy of Documents on Board Vessel. During the Charter Period,
---------------------------------
Charterer agrees to carry a true copy of this Charter Party, the Head Lease and
the Ship Mortgage with the Vessel's papers on board the Vessel and to exhibit
the same to any person having business with the Vessel which may give rise to a
maritime lien upon the Vessel or to the sale, conveyance, mortgage or lease
thereof and on demand to any representative of the Owner.
(d) Identification of Vessel. At all times during the Charter Period,
------------------------
Charterer shall cause to be placed and kept prominently displayed in the
Master's Cabin and the chart room of the Vessel a notice, framed under glass,
printed in
19
<PAGE>
plain type of such size that the paragraph of reading matter thereof shall cover
a space not less than six inches wide by nine inches high, reading as follows:
"NOTICE OF MORTGAGE AND CHARTER"
This vessel is owned by Deutsche Morgan Grenfell (Cayman) Limited, not in
its individual capacity but solely as Managing Trustee of [Name of Owner]
under the Declaration and Agreement of Trust dated as of November 22, 1996,
is under demise charter to [Name of Charterer] pursuant to a Bareboat
Charter Party, dated as of December 19, 1996, and is covered by a first
Ship Mortgage dated December 19, 1996 in favor of State Street Bank and
Trust Company, as Indenture Trustee. Said bareboat charter and mortgage
provide that no person shall create, incur or permit to be placed or
imposed upon this vessel any lien or encumbrance whatsoever except as
expressly permitted therein. A copy of said bareboat charter and mortgage
are carried on this vessel and must be exhibited on demand to any person
having business with this vessel."
Such notice shall be changed to reflect the identity of any successor Owner or
successor Indenture Trustee. Neither Owner nor Charterer shall take any action
or omit to take any action during the Charter Period that would (i) cause the
Vessel to cease to be documented as a vessel pursuant to the laws of the
Marshall Islands, (ii) cause the Ship Mortgage on the Vessel to cease to be a
first Ship Mortgage under the laws of the Marshall Islands, or (iii) cause the
Vessel to cease to be entitled to the same classification that the Vessel had
from the Classification Society on the Closing Date (subject to any reduction in
classification resulting from the age of the Vessel). Except as otherwise
directed by Owner, Charterer shall prevent the name of any Person other than
that of Charterer, MSCL, the Guarantor, or any Affiliate of any thereof from
being placed on any part of the Vessel as a designation that reasonably might be
interpreted as a claim of ownership or right to possession or use thereof.
(e) Lien on Cargoes. Owner will have a lien upon all cargoes and sub-
---------------
freights belonging to Charterer and any Bill of Lading freights for all claims
under this Charter Party.
20
<PAGE>
ARTICLE 16.
Insurance
---------
(a) Coverage. At all times during the Charter Period Charterer shall,
--------
at its own cost and expense, carry and maintain with respect to the Vessel (i)
insurance with respect to the Vessel against marine and hull risks in such
amounts and in such forms as is consistent with the practice of the Charterer's
Affiliates engaged in maritime transportation for other vessels owned or leased
by such Affiliates and (ii) public liability, including personal injury and
property damage and comprehensive general liability insurance against claims,
including, without limitation, environmental claims arising out of or connected
with the possession, use, leasing, operation or condition of the Vessel in such
amounts and in such forms as is consistent with the practice of the Charterer's
Affiliates engaged in maritime transportation for other vessels similar to the
Vessel owned or leased by such Affiliates. The insurance required under clause
(i) or (ii) of this Article 16(a) may be subject to deductible amounts and self-
insured retentions as is consistent with the practice of the Charterer's
Affiliates engaged in maritime transportation for other vessels similar to the
Vessel owned or leased by such Affiliates. Such insurance may be carried under
blanket policies maintained by or on behalf of the Charterer so long as such
policies otherwise comply with the provisions of this Article 16, and may be
carried by insurers that are Affiliates of the Charterer.
(b) Additional Insurance. Nothing in this Article 16 shall prohibit
--------------------
Owner or Charterer from placing any additional insurance that Owner or Charterer
desires, at the expense of the party desiring such additional insurance,
covering the Vessel, or the Vessel Interest, or the Owner or the Charterer with
respect to the Vessel or the Vessel Interest, provided however that any such
insurance shall not exceed the amount permitted by warranties or other
conditions contained in the insurances effected pursuant to the preceding
provisions of this Article 16 without the consent of the relevant insurers.
(c) Certain Terms of Insurance. Any insurance carried in accordance
--------------------------
with this Article 16, to the extent the following can be effected without in the
case of clauses d. and e. Charterer or any Permitted Subcharterer incurring any
material incremental costs in connection therewith, provide in the policy or by
special endorsement that:
a. Owner, the Owner Participant, the Indenture Trustee and the Pass
Through Trustee are included as additional insureds and that no such Person
shall have any obligation or liability for payment of premiums;
21
<PAGE>
b. the insurer thereunder waives all rights of subrogation against
Owner, the Indenture Trustee, the Owner Participant and the Pass Through
Trustee, and waives any right of set-off and counterclaim and any other
right to deduction whether by attachment or otherwise;
c. such insurance shall be primary without right of contribution of
any other insurance carried by or on behalf of Owner, the Indenture
Trustee, the Owner Participant and the Pass Through Trustee;
d. the respective interests of Owner, the Indenture Trustee, the Pass
Through Trustee, and the Owner Participant under all insurance policies
required hereunder shall not be invalidated by any action or inaction of
Charterer or any other Person (other than, with respect to any such
insured, such insured) and such insurance shall insure Owner, the Indenture
Trustee, the Pass Through Trustee, and the Owner Participant as their
interests may appear, regardless of any breach or violation of any
warranty, declaration or condition contained in such policies by Charterer
or any other Person (other than, with respect to any such insured, such
insured);
e. if the insurers cancel such insurance for any reason whatsoever
or any materially adverse change is made in policy terms or conditions, or
if such insurance is allowed to lapse for nonpayment of premium, such
cancellation, change or lapse shall not be effective as to Owner, the Owner
Participant, the Pass Through Trustee or the Indenture Trustee for thirty
days after receipt by Owner, the Owner Participant, the Pass Through
Trustee or the Indenture Trustee, respectively, of written notice from such
insurers of such cancellation, change or lapse; and
f. with respect to all liability insurance, in as much as the
policies are written to cover more than one insured, all terms, conditions,
insuring agreements and endorsements, with the exception of the limits of
liability shall operate in the same manner as if there were a separate
policy covering each insured.
(d) Notice of Accidents. Charterer shall promptly furnish the Owner
-------------------
and the Indenture Trustee with full information regarding any casualties or
other accidents or damages to the Vessel involving an amount in excess of Five
Million United States Dollars (U.S. $5,000,000).
(e) Application of Proceeds of Insurance. All insurance proceeds in
------------------------------------
respect of insurance maintained by
22
<PAGE>
Charterer hereunder with respect to the Vessel under Article 16(a)(i) and
payable under circumstances not constituting an Event of Loss shall be payable
to Charterer. All insurance proceeds (up to an amount not exceeding the
applicable Termination Value) in respect of insurance maintained by Charterer
hereunder with respect to the Vessel under Article 16(a)(i) and payable as the
result of an Event of Loss will be paid to the Owner (or, subject to the
provisions of the Head Lease, to the Indenture Trustee so long as this Charter
Party is subject to the Lien of the Indenture) and shall be applied in reduction
of Charterer's obligation to pay Termination Value and the other amounts payable
under Article 14 hereof in connection with such Event of Loss, if not already
paid by Charterer, or, if already paid by Charterer, shall be applied to
reimburse Charterer for its payment of such Termination Value and the other
amounts payable under Article 14 hereof, and the balance, if any, of such
payments remaining thereafter will be paid over to, or retained by, Charterer.
(f) Application During Charter Event of Default. Notwithstanding the
-------------------------------------------
foregoing provisions of this Article 16, so long as any Charter Event of Default
shall have occurred and be continuing, any amount referred to in this Article 16
that otherwise would be payable to or for the account of, or that otherwise
would be retained by, Charterer pursuant to this Article 16 shall be paid to
Owner (or, subject to the provisions of the Head Lease, to the Indenture Trustee
so long as this Charter Party is subject to the Lien of the Indenture) as
security for the obligations of Charterer under this Charter Party and, subject
to the Indenture, shall be applied against Charterer's payment obligations
hereunder when and as they become due and payable and, at such time thereafter
as no Charter Event of Default shall be continuing, such amount shall, to the
extent not theretofore applied as provided herein or in the Indenture, be paid
promptly to Charterer or as it may direct.
ARTICLE 17.
Requisition
-----------
Requisition (not involving title) of the Vessel for use by any
Government during the Charter Period not constituting an Event of Loss shall not
terminate this Charter Party and Charterer shall remain liable for the
performance of its obligations hereunder.
23
<PAGE>
ARTICLE 18.
Early Termination.
-----------------
(a) Decision. If Charterer shall determine in good faith that the
--------
continuation of the Charter Party is uneconomic by reason of the cost of
compliance with Governmental Rules or Governmental Actions , or by reason of
indemnity payments required to be made to any Person under the Charter Party or
the Participation Agreement, then Charterer may elect to terminate this Charter
Party with respect to the Vessel Interest in accordance with this Article 18 on
any Termination Value Determination Date.
(b) Notice of Termination. In order to exercise its right to
---------------------
terminate this Charter Party as provided in this Article 18, Charterer shall
provide Owner with (i) notice in writing at least 90 days but not more than 545
days prior to the Termination Value Determination Date as of which Charterer is
electing to terminate this Charter Party with respect to the Vessel Interest
(the "Termination Date"), such notice to specify (a) the Termination Date, and
----------------
(b) the Termination Value as of the Termination Date, and (ii) an Officer's
Certificate of Charterer as to the determination referred to in Article 18(a)
and stating that such termination will not violate the provisions of the Head
Lease. Unless Owner shall have elected to retain the Vessel Interest pursuant
to Article 18(e), Charterer may, at its option by written notice to Owner at any
time prior to the 30th day prior to the Termination Date, revoke any such notice
of termination, in which event this Charter Party shall not terminate and the
reasonable out-of-pocket expenses incurred by Owner, Owner Participant and the
Indenture Trustee in connection therewith shall be borne by Charterer; provided,
--------
however, that Charterer shall have no obligation to so reimburse Owner or Owner
- -------
Participant if such notice of revocation is given (or deemed to have been given
pursuant to the penultimate sentence of Article 18(e)) as a result of Owner's
failure to make the payments required to be made by it under Article 18(e)).
(c) Sale of Vessel Interest; Termination Payment. If Charterer shall
--------------------------------------------
have made a Termination Election, Charterer shall, subject to Article 18(f) as
agent for Owner, use reasonable efforts to solicit bids for the cash purchase of
the Vessel Interest on the Termination Date. Owner may also solicit bids for
the cash purchase of the Vessel Interest on the Termination Date independent of
Charterer. Charterer and Owner, as the case may be, shall certify to the other
in writing the amount and terms of each bid received by it and the name and
address of the Person submitting such bid. Subject to Article 18(e), in the
event that Charterer or Owner shall have obtained any such bids from any Person
other than Charterer or an Affiliate of Charterer, Owner shall sell the
24
<PAGE>
Vessel Interest on the Termination Date to such Person which shall have
submitted the highest bona fide cash bid. Upon payment to Owner of the purchase
---- ----
price in immediately available funds (and all other amounts due pursuant to the
next sentence) on the Termination Date, Owner shall sell to the highest bona
----
fide bidder all right, title and interest of Owner in and to the Vessel Interest
- ----
as is and where is, free and clear of Owner's Liens and Owner Participant's
Liens but otherwise without representation or warranty. This Charter Party and
the obligations of Charterer hereunder shall terminate concurrently with such
sale and such payment. As a condition to the sale of the Vessel Interest
pursuant to the second preceding sentence, Charterer shall pay on the
Termination Date to Owner, in immediately available funds, (i) an amount equal
to the excess, if any, of (A) the Termination Value as of the Termination Date
over (B) the proceeds of such sale net of the reasonable out-of-pocket expenses
incurred by Owner and the Owner Participant in connection with such sale, (ii)
all Bareboat Hire due and owing prior to the Termination Date (iii) if the
Termination Date is a Base Hire Payment Date, Base Hire payable on the
Termination Date, (iv) all Supplemental Hire due and owing on or prior to the
Termination Date, including any premium payable with respect to the redemption
of the Secured Notes and (v) all Excess Hire or Additional Excess Hire secured
through the Termination Date. On the Termination Date, Owner shall, at
Charterer's expense, execute and deliver to such Person a bill of sale or
assignment and such other instruments, documents and opinions as such Person or
Charterer may reasonably request to evidence the valid consummation of such
transfer and shall, at Charterer's expense, take such actions under Article 6.03
of the Indenture as Charterer may reasonably request.
(d) Continuation of Charter Party. In the event that (i) Charterer
------------------------------
shall have exercised its right to revoke its notice of termination pursuant to
Article 18(b) or (ii) the highest bona fide bidder under Article 18(c) shall
---- ----
have failed to purchase the Vessel Interest pursuant to Article 18(c), then,
unless Owner shall have retained the Vessel Interest pursuant to Article 18(e),
this Charter Party shall remain in full force and effect.
(e) Retention of Vessel Interest by Owner. If Charterer shall have
-------------------------------------
made a Termination Election with respect to the Vessel Interest, Owner may elect
to retain rather than sell the Vessel Interest pursuant to Article 18(c) by
giving irrevocable notice to Charterer and the Indenture Trustee no earlier than
45 nor later than 30 days prior to the Termination Date. If Owner so elects to
retain the Vessel Interest, on the Termination Date (a) Owner shall pay to the
Indenture Trustee an amount equal to the unpaid principal amount of, and accrued
and unpaid interest on, together with premium, if any, in respect of the Secured
Notes then
25
<PAGE>
Outstanding to the date of payment, and (b) Charterer shall pay to Owner or the
Person entitled thereto as provided in the Operative Documents (i) all Bareboat
Hire due and owing on or prior to the Termination Date, (ii) all Supplemental
Hire due and owing on or prior to the Termination Date, but Charterer shall not
be required to pay any amounts pursuant to Article 18(c), (iii) if the
Termination Date is a Base Hire Payment Date, all Base Hire payable on the
Termination Date and (iv) all Excess Hire or Additional Excess Hire accrued to
the Termination Date. Upon payment of the amounts due pursuant to clause (b) of
the preceding sentence, this Charter Party and the obligations of Charterer
hereunder shall terminate, and Owner shall, at Charterer's expense, execute and
deliver to Charterer on the Termination Date such instruments as Charterer shall
reasonably request to evidence the termination of this Charter Party. In the
event Owner fails to pay the amounts specified in clause (a) of the second
sentence of this Article 18(e) or Charterer fails to pay the amounts specified
in clause (b) of such sentence, Charterer shall be deemed to have revoked its
notice of termination pursuant to Article 18(b). If Owner shall fail to perform
any of its obligations pursuant to this Article 18(e) and as a result thereof
this Charter Party shall not be terminated on a proposed Termination Date, Owner
shall thereafter no longer be entitled to exercise its election to retain the
Vessel Interest upon any subsequent Termination Election pursuant to this
Article 18 and Charterer may at its option at any time thereafter submit a new
termination notice pursuant to Article 18(b).
(f) Termination of Head Lease. In the event that the Head Lease shall
-------------------------
have terminated in circumstances where the U.K. Lessor is obliged to conclude
the sale of the Vessel or its rights under the Conditional Sale Agreement, the
parties shall have no obligation under Article 18(c), and any proceeds from such
sale to which the Owner is entitled shall be applied against the obligations of
the Charterer in respect of the payment of Termination Value under Article 14 or
23(b), as applicable.
ARTICLE 19.
Redelivery
----------
(a) Redelivery. Not less than 30 days prior to the expiration of the
----------
Charter Period, Charterer shall, except as provided in Articles 18 and 19(c)
deliver to Owner notice in writing of the port anywhere in the world chosen in
Charterer's discretion (the "Redelivery Port") at which the Vessel will be
available for redelivery at the end of the Charter Period. At the request of
the Charterer, the Charter Period shall be extended for such time as may be
required for the Vessel to complete the voyage in progress at the date of
expiration of the Charter Period and to discharge its cargo,
26
<PAGE>
in which event the Charterer shall pay hire for such extension at the same rate
per day as in effect for the last Rate Period during the unextended Charter
Period. At the expiration of the Charter Period, except as provided in
Articles 18 and 19(c), Charterer shall, at its own expense, redeliver the Vessel
to Owner at the Redelivery Port and Charterer's obligation to pay additional
Bareboat Hire in respect of periods thereafter shall cease. Charterer shall, at
its own expense, and at Owner's request redocument the Vessel in the name of
Owner or in such other name as the Owner may direct under the laws of the
Marshall Islands if the Vessel is not then documented under the laws of the
Marshall Islands.
(b) Redelivery Condition. Charterer shall redeliver the Vessel in the
--------------------
same class (except for changes in class resulting from the age of the Vessel),
free of recommendations affecting class (with class and trading certificates and
continuous machinery and survey cycle up to date and unextended) and in the same
good order and condition as existed at the time of delivery to Charterer, normal
wear and tear not affecting class excepted. Charterer agrees that at the time
of such redelivery, the Vessel Interest shall be charter free and free and clear
of all Liens, (except any Permitted Liens, it being understood that Charterer
will promptly and diligently cause any such Permitted Liens other than Owner's
Liens and Owner Participant's Liens to be discharged), shall include all
Modifications made hereunder, except those removed by Charterer to the extent
permitted hereby.
(c) Charter Extension. Notwithstanding the provisions of clauses (a)
-----------------
and (b) of this Article 19, Charterer may by notice delivered to Owner not less
than 60 days prior to the expiration of the Charter Period require Owner to
enter into a charter of the Vessel with an Affiliate of Charterer commencing
immediately upon the expiration of the Charter Period for a period of one year,
renewable annually for up to six additional years, at a charter rate
equal to the Bareboat Market Rate determined in accordance with Schedule 2B and
otherwise upon terms and conditions set forth in the pro forma Bareboat Charter
set forth in a schedule to the Joint Venture Agreement, with such changes as the
Charterer and Owner may agree.
ARTICLE 20.
Assignment by Owners; Subcharters
---------------------------------
(a) General. Except as set forth in Article 20(b) or in the last
-------
sentence of Article 29(i), Owner may not assign, transfer or encumber this
Charter Party or all or any part of its interests and rights hereunder except in
27
<PAGE>
connection with the exercise of remedies by Owner following a declaration by
Owner pursuant to Article 22 that this Charter Party is in default.
(b) Security. In order to secure the indebtedness evidenced by the
--------
Secured Notes and certain other obligations as provided in the Indenture, the
Indenture provides, among other things, for the assignment by Owner to the
Indenture Trustee of its right, title and interest in, to and under this Charter
Party to the extent set forth in the Indenture, and for the creation of a
mortgage and security interest in the Vessel Interest in favor of the Indenture
Trustee. The Charterer hereby consents to such assignment and to the creation
of such mortgage and security interest pursuant to the terms and provisions of
the Indenture and to any assignment or other transfer which may occur pursuant
to the exercise of any remedy set forth in the Indenture. The Charterer (i)
acknowledges that such assignment, mortgage and security interest provide for
the exercise by the Indenture Trustee of some or all rights of Owner hereunder
to give any consents, approvals, waivers, notices or the like, to make any
demands or the like or to take any other discretionary action hereunder, but
only in accordance with the Indenture, (ii) acknowledges receipt of an executed
counterpart of the Indenture as in effect on the date hereof and (iii) agrees
that, to the extent provided in the Indenture, the Indenture Trustee shall have
all the rights of Owner hereunder and, in exercising any right or performing any
obligation of Owner hereunder, shall be subject to the terms hereof. The
Charterer will furnish to the Indenture Trustee counterparts of all notices,
certificates, opinions or other documents of any kind required to be delivered
hereunder by the Charterer to Owner. Notwithstanding any other provision
herein, so long as any Secured Notes remain Outstanding, Owner hereby directs,
and the Charterer agrees that, all Base Hire, Termination Value and other
amounts payable hereunder and specified pursuant to Section 4.01 of the
Indenture shall be paid directly to the Indenture Trustee at its account
specified in Schedule 1 to the Participation Agreement or to such other account
as may be specified in writing by the Indenture Trustee to the Charterer at
least 5 Business Days prior to the due date thereof. Upon the Charterer
receiving notice or obtaining actual knowledge that an Indenture Event of
Default shall have occurred and be continuing, Charterer shall make all payments
of Hire and Supplemental Hire (other than Excepted Payments) directly to the
Indenture Trustee at such account. The right of the Indenture Trustee to
receive all such payments shall not be subject to any defense, counterclaim,
setoff or other right or claim of any kind which the Charterer may be able to
assert against Owner or the Owner Participant in an action brought by any
thereof on this Charter Party or otherwise.
28
<PAGE>
(c) Assignments. Charterer may, without the consent of any party to
-----------
the Participation Agreement, at any time and from time to time, assign this
Charter Party and its interests and rights hereunder to any Person so long as,
(i) after giving effect to such assignment, the Guaranty shall remain in full
force and effect and shall constitute a full and unconditional guaranty of the
obligations of the assignee hereunder to the same extent as the guaranty of
Charterer's obligations hereunder prior to giving effect to any such assignment,
(ii) no Specified Charter Event of Default shall be continuing on the date any
such assignment to any Affiliate of Charterer is effected and no Charter Event
of Default shall be continuing on the date such assignment to any other Person
is effected, and (iii) such assignment shall not result in any Tax on Owner or
the Owner Participant that is not indemnified in accordance with the provisions
of Section 13 of the Participation Agreement or of an indemnity agreement
tendered by Charterer and reasonably satisfactory to the Owner and Owner
Participant or subject Owner or the Owner Participant to regulation by any
Governmental Authority to which Owner or the Owner Participant would not have
been subject but for such assignment, (iv) such assignment shall not result in
the violation of any Governmental Rules, including the U.S. Securities Act of
1933, as amended, or the Head Lease, (v) such assignee shall have validly
assumed the obligations of the Charterer under each of the Operative Documents
to which it is a party and under the Pass-through Trust Supplement, (vi) such
assignment will not result in an adverse tax consequence to the holders of the
Pass Though Certificates and (vii) Charterer shall have delivered to Owner an
opinion of counsel as to the satisfaction of the preceding clauses (i) through
(vi).
(d) Subcharters. Charterer may, without the consent of any party to
-----------
the Participation Agreement, at any time and from time to time, subcharter the
Vessel Interest to another Person (including, without limitation, to MSCL
pursuant to the Initial Subcharter); provided that (i) such subcharter shall be
--------
expressly subject and subordinate to this Charter Party (and such subcharter
shall contain a provision providing that any subcharter permitted thereunder
shall be so subject and subordinate) and shall in no event continue beyond the
Charter Period, (ii) Charterer shall remain primarily liable under this Charter
Party and all terms and conditions hereof and of the other Operative Documents
shall be complied with as though no such subcharter was in existence, (iii) the
Guaranty shall remain in full force and effect, (iv) such subcharter shall not
result in any Tax on Owner or the Owner Participant that is not indemnified in
accordance with the provisions of Section 13 of the Participation Agreement or
of an indemnity agreement tendered by Charterer and reasonably satisfactory to
the Owner and Owner Participant or subject Owner or the Owner Participant to
regulation by any
29
<PAGE>
Governmental Authority to which Owner or the Owner Participant would not have
been subject but for such subcharter, (v) no Specified Charter Event of Default
shall be continuing at the commencement of such subcharter, (vi) Charterer shall
give prompt written notice to Owner of any subcharter or sub-subcharter of the
Vessel Interest, and (vii) any such subcharter with a term in excess of six (6)
months shall be approved by Owner prior to its execution. Owner acknowledges
that on the Closing Date Charterer will subcharter the Vessel Interest to MSCL
pursuant to the Initial Subcharter. Any subcharterer under a subcharter
permitted hereunder may sub-subcharter the Vessel Interest to another Person
under a sub-subcharter that otherwise complies with the provisions hereunder
applicable to a subcharter hereunder.
ARTICLE 21.
Charter Event of Default
------------------------
The term "Charter Event of Default", wherever used herein, shall mean
------------------------
any of the following events (whatever the reason for such Charter Event of
Default and whether it shall be voluntary or involuntary, or come about or be
effected by operation of law, or be pursuant to or in compliance with any
judgment, decree or order of any court or any Governmental Rule or Governmental
Action):
(1) Charterer shall fail to make any payment of Assigned Hire within
10 Business Days after the date the same becomes due; or
(2) Charterer shall fail to pay Supplemental Hire or make any other
payment (other than (i) Assigned Hire or (ii) any Excess Hire or any
Additional Excess Hire or any Excepted Payment (unless Owner elects to have
such failure to make such payment of Excess Hire or any Additional Excess
Hire or such failure to make an Excepted Payment constitute a Charter Event
of Default)) required to be made by Charterer under this Charter Party or
under any other Operative Document for more than 15 Business Days after
Charterer has received written notice from Owner or the Indenture Trustee
stating that such payment is due; or
(3) Charterer shall fail in any material respect to perform or observe
any other material covenant or agreement to be performed or observed by it
under this Charter Party or any other Operative Document (other than any
covenant or agreement to pay Excess Hire or any Additional Excess Hire or
make an Excepted Payment) and such failure shall continue for a period of
thirty (30) days after receipt by Charterer of a written notice from
30
<PAGE>
Owner or the Indenture Trustee specifying such failure and requiring it to
be remedied; provided, however, that the continuation of any such failure
-------- -------
for such period of thirty (30) days or such longer period (not to exceed
365 days) after receipt of such notice shall not constitute a Charter Event
of Default so long as (i) such failure is curable or correctable and (ii)
Charterer is diligently pursuing the cure or correction of such failure; or
(4) the Guarantor shall fail in any material respect to perform or
observe any covenant or agreement to be performed or observed by it under
the Guaranty (other than any covenant or agreement in respect of
Charterer's obligations under the Operative Documents) and such failure
shall continue for a period of thirty (30) days after receipt by the
Guarantor of a written notice from Owner or the Indenture Trustee
specifying such failure and requiring it to be remedied; provided, however,
-------- -------
that the continuation of any such failure for such period of thirty (30)
days or such longer period (not to exceed 365 days) after receipt of such
notice shall not constitute a Charter Event of Default so long as (i) such
failure is curable or correctable and (ii) the Guarantor is diligently
pursuing the cure or correction of such failure; or
(5) any material representation or warranty made by Charterer in
Section 5 of the Participation Agreement or in any Officer's Certificate of
Charterer delivered pursuant to the Participation Agreement shall prove to
have been inaccurate in any material respect when made, unless such
inaccuracy shall not be material to the recipient at the time when the
notice referred to below shall have been received by Charterer or any
material adverse impact thereof shall have been cured or corrected within
thirty (30) days after receipt by Charterer of a written notice thereof
from Owner or the Indenture Trustee; provided, however, that the
-------- -------
continuation of any such inaccuracy for such period of thirty (30) days or
such longer period (not to exceed 365 days) after receipt of such notice
shall not constitute a Charter Event of Default so long as (i) any material
adverse impact of such inaccuracy is curable or correctable and (ii)
Charterer is diligently pursuing the cure or correction of such material
adverse impact; or
(6) any material representation or warranty made by the Guarantor in
the Guaranty or in any Officer's Certificate of the Guarantor delivered
pursuant to the Participation Agreement shall prove to have been inaccurate
in any material respect when made, unless such inaccuracy shall not be
material to the recipient at the time when the notice referred to below
shall have been
31
<PAGE>
received by the Guarantor or any material adverse impact thereof shall have
been cured or corrected within thirty (30) days after receipt by Charterer
of a written notice thereof from Owner or the Indenture Trustee; provided,
--------
however, that the continuation of any such inaccuracy for such period of
-------
thirty (30) days or such longer period (not to exceed 365 days) after
receipt of such notice shall not constitute a Charter Event of Default so
long as (i) any material adverse impact of such inaccuracy is curable or
correctable and (ii) the Guarantor is diligently pursuing the cure or
correction of such material adverse impact; or
(7) Charterer or the Guarantor shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, or shall consent to any such relief
or to the appointment or taking possession by any such official or agency
in an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall take any
corporate action to authorize any of the foregoing, or an involuntary case
or other proceeding shall be commenced against Charterer or the Guarantor
seeking liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official or agency of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of ninety
(90) days; or
(8) the Guaranty shall cease to be in full force and effect or to be
the valid, binding and enforceable agreement of the Guarantor; or
(9) Charterer shall fail to maintain (or cause to be maintained) the
insurance required by Article 16 and such failure shall continue for a
period of thirty (30) days following receipt of notice from the Indenture
Trustee or Owner specifying such failure and requiring such failure to be
remedied;
provided, however, that notwithstanding anything to the contrary contained in
- -------- -------
this Article 21, any failure of Charterer to perform or observe any covenant or
agreement specified in Article 21(3) shall not constitute a Charter Event of
Default if such failure is caused solely by reason of
32
<PAGE>
any event that constitutes an Event of Loss (or any event which with lapse of
time would constitute an Event of Loss) so long as Charterer is continuing to
comply with all the applicable terms of Article 14.
ARTICLE 22.
Remedies
--------
(a) In General. Upon the occurrence of any Charter Event of Default
----------
and so long as the same shall be continuing, Owner, at its option, may declare
this Charter Party to be in default by written notice to such effect given to
Charterer (provided that this Charter Party shall be deemed to have been
declared in default without the necessity of such written notice upon the
occurrence of any Event of Default described in paragraph (7) of Article 21),
and at any time thereafter, provided such Charter Event of Default shall be
continuing, Owner may, to the extent permitted by applicable Governmental Rules,
exercise one or more of the following remedies, as Owner in its sole discretion
shall elect:
(i) Owner, by notice to Charterer, may rescind or terminate this
Charter Party;
(ii) whether or not this Charter Party has been terminated, Owner
may, after the Delivery Date, demand that Charterer, and upon the written
demand of Owner, Charterer shall, surrender the Vessel promptly to Owner in
the manner and condition required by, and otherwise in accordance with the
provisions of, this Charter Party as if the Vessel were being returned at
the end of the Charter Period and Owner shall not be liable for the
reimbursement of Charterer for any costs and expenses incurred by Charterer
in connection therewith;
(iii) Owner may (whether or not Owner has taken possession thereof)
sell all or any portion of the Vessel Interest at public or private sale,
as Owner may determine, free and clear of any rights of Charterer with
respect thereto and without any duty to account to Charterer with respect
to such sale or any proceeds with respect thereto (except to the extent
required by paragraph (v) or (vi) of this Article 22(a) if Owner shall
elect to exercise its rights thereunder), in which event Charterer's
obligation to pay Bareboat Hire with respect to the interest sold accruing
after the date of such sale shall be terminated (except to the extent that
Bareboat Hire is to be included in computations under paragraph (v) or (vi)
of this Article 22(a) if Owner shall elect to exercise its rights
thereunder);
33
<PAGE>
(iv) Owner may hold or lease to others all or a portion of the Vessel
Interest, as Owner in its sole discretion may determine, free and clear of
any rights of Charterer with respect thereto and without any duty to
account to Charterer with respect to such action or inaction or for any
proceeds with respect to such action or inaction, except that Charterer's
obligation to pay Bareboat Hire after Charterer shall have been deprived of
use of all or a portion of the Vessel pursuant to this paragraph (iv) shall
be reduced by the net proceeds, if any, received by Owner from chartering
all or a portion of the Vessel Interest to any Person other than Charterer
for the same periods or any portion thereof;
(v) whether or not Owner shall have exercised or thereafter at any
time shall exercise its rights under paragraph (i), (ii), (iii) or (iv) of
this Article 22(a), Owner may demand, by written notice to Charterer
specifying a payment date which shall be a Termination Value Determination
Date not earlier than 10 Business Days after the date of such notice, that
Charterer pay to Owner, and Charterer shall pay to Owner, on such specified
payment date, as liquidated damages for loss of a bargain and not as a
penalty (in lieu of Bareboat Hire accruing on or after such specified
payment date), any unpaid Bareboat Hire due and owing on or prior to such
specified payment date (but excluding any Bareboat Hire payable in advance
on such payment date) and any unpaid Supplemental Hire (to whomsoever
payable) due and owing on or prior to the date of such payment plus
whichever of the following amounts Owner, in its sole discretion, shall
specify in such notice (together with interest on such amount at the
Overdue Rate from such specified payment date to the date of actual
payment):
a. an amount equal to the excess, if any, of Termination Value
for the Vessel Interest as of such specified payment date over the
Fair Market Sales Value of the Vessel Interest as of such specified
payment date (or the last day of the Charter Period, if earlier); or
b. an amount equal to Termination Value for the Vessel Interest
determined as of such specified payment date, and, in this event, upon
full payment by Charterer of all sums due hereunder, Owner shall be
obligated to transfer, without recourse, representation or warranty
(other than the absence of Owner Participant's Liens and Owner's
Liens) the Vessel Interest (including if the Vessel has been sold
pursuant to the Head Lease or otherwise, any proceeds or right to the
proceeds the Owner may have) to Charterer, as is and where is,
whereupon
34
<PAGE>
this Charter Party and Charterer's obligations hereunder shall
terminate. Owner shall, at Charterer's expense, execute and deliver
to Charterer a bill of sale or assignment and such other instruments,
documents and opinions as Charterer may reasonably request to evidence
the valid consummation of such transfer and shall, at Charterer's
expense, take such actions under Section 6.03 of the Indenture as
Charterer may reasonably request;
(vi) if Owner shall have sold all of the Vessel Interest pursuant to
paragraph (iii) of this Article 22(a) or other right of sale, Owner, in
lieu of exercising its rights under paragraph (v) of this Article 22(a),
may, if it shall so elect, demand that Charterer pay to Owner and Charterer
shall pay to Owner on the date of such sale, as liquidated damages for loss
of a bargain and not as a penalty (in lieu of Bareboat Hire accruing on or
after the next Base Hire Payment Date following the date of such sale), any
unpaid Bareboat Hire due and owing or accrued on or prior to such next Base
Hire Payment Date (but excluding any Base Hire payable in advance on such
Base Hire Payment Date) and any other Supplemental Hire due and owing on or
prior to such next Base Hire Payment Date plus the amount of any
deficiency between Termination Value for the Vessel Interest, computed as
of such next Base Hire Payment Date, and the proceeds of such sale,
together with interest at the Overdue Rate plus 3% on the amount of such
Hire, from the due date or dates thereof, and on the amount of such
deficiency from the date of such sale, until the date of actual payment; or
(vii) Subject to Article 22(d), Owner may exercise any other right or
remedy that may be available to it under applicable law or proceed by
appropriate court action to enforce the terms hereof or to recover damages
for the breach hereof.
(b) Continuing Obligations. No rescission or termination of this
----------------------
Charter Party, in whole or in part, or repossession of the Vessel Interest or
exercise of any remedy under Article 22(a) shall, except as specifically
provided herein, relieve Charterer of any of its liabilities and obligations
hereunder. Charterer shall be liable (i) for all reasonable legal fees and
other reasonable costs and expenses incurred by Owner, the Owner Participant,
each Loan Participant or the Indenture Trustee by reason of the occurrence of
any Charter Event of Default or the exercise of Owner's remedies with respect
thereto, including all costs and expenses reasonably incurred in placing the
Vessel in the condition required by Article 19 and (ii) except as otherwise
35
<PAGE>
provided herein, for any and all other accrued and unpaid Hire due hereunder
before, after or during the exercise of any of the foregoing remedies. At any
sale of the Vessel Interest or any part thereof pursuant to Article 22(a),
Owner, the Owner Participant, each Loan Participant, or the Indenture Trustee
may bid for and purchase such property.
(c) Remedies Cumulative. To the extent permitted by applicable law
-------------------
and except as provided herein, no remedy under Article 22(a) is intended to be
exclusive, but each shall be cumulative and in addition to any other remedy
provided under Article 22(a) or otherwise available to Owner at law or in
equity. No express or implied waiver by Owner of any Charter Party Default or
Charter Event of Default shall in any way be, or be construed to be, a waiver of
any future or subsequent Charter Party Default or Charter Event of Default. The
failure or delay of Owner in exercising any rights granted it hereunder upon the
occurrence of any of the contingencies set forth herein shall not constitute a
waiver of any such right upon the continuation or recurrence of any such
contingencies or similar contingencies and any single or partial exercise of any
particular right by Owner shall not exhaust the same or constitute a waiver of
any other right provided herein. To the extent permitted by applicable law,
Charterer hereby waives any rights now or hereafter conferred by statute or
otherwise which may enable it to cancel, quit or surrender this Charter Party,
except as otherwise provided herein, or which may require Owner to sell, lease
or otherwise use the Vessel Interest in mitigation of Owner's damages as set
forth in Article 22(a) or which may limit or modify any of Owner's rights and
remedies provided in Article 22(a).
(d) No Consequential Damages. Notwithstanding any other provision of
-------------------------
this Charter Party, the Charterer shall not be liable to Owner for any claim for
loss of profits, for any reduction in the amount of Excess Hire or Additional
Excess Hire payable in accordance with Article 3, or for any other consequential
damages by reason of any failure of the Charterer to comply with the provisions
of this Charter Party, including Articles 11, 12 and 13.
ARTICLE 23.
Special Termination
-------------------
(a) Special Termination Events. The occurrence of any of the
---------------------------
following will constitute a Special Termination Event: (i) the Delivery Date
shall not have occurred on or before the Final Delivery Date, (ii) the
Construction Contract shall have been terminated, cancelled or rescinded for any
reason prior to the Delivery Date, (iii) title to the Vessel shall be required
to be transferred to the U.K. Lessor or its designee in circumstances where
there has been no assumption
36
<PAGE>
of the obligations of Owner in accordance with Section 3.04 of the Indenture, or
(iv) termination of the Charter Period pursuant to Article 23(c).
(b) Termination. Forthwith upon the occurrence of a Special
------------
Termination Event, Charterer shall give notice of such event to Owner and
Indenture Trustee, and Charterer shall on the next Termination Value
Determination Date occurring not less than 25 days following the giving of such
notice pay to Owner (A) the Termination Value as of the Termination Value
Determination Date, (B) all Bareboat Hire due and owing prior to the date of
such payment, (C) all Supplemental Hire due and owing on or prior to the date of
such payment, which shall include the applicable Make-Whole Amount, if any,
payable upon the redemption of the Secured Notes under the Indenture, (D) if
such Termination Value Determination Date is a Base Hire Payment Date, all Base
Hire payable on such Base Hire Payment Date, and (E) all Excess Hire or
Additional Excess Hire accrued through such Termination Value Determination Date
whereupon Owner shall surrender to Charterer subject to the rights of the U.K.
Lessor, without representation or warranty except as to the absence of Owner's
Liens and Owner Participants' Liens, all of its right title and interest in the
Construction Contract and the Vessel Interest, whereupon this Charter Party
shall terminate, and Charterer shall have no further obligation thereunder. The
Interest so surrendered shall be held and disposed of in accordance with the
last paragraph of Article 5 of the Joint Venture Agreement.
(c) Termination upon Termination of Head Lease. Unless otherwise
-------------------------------------------
agreed by the U.K. Lessor with the consent of the Charterer, the Charter Period
shall automatically terminate on the date falling ten days after the termination
of the leasing of the Vessel under the Head Lease or, if later, the completion
of the then current voyage of the Vessel and the discharge of any cargo
therefor.
ARTICLE 24.
Vessel Plans and Drawings
-------------------------
Owner shall supply and deliver to Charterer a full description of the
Vessel and copies of all documents, plans and drawings required for the proper
operation and maintenance of the Vessel on or before the Delivery Date.
37
<PAGE>
ARTICLE 25.
Wreck Removal
-------------
In the event of the Vessel becoming a wreck or obstruction to
navigation, Charterer shall indemnify Owner against any sums whatsoever which
Owner shall become liable to pay and shall pay in consequence of the Vessel
becoming a wreck or obstruction to navigation.
ARTICLE 26.
General Average
---------------
General Average, if any, shall be adjusted according to the York-
Antwerp Rules 1974 or any subsequent modification thereof current at the time of
the casualty. Bareboat Hire will not contribute to General Average.
ARTICLE 27.
Salvage
-------
All salvage services rendered by the Vessel during the Charter Period
shall be for the benefit of Charterer. Charterer shall satisfy salvage claims
of the crew and any other expenses incurred in connection with such salvage
services.
ARTICLE 28.
Notices.
-------
All communications, notices and consents provided for in this Charter
Party shall be in writing and given in person or by courier or by means of
telecopy or other electronic transmission (with provision for assurance of
receipt in a manner typical with respect to communications of that type), or
mailed by registered or certified first class mail, return receipt requested,
addressed to the respective addresses set forth in Schedule 1 to the
Participation Agreement, or in each case at such other address as the Person
entitled thereto shall from time to time designate by notice in writing to
Charterer and Owner. All such communications, notices and consents given in
such manner shall be deemed given when received by (or when proffered to, if
receipt is refused) the party to whom it is addressed.
38
<PAGE>
ARTICLE 29.
Applicable Law; Miscellaneous
-----------------------------
(a) Governing Law; Disputes. This Charter Party shall be governed by
-----------------------
and construed in accordance with the laws of the State of New York. Subject to
Section 9.02 of the Indenture, Owner and Charterer will negotiate in good faith
to resolve any differences and disputes. Failing agreement, any and all
differences and disputes of whatsoever nature arising out of this Charter Party
shall be decided by the U.S. Federal Courts for the Southern District of New
York, to the jurisdiction of which courts Owner and Charterer hereby submit for
the purpose of adjudication of such disputes. The parties hereby authorize
service of process in connection with any court proceedings to be commenced
pursuant to this Article 29 to be made at the addresses referred to in Article
28.
(b) Complete Agreement. This Charter Party (including any document(s)
------------------
incorporated by reference herein and/or annexed hereto) is intended by the
parties to constitute the final expression of their agreement regarding the
bareboat chartering of the Vessel and is the complete and exclusive statement of
the terms under which the bareboat chartering is undertaken.
(c) Amendments. No amendment, supplement, supplement, modification,
----------
waiver or discharge of any term in this Charter Party shall be valid unless
agreed in writing and executed by both Owner and Charterer and, if required by
Section 9.02 of the Indenture, by the Indenture Trustee.
(d) Severability of Provisions. Any provision of this Charter Party
--------------------------
which may be determined by competent authority to be invalid or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without invalidating or rendering
unenforceable any remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto hereby waive any provision of law which
renders any provision hereof invalid or unenforceable in any respect.
(e) Headings. The division of this Charter Party into sections, the
--------
provision of a table of contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Charter Party.
(f) Counterpart Execution. This Charter Party may be executed in any
---------------------
number of counterparts and by each of the
39
<PAGE>
parties hereto on separate counterparts, all such counterparts together
constituting but one and the same instrument, with the counterpart containing
the receipt therefor executed by the Indenture Trustee on or immediately
following the signature page thereof being deemed the "original executed
counterpart" and all other counterparts being deemed duplicates. For purposes
of recordation, Owner and Charterer agree that certain information set forth on
Schedules 1 through 4 may be omitted from the counterpart presented for filing.
(g) Successors and Assigns. This Charter Party, including the terms
----------------------
and provisions hereof, shall be binding upon Owner and Charterer and their
respective successors and assigns and inure to the benefit of Owner and
Charterer and their respective successors and permitted assigns.
(h) Investment of Security Funds. Any amounts held by Owner as
----------------------------
security hereunder that would be payable to Charterer upon satisfaction of any
applicable conditions shall be invested and reinvested by Owner (or, so long as
this Charter Party shall be subject to the Lien of the Indenture, the Indenture
Trustee), from time to time in Permitted Investments at the written direction of
Charterer. Owner shall have no liability for any loss resulting from any
investment required to be made other than by reason of its willful misconduct or
gross negligence. Any net income or gain realized as a result of any such
investment or reinvestment shall be applied by Owner at the same time, on the
same conditions and in the same manner as the amounts in respect of which such
income or gain was realized are required to be distributed in accordance with
the provisions hereof, or of any other Operative Document pursuant to which such
amounts were required to be held. Charterer shall be responsible for any net
loss realized as a result of any such investment or reinvestment and shall
reimburse Owner (or the Indenture Trustee, as the case may be) therefor on
demand. Any Permitted Investment may be sold or otherwise reduced to cash
(without regard to maturity) by Owner whenever necessary to make any application
as required by the terms of this Charter Party or of any applicable Operative
Document.
(i) Immunities; Satisfaction of Undertakings; Successor Owner Trustee.
-----------------------------------------------------------------
Except as expressly provided herein, all and each of the representations,
warranties, undertakings and agreements herein made on the part of Owner are
made and intended not as personal representations, warranties, undertakings and
agreements by or for the purpose or with the intention of binding the Managing
Trustee personally but are made and intended for the purpose of binding only the
Trust Estate, and this Charter Party is executed and delivered by the Managing
Trustee solely in the exercise of the powers expressly conferred upon it as
trustee under the Trust
40
<PAGE>
Agreement; and no personal liability or responsibility is assumed hereunder by,
or at any time shall be enforceable against, the Managing Trustee or any
successor in trust on account of any representation, warranty, undertaking or
agreement hereunder of Owner, either expressed or implied, all such personal
liability, if any, being expressly waived by Charterer; provided, however, that
-------- -------
(a) Charterer or any Person claiming by, through or under it, making claim
hereunder, may subject to the terms and conditions hereof, look to the Trust
Estate for satisfaction of such liability or responsibility and (b) the Managing
Trustee or its successor in trust, as applicable, shall be personally liable for
its own gross negligence and willful misconduct and for the matters described in
clauses (i) through (v) of the last sentence of Section 7.2 of the Trust
Agreement. Subject to the terms and conditions hereof, each time a successor
Managing Trustee is appointed in accordance with the terms of the Trust
Agreement, such successor Managing Trustee shall, without further act, succeed
to all the rights, duties, immunities and obligations of its predecessor
Managing Trustee hereunder and under the other Operative Documents, and the
predecessor Managing Trustee shall be released from all further duties and
obligations hereunder and under the other Operative Documents, all without the
necessity of any consent or approval by Charterer and without in any way
altering the terms of this Charter Party or such other Operative Documents or
the obligations of Charterer hereunder or thereunder. Charterer, at its
expense, upon receipt of written notice of the appointment of a successor
Managing Trustee in accordance with the Operative Documents, promptly shall make
such modifications and changes to reflect such appointment as reasonably shall
be requested by such successor Managing Trustee in such insurance policies,
schedules, certificates and other instruments relating to the Vessel Interest or
this Charter Party or the other Operative Documents, all in form and substance
reasonably satisfactory to such successor Managing Trustee.
(j) Performance of Obligations to Indenture Trustee and Holders.
-----------------------------------------------------------
After this Charter Party shall no longer be subject to the Lien of the
Indenture, the provisions of this Charter Party which require or permit any
action by, any consent, approval or authorization of, the furnishing of any
document, paper or information to, or the performance of any other obligation
to, the Indenture Trustee or any Holder shall not be effective, and the Sections
hereof containing such provisions shall be read as though there were no such
references to any such requirements or permissions.
(k) True Lease. This Charter Party is intended as and shall
----------
constitute an agreement of lease or charter and nothing herein shall be
construed as conveying to Charterer any right, title or interest in or to the
Vessel Interest
41
<PAGE>
other than as charterer hereunder, it being expressly understood by the parties
hereto that the foregoing does not constitute a covenant, representation or
warranty of Charterer.
(l) Survival of Agreements. The representations, warranties,
----------------------
covenants and indemnities of the parties provided for in the Operative
Documents, and the parties' obligations under any and all thereof, shall survive
the execution and delivery of this Charter Party, the Investment by Owner
Participant and the purchase of the Secured Notes by the Loan Participant, any
disposition of any interest of the Owner Participant or Owner in the Vessel, and
shall be and continue in effect notwithstanding any investigation made by any of
such parties and the fact that compliance with any of the other terms,
provisions or conditions of any of the Operative Documents shall have been
waived.
42
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Charter Party to be
duly executed as of the 19th day of December, 1996.
SAMOCO 1233 TRUST
By: Deutsche Morgan Grenfell
(Cayman) Limited, not in its
individual capacity, but solely
as Managing Trustee under the
Trust Agreement
By: /s/ James Baird
----------------------------------
Name: James Baird
Title: Attorney in Fact
Mobil Marine Finance Company I Inc.
By: /s/ R.E. Sliwinski
----------------------------------
Name: R.E. Slinwinski
Title: Authorized Signatory
43
<PAGE>
SCHEDULE 1
----------
Vessel: Hull No. 1233
Owner's Cost: $85,000,000
Builder: Sumitomo Heavy Industries, Ltd.
Delivery Yard: Shipyard of Sumitomo Heavy Industries,
Ltd. in Oppama, Japan
Scheduled Delivery Date: November 15, 1998
Final Delivery Date: January 2, 2000
Charter Expiration Date: January 2, 2017
U.K. Lease Term: December 31, 2024
U.K. Lessor: FTBF Leasing December (4) Limited
<PAGE>
Exhibit 99.4
================================================================================
VLCC CHARTER PARTY
dated as of
December 19, 1996
among
SAMOCO 1234 TRUST,
a trust created pursuant to the Delaware Business Trust Act
under the Declaration and Agreement of Trust
dated as of November 22, 1996,
by the Owner Participant,
Owner
and
MOBIL MARINE FINANCE COMPANY I INC.
Charterer
- --------------------------------------------------------------------------------
Charter of Hull No. 1234
- --------------------------------------------------------------------------------
AS SET FORTH IN ARTICLE 20 OF THIS CHARTER PARTY, CERTAIN OF THE RIGHT, TITLE
AND INTEREST OF THE OWNER IN AND TO THIS CHARTER PARTY HAS BEEN ASSIGNED TO AND
IS SUBJECT TO A SECURITY INTEREST IN FAVOR OF STATE STREET BANK AND TRUST
COMPANY, AS INDENTURE TRUSTEE, UNDER THE TRUST INDENTURE, ASSIGNMENT OF CHARTER
AND HEAD LEASE, AND SECURITY AGREEMENT DATED AS OF DECEMBER 19, 1996 BETWEEN THE
OWNER TRUST AND THE INDENTURE TRUSTEE, AS SUCH INDENTURE MAY BE AMENDED,
MODIFIED OR SUPPLEMENTED FROM TIME TO TIME IN ACCORDANCE WITH THE PROVISIONS
THEREOF. THIS CHARTER PARTY HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. TO THE
EXTENT, IF ANY, THAT THIS CHARTER PARTY CONSTITUTES CHATTEL PAPER (AS SUCH TERM
IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN THIS CHARTER PARTY MAY BE CREATED THROUGH
THE TRANSFER OF POSSESSION OF ANY EXECUTED COUNTERPART OTHER THAN THE ORIGINAL
EXECUTED COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART THAT CONTAINS
THE RECEIPT THEREFOR EXECUTED BY THE INDENTURE TRUSTEE ON OR IMMEDIATELY
FOLLOWING THE SIGNATURE PAGE THEREOF.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1. Definitions.............................................. 1
ARTICLE 2. Effective Date and Charter Period........................ 2
ARTICLE 3. Hire..................................................... 2
(a) Bareboat Hire................................................. 2
(b) Supplemental Hire............................................. 2
(c) Base Hire and Additional Base Hire............................ 2
(d) Excess Hire and Additional Excess Hire........................ 3
(e) Method of Payment............................................. 3
(f) Late Payment.................................................. 3
(g) Minimum Payment............................................... 3
ARTICLE 4. Description of the Vessel;
Documentation............................................ 4
ARTICLE 5. Owner's Warranties and Representations
and Certain Charterer Undertakings....................... 4
ARTICLE 6. Delivery Date............................................ 5
(a) Delivery...................................................... 5
(b) Delivery Conditions........................................... 5
(c) Determination to Accept Delivery.............................. 7
(d) Notice of Delivery............................................ 7
ARTICLE 7. Quiet Enjoyment; Use and Trade of the
Vessel................................................... 8
ARTICLE 8. Condition Upon Delivery.................................. 8
ARTICLE 9. Net Charter.............................................. 10
ARTICLE 10. Manning.................................................. 11
ARTICLE 11. Maintenance; Inspection.................................. 11
(a) Maintenance................................................... 11
(b) Inspection.................................................... 13
(c) Daily Operating Costs......................................... 13
ARTICLE 12. Fuel, Lubricants, Water, Stores, Equipment and
Spare Replacement Parts.................................. 13
ARTICLE 13. Vessel Modification...................................... 15
(a) Required Modifications........................................ 15
ii
<PAGE>
(b) Optional Modifications........................................ 15
(c) Title to Modifications........................................ 15
(d) Payment for Modifications and Replacement
Components.................................................... 16
(e) Replacement of Components; Removal of
Property...................................................... 17
ARTICLE 14. Event of Loss............................................ 18
(a) Notice of Event of Loss....................................... 18
(b) Payment of Termination Value, Etc............................. 18
(c) Application of Other Payments upon the
Occurrence of an Event of Loss................................ 19
(d) Application of Payments Not Relating to an
Event of Loss................................................. 19
(e) Application During Charter Event of Default................... 19
ARTICLE 15. Liens.................................................... 20
(a) Owner's Liens................................................. 20
(b) Charterer Liens............................................... 20
(c) Copy of Documents on Board Vessel............................. 20
(d) Identification of Vessel...................................... 20
(e) Lien on Cargoes............................................... 21
ARTICLE 16. Insurance................................................ 21
(a) Coverage...................................................... 21
(b) Additional Insurance.......................................... 22
(c) Certain Terms of Insurance.................................... 22
(d) Notice of Accidents........................................... 23
(e) Application of Proceeds of Insurance.......................... 23
(f) Application During Charter Event of Default................... 24
ARTICLE 17. Requisition.............................................. 24
ARTICLE 18. Early Termination........................................ 24
(a) Decision...................................................... 24
(b) Notice of Termination......................................... 25
(c) Sale of Vessel Interest; Termination Payment.................. 25
(d) Continuation of Charter Party................................. 26
(e) Retention of Vessel Interest by Owner......................... 26
ARTICLE 19. Redelivery............................................... 27
ARTICLE 20. Assignment by Owners; Subcharters........................ 28
ARTICLE 21. Charter Event of Default................................. 31
ARTICLE 22. Remedies................................................. 34
(a) In General.................................................... 34
iii
<PAGE>
(b) Continuing Obligations........................................ 36
(c) Remedies Cumulative........................................... 37
(d) No Consequential Damages...................................... 37
ARTICLE 23. Special Termination...................................... 37
(a) Special Termination Events.................................... 37
(b) Termination................................................... 38
(c) Termination upon Termination of Head Lease.................... 38
ARTICLE 24. Vessel Plans and Drawings................................ 39
ARTICLE 25. Wreck Removal............................................ 39
ARTICLE 26. General Average.......................................... 39
ARTICLE 27. Salvage.................................................. 39
ARTICLE 28. Notices.................................................. 39
ARTICLE 29. Applicable Law; Miscellaneous............................ 40
(a) Governing Law; Disputes....................................... 40
(b) Complete Agreement............................................ 40
(c) Amendments.................................................... 40
(d) Severability of Provisions.................................... 40
(e) Headings...................................................... 41
(f) Counterpart Execution......................................... 41
(g) Successors and Assigns........................................ 41
(h) Investment of Security Funds.................................. 41
(i) Immunities; Satisfaction of Undertakings;
Successor Owner Trustee....................................... 42
(j) Performance of Obligations to Indenture
Trustee and Holders........................................... 42
(k) True Lease.................................................... 43
(l) Survival of Agreements........................................ 43
SCHEDULES
Appendix A Definitions
Schedule 1 Description of Vessel; Owner's Cost
Schedule 2 Bareboat Hire
Schedule 3 Termination Values
iv
<PAGE>
BAREBOAT CHARTER PARTY
----------------------
AGREEMENT made as of the 19th day of December, 1996 between SAMOCO
1234 TRUST, a trust created pursuant to the Delaware Business Trust Act
(hereinafter called "Owner"), having an office and authorized to conduct
business at Elizabethan Square, Grand Cayman, Cayman Islands and created under
the Declaration and Agreement of Trust, under which Deutsche Morgan Grenfell
(Cayman) Limited, a Cayman Islands banking corporation is the Managing Trustee
(together with its permitted successors and assigns, the "Managing Trustee")
(the Managing Trustee acting not individually, but solely as trustee for the
Owner Trust, being the "Owner Trustee"), and Mobil Marine Finance Company I
Inc., a Delaware corporation having an office and place of business at 3225
Gallows Road, Fairfax, VA 22037 (hereinafter called "Charterer"), whereby Owner
will let and demise and Charterer will hire the very large crude carrier
identified in Schedule 1 (hereinafter called the "Vessel").
WHEREAS, Owner has contracted to acquire title to the Vessel;
WHEREAS, Owner has entered into a Conditional Sale Agreement dated
November 25, 1996 with the U.K. Lessor providing for the sale of the Vessel on
the terms stated therein to the U.K. Lessor;
WHEREAS, Owner has entered into the Head Lease with the U.K. Lessor
pursuant to which the U.K. Lessor's interest in the Vessel has been let to the
Owner for the U.K. Lease Term; and
WHEREAS, Owner wishes to subject its interests in the Vessel,
including such interests under the Conditional Sale Agreement and the Head
Lease, to a charter in favor of the Charterer upon the terms set forth herein;
NOW THEREFORE, in consideration of $1.00 in hand paid and other good
and valuable consideration the receipt of which is hereby acknowledged, the
parties hereby agree as follows:
ARTICLE 1.
Definitions
-----------
For the purposes hereof, capitalized terms used herein (including
those used in the preamble and in the foregoing recitals) and not otherwise
defined herein shall have the meanings assigned to them in Appendix A, which
Appendix A shall for all purposes constitute part of this Charter Party and
shall be subject to amendment in accordance
<PAGE>
with the terms hereof. References in this Charter Party to Articles,
subarticles, clauses, Schedules, Appendices and Exhibits are to Articles,
subarticles and clauses of, and Schedules, Appendices and Exhibits to, this
Charter Party unless otherwise indicated.
ARTICLE 2.
Effective Date and Charter Period
---------------------------------
Owner agrees to let and demise and Charterer agrees to hire all of
Owner's right, title and interest in the Vessel upon the terms and conditions
set forth in this Agreement for the Charter Period. As of the Charter
Termination Date, the Vessel shall, except as otherwise expressly provided
herein, be redelivered to Owner or its designee pursuant to the terms of Article
19. This Agreement shall be binding and effective immediately upon execution
hereof notwithstanding any failure of the Delivery Date to occur.
ARTICLE 3.
Hire
----
(a) Bareboat Hire. Charterer shall pay to Owner, as charter hire for
-------------
the Vessel Interest, Bareboat Hire in installments with respect to each Rate
Period during the Charter Period on the dates and in the amounts provided in
Articles 3(c) and (d). Each installment of Bareboat Hire shall be in arrears.
Bareboat Hire with respect to any charter entered into pursuant to Article 19(c)
following the expiration of this Charter Party shall be payable as provided in
Article 19(c).
(b) Supplemental Hire. Charterer shall pay to Owner, for its own
-----------------
account, or to the Person entitled thereto, as provided herein or in any other
Operative Document, any and all Supplemental Hire promptly as the same shall
become due and payable. As part of Supplemental Hire hereunder, Charterer shall
pay the Make-Whole Amount, if any, payable upon any redemption of the Secured
Notes under the Indenture as and when such Make-Whole Amount is due, provided
--------
that Charterer shall not be required to pay any Make-Whole Amount in respect of
the redemption or purchase of the Secured Notes pursuant to Section 3.06 of the
Indenture.
(c) Base Hire. Base Hire shall be payable to Owner semi-annually in
---------
arrears on the Base Hire Payment Dates in the amounts and commencing on the date
set forth in Schedule 2. Under no circumstances shall the Bareboat Hire for any
Rate Period be lower than the Base Hire for such Rate Period.
2
<PAGE>
(d) Excess Hire and Additional Excess Hire. Payment of Excess Hire
---------------------------------------
and Additional Excess Hire shall be payable to Owner or in accordance with its
instructions, semi-annually in arrears on February 1 and August 1 of each year
following the applicable Rate Period. The amount of Excess Hire and Additional
Excess Hire shall be determined in accordance with Schedule 2A.
(e) Method of Payment. Subject to Article 20(b), all Bareboat Hire
-----------------
and Supplemental Hire payable to Owner shall be paid to the Owner's account
specified in Schedule 1 to the Participation Agreement or to such other Person
or account at such other place as Owner shall specify in writing to the
Charterer at least five Business Days prior to the due date thereof. All
Supplemental Hire payable to any Person other than Owner pursuant to any
Operative Document shall be paid directly to such Person as provided in such
Operative Document. Each payment of Hire shall be made by Charterer in
immediately available funds, on or before 12:00 noon, local time at the place of
receipt, on the scheduled date on which such payment shall be due, unless such
scheduled date shall not be a Business Day in which case such payment shall be
due and payable on the next succeeding Business Day with the same force and
effect as if made on such scheduled date and (provided such payment is made on
such next succeeding Business Day) no interest shall accrue on the amount of
such payment from and after such scheduled date.
(f) Late Payment. If any Hire shall not be paid when due, Charterer
------------
shall pay to Owner (or, in the case of Supplemental Hire, to Owner for its own
account or to the Person entitled thereto as provided herein or in any other
Operative Document), as Supplemental Hire, interest (to the extent permitted by
law) on such overdue amount from and including the due date thereof to but
excluding the date of payment thereof (unless payment is made after 12:00 noon,
local time at the place of receipt, in which event such date of payment shall be
included) at the Overdue Rate.
(g) Minimum Payment. Notwithstanding any other provision of this
---------------
Charter Party or any other Operative Document, (a) the amount of Base Hire
payable on each Base Hire Payment Date, shall be at least equal to the aggregate
amount of scheduled principal and accrued interest due and payable on the
Secured Notes Outstanding on such Base Hire Payment Date and (b) the amount of
Termination Value as of any date, together with any Base Hire payable hereunder
on such date, shall be at least equal to the aggregate amount of principal and
accrued interest which would be due and payable on the Secured Notes Outstanding
on such date.
3
<PAGE>
ARTICLE 4.
Description of the Vessel; Documentation
----------------------------------------
(a) Description of Vessel. The Vessel will be built by the Builder and
---------------------
at the Delivery Yard shown on Schedule 1 in accordance with the Construction
Contract which calls for delivery thereof on or prior to the scheduled delivery
date shown on Schedule 1. The Vessel will have a gross registered tonnage of
approximately 160,000 tons, a net registered tonnage of approximately 95,000
tons, a designed deadweight capacity of approximately 280,000 metric tons, and
otherwise will conform to the description set forth in Schedule 1.
(b) Documentation. As of the Delivery Date the Vessel shall be
-------------
registered under the laws of the Marshall Islands or under the laws of such
other country as the Owner and Charterer may agree which is not materially less
favorable to the holder of Secured Notes; and Charterer shall, throughout the
Charter Period maintain, at its cost, said documentation. Owner shall, at the
request of Charterer, immediately execute or file all documents necessary to
maintain such documentation and to effect any name change(s). Charterer may, at
any time, instruct Owner to change the name of the Vessel, it being understood
that all costs for changing the Vessel's name shall be payable by Charterer.
ARTICLE 5.
Owner's Warranties and Representations and Certain Charterer Undertakings
-------------------------------------------------------------------------
(a) Owner's Representations. Owner represents and warrants that as of
-----------------------
the Delivery Date (i) legal title in the Vessel will be held by Owner, (ii)
unless the Head Lease shall have been terminated, Owner shall be the lessee
under the Head Lease, which shall be in full force and effect, (iii) Owner's
rights to the Vessel shall be subject to no Owner's Liens, and (iv) the
description of the Vessel set forth herein will be true and accurate in all
material respects.
(b) Indenture. Charterer has acquainted itself with all terms,
---------
conditions and provisions of the Indenture. Charterer undertakes that during
the Charter Period it will comply with all such instructions or directions in
regard to the employment, insurances, repairs and maintenance of the Vessel set
forth in the Indenture or as may be directed from time to time during the
Charter Period by the Indenture Trustee in conformity with the Indenture.
(c) U.K. Documents. Charterer has acquainted itself with all terms,
--------------
conditions and provisions of the Head
4
<PAGE>
Lease and the other U.K. Documents. To the extent there are any obligations
imposed on Owner under the Head Lease other than obligations to pay rentals,
termination amounts, and related adjustments under Articles 7, 8, 18, 19, 21, 22
of the Head Lease and the Financial Schedule thereto that are not imposed on
Charterer hereunder, Charterer shall take such action as may be required to
permit the Lessor to perform, or shall itself perform, such obligations to the
extent necessary to keep the Head Lease in full force and effect. Nothing in
this Article 5(c) shall create a separate obligation of Charterer to perform any
of the covenants contained in the Head Lease except to the extent expressly
required in the preceding sentence.
ARTICLE 6.
Delivery Date
-------------
(a) Delivery. Owner shall deliver and demise the Vessel to Charterer,
---------
and Charterer shall accept the delivery and demise of the Vessel immediately
upon delivery of the Vessel by the Builder on the Delivery Date at the Delivery
Yard, such delivery and acceptance to be conclusively evidenced by Charterer's
execution of the Protocol of Delivery and Acceptance.
(b) Delivery Conditions. Satisfaction of the following in all
--------------------
material respects on or prior to the Delivery Date shall be a condition to the
occurrence of the Delivery Date:
(i) the Owner Trust shall have paid the Builder any additional amount
then due under the Construction Contract out of funds available to it for
the purpose as contemplated by the Operative Documents;
(ii) the Owner Trust (or the Charterer on behalf of the Owner Trust)
shall have accepted delivery of the Vessel from the Builder and in evidence
thereof shall have executed a Protocol of Delivery and Acceptance;
(iii) unless the U.K. Documents shall have theretofore been
terminated, the Owner Trust shall have delivered possession and use of the
Vessel to the U.K. Lessor under the Conditional Sale Agreement and shall
have accepted possession and use of the Vessel under the Head Lease;
(iv) the Charterer shall have accepted delivery of the Vessel under
the Charter and in evidence thereof shall have executed and delivered to
the Owner Trust a Protocol of Delivery and Acceptance;
5
<PAGE>
(v) the Charterer shall have caused title to the Vessel to be
registered in the name of the Owner Trust in the Marshall Islands (or other
jurisdiction designated by Charterer acceptable to the Owner Participant
and not materially less favorable to the holder of the Secured Note);
(vi) the Owner Trust shall have executed and delivered to the
Indenture Trustee the Ship Mortgage in the form attached to the Indenture
with such changes thereto as the Owner Trust and the Indenture Trustee may
agree and are not materially adverse to the holder of the Secured Note and
the Charterer shall have caused the Ship Mortgage to be filed and recorded
in the registry of the Marshall Islands or, if applicable, the appropriate
registry of such other jurisdiction in which the Vessel has been
registered;
(vii) the Charterer shall have caused to be accomplished all other
filings, recordings or other action that are reasonably feasible and
necessary or desirable to establish the Owner Trust's right, title and
interest in and to the Vessel Interest, and to perfect the mortgage lien on
and security interest in the Indenture Estate created by the Indenture and
the Ship Mortgage;
(viii) on or prior to the Delivery Date, insurance complying in all
respects with the provisions of Section 13.1 of the Charter shall be in
full force and effect and the Owner Participant, the Pass Through Trustee
and the Indenture Trustee shall have received a certificate of an
independent insurance broker or consultant, which broker or consultant may
be the Charterer's independent insurance broker or consultant, dated the
Delivery Date, setting forth the insurance obtained by or on behalf of the
Charterer in accordance with Section 13.1(a) of the Charter and as then in
effect, stating that such insurance is in full force and effect and that
all premiums then due thereon have been paid and an Officer's Certificate
of the Charterer, dated the Delivery Date, stating that such insurance
complies in all respects with the provisions of such Section 13.1(a); and
(ix) Charterer shall have caused to be delivered to the other parties
hereto favorable opinions of counsel as to the matters referred to in
clauses 2.12(v), (vi) and (vii).
Any of such conditions may be amended or waived by agreement of the Owner and
the Charterer subject, in the case of any such amendment or waiver that would be
adverse to the
6
<PAGE>
interests of the holders of Secured Notes in any material respect, to the prior
consent of the Indenture Trustee.
(c) Determination to Accept Delivery. Nothing in this Article 6
---------------------------------
shall affect in any way the rights of MOSAT in accordance with Article 5 of the
Joint Venture Agreement or in accordance with the Contract of Assignment and
Supervisory Agreement both dated June 28, 1996 related to the Construction
Contract, to determine when and whether to accept delivery of the Vessel.
(d) Notice of Delivery. Owner will provide Charterer with the
-------------------
earliest possible notification of the intended Delivery Date, and shall confirm
this information fifteen (15) days, seven (7) days and three (3) days prior to
the Delivery Date; provided that the failure to provide any such notice shall
not otherwise affect Charterer's obligations hereunder.
ARTICLE 7.
Quiet Enjoyment; Use and Trade of the Vessel
--------------------------------------------
(a) Quiet Enjoyment. The Owner warrants that, unless a Charter Event
---------------
of Default shall have occurred and be continuing and this Charter Party shall
have been declared to be in default pursuant to Article 22(a), the Charterer
shall at all times during the Charter Period be entitled to the quiet use and
enjoyment of the benefits of the Vessel Interest, including the right to
uninterrupted possession and use of the Vessel but subject to the rights of the
parties to the U.K. Financing Documents, and the Owner shall not save as
provided under the U.K. Financing Documents take or permit any Person lawfully
claiming by, through or under it to take any action which interferes with such
quiet use or enjoyment or such possession or use or the rights of any
subcharterer or assignee to such quiet use or enjoyment or such possession or
use under any subcharter or assignment permitted hereunder (including, without
limitation, the rights of MSCL under the Initial Subcharter).
(b) Use of Vessel. During the Charter Period, Charterer shall have
-------------
the full use of the Vessel and may employ it worldwide in any lawful trades
permitted by U.S. and Marshall Islands laws and regulations, subject to the
limits of then current Institute Warranties and Clauses, carrying such lawful
cargoes as Charterer, Permitted Subcharterer or their authorized agents may
direct.
7
<PAGE>
ARTICLE 8.
Condition Upon Delivery
-----------------------
(a) Disclaimer of Warranties. Neither Owner nor Owner Participant
------------------------
makes any representations or warranties whether written, oral or implied, with
respect to the Vessel Interest, the Vessel, or any part thereof, except as
expressly set forth in Section 7 or 9 of the Participation Agreement or in any
Officer's Certificate of the Owner Trust or the Owner Participant, in each case
delivered pursuant to the Participation Agreement. As between Owner and
Charterer, execution by Charterer of this Charter Party and the Protocol of
Delivery and Acceptance shall be conclusive proof of Charterer's acceptance of
the Vessel and the Vessel Interest for all purposes hereof and of the
commencement of the Charter Period with respect thereto and that the Vessel and
the Vessel Interest are satisfactory to the Charterer in all respects.
CHARTERER ACKNOWLEDGES THAT OWNER IS NOT A MANUFACTURER OR DEALER IN SHIPS OR
THE COMPONENTS THEREOF AND OWNER CHARTERS AND CHARTERER TAKES THE VESSEL AND THE
VESSEL INTEREST AND EACH PART THEREOF AS IS AND WHERE IS, AND NEITHER OWNER NOR
OWNER PARTICIPANT SHALL BE DEEMED TO HAVE MADE, AND OWNER HEREBY DISCLAIMS, ANY
REPRESENTATION OR WARRANTY OTHER THAN THOSE REFERRED TO IN THE SECOND PRECEDING
SENTENCE, EITHER EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING,
WITHOUT LIMITATION, THE DESIGN OR CONDITION OF THE VESSEL OR ANY PART THEREOF,
THE MERCHANTABILITY THEREOF OR THE FITNESS THEREOF FOR ANY PARTICULAR PURPOSE,
THE ABILITY OF THE VESSEL TO PERFORM ANY FUNCTION, TITLE TO THE VESSEL OR ANY
PART THEREOF, THE QUALITY OF THE MATERIALS OR WORKMANSHIP THEREOF OR CONFORMITY
THEREOF TO SPECIFICATIONS, OR THE PRESENCE OR ABSENCE OF ANY LATENT OR OTHER
DEFECTS, WHETHER OR NOT DISCOVERABLE. CHARTERER CONFIRMS THAT IT HAS SELECTED
THE VESSEL AND EACH PART THEREOF ON THE BASIS OF ITS OWN JUDGMENT AND EXPRESSLY
DISCLAIMS RELIANCE IN CONNECTION WITH SUCH SELECTION UPON ANY STATEMENTS,
REPRESENTATIONS OR WARRANTIES MADE BY OWNER OR OWNER PARTICIPANT. The
provisions of this Article have been negotiated and, except as expressly set
forth in Sections 7 and 9 of the Participation Agreement or in any Officer's
Certificate of the Owner Trust or Owner Participant, the foregoing provisions
are intended to be a complete exclusion and negation of any representation or
warranty by Owner or Owner Participant, express or implied, with respect to this
Charter Party, the Vessel, the Vessel Interest or any part thereof that may
arise pursuant to any law now or hereafter in effect or otherwise. Nothing
contained in this Article shall be construed as a waiver of any warranty or
other claim against any manufacturer, supplier, dealer, vendor, contractor,
subcontractor or installer, including the Builder.
8
<PAGE>
(b) Enforcement of Warranties. Owner hereby appoints and constitutes
-------------------------
MOSAT its agent and attorney-in-fact during the Charter Period to assert and
enforce, from time to time, in its sole discretion, in the name and for the
account of Owner and Charterer, as their interests may appear, but in all cases
at no cost or expense to Owner, subject to the provisions of the applicable
Supervisory Agreement, whatever claims and rights Owner may have as the owner of
the Vessel Interest against any manufacturer or vendor of the Vessel or any
Component of the Vessel; provided, however, that if this Charter Party shall
-------- -------
have been declared in default pursuant to Article 22, such power of attorney
shall, at the option of Owner, terminate and Owner may assert, at Charterer's
expense, such claims and rights.
ARTICLE 9.
Net Charter
-----------
This is a net bareboat charter and, notwithstanding any other
provision of this Charter Party, the obligation of Charterer to pay Hire
hereunder shall be absolute and unconditional and shall not be affected by any
circumstance of any character, including, without limitation: (a) counterclaim,
setoff, deduction, defense, abatement, suspension, deferment, diminution or
reduction; (b) any defect in the condition, design, quality or fitness for use
of the Vessel, or any part thereof or interest therein or the failure of the
Builder to construct or deliver the Vessel; (c) any damage to, removal,
abandonment, salvage, loss, scrapping or destruction of or any requisition or
taking of, the Vessel Interest, the Vessel or any part thereof or interest
therein; (d) any restriction, prevention, interruption or curtailment of or
interference with any use, operation or possession of the Vessel Interest, the
Vessel or any part thereof or interest therein, including, without limitation,
as a result of a termination of or default under the Head Lease, the Conditional
Sale Agreement or any other U.K. Document; (e) any defect in, or any Lien on,
title to the Vessel Interest, the Vessel or any part thereof or interest
therein; (f) any change, waiver, extension, indulgence or other action or
omission in respect of any obligation or liability of Charterer or Owner; (g)
any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to Charterer, the
Indenture Trustee, Owner, Owner Participant, any Loan Participant, any Holder or
any other Person, or any action taken with respect to this Charter Party by any
trustee or receiver of any Person mentioned above, or by any court; (h) any
claim that Charterer has or might have against any Person, including, without
limitation, the Indenture Trustee, any Loan Participant, Owner, Owner
Participant, Managing Trustee or any Holder (but this Article 9 shall not
constitute a waiver of
9
<PAGE>
any such claim); (i) any failure on the part of Owner, the Indenture Trustee,
Owner Participant, Managing Trustee or any Loan Participant to perform or comply
with any of the terms hereof or of any other agreement; (j) any invalidity or
unenforceability or disaffirmance of this Charter Party or any provision hereof
or any of the other Operative Documents or any provision of any thereof, whether
against or by Charterer or otherwise; or (k) any other occurrence whatsoever,
whether similar or dissimilar to the foregoing, whether or not Charterer shall
have notice or knowledge of any of the foregoing. Except as expressly provided
herein, Charterer, to the extent permitted by law, waives all rights now or
hereafter conferred by statute or otherwise to quit, terminate or surrender this
Charter Party, or to any diminution or reduction of Assigned Hire payable by
Charterer hereunder. All payments by Charterer of Base Hire and Termination
Value (or amounts payable by reference thereto) and other Assigned Hire made
hereunder as required hereby shall be final absent manifest error, and Charterer
shall not seek to recover any such payment or any part thereof for any reason
whatsoever absent manifest error. If this Charter Party shall be terminated in
whole or in part for any reason whatsoever Charterer shall, except as expressly
provided herein, nonetheless pay to Owner (or, in the case of Supplemental Hire,
to the Person entitled to such Supplemental Hire as specified herein or in the
appropriate Operative Document) an amount equal to each payment of Assigned Hire
at the time and in the manner that such payment would have become due and
payable under the terms of this Charter Party if it had not been terminated in
whole or in part. Nothing contained in this Article 9 shall be construed as (a)
a guaranty of (i) the value of the Vessel Interest or the Vessel upon the
expiration or termination of the Charter Period or (ii) the useful life of the
Vessel or (iii) payment of any of the Secured Notes or (b) a prohibition of
assertion of any claim against any manufacturer, supplier, dealer, vendor,
contractor, subcontractor or installer with respect to the Vessel or (c) a
waiver by Charterer of its right to assert and sue upon any claims it may have
against any other Person in one or more separate actions.
ARTICLE 10.
Manning
-------
Solely as between Owner and Charterer, the master, officers and crew
of the Vessel and all other persons at any time during the Charter Period on
board the Vessel shall be deemed to be engaged and employed exclusively by
Charterer or Permitted Subcharterers and shall be deemed to be and remain the
Charterer's or Permitted Subcharterers' servants, navigating and working the
Vessel solely on behalf of and at
10
<PAGE>
the risk of the Charterer or such Permitted Subcharterers. Owner shall not have
any interest in any hire, freight or salvage moneys earned by the Vessel or
received by Charterer or any Permitted Subcharterer.
ARTICLE 11.
Maintenance; Inspection
-----------------------
(a) Maintenance. During the Charter Period, Charterer shall at its
-----------
expense maintain and preserve the Vessel in such condition as will entitle it to
maintain the same classification and rating of American Bureau of Shipping
(hereinafter called the "Classification Society") as when delivered to Charterer
under this Charter Party. Charterer at its expense shall furnish to Owner a
copy of all reports and certificates issued by the Classification Society
evidencing the maintenance of such classification and safety standards, and
Charterer will provide Owner with an annual Confirmation of Class Certificate
during each year of the Charter Period. The application or implementation of
all requirements of the Classification Society, including changes or additions
thereto, shall be for Charterer's account, except as provided for in Article
12(d). At all times during the Charter Period, Charterer shall, at its own
expense, operate and maintain (or cause the Permitted Subcharterer to operate
and maintain) the Vessel in accordance with MOSAT's established maintenance,
rebuild and repair programs (and without discriminating against the Vessel based
on the leased status of the Vessel Interest or otherwise) so as to keep the
Vessel (i) in good working order and condition, ordinary wear and tear excepted
and (ii) in compliance in all material respects with all applicable Governmental
Rules and Governmental Actions and the requirements of the Classification
Society; provided, however, that the Charterer shall not be obligated to comply
-------- -------
with any Governmental Rule or Governmental Action (A) whose application or
validity is being contested diligently and in good faith by appropriate
proceedings, (B) compliance with which shall have been excused or exempted by a
nonconforming use permit, waiver, extension or forbearance exempting it from
such Governmental Rule or Governmental Action but only to the extent that the
Charterer's noncompliance is in accordance therewith, (C) if good faith efforts
and appropriate steps are being taken to comply (in which case such compliance
shall be effected prior to the date the Vessel is to be returned to Owner
hereunder), or (D) if failure of compliance (individually and in the aggregate
with all other instances of continuing noncompliance by Charterer) would result
in no material adverse consequences to Charterer, so long as, in the case of
each of clauses (A) through (D) of this proviso, neither such failure of
compliance nor such contest shall result in any material risk or danger of (1)
the sale, for-
11
<PAGE>
feiture or loss of any material part of or interest in the Vessel or the Vessel
Interest, the Trust Estate or the Indenture Estate or title thereto, (2) any
interference with the payment of Hire when due, or (3) the imposition of any
criminal liability on the part of, or any other material adverse effect on,
Owner, Owner Participant, the Trust Estate, the Indenture Estate or the Vessel
Interest. Charterer shall have the right to make such repairs to the Vessel as
it deems advisable in its sole discretion, subject to compliance with the
express provisions of this Charter Party. Owner shall have no obligation to
maintain, alter, repair, rebuild or replace the Vessel or any part thereof, and
Charterer expressly waives (to the extent legally permitted to do so) the right
to perform any such action at the expense of Owner pursuant to any law at any
time in effect. During the Charter Period, Charterer shall keep and maintain
(or cause to be kept and maintained) proper books and records relating to all
services rendered and all funds expended for operation, maintenance, repair and
replacement of the Vessel and the acquisition, construction or installation of
all Components, Replacement Components and Modifications, all in accordance with
customary practices in the oil tanker industry.
(b) Inspection. During the Charter Period, Owner shall have the right
----------
at any time, on reasonable notice, to inspect the Vessel in order to ascertain
whether the Vessel is being properly repaired and maintained. Charterer shall
also permit Owner to inspect the Vessel's logs whenever requested, on reasonable
notice, and shall promptly furnish Owner with information in such detail as may
reasonably be requested regarding any material casualties or oil pollution
incidents involving the Vessel. During the Charter Period, Indenture Trustee
shall have the same right to inspect the Vessel and the related books and
records, provided that, unless an Event of Default shall have occurred and be
continuing, such inspection shall be not more often than once per year.
(c) Certain Operating Costs. The provisions of Articles 11 to 13 as
------------------------
to the costs of maintaining, operating and modifying the Vessel and of Article
5(c) as to the costs of maintaining the Head Lease in force shall be without
prejudice to the calculation of Daily Operating Costs in accordance with the
terms of clause (vii) of Schedule 2B and without prejudice to the obligation of
the Owner to comply with the provisions of Articles 12 and 16 of the Joint
Venture Agreement.
ARTICLE 12.
Fuel, Lubricants, Water, Stores,
Equipment and Spare Replacement Parts
-------------------------------------
12
<PAGE>
(a) Fuel and Lubricants. On or as soon as possible following the
-------------------
Delivery Date, Charterer agrees to pay or cause to be paid to Builder in
accordance with the provisions of Article 4 of the Joint Venture Agreement, the
amount payable under Section 6(d)(iii) of the Shipbuilding Contract for such
fuel, unbroached lubricating oil, unused lubricating oil in storage tanks, and
unbroached consumable stores as may be aboard the Vessel as of the Delivery
Date. In the event the Vessel is redelivered to Owner or its designee at the
expiration of this Charter Party, on the date of such redelivery (hereinafter
the "Redelivery Date"), Owner or its designee shall accept and pay Charterer the
latter's actual costs for such fuel, unbroached lubricating oil, unused
lubricating oil in storage tanks and unbroached consumable stores as then remain
on board the Vessel.
(b) Use of Equipment and Appurtenances. Charterer shall have the use,
----------------------------------
without extra cost, of such equipment, outfit, appurtenances, as are on board
the Vessel on the Delivery Date. Such items or their substantial equivalent
shall be returned to Owner or its designee on the Redelivery Date in the same
good order and condition as when received, reasonable wear and tear excepted.
Charterer shall have the use, without extra cost, of spare and replacement parts
as are on board the Vessel on the Delivery Date. The same or their substantial
equivalent shall be returned to Owner or its designee on the Redelivery Date in
the same good condition as when received, reasonable wear and tear excepted.
(c) Spares and Replacement Parts. Subject to Article 13 below, during
----------------------------
the Charter Period, Charterer shall, at its expense and on its time, provide
such additional equipment, outfit, tools, spare and replacement parts, crockery
and linen as may be required for Charterer's operation of the Vessel. Spare and
replacement parts ordered for, but not delivered to, the Vessel by or for Owner
on or before the Delivery Date, or the same or the substantial equivalent of
such spare and replacement parts ordered by or for Charterer on or before the
Redelivery Date shall be taken over and paid for, respectively, by Charterer or
Owner, as the case may be, when delivered to the Vessel; and such equipment
shall remain the property of, respectively, the Charterer or Owner as the case
may be. The foregoing shall not apply to spare and replacement parts ordered
for the pumps, gear and equipment described in Article 13(b).
(d) Certificate of Master. For the purposes of Article 12(a), the
---------------------
certificate of the master of the Vessel shall in the absence of manifest error
be binding on Charterer and Owner as to the inventory fuel, unbroached
lubricating oil, unused lubricating oil in storage tanks and unbroached
consumable stores on board the Vessel at the Delivery Date and Redelivery Date;
and said inventories shall be used to
13
<PAGE>
determine the sums, if any, owing to Builder on behalf of Owner or Charterer
pursuant to Article 12(a) on the Delivery Date and Redelivery Date,
respectively, which sums shall be due and payable to Owner or Charterer, as the
case may be, in United States Dollars on presentation of the respective party's
invoice.
ARTICLE 13.
Vessel Modification
(a) Required Modifications. At all times during the Charter Period,
----------------------
Charterer shall make (or cause to be made) all Severable and Nonseverable
Modifications to the Vessel as may be required from time to time to meet the
requirements of clause (ii) of Article 11(a) or to maintain any insurance
coverage required by Article 16 (subject to the qualifications set forth in such
Article) unless Charterer shall have elected to terminate this Charter Party
pursuant to Article 18 or unless the Charterer shall have made the election
provided in Article 13(f). Charterer shall complete (or cause to be completed)
all such Modifications in a good and workmanlike manner, with reasonable
dispatch and in a manner (but only to the extent practicable in the case of
Modifications to the Vessel required pursuant to clause (ii) of Article 11(a) or
to maintain any insurance coverage required by Article 16) which does not
decrease except to a de minimis extent the Fair Market Sales Value of the Vessel
-- -------
or decrease the remaining useful life or utility of the Vessel or cause the
Vessel to become "limited use property" within the meaning of Revenue Procedure
76-30.
(b) Optional Modifications. Charterer may, at no expense to Owner,
----------------------
make (or cause or allow to be made) such other Severable and Nonseverable
Modifications to the Vessel not required by Article 11(a), including the
installation of pumps, gear and equipment in addition to that on board as of the
Delivery Date, as do not decrease the Fair Market Sales Value (except to a de
--
minimis extent) of the Vessel or decrease the remaining useful life or cause the
- -------
Vessel to become "limited use property" within the meaning of Revenue Procedure
76-30.
(c) Title to Modifications; Purchase Option for Severable
-----------------------------------------------------
Modifications. (i) Title to all Severable Modifications to the Vessel not
- -------------
required by any Governmental Rule or Governmental Action and not financed by
Owner through the issuance of Additional Notes shall vest in Charterer or any
Person designated by Charterer. Charterer may remove (or allow to be removed)
any such Severable Modification prior to or, subject to Article 13(c)(iii), upon
the expiration of the Charter Period.
14
<PAGE>
(ii) Title to (x) Severable Modifications to the Vessel required by
any Governmental Rule or Governmental Action, (y) Nonseverable Modifications to
the Vessel, and (z) Modifications financed through the issuance of Additional
Notes shall vest in Owner free and clear of all Liens except Permitted Liens.
(iii) Owner shall have the option, at the expiration of the Charter
Period, to purchase any Severable Modifications to the Vessel (x) which was not
required by any Governmental Rule or Governmental Action and which was not
financed by the issuance of Additional Notes, (y) title to which is in Charterer
or any Affiliate of Charterer on the last day of the Charter Period and (z)
which is necessary for the economic operation of the Vessel and which is not
commercially available for purchase by Owner, at a purchase price equal to the
Fair Market Sales Value of such Severable Modification as of such date; provided
--------
that any Severable Modification to the Vessel not removed by such date and as to
which Charterer has not provided Owner prior to such date written notice to the
effect that it is intended that such Severable Modification shall be removed
shall, to the extent of Charterer's (or its Affiliate's) interest therein, be
deemed transferred to Owner without further act or payment. On or prior to the
90th day prior to the expiration of the Charter Period, Charterer shall provide
Owner with notice of such Severable Modifications that it intends to remove.
Owner may exercise its option to purchase such Severable Modifications by
written notice to such effect delivered to Charterer at least 30 days prior to
expiration of the Charter Period. Owner and Charterer shall attempt to agree
upon the Fair Market Sales Value of such Severable Modification as of the
expiration of the Charter Period. If Owner and Charterer shall fail to agree
within 15 days after such written notice, such Fair Market Sales Value of any
such Severable Modification shall be determined by the Appraisal Procedure. If
Owner shall have exercised its option to purchase any Severable Modification to
the Vessel pursuant to this Article 13(c)(iii), Charterer, if requested by
Owner, shall furnish (or cause to be furnished) to Owner a bill of sale or
assignment, in form and substance reasonably satisfactory to Owner, conveying
the right, title and interest of Charterer (or its Affiliate) in and to such
Severable Modification, free and clear of all Liens (other than Permitted Liens
described in clauses (a), (b), (f) and (g) of the definition thereof), to Owner.
(d) Payment for Modifications and Replacement Components. (i)
----------------------------------------------------
Charterer shall be permitted at any time to finance the cost of any Severable
Modification to the Vessel not required by any Governmental Rule or Governmental
Action, directly or indirectly, including, without limitation, on a third party
ownership basis.
15
<PAGE>
(ii) Charterer may with the written consent of Owner Participant seek
financing for the cost of any Modification (including any alterations to the
Vessel pursuant to Article 15 of the Construction Contract) to the Vessel by the
issuance of Additional Notes pursuant to Section 2.08 of the Indenture.
Charterer shall first provide Owner and Owner Participant with written notice of
such Modification at least 30 days prior to the date of such proposed financing.
(e) Replacement of Components; Removal of Property. (i) In the
----------------------------------------------
ordinary course of maintenance, service, repair or testing during the Charter
Period, any Component or Replacement Component may be removed and replaced with
a Replacement Component and, upon such replacement, Charterer (or its designee)
shall be entitled to retain the amount of the net proceeds of any sale or
disposition of any such removed Component or Replacement Component. Any such
Replacement Components shall be free and clear of all Liens, except Permitted
Liens, and in as good operating condition as, and with a value, utility and
useful life at least equal to, the Components or Replacement Components
replaced, assuming such replaced Components or Replacement Components were in at
least the condition and repair required to be maintained hereunder. Immediately
upon any Replacement Component becoming incorporated in the Vessel without
further act, (x) title to such Replacement Component thereupon shall vest in
Owner and Owner's interest therein shall be subject to the Lien of the
Indenture, (y) such Replacement Component shall become subject to this Charter
Party and Owner's interest therein shall be deemed a part of the Vessel Interest
for all purposes hereof to the same extent as the Component or Replacement
Component it replaced and (z) title to such removed Component or Replacement
Component shall vest in Charterer or such Person as shall be designated by
Charterer, free and clear of all rights of Owner and the Indenture Trustee and
shall no longer be deemed a Component or a Replacement Component hereunder.
(ii) If, at any time during the Charter Period, Charterer shall
conclude that any property included in the Vessel is obsolete, redundant or
unnecessary and can be removed without diminishment of the value or utility of
the Vessel or reduction of the remaining useful life of the Vessel and without
causing the Vessel to become "limited use property" within the meaning of
Revenue Procedure 76-30, Charterer may remove (or allow to be removed) such
property and upon such removal, without further act, title to such property
shall vest in Charterer or in such Person as shall be designated by Charterer,
free of the Lien of the Indenture; provided that Charterer shall pay to Owner an
--------
amount equal to any net proceeds from any sale or other disposition of any items
of such property thereafter removed to the extent such net proceeds so allocated
after the Closing Date exceed, in
16
<PAGE>
the aggregate, Five hundred thousand dollars ($500,000) (provided that
--------
Charterer shall have no obligation to sell or otherwise dispose of (or cause to
be sold or disposed) such property).
(f) Exemption from Certain Modifications. Notwithstanding the
------------------------------------
provisions of Article 13 (a), if in the reasonable estimation of Charterer any
Severable or Nonseverable Modification that would otherwise be required
hereunder by reason of Governmental Rules exceeds $1,000,000 multiplied by the
Inflation Factor for the date of such estimate, Charterer may, by notice to the
Owner, elect not to make such Modification provided the failure to make such
Modification will not prevent economic operation of the Vessel in jurisdictions
and between ports not affected by such Governmental Rules, provided, further,
-------- -------
the failure to make such modification shall not result in any material risk or
danger of (1) the sale, forfeiture or loss of any material part of or interest
in the Vessel or the Vessel Interest, the Trust Estate or the Indenture Estate
or title thereto, (2) any interference with the payment of Hire when due or (3)
the imposition of any criminal liability on the part of, or any other material
adverse effect on, Owner, Owner Participant, the Trust Estate, the Indenture
Estate or the Vessel Interest.
(g) Sharing in Cost of Modifications. Charterer shall be entitled to
--------------------------------
recover from Owner Participant its share of the cost of any Modification
determined in accordance with Article 11 of the Joint Venture Agreement,
provided that no failure of Owner Participant to pay such reimbursement shall
constitute a default under this Charter Party, reduce the obligations or rights
of Charterer or Owner hereunder or affect the continued validity and
enforceability of this Charter Party in any manner.
ARTICLE 14.
Event of Loss
-------------
(a) Notice of Event of Loss. If there shall occur an Event of Loss,
-----------------------
Charterer shall promptly notify Owner and the Indenture Trustee of the
occurrence thereof and the Termination Value Determination Date on which the
Termination Value will be paid.
(b) Payment of Termination Value, Etc. If an Event of Loss shall
----------------------------------
occur, Charterer shall pay to Owner as compensation for such Event of Loss, on
the date which is the latest Termination Value Determination Date occurring not
later than 180 days after the date of such Event of Loss, the Termination Value
as of such Termination Value Determination
17
<PAGE>
Date. Charterer shall pay, simultaneously therewith, (i) all Bareboat Hire due
and owing prior to the date of such payment, (ii) all Supplemental Hire due and
owing on or prior to the date of such payment, (iii) if such Termination Value
Determination Date is a Base Hire Payment Date, all Base Hire payable on such
Base Hire Payment Date, and (iv) all Excess Hire or Additional Excess Hire
accrued through such Termination Value Determination Date, whereupon (A) this
Charter Party and the obligations of Charterer hereunder shall terminate as of
the date of such payment and (B) Owner shall hold all right, title and interest
of Owner in and to the Vessel Interest, in accordance with the provisions of the
Joint Venture Agreement, and shall apply all proceeds thereof to the
reimbursement of all amounts paid by Charterer in respect of Termination Value,
together with interest thereon at the Debt Rate from the date of payment, and
(C) Owner shall, at Charterer's expense, take such actions under Section 6.03 of
the Indenture as Charterer may reasonably request.
(c) Application of Other Payments upon the Occurrence of an Event of
----------------------------------------------------------------
Loss. Any amounts of condemnation or requisition proceeds received at any time
- ----
by Owner, the Indenture Trustee or Charterer as a result of the occurrence of an
Event of Loss shall be divided between Charterer and Owner as their respective
interests may appear and the amount paid to Owner shall reduce the amount that
Charterer is required to pay to Owner (but not below zero) pursuant to Article
14(b) or, if the amount payable pursuant to Article 14(b) has already been paid
by Charterer, Charterer shall be entitled to retain out of the amounts otherwise
payable to Owner pursuant to this Article 14(c), the amount that would have been
applied in reduction of the amount payable by Charterer under Article 14(b).
(d) Application of Payments Not Relating to an Event of Loss.
--------------------------------------------------------
Payments (except for payments under insurance policies described in Article 16)
received at any time by Owner, the Indenture Trustee or Charterer from any
Governmental Authority or other Person with respect to any destruction, damage,
loss, condemnation, confiscation, theft or seizure of or requisition of title to
or use of the Vessel Interest or any part thereof not constituting an Event of
Loss shall be paid over to Charterer or as it may direct and all such amounts
paid to Charterer shall be retained by Charterer.
(e) Application During Charter Event of Default. Notwithstanding the
-------------------------------------------
foregoing provisions of this Article 14, so long as any Charter Event of Default
shall have occurred and be continuing, any amount (except for payments under
insurance policies described in Article 16) that otherwise would be payable to
or for the account of, or that otherwise would be retained by, Charterer
pursuant to this Article 14 shall be paid to Owner (or to the Indenture Trustee
so long as
18
<PAGE>
this Charter Party is subject to the Lien of the Indenture) as security for the
obligations of Charterer under this Charter Party and, subject to the Indenture,
applied against Charterer's payment obligations hereunder when and as they
become due and payable and, at such time thereafter as no Charter Event of
Default shall be continuing, such amount shall, to the extent not theretofore
applied as provided herein or in the Indenture, be paid promptly to Charterer or
as it may direct.
ARTICLE 15.
Liens
-----
(a) Owner's Liens. In addition to the undertakings and warranties in
-------------
Articles 4 and 5 and in the Participation Agreement concerning absence of
Owner's Liens upon delivery of the Vessel to Charterer hereunder, Owner warrants
that throughout the Charter Period Owner will not cause the Vessel or the Vessel
Interest to incur any Owner's Liens whatsoever; and Owner will defend, indemnify
and hold Charterer harmless with respect to any such Owner's Liens and/or
charters, and will promptly take, at its own expense, such actions as may be
required to discharge any Owner's Lien prohibited by this Article 15(a).
(b) Charterer Liens. Charterer will not, directly or indirectly,
---------------
create, incur, assume or suffer to exist any Liens on or with respect to all or
any part of the Vessel or the Vessel Interest, title thereto or any interest
therein, other than Permitted Liens, and Charterer promptly, at its own expense,
will take such actions as may be necessary duly to discharge any such Lien not
excepted above. Neither Charterer, the Master, the Vessel nor any third party
has or shall have any right, power or authority to create, incur or permit to be
placed or imposed upon the Vessel, its freights, profits or hire, or the Vessel
Interest any Lien whatsoever other than Permitted Liens.
(c) Copy of Documents on Board Vessel. During the Charter Period,
---------------------------------
Charterer agrees to carry a true copy of this Charter Party, the Head Lease and
the Ship Mortgage with the Vessel's papers on board the Vessel and to exhibit
the same to any person having business with the Vessel which may give rise to a
maritime lien upon the Vessel or to the sale, conveyance, mortgage or lease
thereof and on demand to any representative of the Owner.
(d) Identification of Vessel. At all times during the Charter Period,
------------------------
Charterer shall cause to be placed and kept prominently displayed in the
Master's Cabin and the chart room of the Vessel a notice, framed under glass,
printed in
19
<PAGE>
plain type of such size that the paragraph of reading matter thereof shall cover
a space not less than six inches wide by nine inches high, reading as follows:
"NOTICE OF MORTGAGE AND CHARTER"
This vessel is owned by Deutsche Morgan Grenfell (Cayman) Limited, not in
its individual capacity but solely as Managing Trustee of [Name of Owner]
under the Declaration and Agreement of Trust dated as of November 22, 1996,
is under demise charter to [Name of Charterer] pursuant to a Bareboat
Charter Party, dated as of December 19, 1996, and is covered by a first
Ship Mortgage dated December 19, 1996 in favor of State Street Bank and
Trust Company, as Indenture Trustee. Said bareboat charter and mortgage
provide that no person shall create, incur or permit to be placed or
imposed upon this vessel any lien or encumbrance whatsoever except as
expressly permitted therein. A copy of said bareboat charter and mortgage
are carried on this vessel and must be exhibited on demand to any person
having business with this vessel."
Such notice shall be changed to reflect the identity of any successor Owner or
successor Indenture Trustee. Neither Owner nor Charterer shall take any action
or omit to take any action during the Charter Period that would (i) cause the
Vessel to cease to be documented as a vessel pursuant to the laws of the
Marshall Islands, (ii) cause the Ship Mortgage on the Vessel to cease to be a
first Ship Mortgage under the laws of the Marshall Islands, or (iii) cause the
Vessel to cease to be entitled to the same classification that the Vessel had
from the Classification Society on the Closing Date (subject to any reduction in
classification resulting from the age of the Vessel). Except as otherwise
directed by Owner, Charterer shall prevent the name of any Person other than
that of Charterer, MSCL, the Guarantor, or any Affiliate of any thereof from
being placed on any part of the Vessel as a designation that reasonably might be
interpreted as a claim of ownership or right to possession or use thereof.
(e) Lien on Cargoes. Owner will have a lien upon all cargoes and sub-
---------------
freights belonging to Charterer and any Bill of Lading freights for all claims
under this Charter Party.
20
<PAGE>
ARTICLE 16.
Insurance
---------
(a) Coverage. At all times during the Charter Period Charterer shall,
--------
at its own cost and expense, carry and maintain with respect to the Vessel (i)
insurance with respect to the Vessel against marine and hull risks in such
amounts and in such forms as is consistent with the practice of the Charterer's
Affiliates engaged in maritime transportation for other vessels owned or leased
by such Affiliates and (ii) public liability, including personal injury and
property damage and comprehensive general liability insurance against claims,
including, without limitation, environmental claims arising out of or connected
with the possession, use, leasing, operation or condition of the Vessel in such
amounts and in such forms as is consistent with the practice of the Charterer's
Affiliates engaged in maritime transportation for other vessels similar to the
Vessel owned or leased by such Affiliates. The insurance required under clause
(i) or (ii) of this Article 16(a) may be subject to deductible amounts and self-
insured retentions as is consistent with the practice of the Charterer's
Affiliates engaged in maritime transportation for other vessels similar to the
Vessel owned or leased by such Affiliates. Such insurance may be carried under
blanket policies maintained by or on behalf of the Charterer so long as such
policies otherwise comply with the provisions of this Article 16, and may be
carried by insurers that are Affiliates of the Charterer.
(b) Additional Insurance. Nothing in this Article 16 shall prohibit
--------------------
Owner or Charterer from placing any additional insurance that Owner or Charterer
desires, at the expense of the party desiring such additional insurance,
covering the Vessel, or the Vessel Interest, or the Owner or the Charterer with
respect to the Vessel or the Vessel Interest, provided however that any such
insurance shall not exceed the amount permitted by warranties or other
conditions contained in the insurances effected pursuant to the preceding
provisions of this Article 16 without the consent of the relevant insurers.
(c) Certain Terms of Insurance. Any insurance carried in accordance
--------------------------
with this Article 16, to the extent the following can be effected without in the
case of clauses d. and e. Charterer or any Permitted Subcharterer incurring any
material incremental costs in connection therewith, provide in the policy or by
special endorsement that:
a. Owner, the Owner Participant, the Indenture Trustee and the Pass
Through Trustee are included as additional insureds and that no such Person
shall have any obligation or liability for payment of premiums;
21
<PAGE>
b. the insurer thereunder waives all rights of subrogation against Owner,
the Indenture Trustee, the Owner Participant and the Pass Through Trustee,
and waives any right of set-off and counterclaim and any other right to
deduction whether by attachment or otherwise;
c. such insurance shall be primary without right of contribution of
any other insurance carried by or on behalf of Owner, the Indenture
Trustee, the Owner Participant and the Pass Through Trustee;
d. the respective interests of Owner, the Indenture Trustee, the Pass
Through Trustee, and the Owner Participant under all insurance policies
required hereunder shall not be invalidated by any action or inaction of
Charterer or any other Person (other than, with respect to any such
insured, such insured) and such insurance shall insure Owner, the Indenture
Trustee, the Pass Through Trustee, and the Owner Participant as their
interests may appear, regardless of any breach or violation of any
warranty, declaration or condition contained in such policies by Charterer
or any other Person (other than, with respect to any such insured, such
insured);
e. if the insurers cancel such insurance for any reason whatsoever
or any materially adverse change is made in policy terms or conditions, or
if such insurance is allowed to lapse for nonpayment of premium, such
cancellation, change or lapse shall not be effective as to Owner, the Owner
Participant, the Pass Through Trustee or the Indenture Trustee for thirty
days after receipt by Owner, the Owner Participant, the Pass Through
Trustee or the Indenture Trustee, respectively, of written notice from such
insurers of such cancellation, change or lapse; and
f. with respect to all liability insurance, in as much as the
policies are written to cover more than one insured, all terms, conditions,
insuring agreements and endorsements, with the exception of the limits of
liability shall operate in the same manner as if there were a separate
policy covering each insured.
(d) Notice of Accidents. Charterer shall promptly furnish the Owner
-------------------
and the Indenture Trustee with full information regarding any casualties or
other accidents or damages to the Vessel involving an amount in excess of Five
Million United States Dollars (U.S. $5,000,000).
(e) Application of Proceeds of Insurance. All insurance proceeds in
------------------------------------
respect of insurance maintained by
22
<PAGE>
Charterer hereunder with respect to the Vessel under Article 16(a)(i) and
payable under circumstances not constituting an Event of Loss shall be payable
to Charterer. All insurance proceeds (up to an amount not exceeding the
applicable Termination Value) in respect of insurance maintained by Charterer
hereunder with respect to the Vessel under Article 16(a)(i) and payable as the
result of an Event of Loss will be paid to the Owner (or, subject to the
provisions of the Head Lease, to the Indenture Trustee so long as this Charter
Party is subject to the Lien of the Indenture) and shall be applied in reduction
of Charterer's obligation to pay Termination Value and the other amounts payable
under Article 14 hereof in connection with such Event of Loss, if not already
paid by Charterer, or, if already paid by Charterer, shall be applied to
reimburse Charterer for its payment of such Termination Value and the other
amounts payable under Article 14 hereof, and the balance, if any, of such
payments remaining thereafter will be paid over to, or retained by, Charterer.
(f) Application During Charter Event of Default. Notwithstanding the
-------------------------------------------
foregoing provisions of this Article 16, so long as any Charter Event of Default
shall have occurred and be continuing, any amount referred to in this Article 16
that otherwise would be payable to or for the account of, or that otherwise
would be retained by, Charterer pursuant to this Article 16 shall be paid to
Owner (or, subject to the provisions of the Head Lease, to the Indenture Trustee
so long as this Charter Party is subject to the Lien of the Indenture) as
security for the obligations of Charterer under this Charter Party and, subject
to the Indenture, shall be applied against Charterer's payment obligations
hereunder when and as they become due and payable and, at such time thereafter
as no Charter Event of Default shall be continuing, such amount shall, to the
extent not theretofore applied as provided herein or in the Indenture, be paid
promptly to Charterer or as it may direct.
ARTICLE 17.
Requisition
-----------
Requisition (not involving title) of the Vessel for use by any
Government during the Charter Period not constituting an Event of Loss shall not
terminate this Charter Party and Charterer shall remain liable for the
performance of its obligations hereunder.
23
<PAGE>
ARTICLE 18.
Early Termination.
-----------------
(a) Decision. If Charterer shall determine in good faith that the
--------
continuation of the Charter Party is uneconomic by reason of the cost of
compliance with Governmental Rules or Governmental Actions , or by reason of
indemnity payments required to be made to any Person under the Charter Party or
the Participation Agreement, then Charterer may elect to terminate this Charter
Party with respect to the Vessel Interest in accordance with this Article 18 on
any Termination Value Determination Date.
(b) Notice of Termination. In order to exercise its right to
---------------------
terminate this Charter Party as provided in this Article 18, Charterer shall
provide Owner with (i) notice in writing at least 90 days but not more than 545
days prior to the Termination Value Determination Date as of which Charterer is
electing to terminate this Charter Party with respect to the Vessel Interest
(the "Termination Date"), such notice to specify (a) the Termination Date, and
----------------
(b) the Termination Value as of the Termination Date, and (ii) an Officer's
Certificate of Charterer as to the determination referred to in Article 18(a)
and stating that such termination will not violate the provisions of the Head
Lease. Unless Owner shall have elected to retain the Vessel Interest pursuant
to Article 18(e), Charterer may, at its option by written notice to Owner at any
time prior to the 30th day prior to the Termination Date, revoke any such notice
of termination, in which event this Charter Party shall not terminate and the
reasonable out-of-pocket expenses incurred by Owner, Owner Participant and the
Indenture Trustee in connection therewith shall be borne by Charterer; provided,
--------
however, that Charterer shall have no obligation to so reimburse Owner or Owner
- -------
Participant if such notice of revocation is given (or deemed to have been given
pursuant to the penultimate sentence of Article 18(e)) as a result of Owner's
failure to make the payments required to be made by it under Article 18(e)).
(c) Sale of Vessel Interest; Termination Payment. If Charterer shall
--------------------------------------------
have made a Termination Election, Charterer shall, subject to Article 18(f) as
agent for Owner, use reasonable efforts to solicit bids for the cash purchase of
the Vessel Interest on the Termination Date. Owner may also solicit bids for
the cash purchase of the Vessel Interest on the Termination Date independent of
Charterer. Charterer and Owner, as the case may be, shall certify to the other
in writing the amount and terms of each bid received by it and the name and
address of the Person submitting such bid. Subject to Article 18(e), in the
event that Charterer or Owner shall have obtained any such bids from any Person
other than Charterer or an Affiliate of Charterer, Owner shall sell the
24
<PAGE>
Vessel Interest on the Termination Date to such Person which shall have
submitted the highest bona fide cash bid. Upon payment to Owner of the purchase
---- ----
price in immediately available funds (and all other amounts due pursuant to the
next sentence) on the Termination Date, Owner shall sell to the highest bona
----
fide bidder all right, title and interest of Owner in and to the Vessel Interest
- ----
as is and where is, free and clear of Owner's Liens and Owner Participant's
Liens but otherwise without representation or warranty. This Charter Party and
the obligations of Charterer hereunder shall terminate concurrently with such
sale and such payment. As a condition to the sale of the Vessel Interest
pursuant to the second preceding sentence, Charterer shall pay on the
Termination Date to Owner, in immediately available funds, (i) an amount equal
to the excess, if any, of (A) the Termination Value as of the Termination Date
over (B) the proceeds of such sale net of the reasonable out-of-pocket expenses
incurred by Owner and the Owner Participant in connection with such sale, (ii)
all Bareboat Hire due and owing prior to the Termination Date (iii) if the
Termination Date is a Base Hire Payment Date, Base Hire payable on the
Termination Date, (iv) all Supplemental Hire due and owing on or prior to the
Termination Date, including any premium payable with respect to the redemption
of the Secured Notes and (v) all Excess Hire or Additional Excess Hire secured
through the Termination Date. On the Termination Date, Owner shall, at
Charterer's expense, execute and deliver to such Person a bill of sale or
assignment and such other instruments, documents and opinions as such Person or
Charterer may reasonably request to evidence the valid consummation of such
transfer and shall, at Charterer's expense, take such actions under Article 6.03
of the Indenture as Charterer may reasonably request.
(d) Continuation of Charter Party. In the event that (i) Charterer
------------------------------
shall have exercised its right to revoke its notice of termination pursuant to
Article 18(b) or (ii) the highest bona fide bidder under Article 18(c) shall
---- ----
have failed to purchase the Vessel Interest pursuant to Article 18(c), then,
unless Owner shall have retained the Vessel Interest pursuant to Article 18(e),
this Charter Party shall remain in full force and effect.
(e) Retention of Vessel Interest by Owner. If Charterer shall have
-------------------------------------
made a Termination Election with respect to the Vessel Interest, Owner may elect
to retain rather than sell the Vessel Interest pursuant to Article 18(c) by
giving irrevocable notice to Charterer and the Indenture Trustee no earlier than
45 nor later than 30 days prior to the Termination Date. If Owner so elects to
retain the Vessel Interest, on the Termination Date (a) Owner shall pay to the
Indenture Trustee an amount equal to the unpaid principal amount of, and accrued
and unpaid interest on, together with premium, if any, in respect of the Secured
Notes then
25
<PAGE>
Outstanding to the date of payment, and (b) Charterer shall pay to Owner or the
Person entitled thereto as provided in the Operative Documents (i) all Bareboat
Hire due and owing on or prior to the Termination Date, (ii) all Supplemental
Hire due and owing on or prior to the Termination Date, but Charterer shall not
be required to pay any amounts pursuant to Article 18(c), (iii) if the
Termination Date is a Base Hire Payment Date, all Base Hire payable on the
Termination Date and (iv) all Excess Hire or Additional Excess Hire accrued to
the Termination Date. Upon payment of the amounts due pursuant to clause (b) of
the preceding sentence, this Charter Party and the obligations of Charterer
hereunder shall terminate, and Owner shall, at Charterer's expense, execute and
deliver to Charterer on the Termination Date such instruments as Charterer shall
reasonably request to evidence the termination of this Charter Party. In the
event Owner fails to pay the amounts specified in clause (a) of the second
sentence of this Article 18(e) or Charterer fails to pay the amounts specified
in clause (b) of such sentence, Charterer shall be deemed to have revoked its
notice of termination pursuant to Article 18(b). If Owner shall fail to perform
any of its obligations pursuant to this Article 18(e) and as a result thereof
this Charter Party shall not be terminated on a proposed Termination Date, Owner
shall thereafter no longer be entitled to exercise its election to retain the
Vessel Interest upon any subsequent Termination Election pursuant to this
Article 18 and Charterer may at its option at any time thereafter submit a new
termination notice pursuant to Article 18(b).
(f) Termination of Head Lease. In the event that the Head Lease shall
-------------------------
have terminated in circumstances where the U.K. Lessor is obliged to conclude
the sale of the Vessel or its rights under the Conditional Sale Agreement, the
parties shall have no obligation under Article 18(c), and any proceeds from such
sale to which the Owner is entitled shall be applied against the obligations of
the Charterer in respect of the payment of Termination Value under Article 14 or
23(b), as applicable.
ARTICLE 19.
Redelivery
----------
(a) Redelivery. Not less than 30 days prior to the expiration of the
----------
Charter Period, Charterer shall, except as provided in Articles 18 and 19(c)
deliver to Owner notice in writing of the port anywhere in the world chosen in
Charterer's discretion (the "Redelivery Port") at which the Vessel will be
available for redelivery at the end of the Charter Period. At the request of
the Charterer, the Charter Period shall be extended for such time as may be
required for the Vessel to complete the voyage in progress at the date of
expiration of the Charter Period and to discharge its cargo,
26
<PAGE>
in which event the Charterer shall pay hire for such extension at the same rate
per day as in effect for the last Rate Period during the unextended Charter
Period. At the expiration of the Charter Period, except as provided in
Articles 18 and 19(c), Charterer shall, at its own expense, redeliver the Vessel
to Owner at the Redelivery Port and Charterer's obligation to pay additional
Bareboat Hire in respect of periods thereafter shall cease. Charterer shall, at
its own expense, and at Owner's request redocument the Vessel in the name of
Owner or in such other name as the Owner may direct under the laws of the
Marshall Islands if the Vessel is not then documented under the laws of the
Marshall Islands.
(b) Redelivery Condition. Charterer shall redeliver the Vessel in the
--------------------
same class (except for changes in class resulting from the age of the Vessel),
free of recommendations affecting class (with class and trading certificates and
continuous machinery and survey cycle up to date and unextended) and in the same
good order and condition as existed at the time of delivery to Charterer, normal
wear and tear not affecting class excepted. Charterer agrees that at the time
of such redelivery, the Vessel Interest shall be charter free and free and clear
of all Liens, (except any Permitted Liens, it being understood that Charterer
will promptly and diligently cause any such Permitted Liens other than Owner's
Liens and Owner Participant's Liens to be discharged), shall include all
Modifications made hereunder, except those removed by Charterer to the extent
permitted hereby.
(c) Charter Extension. Notwithstanding the provisions of clauses (a)
-----------------
and (b) of this Article 19, Charterer may by notice delivered to Owner not less
than 60 days prior to the expiration of the Charter Period require Owner to
enter into a charter of the Vessel with an Affiliate of Charterer commencing
immediately upon the expiration of the Charter Period for a period of one year,
renewable annually for up to six additional years, at a charter rate
equal to the Bareboat Market Rate determined in accordance with Schedule 2B and
otherwise upon terms and conditions set forth in the pro forma Bareboat Charter
set forth in a schedule to the Joint Venture Agreement, with such changes as the
Charterer and Owner may agree.
ARTICLE 20.
Assignment by Owners; Subcharters
---------------------------------
(a) General. Except as set forth in Article 20(b) or in the last
-------
sentence of Article 29(i), Owner may not assign, transfer or encumber this
Charter Party or all or any part of its interests and rights hereunder except in
27
<PAGE>
connection with the exercise of remedies by Owner following a declaration by
Owner pursuant to Article 22 that this Charter Party is in default.
(b) Security. In order to secure the indebtedness evidenced by the
--------
Secured Notes and certain other obligations as provided in the Indenture, the
Indenture provides, among other things, for the assignment by Owner to the
Indenture Trustee of its right, title and interest in, to and under this Charter
Party to the extent set forth in the Indenture, and for the creation of a
mortgage and security interest in the Vessel Interest in favor of the Indenture
Trustee. The Charterer hereby consents to such assignment and to the creation
of such mortgage and security interest pursuant to the terms and provisions of
the Indenture and to any assignment or other transfer which may occur pursuant
to the exercise of any remedy set forth in the Indenture. The Charterer (i)
acknowledges that such assignment, mortgage and security interest provide for
the exercise by the Indenture Trustee of some or all rights of Owner hereunder
to give any consents, approvals, waivers, notices or the like, to make any
demands or the like or to take any other discretionary action hereunder, but
only in accordance with the Indenture, (ii) acknowledges receipt of an executed
counterpart of the Indenture as in effect on the date hereof and (iii) agrees
that, to the extent provided in the Indenture, the Indenture Trustee shall have
all the rights of Owner hereunder and, in exercising any right or performing any
obligation of Owner hereunder, shall be subject to the terms hereof. The
Charterer will furnish to the Indenture Trustee counterparts of all notices,
certificates, opinions or other documents of any kind required to be delivered
hereunder by the Charterer to Owner. Notwithstanding any other provision
herein, so long as any Secured Notes remain Outstanding, Owner hereby directs,
and the Charterer agrees that, all Base Hire, Termination Value and other
amounts payable hereunder and specified pursuant to Section 4.01 of the
Indenture shall be paid directly to the Indenture Trustee at its account
specified in Schedule 1 to the Participation Agreement or to such other account
as may be specified in writing by the Indenture Trustee to the Charterer at
least 5 Business Days prior to the due date thereof. Upon the Charterer
receiving notice or obtaining actual knowledge that an Indenture Event of
Default shall have occurred and be continuing, Charterer shall make all payments
of Hire and Supplemental Hire (other than Excepted Payments) directly to the
Indenture Trustee at such account. The right of the Indenture Trustee to
receive all such payments shall not be subject to any defense, counterclaim,
setoff or other right or claim of any kind which the Charterer may be able to
assert against Owner or the Owner Participant in an action brought by any
thereof on this Charter Party or otherwise.
28
<PAGE>
(c) Assignments. Charterer may, without the consent of any party to
-----------
the Participation Agreement, at any time and from time to time, assign this
Charter Party and its interests and rights hereunder to any Person so long as,
(i) after giving effect to such assignment, the Guaranty shall remain in full
force and effect and shall constitute a full and unconditional guaranty of the
obligations of the assignee hereunder to the same extent as the guaranty of
Charterer's obligations hereunder prior to giving effect to any such assignment,
(ii) no Specified Charter Event of Default shall be continuing on the date any
such assignment to any Affiliate of Charterer is effected and no Charter Event
of Default shall be continuing on the date such assignment to any other Person
is effected, and (iii) such assignment shall not result in any Tax on Owner or
the Owner Participant that is not indemnified in accordance with the provisions
of Section 13 of the Participation Agreement or of an indemnity agreement
tendered by Charterer and reasonably satisfactory to the Owner and Owner
Participant or subject Owner or the Owner Participant to regulation by any
Governmental Authority to which Owner or the Owner Participant would not have
been subject but for such assignment, (iv) such assignment shall not result in
the violation of any Governmental Rules, including the U.S. Securities Act of
1933, as amended, or the Head Lease, (v) such assignee shall have validly
assumed the obligations of the Charterer under each of the Operative Documents
to which it is a party and under the Pass-through Trust Supplement, (vi) such
assignment will not result in an adverse tax consequence to the holders of the
Pass Though Certificates and (vii) Charterer shall have delivered to Owner an
opinion of counsel as to the satisfaction of the preceding clauses (i) through
(vi).
(d) Subcharters. Charterer may, without the consent of any party to
-----------
the Participation Agreement, at any time and from time to time, subcharter the
Vessel Interest to another Person (including, without limitation, to MSCL
pursuant to the Initial Subcharter); provided that (i) such subcharter shall be
--------
expressly subject and subordinate to this Charter Party (and such subcharter
shall contain a provision providing that any subcharter permitted thereunder
shall be so subject and subordinate) and shall in no event continue beyond the
Charter Period, (ii) Charterer shall remain primarily liable under this Charter
Party and all terms and conditions hereof and of the other Operative Documents
shall be complied with as though no such subcharter was in existence, (iii) the
Guaranty shall remain in full force and effect, (iv) such subcharter shall not
result in any Tax on Owner or the Owner Participant that is not indemnified in
accordance with the provisions of Section 13 of the Participation Agreement or
of an indemnity agreement tendered by Charterer and reasonably satisfactory to
the Owner and Owner Participant or subject Owner or the Owner Participant to
regulation by any
29
<PAGE>
Governmental Authority to which Owner or the Owner Participant would not have
been subject but for such subcharter, (v) no Specified Charter Event of Default
shall be continuing at the commencement of such subcharter, (vi) Charterer shall
give prompt written notice to Owner of any subcharter or sub-subcharter of the
Vessel Interest, and (vii) any such subcharter with a term in excess of six (6)
months shall be approved by Owner prior to its execution. Owner acknowledges
that on the Closing Date Charterer will subcharter the Vessel Interest to MSCL
pursuant to the Initial Subcharter. Any subcharterer under a subcharter
permitted hereunder may sub-subcharter the Vessel Interest to another Person
under a sub-subcharter that otherwise complies with the provisions hereunder
applicable to a subcharter hereunder.
ARTICLE 21.
Charter Event of Default
------------------------
The term "Charter Event of Default", wherever used herein, shall mean
------------------------
any of the following events (whatever the reason for such Charter Event of
Default and whether it shall be voluntary or involuntary, or come about or be
effected by operation of law, or be pursuant to or in compliance with any
judgment, decree or order of any court or any Governmental Rule or Governmental
Action):
(1) Charterer shall fail to make any payment of Assigned Hire within
10 Business Days after the date the same becomes due; or
(2) Charterer shall fail to pay Supplemental Hire or make any other
payment (other than (i) Assigned Hire or (ii) any Excess Hire or any
Additional Excess Hire or any Excepted Payment (unless Owner elects to have
such failure to make such payment of Excess Hire or any Additional Excess
Hire or such failure to make an Excepted Payment constitute a Charter Event
of Default)) required to be made by Charterer under this Charter Party or
under any other Operative Document for more than 15 Business Days after
Charterer has received written notice from Owner or the Indenture Trustee
stating that such payment is due; or
(3) Charterer shall fail in any material respect to perform or observe
any other material covenant or agreement to be performed or observed by it
under this Charter Party or any other Operative Document (other than any
covenant or agreement to pay Excess Hire or any Additional Excess Hire or
make an Excepted Payment) and such failure shall continue for a period of
thirty (30) days after receipt by Charterer of a written notice from
30
<PAGE>
Owner or the Indenture Trustee specifying such failure and requiring it to
be remedied; provided, however, that the continuation of any such failure
-------- -------
for such period of thirty (30) days or such longer period (not to exceed
365 days) after receipt of such notice shall not constitute a Charter Event
of Default so long as (i) such failure is curable or correctable and (ii)
Charterer is diligently pursuing the cure or correction of such failure; or
(4) the Guarantor shall fail in any material respect to perform or
observe any covenant or agreement to be performed or observed by it under
the Guaranty (other than any covenant or agreement in respect of
Charterer's obligations under the Operative Documents) and such failure
shall continue for a period of thirty (30) days after receipt by the
Guarantor of a written notice from Owner or the Indenture Trustee
specifying such failure and requiring it to be remedied; provided, however,
-------- -------
that the continuation of any such failure for such period of thirty (30)
days or such longer period (not to exceed 365 days) after receipt of such
notice shall not constitute a Charter Event of Default so long as (i) such
failure is curable or correctable and (ii) the Guarantor is diligently
pursuing the cure or correction of such failure; or
(5) any material representation or warranty made by Charterer in
Section 5 of the Participation Agreement or in any Officer's Certificate of
Charterer delivered pursuant to the Participation Agreement shall prove to
have been inaccurate in any material respect when made, unless such
inaccuracy shall not be material to the recipient at the time when the
notice referred to below shall have been received by Charterer or any
material adverse impact thereof shall have been cured or corrected within
thirty (30) days after receipt by Charterer of a written notice thereof
from Owner or the Indenture Trustee; provided, however, that the
-------- -------
continuation of any such inaccuracy for such period of thirty (30) days or
such longer period (not to exceed 365 days) after receipt of such notice
shall not constitute a Charter Event of Default so long as (i) any material
adverse impact of such inaccuracy is curable or correctable and (ii)
Charterer is diligently pursuing the cure or correction of such material
adverse impact; or
(6) any material representation or warranty made by the Guarantor in
the Guaranty or in any Officer's Certificate of the Guarantor delivered
pursuant to the Participation Agreement shall prove to have been inaccurate
in any material respect when made, unless such inaccuracy shall not be
material to the recipient at the time when the notice referred to below
shall have been
31
<PAGE>
received by the Guarantor or any material adverse impact thereof shall have
been cured or corrected within thirty (30) days after receipt by Charterer
of a written notice thereof from Owner or the Indenture Trustee; provided,
--------
however, that the continuation of any such inaccuracy for such period of
-------
thirty (30) days or such longer period (not to exceed 365 days) after
receipt of such notice shall not constitute a Charter Event of Default so
long as (i) any material adverse impact of such inaccuracy is curable or
correctable and (ii) the Guarantor is diligently pursuing the cure or
correction of such material adverse impact; or
(7) Charterer or the Guarantor shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, or shall consent to any such relief
or to the appointment or taking possession by any such official or agency
in an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall take any
corporate action to authorize any of the foregoing, or an involuntary case
or other proceeding shall be commenced against Charterer or the Guarantor
seeking liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official or agency of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of ninety
(90) days; or
(8) the Guaranty shall cease to be in full force and effect or to be
the valid, binding and enforceable agreement of the Guarantor; or
(9) Charterer shall fail to maintain (or cause to be maintained) the
insurance required by Article 16 and such failure shall continue for a
period of thirty (30) days following receipt of notice from the Indenture
Trustee or Owner specifying such failure and requiring such failure to be
remedied;
provided, however, that notwithstanding anything to the contrary contained in
- -------- -------
this Article 21, any failure of Charterer to perform or observe any covenant or
agreement specified in Article 21(3) shall not constitute a Charter Event of
Default if such failure is caused solely by reason of
32
<PAGE>
any event that constitutes an Event of Loss (or any event which with lapse of
time would constitute an Event of Loss) so long as Charterer is continuing to
comply with all the applicable terms of Article 14.
ARTICLE 22.
Remedies
--------
(a) In General. Upon the occurrence of any Charter Event of Default
----------
and so long as the same shall be continuing, Owner, at its option, may declare
this Charter Party to be in default by written notice to such effect given to
Charterer (provided that this Charter Party shall be deemed to have been
declared in default without the necessity of such written notice upon the
occurrence of any Event of Default described in paragraph (7) of Article 21),
and at any time thereafter, provided such Charter Event of Default shall be
continuing, Owner may, to the extent permitted by applicable Governmental Rules,
exercise one or more of the following remedies, as Owner in its sole discretion
shall elect:
(i) Owner, by notice to Charterer, may rescind or terminate this
Charter Party;
(ii) whether or not this Charter Party has been terminated, Owner
may, after the Delivery Date, demand that Charterer, and upon the written
demand of Owner, Charterer shall, surrender the Vessel promptly to Owner in
the manner and condition required by, and otherwise in accordance with the
provisions of, this Charter Party as if the Vessel were being returned at
the end of the Charter Period and Owner shall not be liable for the
reimbursement of Charterer for any costs and expenses incurred by Charterer
in connection therewith;
(iii) Owner may (whether or not Owner has taken possession thereof)
sell all or any portion of the Vessel Interest at public or private sale,
as Owner may determine, free and clear of any rights of Charterer with
respect thereto and without any duty to account to Charterer with respect
to such sale or any proceeds with respect thereto (except to the extent
required by paragraph (v) or (vi) of this Article 22(a) if Owner shall
elect to exercise its rights thereunder), in which event Charterer's
obligation to pay Bareboat Hire with respect to the interest sold accruing
after the date of such sale shall be terminated (except to the extent that
Bareboat Hire is to be included in computations under paragraph (v) or (vi)
of this Article 22(a) if Owner shall elect to exercise its rights
thereunder);
33
<PAGE>
(iv) Owner may hold or lease to others all or a portion of the Vessel
Interest, as Owner in its sole discretion may determine, free and clear of
any rights of Charterer with respect thereto and without any duty to
account to Charterer with respect to such action or inaction or for any
proceeds with respect to such action or inaction, except that Charterer's
obligation to pay Bareboat Hire after Charterer shall have been deprived of
use of all or a portion of the Vessel pursuant to this paragraph (iv) shall
be reduced by the net proceeds, if any, received by Owner from chartering
all or a portion of the Vessel Interest to any Person other than Charterer
for the same periods or any portion thereof;
(v) whether or not Owner shall have exercised or thereafter at any
time shall exercise its rights under paragraph (i), (ii), (iii) or (iv) of
this Article 22(a), Owner may demand, by written notice to Charterer
specifying a payment date which shall be a Termination Value Determination
Date not earlier than 10 Business Days after the date of such notice, that
Charterer pay to Owner, and Charterer shall pay to Owner, on such specified
payment date, as liquidated damages for loss of a bargain and not as a
penalty (in lieu of Bareboat Hire accruing on or after such specified
payment date), any unpaid Bareboat Hire due and owing on or prior to such
specified payment date (but excluding any Bareboat Hire payable in advance
on such payment date) and any unpaid Supplemental Hire (to whomsoever
payable) due and owing on or prior to the date of such payment plus
whichever of the following amounts Owner, in its sole discretion, shall
specify in such notice (together with interest on such amount at the
Overdue Rate from such specified payment date to the date of actual
payment):
a. an amount equal to the excess, if any, of Termination Value
for the Vessel Interest as of such specified payment date over the
Fair Market Sales Value of the Vessel Interest as of such specified
payment date (or the last day of the Charter Period, if earlier); or
b. an amount equal to Termination Value for the Vessel Interest
determined as of such specified payment date, and, in this event, upon
full payment by Charterer of all sums due hereunder, Owner shall be
obligated to transfer, without recourse, representation or warranty
(other than the absence of Owner Participant's Liens and Owner's
Liens) the Vessel Interest (including if the Vessel has been sold
pursuant to the Head Lease or otherwise, any proceeds or right to the
proceeds the Owner may have) to Charterer, as is and where is,
whereupon
34
<PAGE>
this Charter Party and Charterer's obligations hereunder shall
terminate. Owner shall, at Charterer's expense, execute and deliver
to Charterer a bill of sale or assignment and such other instruments,
documents and opinions as Charterer may reasonably request to evidence
the valid consummation of such transfer and shall, at Charterer's
expense, take such actions under Section 6.03 of the Indenture as
Charterer may reasonably request;
(vi) if Owner shall have sold all of the Vessel Interest pursuant to
paragraph (iii) of this Article 22(a) or other right of sale, Owner, in
lieu of exercising its rights under paragraph (v) of this Article 22(a),
may, if it shall so elect, demand that Charterer pay to Owner and Charterer
shall pay to Owner on the date of such sale, as liquidated damages for loss
of a bargain and not as a penalty (in lieu of Bareboat Hire accruing on or
after the next Base Hire Payment Date following the date of such sale), any
unpaid Bareboat Hire due and owing or accrued on or prior to such next Base
Hire Payment Date (but excluding any Base Hire payable in advance on such
Base Hire Payment Date) and any other Supplemental Hire due and owing on or
prior to such next Base Hire Payment Date plus the amount of any
deficiency between Termination Value for the Vessel Interest, computed as
of such next Base Hire Payment Date, and the proceeds of such sale,
together with interest at the Overdue Rate plus 3% on the amount of such
Hire, from the due date or dates thereof, and on the amount of such
deficiency from the date of such sale, until the date of actual payment; or
(vii) Subject to Article 22(d), Owner may exercise any other right or
remedy that may be available to it under applicable law or proceed by
appropriate court action to enforce the terms hereof or to recover damages
for the breach hereof.
(b) Continuing Obligations. No rescission or termination of this
----------------------
Charter Party, in whole or in part, or repossession of the Vessel Interest or
exercise of any remedy under Article 22(a) shall, except as specifically
provided herein, relieve Charterer of any of its liabilities and obligations
hereunder. Charterer shall be liable (i) for all reasonable legal fees and
other reasonable costs and expenses incurred by Owner, the Owner Participant,
each Loan Participant or the Indenture Trustee by reason of the occurrence of
any Charter Event of Default or the exercise of Owner's remedies with respect
thereto, including all costs and expenses reasonably incurred in placing the
Vessel in the condition required by Article 19 and (ii) except as otherwise
35
<PAGE>
provided herein, for any and all other accrued and unpaid Hire due hereunder
before, after or during the exercise of any of the foregoing remedies. At any
sale of the Vessel Interest or any part thereof pursuant to Article 22(a),
Owner, the Owner Participant, each Loan Participant, or the Indenture Trustee
may bid for and purchase such property.
(c) Remedies Cumulative. To the extent permitted by applicable law
-------------------
and except as provided herein, no remedy under Article 22(a) is intended to be
exclusive, but each shall be cumulative and in addition to any other remedy
provided under Article 22(a) or otherwise available to Owner at law or in
equity. No express or implied waiver by Owner of any Charter Party Default or
Charter Event of Default shall in any way be, or be construed to be, a waiver of
any future or subsequent Charter Party Default or Charter Event of Default. The
failure or delay of Owner in exercising any rights granted it hereunder upon the
occurrence of any of the contingencies set forth herein shall not constitute a
waiver of any such right upon the continuation or recurrence of any such
contingencies or similar contingencies and any single or partial exercise of any
particular right by Owner shall not exhaust the same or constitute a waiver of
any other right provided herein. To the extent permitted by applicable law,
Charterer hereby waives any rights now or hereafter conferred by statute or
otherwise which may enable it to cancel, quit or surrender this Charter Party,
except as otherwise provided herein, or which may require Owner to sell, lease
or otherwise use the Vessel Interest in mitigation of Owner's damages as set
forth in Article 22(a) or which may limit or modify any of Owner's rights and
remedies provided in Article 22(a).
(d) No Consequential Damages. Notwithstanding any other provision of
-------------------------
this Charter Party, the Charterer shall not be liable to Owner for any claim for
loss of profits, for any reduction in the amount of Excess Hire or Additional
Excess Hire payable in accordance with Article 3, or for any other consequential
damages by reason of any failure of the Charterer to comply with the provisions
of this Charter Party, including Articles 11, 12 and 13.
ARTICLE 23.
Special Termination
-------------------
(a) Special Termination Events. The occurrence of any of the
---------------------------
following will constitute a Special Termination Event: (i) the Delivery Date
shall not have occurred on or before the Final Delivery Date, (ii) the
Construction Contract shall have been terminated, cancelled or rescinded for any
reason prior to the Delivery Date, (iii) title to the Vessel shall be required
to be transferred to the U.K. Lessor or its designee in circumstances where
there has been no assumption
36
<PAGE>
of the obligations of Owner in accordance with Section 3.04 of the Indenture, or
(iv) termination of the Charter Period pursuant to Article 23(c).
(b) Termination. Forthwith upon the occurrence of a Special
------------
Termination Event, Charterer shall give notice of such event to Owner and
Indenture Trustee, and Charterer shall on the next Termination Value
Determination Date occurring not less than 25 days following the giving of such
notice pay to Owner (A) the Termination Value as of the Termination Value
Determination Date, (B) all Bareboat Hire due and owing prior to the date of
such payment, (C) all Supplemental Hire due and owing on or prior to the date of
such payment, which shall include the applicable Make-Whole Amount, if any,
payable upon the redemption of the Secured Notes under the Indenture, (D) if
such Termination Value Determination Date is a Base Hire Payment Date, all Base
Hire payable on such Base Hire Payment Date, and (E) all Excess Hire or
Additional Excess Hire accrued through such Termination Value Determination Date
whereupon Owner shall surrender to Charterer subject to the rights of the U.K.
Lessor, without representation or warranty except as to the absence of Owner's
Liens and Owner Participants' Liens, all of its right title and interest in the
Construction Contract and the Vessel Interest, whereupon this Charter Party
shall terminate, and Charterer shall have no further obligation thereunder. The
Interest so surrendered shall be held and disposed of in accordance with the
last paragraph of Article 5 of the Joint Venture Agreement.
(c) Termination upon Termination of Head Lease. Unless otherwise
-------------------------------------------
agreed by the U.K. Lessor with the consent of the Charterer, the Charter Period
shall automatically terminate on the date falling ten days after the termination
of the leasing of the Vessel under the Head Lease or, if later, the completion
of the then current voyage of the Vessel and the discharge of any cargo
therefor.
ARTICLE 24.
Vessel Plans and Drawings
-------------------------
Owner shall supply and deliver to Charterer a full description of the
Vessel and copies of all documents, plans and drawings required for the proper
operation and maintenance of the Vessel on or before the Delivery Date.
37
<PAGE>
ARTICLE 25.
Wreck Removal
-------------
In the event of the Vessel becoming a wreck or obstruction to
navigation, Charterer shall indemnify Owner against any sums whatsoever which
Owner shall become liable to pay and shall pay in consequence of the Vessel
becoming a wreck or obstruction to navigation.
ARTICLE 26.
General Average
---------------
General Average, if any, shall be adjusted according to the York-
Antwerp Rules 1974 or any subsequent modification thereof current at the time of
the casualty. Bareboat Hire will not contribute to General Average.
ARTICLE 27.
Salvage
-------
All salvage services rendered by the Vessel during the Charter Period
shall be for the benefit of Charterer. Charterer shall satisfy salvage claims
of the crew and any other expenses incurred in connection with such salvage
services.
ARTICLE 28.
Notices.
-------
All communications, notices and consents provided for in this Charter
Party shall be in writing and given in person or by courier or by means of
telecopy or other electronic transmission (with provision for assurance of
receipt in a manner typical with respect to communications of that type), or
mailed by registered or certified first class mail, return receipt requested,
addressed to the respective addresses set forth in Schedule 1 to the
Participation Agreement, or in each case at such other address as the Person
entitled thereto shall from time to time designate by notice in writing to
Charterer and Owner. All such communications, notices and consents given in
such manner shall be deemed given when received by (or when proffered to, if
receipt is refused) the party to whom it is addressed.
38
<PAGE>
ARTICLE 29.
Applicable Law; Miscellaneous
-----------------------------
(a) Governing Law; Disputes. This Charter Party shall be governed by
-----------------------
and construed in accordance with the laws of the State of New York. Subject to
Section 9.02 of the Indenture, Owner and Charterer will negotiate in good faith
to resolve any differences and disputes. Failing agreement, any and all
differences and disputes of whatsoever nature arising out of this Charter Party
shall be decided by the U.S. Federal Courts for the Southern District of New
York, to the jurisdiction of which courts Owner and Charterer hereby submit for
the purpose of adjudication of such disputes. The parties hereby authorize
service of process in connection with any court proceedings to be commenced
pursuant to this Article 29 to be made at the addresses referred to in Article
28.
(b) Complete Agreement. This Charter Party (including any document(s)
------------------
incorporated by reference herein and/or annexed hereto) is intended by the
parties to constitute the final expression of their agreement regarding the
bareboat chartering of the Vessel and is the complete and exclusive statement of
the terms under which the bareboat chartering is undertaken.
(c) Amendments. No amendment, supplement, supplement, modification,
----------
waiver or discharge of any term in this Charter Party shall be valid unless
agreed in writing and executed by both Owner and Charterer and, if required by
Section 9.02 of the Indenture, by the Indenture Trustee.
(d) Severability of Provisions. Any provision of this Charter Party
--------------------------
which may be determined by competent authority to be invalid or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without invalidating or rendering
unenforceable any remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto hereby waive any provision of law which
renders any provision hereof invalid or unenforceable in any respect.
(e) Headings. The division of this Charter Party into sections, the
--------
provision of a table of contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Charter Party.
(f) Counterpart Execution. This Charter Party may be executed in any
---------------------
number of counterparts and by each of the
39
<PAGE>
parties hereto on separate counterparts, all such counterparts together
constituting but one and the same instrument, with the counterpart containing
the receipt therefor executed by the Indenture Trustee on or immediately
following the signature page thereof being deemed the "original executed
counterpart" and all other counterparts being deemed duplicates. For purposes
of recordation, Owner and Charterer agree that certain information set forth on
Schedules 1 through 4 may be omitted from the counterpart presented for filing.
(g) Successors and Assigns. This Charter Party, including the terms
----------------------
and provisions hereof, shall be binding upon Owner and Charterer and their
respective successors and assigns and inure to the benefit of Owner and
Charterer and their respective successors and permitted assigns.
(h) Investment of Security Funds. Any amounts held by Owner as
----------------------------
security hereunder that would be payable to Charterer upon satisfaction of any
applicable conditions shall be invested and reinvested by Owner (or, so long as
this Charter Party shall be subject to the Lien of the Indenture, the Indenture
Trustee), from time to time in Permitted Investments at the written direction of
Charterer. Owner shall have no liability for any loss resulting from any
investment required to be made other than by reason of its willful misconduct or
gross negligence. Any net income or gain realized as a result of any such
investment or reinvestment shall be applied by Owner at the same time, on the
same conditions and in the same manner as the amounts in respect of which such
income or gain was realized are required to be distributed in accordance with
the provisions hereof, or of any other Operative Document pursuant to which such
amounts were required to be held. Charterer shall be responsible for any net
loss realized as a result of any such investment or reinvestment and shall
reimburse Owner (or the Indenture Trustee, as the case may be) therefor on
demand. Any Permitted Investment may be sold or otherwise reduced to cash
(without regard to maturity) by Owner whenever necessary to make any application
as required by the terms of this Charter Party or of any applicable Operative
Document.
(i) Immunities; Satisfaction of Undertakings; Successor Owner Trustee.
-----------------------------------------------------------------
Except as expressly provided herein, all and each of the representations,
warranties, undertakings and agreements herein made on the part of Owner are
made and intended not as personal representations, warranties, undertakings and
agreements by or for the purpose or with the intention of binding the Managing
Trustee personally but are made and intended for the purpose of binding only the
Trust Estate, and this Charter Party is executed and delivered by the Managing
Trustee solely in the exercise of the powers expressly conferred upon it as
trustee under the Trust
40
<PAGE>
Agreement; and no personal liability or responsibility is assumed hereunder by,
or at any time shall be enforceable against, the Managing Trustee or any
successor in trust on account of any representation, warranty, undertaking or
agreement hereunder of Owner, either expressed or implied, all such personal
liability, if any, being expressly waived by Charterer; provided, however, that
-------- -------
(a) Charterer or any Person claiming by, through or under it, making claim
hereunder, may subject to the terms and conditions hereof, look to the Trust
Estate for satisfaction of such liability or responsibility and (b) the Managing
Trustee or its successor in trust, as applicable, shall be personally liable for
its own gross negligence and willful misconduct and for the matters described in
clauses (i) through (v) of the last sentence of Section 7.2 of the Trust
Agreement. Subject to the terms and conditions hereof, each time a successor
Managing Trustee is appointed in accordance with the terms of the Trust
Agreement, such successor Managing Trustee shall, without further act, succeed
to all the rights, duties, immunities and obligations of its predecessor
Managing Trustee hereunder and under the other Operative Documents, and the
predecessor Managing Trustee shall be released from all further duties and
obligations hereunder and under the other Operative Documents, all without the
necessity of any consent or approval by Charterer and without in any way
altering the terms of this Charter Party or such other Operative Documents or
the obligations of Charterer hereunder or thereunder. Charterer, at its
expense, upon receipt of written notice of the appointment of a successor
Managing Trustee in accordance with the Operative Documents, promptly shall make
such modifications and changes to reflect such appointment as reasonably shall
be requested by such successor Managing Trustee in such insurance policies,
schedules, certificates and other instruments relating to the Vessel Interest or
this Charter Party or the other Operative Documents, all in form and substance
reasonably satisfactory to such successor Managing Trustee.
(j) Performance of Obligations to Indenture Trustee and Holders.
-----------------------------------------------------------
After this Charter Party shall no longer be subject to the Lien of the
Indenture, the provisions of this Charter Party which require or permit any
action by, any consent, approval or authorization of, the furnishing of any
document, paper or information to, or the performance of any other obligation
to, the Indenture Trustee or any Holder shall not be effective, and the Sections
hereof containing such provisions shall be read as though there were no such
references to any such requirements or permissions.
(k) True Lease. This Charter Party is intended as and shall
----------
constitute an agreement of lease or charter and nothing herein shall be
construed as conveying to Charterer any right, title or interest in or to the
Vessel Interest
41
<PAGE>
other than as charterer hereunder, it being expressly understood by the parties
hereto that the foregoing does not constitute a covenant, representation or
warranty of Charterer.
(l) Survival of Agreements. The representations, warranties,
----------------------
covenants and indemnities of the parties provided for in the Operative
Documents, and the parties' obligations under any and all thereof, shall survive
the execution and delivery of this Charter Party, the Investment by Owner
Participant and the purchase of the Secured Notes by the Loan Participant, any
disposition of any interest of the Owner Participant or Owner in the Vessel, and
shall be and continue in effect notwithstanding any investigation made by any of
such parties and the fact that compliance with any of the other terms,
provisions or conditions of any of the Operative Documents shall have been
waived.
42
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Charter Party to be
duly executed as of the 19th day of December, 1996.
SAMOCO 1234 TRUST
By: Deutsche Morgan Grenfell
(Cayman) Limited, not in its
individual capacity but solely
as Managing Trustee
By: /s/ James Baird
------------------------------------------
Name: James Baird
Title: Attorney in Fact
Mobil Marine Finance Company I Inc.
By: /s/ R.E. Sliwinski
------------------------------------------
Name: R.E. Sliwinski
Title: Authorized Signatory
43
<PAGE>
SCHEDULE 1
----------
Vessel: Hull No. 1234
Owner's Cost: $86,000,000
Builder: Sumitomo Heavy Industries, Ltd.
Delivery Yard: Shipyard of Ishikawajima-Harima Heavy Industries Co., Ltd. in
Kure, Japan
Scheduled Delivery Date: May 31, 1999
Final Delivery Date: July 2, 2000
Charter Expiration Date: July 2, 2017
U.K. Lease Term: June 30, 2025
U.K. Lessor: Midland Montagu Leasing (U.K.) Limited
<PAGE>
Exhibit 99.5
================================================================================
PARTICIPATION AGREEMENT
among
MOBIL MARINE FINANCE COMPANY I INC.,
Charterer
SAMOCO L.L.C.,
Owner Participant
SAMOCO RAVEN TRUST,
Owner Trust
DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED,
Managing Trustee
STATE STREET BANK AND TRUST COMPANY,
Pass Through Trustee and Loan Participant
and
STATE STREET BANK AND TRUST COMPANY,
Indenture Trustee
Dated as of December 19, 1996
================================================================================
Lease Financing of One Very Large Crude Carrier
RAVEN
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
RECITALS........................................... 1
SECTION 1. DEFINITIONS; INTERPRETATION........ 2
SECTION 2. COMMITMENTS OF PARTICIPANTS;
CLOSING; FUNDING; TRANSACTION
EXPENSES......................... 3
2.1 Commitment of Owner Participant....... 3
2.2 Commitments of Pass Through Trustee;
Secured Note
2.3 Expiration of Commitments.............. 3
2.4 Notice of Closing Dates................ 3
2.5 Time and Place of Closing.............. 4
2.6 Delivery of Funds...................... 4
2.7 Application of Funds by Owner Trust.... 4
2.8 Conclusion of U.K. Arrangements........ 5
2.9 Actions on Closing Date................ 5
2.10 Transaction Expenses.................. 5
2.11 Authorization to Owner Trust.......... 6
SECTION 3. CONDITIONS TO CLOSING BY THE
CHARTERER........................... 6
3.1 Operative Documents.................... 6
3.2 Legality, Etc.......................... 7
3.3 Event of Loss.......................... 7
3.4 Consents and Approvals................. 7
3.5 Representations and Warranties;
Certificates........................... 8
3.6 Opinions............................... 8
3.7 Litigation............................. 8
3.8 Sale of Pass Through Certificates...... 8
SECTION 4. CONDITIONS TO CLOSING BY THE PASS
THROUGH TRUSTEE..................... 9
4.1 Notice of Closing...................... 9
4.2 Operative Documents.................... 9
4.3 Legality, Etc.......................... 10
4.4 Event of Loss.......................... 10
4.5 Insurance.............................. 10
4.6 Opinions............................... 10
4.7 Taxes.................................. 11
4.8 Officer's Certificates................. 11
4.9 Resolutions, Etc....................... 13
4.10 Litigation............................ 14
4.11 Consents and Approvals................ 15
4.12 Title; Filings and Recordings......... 15
4.13 Sale of Pass Through Certificates..... 16
4.14 No Default Under Charter.............. 16
4.15 U.K. Closing.......................... 16
i
<PAGE>
4.16 Investment............................ 16
SECTION 5. CONDITIONS TO CLOSING BY OWNER
PARTICIPANT................ 16
5.1 Notice of Closing...................... 17
5.2 Operative Documents.................... 17
5.3 Legality, Etc.......................... 17
5.4 Event of Loss.......................... 18
5.5 Insurance.............................. 18
5.6 Opinions............................... 18
5.7 Taxes.................................. 19
5.8 Officer's Certificates................. 19
5.9 Resolutions, Etc....................... 20
5.10 Litigation............................ 22
5.11 Consents and Approvals................ 22
5.12 Title; Filings and Recordings......... 23
5.13 Sale of Pass Through Certificates..... 23
5.14 No Default Under Charters............. 23
5.15 Loans................................. 23
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE
CHARTERER........................... 23
6.1 Due Organization....................... 24
6.2 Authorization.......................... 24
6.3 Execution; Enforceability.............. 24
6.4 No Violation........................... 24
6.5 Consents and Approvals................. 25
6.6 Securities Act......................... 25
6.7 Title; Filings and Recordings.......... 26
6.8 Chief Place of Business................ 26
6.9 Litigation............................. 26
6.10 No Default............................ 26
6.11 Event of Loss......................... 26
6.12 Investment Company Act................ 26
6.13 No Brokers' Fees...................... 27
6.14 No Other Business or Liabilities...... 27
6.15 Payment of Taxes, etc................. 27
SECTION 7. REPRESENTATIONS AND WARRANTIES
OF THE OWNER PARTICIPANT............ 28
7.1 Due Organization....................... 28
7.2 Authorization; Execution; Enforceability 28
7.3 No Violation........................... 28
7.4 Owner Participant's Liens.............. 28
7.5 Acquisition for Investment............. 29
7.6 Securities Act......................... 29
7.7 ERISA.................................. 29
7.8 Investment Company Act................. 29
7.9 Litigation............................. 29
7.10 No Default............................ 30
7.11 Federal Reserve Regulations........... 30
ii
<PAGE>
7.12 No Brokers' Fees...................... 30
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE
PASS THROUGH TRUSTEE................ 30
8.1 Due Organization....................... 30
8.2 Authorization; Execution; Enforceability 31
8.3 No Violation........................... 31
8.4 Litigation............................. 32
8.5 Pass Through Trustee's Liens........... 32
8.6 Securities Act......................... 32
SECTION 9. REPRESENTATIONS AND WARRANTIES OF THE
TRUST COMPANY AND OWNER TRUST....... 32
9.1 Due Organization....................... 32
9.2 Authorization; Execution; Enforceability 33
9.3 No Violation........................... 33
9.4 No Default............................. 34
9.5 Litigation............................. 34
9.6 Owner's Liens.......................... 35
9.7 Securities Act......................... 35
9.8 Chief Place of Business................ 35
9.9 No Taxes Payable....................... 35
9.10 Title................................. 36
9.11 Federal Reserve Regulations........... 36
SECTION 10. REPRESENTATIONS AND WARRANTIES OF
INDENTURE TRUSTEE................... 36
10.1 Due Organization...................... 36
10.2 Authorization; Execution; Enforceability
10.3 No Violation.......................... 37
10.4 Litigation............................ 37
10.5 Indenture Trustee's Liens............. 38
SECTION 11. CHARTERER COVENANTS................. 38
11.1 Officer's Certificate................. 38
11.2 Maintenance of Corporate Existence, Etc.
11.3 Merger, Consolidation, Sale, Etc...... 38
11.4 Change in Name or Chief Place of Business
11.5 Further Assurances.................... 40
11.6 Inspection............................ 41
11.7 Documentation of Vessels.............. 41
11.8 No Petition........................... 42
SECTION 12. OTHER COVENANTS AND AGREEMENTS...... 42
12.1 Agreements of Owner Participant....... 42
12.2 Agreements of Trust Company and Owner
Trust................................. 44
12.3 Agreements of Pass Through Trustee.... 46
iii
<PAGE>
Page
12.4 Agreements of Indenture Trustee....... 47
12.5 Confidentiality....................... 48
12.6 Further Assurances.................... 49
SECTION 13. INDEMNIFICATION..................... 49
13.1 General Indemnification............... 49
13.2 General Tax Indemnification........... 54
13.3 Special Indemnity Relating to U.K.
Documents........................... 64
13.4 No Guarantee.......................... 64
SECTION 14. TRANSFER OF AN OWNER PARTICIPANT'S
INTEREST.................. 64
14.1 Restrictions on Transfer.............. 64
14.2 Permitted Transfers................... 64
14.3 Effect of Transfer.................... 66
SECTION 15. MISCELLANEOUS....................... 66
15.1 Survival.............................. 66
15.2 Binding Effect........................ 67
15.3 Notices............................... 67
15.4 Counterpart Execution................. 67
15.5 GOVERNING LAW......................... 67
15.6 Amendments, Supplements, Etc.......... 67
15.7 Headings; Table of Contents........... 68
15.8 Severability of Provisions............ 68
15.9 Entire Agreement...................... 68
15.10 Limitation of Liability of Managing
Trustee, Indenture Trustee and Pass
Through Trustee..................... 68
15.11 Jurisdiction; Service of Process..... 71
15.12 Instructions......................... 71
Appendix A Definitions
Schedules
Schedule 1 Addresses for Notices and Payments
Schedule 2 Equity Investment
Schedule 3 Certain Filings and Recordings
Exhibit A-1 Ralph N. Johanson, Jr., Esq., Managing Counsel, Corporate Finance
and Securities of the Guarantor
Exhibit A-2 Dewey Ballantine, special counsel to the Charterer and the
Guarantor
Exhibit A-3 Haight, Gardner, Poor & Havens, special Marshall Islands counsel
iv
<PAGE>
Exhibit A-4 Maples & Calder, special counsel to the Owner Participant
Exhibit A-5 Morris, James, Hitchins & Williams, special Delaware counsel to the
Resident Trustee and the Owner Trust
Exhibit A-6 Maples & Calder, special Cayman Islands counsel to the Trust
Company and the Owner Trust
Exhibit A-7 Bingham, Dana & Gould, counsel to the Indenture Trustee
Exhibit A-8 Bingham, Dana & Gould, counsel to the Pass Through Trustee
Exhibit A-9 Dewey Ballantine, special New York counsel to the Owner Participant
Exhibit A-10 Slaughter and May, special English counsel to the Owner
Participant
v
<PAGE>
PARTICIPATION AGREEMENT
-----------------------
THIS PARTICIPATION AGREEMENT, dated as of December 19, 1996, is among
MOBIL MARINE FINANCE COMPANY I INC. a Delaware corporation, SAMOCO L.L.C., a
Cayman Islands limited life company, STATE STREET BANK AND TRUST COMPANY, a
Massachusetts chartered trust company, not in its individual capacity except to
the extent expressly set forth herein but solely as Pass Through Trustee under
the Pass Through Trust Agreement, SAMOCO RAVEN TRUST, a trust created pursuant
to the Delaware Business Trust Act under the Trust Agreement, DEUTSCHE MORGAN
GRENFELL (CAYMAN) LIMITED, a Cayman Islands company, not in its individual
capacity except to the extent expressly set forth herein but solely as Managing
Trustee under the Trust Agreement, and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts chartered trust company, not in its individual capacity except to
the extent expressly set forth herein but solely as Indenture Trustee under the
Indenture.
RECITALS:
A. The Owner Trust desires to finance its acquisition of the Vessel
in part through the transactions contemplated by this Agreement.
B. Subject to the terms and conditions set forth herein, the Owner
Trust desires to charter the Vessel Interest to the Charterer pursuant to the
Charter and the Charterer desires to charter the Vessel Interest from the Owner
Trust pursuant to the Charter and to sub-charter the Vessel Interest to MSCL
pursuant to the Initial Subcharter.
C. Prior to the execution and delivery of this Agreement, the Owner
Participant, the Trust Company and the Resident Trustee have entered into the
Trust Agreement, pursuant to which the Trust Company has agreed, among other
things, to act as the Managing Trustee, and to hold the Trust Estate as Managing
Trustee for the benefit of the Owner Participant on the terms specified therein,
subject, however, to the Lien created under the Indenture.
D. Prior to the execution and delivery of this Agreement, the Owner
Trust and the U.K. Lessor have entered into the Conditional Sale Agreement,
pursuant to which the Owner Trust agreed, among other things, to sell to the
U.K. Lessor the Vessel and the U.K. Lessor has agreed to purchase the Vessel
from the Owner Trust on the terms specified therein;
E. Prior to the execution and delivery of this Agreement, the Owner
Trust and the U.K. Lessor have entered
<PAGE>
into a Head Lease with respect to the Vessel pursuant to which the U.K. Lessor
agreed, among other things, to lease the Vessel to the Owner Trust and the Owner
Trust has agreed to lease the Vessel from the U.K. Lessor on the terms specified
therein;
F. Concurrently with the execution and delivery of this Agreement,
the Owner Trust and the Charterer have entered into the Charter, pursuant to
which the Owner Trust agreed, among other things, to charter the Vessel Interest
to the Charterer and the Charterer has agreed to charter the Vessel Interest
from the Owner Trust on the terms specified therein.
G. Concurrently with the execution and delivery of this Agreement,
the Owner Trust and the Indenture Trustee have entered into the Indenture,
pursuant to which the Owner Trust, for the benefit of the Loan Participant, has
agreed, among other things, to mortgage and pledge unto the Indenture Trustee,
all of the Owner Trust's right, title and interest in and to the Indenture
Estate.
H. Concurrently with the execution and delivery of this Agreement,
the Pass Through Trustee, the Charterer and certain other Persons have entered
into the Pass Through Trust Agreement and the Pass Through Trust Supplement
pursuant to which, among other things, the Pass Through Certificates will be
issued.
I. Concurrently with the execution and delivery of this Agreement,
the Guarantor has entered into the Guarantee whereby the Guarantor will guaranty
the Charterer's obligations hereunder and under the other Operative Documents to
which the Charterer is a party.
J. The Owner Participant desires to participate in the payment of
Owner's Cost by providing its Investment to the Owner Trust. The Pass Through
Trustee, as a Loan Participant, desires to participate in the payment of Owner's
Cost by purchasing the Secured Note from the Owner Trust.
Accordingly, in consideration of the premises and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION.
---------------------------
For the purposes hereof, terms used herein and not otherwise defined
shall have the meanings assigned to them in Appendix A. References in this
Agreement to Sections, subsections, paragraphs, Schedules, Appendices and
Exhibits are to Sections, subsections and paragraphs in, and Schedules,
2
<PAGE>
Appendices and Exhibits to, this Agreement unless otherwise indicated.
SECTION 2. COMMITMENTS OF PARTICIPANTS;
CLOSING; FUNDING; TRANSACTION
EXPENSES.
--------------------------------------
2.1 Commitment of Owner Participant. Subject to the terms and
-------------------------------
conditions of this Agreement, the Owner Participant agrees to participate in the
payment of Owner's Cost by making an equity investment (the "Investment") in the
----------
beneficial ownership of the Vessel Interest on or before the Closing Date in the
amount shown on Schedule 2, and shall take and cause the Owner Trust to take, on
the Closing Date, the respective actions specified in Sections 2.8 and 2.9 to be
taken by the Owner Participant and the Owner Trust.
2.2 Commitments of Pass Through Trustee; Secured Note. Subject to
-------------------------------------------------
the terms and conditions of this Agreement, the Pass Through Trustee, as a Loan
Participant, agrees to participate on the Closing Date in the payment of the
Owner's Cost for the Vessel Interest by purchasing the Secured Note from the
Owner Trust at a purchase price equal to a percentage of the aggregate principal
amount payable at maturity of the Secured Note set forth in Schedule 2 and shall
take and cause the Indenture Trustee to take, on the Closing Date, the
respective actions specified in Section 2.9 to be taken by the Pass Through
Trustee, as a Loan Participant, and the Indenture Trustee. The Secured Note
shall be issued to the Pass Through Trustee, as a Loan Participant, under and in
accordance with the terms of the Indenture.
2.3 Expiration of Commitments. Unless the Owner Participant shall
-------------------------
agree to a later date, the Owner Participant's commitment to make the Investment
on the Closing Date pursuant to Section 2.1 shall expire if the Closing Date
shall not have occurred before midnight on the Cut-off Date. Unless the Pass
Through Trustee, as Loan Participant, shall agree to a later date, the Pass
Through Trustee's commitment, as a Loan Participant, to purchase the Secured
Note pursuant to Section 2.2 shall expire if the Closing Date or purchase shall
not have occurred before midnight on the Cut-off Date.
2.4 Notice of Closing Dates. On or before the second Business Day
-----------------------
prior to the Closing Date, the Charterer shall deliver to each Participant
written notice of the Closing Date, which notice shall contain (a) the date of
the Closing Date, (b) the amount of Owner's Cost with respect to the Vessel
Interest, (c) the amount of the Investment with respect to the Vessel Interest
and (d) the principal amount and purchase price of the Secured Note to be
purchased by the Pass Through Trustee, as a Loan Participant, on the Closing
3
<PAGE>
Date; provided, however, that the funding of the Owner Participant's Investment
-------- -------
or the funding of the purchase price for the Secured Note to be purchased by the
Pass Through Trustee, as a Loan Participant, on the Closing Date, as the case
may be, and the taking of the other actions contemplated to be taken hereby in
each case on the Closing Date shall be deemed a waiver of the requirement of
notice of the Closing Date set forth in this Section 2.4.
2.5 Time and Place of Closing. The closing on the Closing Date shall
-------------------------
commence at 8:00 a.m., New York City time, at the offices of Dewey Ballantine,
New York, New York, or at such other location in New York City as the Charterer
may specify in the notice of closing for the Closing Date delivered pursuant to
Section 2.4.
2.6 Delivery of Funds. Subject to the terms and conditions of this
-----------------
Agreement, on or before 9:15 a.m., New York City time, on the Closing Date, the
Owner Participant shall deliver to the Owner Trust by wire transfer of
immediately available funds an amount equal to any remaining Investment to be
made by the Owner Participant on the Closing Date and the Pass Through Trustee,
as a Loan Participant, shall deliver to the Owner Trust by wire transfer of
immediately available funds an amount equal to the purchase price of the Secured
Note to be purchased by the Pass Through Trustee, as a Loan Participant, on the
Closing Date, in each case to the account of the Owner Trust specified in
Schedule 1 or to such other account as shall be specified in writing by the
Owner Trust to the Owner Participant and the Pass Through Trustee, as a Loan
Participant, at least one Business Day prior to the Closing Date, which amounts
shall be held by the Owner Trust in trust, solely on behalf of the Participant
delivering or transferring such amount (and not as part of the Trust Estate),
until such Participant shall have instructed the Owner Trust that such amount is
available to be applied by the Owner Trust pursuant to Section 2.7. No
Participant shall be obligated to deliver such instruction if the conditions to
its participation set forth in Section 4 have not been met to its satisfaction
or waived by it.
2.7 Application of Funds by Owner Trust. On the Closing Date, upon
-----------------------------------
receipt by the Owner Trust of (a) the amount of the Investment to be made by the
Owner Participant on the Closing Date, (b) the purchase price of the Secured
Note to be paid by the Pass Through Trustee, as a Loan Participant, on the
Closing Date, and (c) the instruction pursuant to Section 2.6 that each of such
amounts is available to be applied by the Owner Trust pursuant to this Section
2.7, the Owner Trust shall cause such funds to be deposited in such amounts and
in such accounts as may be specified by the Owner Participant by written
instructions.
4
<PAGE>
2.8 Conclusion of U.K. Arrangements. (a) The parties recognize that
-------------------------------
it is the intention of the Owner Participant that, immediately following the
Closing Date, the U.K. Financing will be concluded by the satisfaction of the
conditions to the obligation of the U.K. Lessor to lease the Vessel to the Owner
Trust under the Head Lease. The Owner Participant agrees that the U.K.
Financing, if concluded, will be concluded on documents substantially in the
form of the documents delivered to the parties hereto with such changes as shall
not be materially adverse to any party hereto.
(b) The conclusion of the U.K. Financing is not a condition to the
issuance and sale of the Secured Note and the other transactions contemplated by
this Agreement and if for any reason the U.K. Financing is not concluded, the
parties agree, at the request and expense of the Owner Participant, to execute
such documents and take such actions as may be necessary or desirable to reflect
the abandonment of the U.K. Financing while maintaining in effect the
transactions contemplated by this Agreement; provided, however that the
-------- -------
execution of such documents and the taking of such actions shall not be adverse
to the interests of any such party in any material respect or increase its
liability under the Operative Documents.
2.9 Actions on Closing Date. Subject to satisfaction of the
-----------------------
applicable conditions precedent set forth in Sections 3, 4 and 5, on the Closing
Date:
(a) the Owner Participant shall make the Investment required to be
made by it on the Closing Date;
(b) the Pass Through Trustee, as a Loan Participant, shall pay to the
Owner Trust the purchase price for the Secured Note required to be
purchased by it on the Closing Date, the Owner Trust shall execute and
deliver to the Indenture Trustee the Secured Note, and the Indenture
Trustee shall authenticate and register the Secured Note and shall deliver
the Secured Note to the Pass Through Trustee, as a Loan Participant; and
(c) simultaneously therewith, the Owner Trust shall enter into the
Charter with the Owner Trust; and
(d) if the Delivery Date shall have occurred, the Charterer shall
sub-charter the Vessel Interest to MSCL pursuant to the Initial Subcharter.
2.10 Transaction Expenses. (a) If the transactions contemplated by
--------------------
this Agreement are consummated, the Owner Trust shall as soon as practicable
after the Closing Date pay, or reimburse the Charterer for, all related
Transaction Expenses accrued to the Closing Date and not
5
<PAGE>
theretofore paid by the Owner Trust, and the Owner Participant will provide to
the Owner Trust funds therefor and instructions with respect to the payment
thereof; provided that the underwriting commissions of Morgan Stanley & Co.
--------
Incorporated as underwriter of the Pass Through Certificates shall be paid by
the Owner Trust in immediately available funds on the Closing Date. If the
transactions contemplated by this Agreement to be consummated on the Closing
Date are not consummated for any reason whatsoever, the Charterer shall be
obligated to pay or reimburse the Owner Participant for all Transaction
Expenses.
(b) Each of the Transaction Expenses shall be evidenced by
appropriate bills or invoices. The Charterer shall have the right to receive
and review any substantiation relating to any Transaction Expenses or such
ongoing expenses as it may reasonably request.
2.11 Authorization to Owner Trust. The Owner Participant agrees that
----------------------------
on the Closing Date the receipt by the Owner Trust of an instruction from each
Participant pursuant to Section 2.6 making available the amount delivered by
such Participant to the Owner Trust shall constitute, without further act,
authorization and direction by such Participant to the Owner Trust to take the
actions contemplated to be taken by the Owner Trust on the Closing Date in the
Operative Documents, including, without limitation, the execution and delivery
of all other documents and instruments contemplated to be executed and delivered
by the Owner Trust on or prior to the Closing Date in the Operative Documents.
SECTION 3. CONDITIONS TO CLOSING BY THE
CHARTERER.
-------------------------------------------
The obligation of the Charterer pursuant to Section 2 to charter the
Vessel Interest from the Owner Trust and take the other actions contemplated by
Section 2 to be taken by it on the Closing Date are subject only to the
fulfillment on the Closing Date to the satisfaction of or waiver by the
Charterer of each of the following conditions precedent:
3.1 Operative Documents. Each of the following documents shall have
-------------------
been duly authorized, executed and delivered by the respective parties thereto
(other than the Charterer or the Guarantor):
(a) this Agreement;
(b) the Charter;
(c) the Bill of Sale;
(d) the Indenture;
6
<PAGE>
(e) the Secured Note;
(f) the Trust Agreement;
(g) the Ship Mortgage;
(h) the Pass Through Trust Agreement;
(i) the Pass Through Trust Supplement; and
(j) the Underwriting Agreement
and each such document shall be in full force and effect on the Closing
Date, and an executed counterpart of each of the same shall have been
delivered to the Charterer (except that the original Secured Note shall be
delivered only to the Pass Through Trustee).
3.2 Legality, Etc. No change shall have occurred after December 14,
-------------
1996 in Governmental Rules that, in the reasonable opinion of the Charterer,
would make it illegal or unduly burdensome for the Charterer, the Guarantor, the
Owner Trustee, the Indenture Trustee, the Pass Through Trustee or any
Participant to participate in any of the transactions contemplated by the
Operative Documents to be consummated on the Closing Date.
3.3 Event of Loss. No Event of Loss shall have occurred and no
-------------
action or proceeding shall have been commenced that could result in an Event of
Loss.
3.4 Consents and Approvals. On the Closing Date, all Governmental
----------------------
Actions required to be taken, given or obtained, as the case may be, by or from
any Governmental Authority which are required in connection with the
transactions contemplated by the Operative Documents and the Pass Through Trust
Agreement, or to authorize the execution, delivery and performance by the
Charterer and/or the Guarantor, as the case may be, of the Pass Through Trust
Agreement, the Underwriting Agreement, and the Operative Documents to which it
is a party, other than those constituting filings, recordings or other actions
of the types referred to in Section 4.12, shall have been duly taken, given or
obtained, as the case may be, shall be in full force and effect on the Closing
Date, shall not be subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and shall be adequate to authorize the
consummation of the transactions contemplated by the Pass Through Trust
Agreement, the Underwriting Agreement and the Operative Documents and the
performance by each of the Charterer and the Guarantor of its obligations under
such thereof to which it is a party, except such as may be required to be taken,
obtained, given, accomplished or renewed from time to time in connection
7
<PAGE>
with the delivery, maintenance or operation of the Vessel or which are otherwise
required in connection with the transactions contemplated by the Pass Through
Trust Agreement, the Underwriting Agreement and the Operative Documents which
have been applied for but which cannot be obtained, or which are not normally
applied for or taken, given or obtained, prior to the Closing Date, and which in
the normal course would be granted; provided that the failure to obtain such
--------
Governmental Actions, consents or approvals by the Closing Date would not
materially adversely affect the ability of (x) the Charterer to perform its
obligations under this Agreement, the Pass Through Trust Agreement or any other
Operative Document to which it is or will be a party or (y) the ability of the
Guarantor to perform its obligations under the Guarantee.
3.5 Representations and Warranties; Certificates. The
--------------------------------------------
representations and warranties of the Owner Participant, the Pass Through
Trustee, the Trust Company, the Owner Trust, and the Indenture Trustee contained
in Sections 7, 8, 9 and 10, respectively, shall be true and accurate on and as
of the Closing Date as though made on and as of such date, except to the extent
that such representations and warranties relate solely to an earlier date (in
which case the same shall be true and accurate as of such earlier date), and the
Charterer shall have received executed copies of each of the certificates
referred to in Section 4.8 and Section 4.9 (other than Sections 4.8(a) and (f)
and Sections 4.9(a) and (f)) required to be delivered on the Closing Date, which
certificates shall be dated the Closing Date.
3.6 Opinions. A signed original of each opinion referred to in
--------
Section 4.6 (other than Sections 4.6(a), 4.6(b) and 4.6(i)) shall have been
addressed to and delivered to the Charterer.
3.7 Litigation. There shall be no actions, suits, investigations or
----------
proceedings pending or, to the knowledge of the Charterer, threatened against
the Charterer, the Guarantor, the Owner Participant, the Pass Through Trustee,
the Owner Trust or the Indenture Trustee or the properties of any of such
Persons before any Governmental Authority to set aside, restrain, enjoin or
prevent the consummation of this Agreement or the transactions contemplated
hereby or by any of the other Operative Documents, the Pass Through Trust
Agreement or the Underwriting Agreement.
3.8 Sale of Pass Through Certificates. The Pass Through Certificates
---------------------------------
shall have been issued pursuant to the Pass Through Trust Agreement and sold
pursuant to the Underwriting Agreement and the Underwriters shall have
transferred to the Pass Through Trustee in immediately available funds an amount
equal to the purchase price for the
8
<PAGE>
Pass Through Certificates sold pursuant to the Pass Through Trust Agreement.
SECTION 4. CONDITIONS TO CLOSING BY THE PASS THROUGH
TRUSTEE
-----------------------------------------
The obligations of the Pass Through Trustee pursuant to Section 2 to
purchase the Secured Notes and to take the other actions contemplated by Section
2 to be taken by it on the Closing Date are subject only to the fulfillment on
the Closing Date to the satisfaction of (including, with respect to writings,
such writings being in form and substance reasonably satisfactory to the
addressee or the beneficiary thereof) or waiver by the Pass Through Trustee of
each of the following conditions precedent (other than in the case of the Pass
Through Trustee, Sections 4.8(e) and 4.9(e)), except that the obligations of
such Pass Through Trustee shall not be subject to such Pass Through Trustee's
own performance or, if the Pass Through Trustee shall have the power to cause
another Person to perform, the Pass Through Trustee's failure to cause such
performance:
4.1 Notice of Closing. The Participants shall have received the
-----------------
notice of closing for such Closing Date required to be delivered pursuant to
Section 2.4.
4.2 Operative Documents. Each of the following documents shall have
-------------------
been duly authorized, executed and delivered by the respective parties thereto:
(a) this Agreement;
(b) the Charter;
(c) the Bill of Sale;
(d) the Indenture;
(e) the Secured Note;
(f) the Trust Agreement;
(g) the Parent Guarantee; and
(h) the Ship Mortgage;
and each such document, the Lessor's Security Assignment, the Pass Through Trust
Agreement and the Pass Through Trust Supplement shall be in full force and
effect on the Closing Date, and no event or condition shall have occurred that,
with or without the lapse of time or the giving of notice, shall give any other
party thereto the right to terminate such document and an executed counterpart
(or a true, correct and
9
<PAGE>
complete copy) of each of the same shall have been delivered to the Pass Through
Trustee.
4.3 Legality, Etc. No change shall have occurred after December 12,
-------------
1996 in Governmental Rules that, in the reasonable opinion of the Pass Through
Trustee, would make it illegal or unduly burdensome for the Trust Company, the
Resident Trustee, the Owner Trust, the Charterer, the Guarantor, the Indenture
Trustee, the Pass Through Trustee in its individual capacity or any Participant
to participate in any of the transactions contemplated by the Operative
Documents to be consummated on the Closing Date.
4.4 Event of Loss. No Event of Loss shall have occurred and no
-------------
action or proceeding shall have been commenced that could result in an Event of
Loss.
4.5 Insurance. If the Delivery Date has occurred, insurance
---------
complying in all respects with the provisions of Section 13.1 of the Charter
shall be in full force and effect and the Owner Participant, the Pass Through
Trustee and the Indenture Trustee shall have received a certificate of an
independent insurance broker or consultant, which broker or consultant may be
the Charterer's independent insurance broker or consultant, dated the Closing
Date, setting forth the insurance obtained by or on behalf of the Charterer in
accordance with Section 13.1(a) of the Charter and as then in effect, stating
that such insurance is in full force and effect and that all premiums then due
thereon have been paid and an Officer's Certificate of the Charterer, dated the
Closing Date, stating that such insurance complies in all respects with the
provisions of such Section 13.1(a).
4.6 Opinions. Opinions dated the Closing Date of the following
--------
counsel, each such opinion substantially in the form of the indicated Exhibit
hereto (with such changes to such form as contemplated by such Exhibit) and
addressed as provided in such Exhibit (or, in lieu of including the Underwriter
as an addressee, such counsel may deliver a reliance letter to the Underwriter),
shall have been executed and delivered by such counsel:
(a) Ralph N. Johanson, Jr., Esq., Managing Counsel, Corporate Finance
and Securities of the Guarantor, substantially in the form of Exhibit A-1;
(b) Dewey Ballantine, special counsel to the Charterer and the
Guarantor, substantially in the form of Exhibit A-2;
(c) Haight, Gardner, Poor & Havens, special Marshall Islands counsel,
substantially in the form of Exhibit A-3;
10
<PAGE>
(d) Maples & Calder, special counsel to the Owner Participant,
substantially in the form of Exhibit A-4;
(e) Morris, James, Hitchins & Williams, special Delaware counsel to
the Resident Trustee and the Owner Trust, substantially in the form of
Exhibit A-5;
(f) Maples & Calder, special Cayman Islands counsel to the Trust
Company and the Owner Trust, substantially in the form of Exhibit A-6;
(g) Bingham, Dana & Gould, counsel to the Indenture Trustee,
substantially in the form of Exhibit A-7;
(h) Bingham, Dana & Gould, counsel to the Pass Through Trustee,
substantially in the form of Exhibit A-8;
(i) Dewey Ballantine, special New York counsel to the Owner
Participant, substantially in the form of Exhibit A-9; and
(j) Slaughter and May, special English counsel to the Owner
Participant, substantially in the form of Exhibit A-10.
4.7 Taxes. All Taxes, fees and other charges, if any, payable on or
-----
prior to the Closing Date in connection with the execution, delivery,
recordation and filing of all documents and instruments referred to in Section
4.12 below, this Agreement or any other Operative Document, or in connection
with the acquisition by the Owner Trustee on the Closing Date of the Vessel
Interest, the issuance and sale of the Secured Note and the Pass Through
Certificates and the subjecting of the Vessel Interest to the Lien of the
Indenture, shall have been duly paid in full by the Charterer.
4.8 Officer's Certificates. On the Closing Date, the following
----------------------
statements shall be true and the Pass Through Trustee and the Indenture Trustee
shall have received:
(a) an Officer's Certificate of the Charterer, dated the Closing
Date, stating that (A) the representations and warranties of the Charterer
contained in Section 6 are true and accurate on and as of the Closing Date
as though made on and as of such date except to the extent that such
representations and warranties specifically relate solely to an earlier
date (in which case such representations and warranties shall have been
true and accurate on and as of such earlier date) and (B) each Operative
Document to which it is a party and the Pass Through Trust Agreement remain
in full force and effect with respect to it;
11
<PAGE>
(b) an Officer's Certificate of the Owner Participant, dated the
Closing Date, stating that (i) the representations and warranties of the
Owner Participant contained in Section 7 are true and accurate on and as of
the Closing Date as though made on and as of such date except to the extent
that such representations and warranties specifically relate solely to an
earlier date (in which case such representations and warranties shall have
been true and accurate on and as of such earlier date); and (ii) each
Operative Document to which it is a party remains in full force and effect
with respect to it;
(c) an Officer's Certificate of each of the Trust Company and the
Managing Trustee, dated the Closing Date, stating that (i) the
representations and warranties of the Trust Company and the Managing
Trustee contained in Section 9 are true and accurate on and as of the
Closing Date as though made on and as of such date except to the extent
that such representations and warranties specifically relate solely to an
earlier date (in which case such representations and warranties shall have
been true and accurate on and as of such earlier date); and (ii) each
Operative Document to which it is a party remains in full force and effect
with respect to it;
(d) an Officer's Certificate of the Indenture Trustee, dated the
Closing Date, stating that (i) the representations and warranties of the
Indenture Trustee contained in Section 10 are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which case such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) each
Operative Document to which it is a party remains in full force and effect
with respect to it;
(e) an Officer's Certificate of the Pass Through Trustee, dated the
Closing Date, stating that (i) the representations and warranties of the
Pass Through Trustee contained in Section 8 are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which case such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) each
of the Participation Agreement and the Pass Through Trust Agreement remain
in full force and effect with respect to it; and
12
<PAGE>
(f) an Officer's Certificate of the Guarantor, dated the Closing Date,
stating that (i) the representations and warranties of the Guarantor
contained in Section 1.1 of the Guarantee are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which are such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) each
of the Guarantee and the Pass Through Trust Agreement remains in full force
and effect with respect to it.
4.9 Resolutions, Etc. The Loan Participant and the Indenture Trustee
-----------------
shall have received the following, in each case in form and substance reasonably
satisfactory to such Person:
(a) a Secretary's or an Assistant Secretary's certificate of the
Charterer, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Charterer of each Operative Document to
which it is a party, and the Pass Through Trust Agreement and the
transactions contemplated thereby, certified to be in full force and effect
without modification as of the Closing Date, (ii) its charter documents,
(iii) its by-laws, and (iv) the incumbency and signature of persons
authorized to execute and deliver such documents on behalf of the
Charterer;
(b) a Secretary's or an Assistant Secretary's certificate of the Owner
Participant, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Owner Participant of each Operative
Document to which it is a party, and the transactions contemplated thereby,
certified to be in full force and effect without modification as of the
Closing Date, (ii) its charter documents, (iii) its by-laws, and (iv) the
incumbency and signature of persons authorized to execute and deliver such
documents on behalf of the Owner Participant;
(c) a Secretary's or an Assistant Secretary's certificate of the Trust
Company, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Trust Company of each Operative Document to
which it is a party, and the transactions contemplated thereby, certified
to be in full force and effect without modification as of the Closing Date,
(ii) its charter documents, (iii) its by-
13
<PAGE>
laws, and (iv) the incumbency and signature of persons authorized to
execute and deliver such documents on behalf of the Trust Company;
(d) a Secretary's or an Assistant Secretary's certificate of the
Indenture Trustee, dated the Closing Date, attaching and certifying as to
(i) resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Indenture Trustee of each Operative
Document to which it is a party, and the transactions contemplated thereby,
certified to be in full force and effect without modification as of the
Closing Date, (ii) its charter documents, (iii) its by-laws, and (iv) the
incumbency and signature of persons authorized to execute and deliver such
documents on behalf of the Indenture Trustee;
(e) a Secretary's or an Assistant Secretary's certificate of the Pass
Through Trustee, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors or an appropriate committee thereof
duly authorizing the execution, delivery and performance by the Pass
Through Trustee of the Pass Through Trust Agreement, the Pass Through Trust
Supplement and the Participation Agreement, and the transactions
contemplated thereby, certified to be in full force and effect without
modification as of the Closing Date, (ii) its charter documents, (iii) its
by-laws, and (iv) the incumbency and signature of persons authorized to
execute and deliver such documents on behalf of the Pass Through Trustee;
and
(f) a Secretary's or an Assistant Secretary's certificate of the
Guarantor, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Guarantor of the Guarantee and its
obligations thereunder, certified to be in full force and effect without
modification as of the Closing Date, (ii) its charter documents, (iii) its
by-laws and (iv) the incumbency and signature of persons authorized to
execute and deliver the Guarantee on behalf of the Guarantor.
4.10 Litigation. There shall be no actions, suits, investigations or
----------
proceedings pending or, to the knowledge of the Owner Participant, the Owner
Trust, the Indenture Trustee, the Charterer, or the Guarantor threatened against
any of such Persons or the properties of any of such Persons before any
Governmental Authority to set aside, restrain, enjoin or prevent the
consummation of this Agreement or the transactions contemplated hereby or by any
of the other Operative
14
<PAGE>
Documents, the Pass Through Trust Agreement, the Pass Through Trust Supplement
or the Underwriting Agreement.
4.11 Consents and Approvals. On the Closing Date, all Governmental
----------------------
Actions which are required to have been taken, given, obtained, filed or
recorded, as the case may be, on or prior to the Closing Date by, from or with
any Governmental Authority, and all other consents, filings or approvals which
are required to have been taken, given, obtained, filed or recorded, as the case
may be, on or prior to the Closing Date by, from or with any other Person, in
connection with the transactions contemplated by the Operative Documents and the
Pass Through Trust Agreement, or to authorize the execution, delivery and
performance by the Charterer, the Guarantor, the Owner Participant, the Owner
Trustee, the Indenture Trustee or the Pass Through Trustee of the Pass Through
Trust Agreement and each of the Operative Documents to which it is a party, or
the legality, validity, binding effect or enforceability thereof as against the
Charterer or the Guarantor, other than those constituting filings, recordings or
other actions of the type referred to in Section 4.12, shall have been duly
taken, given or obtained, as the case may be, shall be in full force and effect
on the Closing Date, shall not be subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and shall be adequate to authorize the
consummation of the transactions contemplated by the Pass Through Trust
Agreement, the Underwriting Agreement and the Operative Documents and the
performance by the Charterer and the Guarantor of its obligations under such
thereof to which it is a party, except such as may be required to be taken,
obtained, given, accomplished or renewed from time to time in connection with
the maintenance or operation of the Vessel or which is otherwise required in
connection with the transactions contemplated by the Pass Through Trust
Agreement, the Underwriting Agreement and the Operative Documents which have
been applied for but which cannot be obtained, or which are not normally applied
for or taken, given or obtained, prior to the Closing Date, and which in the
normal course would be granted; provided that the failure to obtain such
--------
Governmental Actions, consents or approvals by the Closing Date would not
materially adversely affect the ability of (x) the Charterer to perform its
obligations under this Agreement, the Pass Through Trust Agreement or any other
Operative Document to which it is or will be a party or (y) the Guarantor to
perform its obligations under the Guarantee.
4.12 Title; Filings and Recordings. On or prior to the Closing Date,
-----------------------------
(a) title to the Vessel shall have been duly and effectively vested in the Owner
Trust pursuant to the Bill of Sale, free and clear of all Liens other than
Permitted Liens, all filings and recordings or other actions necessary or
advisable to establish the Owner Trust's right, title and
15
<PAGE>
interest in and to the Vessel Interest, and to perfect the mortgage Lien on and
security interest in the Indenture Estate created by the Indenture and the Ship
Mortgage (including, without limitation, all filings and recordings necessary to
register the Owner Trust's title to the Vessel in the Marshall Islands and the
filing of the Ship Mortgage in the Office of the Maritime Administrator of the
Marshall Islands registry), shall have been duly made, subject to requirements
for filing continuation statements at appropriate intervals and subject to
Permitted Liens, and (b) no other action shall be required to perfect such
mortgage Lien and security interest.
4.13 Sale of Pass Through Certificates. The Charterer, the Other
---------------------------------
Charterer and the Guarantor shall have entered into the Underwriting Agreement,
the Pass Through Trust Agreement and the Pass Through Trust Supplement, and the
Pass Through Certificates shall have been issued pursuant to the Pass Through
Trust Agreement and sold pursuant to the Underwriting Agreement and the
Underwriters shall have transferred to the Pass Through Trustee in immediately
available funds an amount equal to the purchase price for the Pass Through
Certificates.
4.14 No Default Under Charter. The Vessel shall have been duly
------------------------
accepted by the Charterer under the Charter and in evidence thereof the Pass
Through Trustee and the Indenture Trustee shall have received a protocol of
delivery and acceptance executed by Charterer and no Charter Default or Charter
Event of Default shall have occurred and be continuing.
4.15 U.K. Closing. The Pass Through Trustee and Indenture Trustee
------------
shall have received copies of the executed Head Lease, Conditional Sale
Agreement, Lessee Support Agreement, Lessor's Security Assignment and the U.K.
Lessor's Mortgage and each such document shall have terms reasonably
satisfactory to it.
4.16 Investment. The Owner Participant shall have made available to
----------
the Owner Trust the full amount of its Investment on the Closing Date pursuant
to Section 2.
SECTION 5. CONDITIONS TO CLOSING BY OWNER
PARTICIPANT.
------------------------------
The obligations of the Owner Participant pursuant to Section 2 to
participate in the payment of Owner's Cost and to take the other actions
contemplated by Section 2 to be taken by it on the Closing Date are subject only
to the fulfillment on the Closing Date to the satisfaction of (including, with
respect to writings, such writings being in form and substance reasonably
satisfactory to the addressee or the beneficiary thereof) or waiver by the Owner
Participant of each of the
16
<PAGE>
following conditions precedent (other than (i) in the case of the Owner
Participant, Sections 5.6 (d) and (i) except that the obligations of the Owner
Participant shall not be subject to the Owner Participant's own performance or,
if the Owner Participant shall have the power to cause another Person to
perform, the Owner Participant's failure to cause such performance:
5.1 Notice of Closing. The Owner Participant shall have received the
-----------------
notice of closing for such Closing Date required to be delivered pursuant to
Section 2.4.
5.2 Operative Documents. Each of the following documents shall have
-------------------
been duly authorized, executed and delivered by the respective parties thereto:
(a) this Agreement;
(b) the Charter;
(c) the Bill of Sale;
(d) the Indenture;
(e) the Secured Note;
(f) the Trust Agreement;
(g) the Guarantee;
(h) the Ship Mortgage; and
(i) the U.K. Lessor's Mortgage;
and each such document, the Pass Through Trust Agreement and the Pass Through
Trust Supplement shall be in full force and effect on the Closing Date, and no
event or condition shall have occurred that, with or without the lapse of time
or the giving of notice, shall give any other party thereto the right to
terminate such document and an executed counterpart (or a true, correct and
complete copy) of each of the same shall have been delivered to the Owner
Participant.
5.3 Legality, Etc. No change shall have occurred after December 14,
-------------
1996 in Governmental Rules that, in the reasonable opinion of the Owner
Participant, would make it illegal or unduly burdensome for the Trust Company,
the Owner Trust, the Charterer, the Guarantor, the Indenture Trustee or any
Participant to participate in any of the transactions contemplated by the
Operative Documents to be consummated on the Closing Date.
17
<PAGE>
5.4 Event of Loss. No Event of Loss shall have occurred and no
-------------
action or proceeding shall have been commenced that could result in an Event of
Loss.
5.5 Insurance. If the Delivery Date has occurred, insurance
---------
complying in all respects with the provisions of Section 13.1 of the Charter
shall be in full force and effect and the Owner Participant and the Indenture
Trustee shall have received a certificate of an independent insurance broker or
consultant, which broker or consultant may be the Charterer's independent
insurance broker or consultant, dated the Closing Date, setting forth the
insurance obtained by or on behalf of the Charterer in accordance with Section
13.1(a) of the Charter and as then in effect, stating that such insurance is in
full force and effect and that all premiums then due thereon have been paid and
an Officer's Certificate of the Charterer, dated the Closing Date, stating that
such insurance complies in all respects with the provisions of such Section
13.1(a).
5.6 Opinions. Opinions dated the Closing Date of the following
--------
counsel, each such opinion substantially in the form of the indicated Exhibit
hereto (with such changes to such form as contemplated by such Exhibit) and
addressed as provided in such Exhibit (or, in lieu of including the Underwriter
as an addressee, such counsel may deliver a reliance letter to the Underwriter),
shall have been executed and delivered by such counsel:
(a) Ralph N. Johanson, Jr., Esq., Managing Counsel, Corporate Finance
and Securities of the Guarantor, substantially in the form of Exhibit A-1;
(b) Dewey Ballantine, special counsel to the Charterer and the
Guarantor, substantially in the form of Exhibit A-2;
(c) Haight, Gardner, Poor & Havens, special Marshall Islands counsel,
substantially in the form of Exhibit A-3;
(d) Maples & Calder, special counsel to the Owner Participant,
substantially in the form of Exhibit A-4;
(e) Morris, James, Hitchins & Williams, special Delaware counsel to
the Resident Trustee and the Owner Trustee, substantially in the form of
Exhibit A-5;
(f) Maples & Calder, special Cayman Islands counsel to the Trust
Company and the Owner Trustee, substantially in the form of Exhibit A-6;
18
<PAGE>
(g) Bingham, Dana & Gould, counsel to the Indenture Trustee,
substantially in the form of Exhibit A-7;
(h) Bingham, Dana & Gould, counsel to the Pass Through Trustee,
substantially in the form of Exhibit A-8;
(i) Dewey Ballantine, special New York counsel to the Owner
Participant, substantially in the form of Exhibit A-9; and
(j) Slaughter and May, special English counsel to the Owner
Participant, substantially in the form of Exhibit A-10.
5.7 Taxes. All Taxes, fees and other charges, if any, payable on or
-----
prior to the Closing Date in connection with the execution, delivery,
recordation and filing of all documents and instruments referred to in Section
5.12 below, this Agreement or any other Operative Document, or in connection
with the acquisition by the Owner Trustee on the Closing Date of the Vessel
Interest, the issuance and sale of the Secured Note and the Pass Through
Certificates and the subjecting of the Vessel Interest to the Lien of the
Indenture, shall have been duly paid in full by the Charterer.
5.8 Officer's Certificates. On the Closing Date, the following
----------------------
statements shall be true and the Owner Participant and the Owner Trust shall
have received:
(a) an Officer's Certificate of the Charterer, dated the Closing
Date, stating that (A) the representations and warranties of the Charterer
contained in Section 6 are true and accurate on and as of the Closing Date
as though made on and as of such date except to the extent that such
representations and warranties specifically relate solely to an earlier
date (in which case such representations and warranties shall have been
true and accurate on and as of such earlier date) and (B) each Operative
Document to which it is a party and the Pass Through Trust Agreement remain
in full force and effect with respect to it;
(b) an Officer's Certificate of each of the Trust Company and the
Managing Trustee, dated the Closing Date, stating that (i) the
representations and warranties of the Trust Company and the Owner Trust
contained in Section 9, as the case may be, are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which case such representations and warranties shall
have been true and accurate on and as of such
19
<PAGE>
earlier date); and (ii) each Operative Document to which it is a party
remains in full force and effect with respect to it;
(c) an Officer's Certificate of the Indenture Trustee, dated the
Closing Date, stating that (i) the representations and warranties of the
Indenture Trustee contained in Section 10 are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which case such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) each
Operative Document to which it is a party remains in full force and effect
with respect to it;
(d) an Officer's Certificate of the Pass Through Trustee, dated the
Closing Date, stating that (i) the representations and warranties of the
Pass Through Trustee contained in Section 8 are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which case such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) each
of the Participation Agreement, the Pass Through Trust Agreement and the
Pass Through Trust Supplement remain in full force and effect with respect
to it; and
(e) an Officer's Certificate of the Guarantor, dated the Closing Date,
stating that (i) the representations and warranties of the Guarantor
contained in Section 1.1 of the Guarantee are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which are such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) the
Guarantee remains in full force and effect.
5.9 Resolutions, Etc. The Owner Participant and the Owner Trust
-----------------
shall have received the following, in each case in form and substance reasonably
satisfactory to the Owner Participant:
(a) a Secretary's or an Assistant Secretary's certificate of the
Charterer, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Charterer of each
20
<PAGE>
Operative Document to which it is a party, and the Pass Through Trust
Agreement and the transactions contemplated thereby, certified to be in
full force and effect without modification as of the Closing Date, (ii) its
charter documents, (iii) its by-laws, and (iv) the incumbency and signature
of persons authorized to execute and deliver such documents on behalf of
the Charterer;
(b) a Secretary's or an Assistant Secretary's certificate of the Trust
Company, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Trust Company of each Operative Document to
which it is a party, and the transactions contemplated thereby, certified
to be in full force and effect without modification as of the Closing Date,
(ii) its charter documents, (iii) its by-laws, and (iv) the incumbency and
signature of persons authorized to execute and deliver such documents on
its behalf;
(c) a Secretary's or an Assistant Secretary's certificate of the
Indenture Trustee, dated the Closing Date, attaching and certifying as to
(i) resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Indenture Trustee of each Operative
Document to which it is a party, and the transactions contemplated thereby,
certified to be in full force and effect without modification as of the
Closing Date, (ii) its charter documents, (iii) its by-laws, and (iv) the
incumbency and signature of persons authorized to execute and deliver such
documents on behalf of the Indenture Trustee;
(d) a Secretary's or an Assistant Secretary's certificate of the Pass
Through Trustee, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors or an appropriate committee thereof
duly authorizing the execution, delivery and performance by the Pass
Through Trustee of the Pass Through Trust Agreement, the Pass Through Trust
Supplement, and the Participation Agreement, and the transactions
contemplated thereby, certified to be in full force and effect without
modification as of the Closing Date, (ii) its charter documents, (iii) its
by-laws, and (iv) the incumbency and signature of persons authorized to
execute and deliver such documents on behalf of the Pass Through Trustee;
and
(e) a Secretary's or an Assistant Secretary's certificate of the
Guarantor, dated the Closing Date, attaching and certifying as to (i)
resolutions of its
21
<PAGE>
Board of Directors duly authorizing the execution, delivery and performance
by the Guarantor of the Guarantee and its obligations thereunder, certified
to be in full force and effect without modification as of the Closing Date,
(ii) its charter documents, (iii) its by-laws and (iv) the incumbency and
signature of persons authorized to execute and deliver the Guarantee on
behalf of the Guarantor.
5.10 Litigation. There shall be no actions, suits, investigations or
----------
proceedings pending or, to the knowledge of the Owner Participant, the
Charterer, the Guarantor, the Owner Trust or the Indenture Trustee, threatened
against any of such Persons or the properties of any of such Persons before any
Governmental Authority to set aside, restrain, enjoin or prevent the
consummation of this Agreement or the transactions contemplated hereby or by any
of the other Operative Documents, the Pass Through Trust Agreement, the Pass
Through Trust Supplement or the Underwriting Agreement.
5.11 Consents and Approvals. On the Closing Date, all Governmental
----------------------
Actions which are required to have been taken, given, obtained, filed or
recorded, as the case may be, on or prior to the Closing Date by, from or with
any Governmental Authority, and all other consents, filings or approvals which
are required to have been taken, given, obtained, filed or recorded, as the case
may be, on or prior to the Closing Date by, from or with any other Person, in
connection with the transactions contemplated by the Operative Documents and the
Pass Through Trust Agreement, or to authorize the execution, delivery and
performance by the Charterer, the Guarantor, the Owner Participant, the Owner
Trust, the Indenture Trustee or the Pass Through Trustee of the Pass Through
Trust Agreement and each of the Operative Documents to which it is a party, or
the legality, validity, binding effect or enforceability thereof as against the
Charterer or the Guarantor, other than those constituting filings, recordings or
other actions of the type referred to in Section 5.12, shall have been duly
taken, given or obtained, as the case may be, shall be in full force and effect
on the Closing Date, shall not be subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and shall be adequate to authorize the
consummation of the transactions contemplated by the Pass Through Trust
Agreement, the Underwriting Agreement and the Operative Documents and the
performance by the Charterer and the Guarantor of its obligations under such
thereof to which it is a party, except such as may be required to be taken,
obtained, given, accomplished or renewed from time to time in connection with
the maintenance or operation of the Vessel or which is otherwise required in
connection with the transactions contemplated by the Pass Through Trust
Agreement, the Underwriting Agreement and the Operative Documents which have
22
<PAGE>
been applied for but which cannot be obtained, or which are not normally applied
for or taken, given or obtained, prior to the Closing Date, and which in the
normal course would be granted; provided that the failure to obtain such
--------
Governmental Actions, consents or approvals by the Closing Date would not
materially adversely affect the ability of (x) the Charterer to perform its
obligations under this Agreement, the Pass Through Trust Agreement or any other
Operative Document to which it is or will be a party or (y) the Guarantor to
perform its obligations under the Guarantee.
5.12 Title; Filings and Recordings. On or prior to the Closing Date,
-----------------------------
(a) title to the Vessel Interest shall have been duly and effectively vested in
the Owner Trust pursuant to the Bill of Sale, free and clear of all Liens other
than Permitted Liens, all filings and recordings necessary to establish the
Owner Trust's right, title and interest in and to the Vessel Interest, and to
perfect the mortgage Lien on and security interest in the Indenture Estate
created by the Indenture and the Ship Mortgage (including, without limitation,
all filings and recordings necessary to register the Owner Trust's title to the
Vessel in the Marshall Islands and the filing of the Ship Mortgage in the Office
of the Maritime Administrator of the Marshall Islands registry), shall have been
duly made, subject to requirements for filing continuation statements at
appropriate intervals and subject to Permitted Liens, and (b) no other action
shall be required to perfect such mortgage Lien and security interest.
5.13 Sale of Pass Through Certificates. The Charterer, the Other
---------------------------------
Charterer and the Guarantor shall have entered into the Underwriting Agreement,
the Pass Through Trust Agreement and the Pass Through Trust Supplement, and the
Pass Through Certificates shall have been issued pursuant to the Pass Through
Trust Agreement and sold pursuant to the Underwriting Agreement and the
Underwriters shall have transferred to the Pass Through Trustee in immediately
available funds an amount equal to the purchase price for the Pass Through
Certificates.
5.14 No Default Under Charters. No Charter Default or Charter Event
-------------------------
of Default shall have occurred and be continuing.
5.15 Loans. The Pass Through Trustee shall have purchased the
-----
Secured Note required to be purchased by it on the Closing Date pursuant to
Section 2.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF
THE CHARTERER.
---------------------------------
The Charterer represents and warrants to each of the other parties
hereto that:
23
<PAGE>
6.1 Due Organization. The Charterer is a corporation duly organized,
----------------
validly existing and in good standing under the laws of the State of Delaware
and has the corporate power and authority to carry on its business as presently
conducted and as it is contemplated it will be conducted in connection with the
Vessel Interest, to own or hold under lease or charter its properties, and to
enter into and perform its obligations under this Agreement, the Pass Through
Trust Agreement and each other Operative Document to which it is a party. The
Charterer has not failed to qualify to do business in any jurisdiction where
failure so to qualify could reasonably be expected to materially adversely
affect its ability to perform any of its obligations under this Agreement, the
Pass Through Trust Agreement, the Pass Through Trust Supplement or any other
Operative Document to which it is a party.
6.2 Authorization. The execution, delivery and performance by the
-------------
Charterer of this Agreement, the Pass Through Trust Agreement, the Pass Through
Trust Supplement and each other Operative Document to which it is a party and of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of the Charterer and do not and will
not require the consent or approval of any shareholder of the Charterer or any
trustee or holder of any indebtedness or other obligation of the Charterer.
6.3 Execution; Enforceability. This Agreement, the Pass Through
-------------------------
Trust Agreement, the Pass Through Trust Supplement and each other Operative
Document to which the Charterer is a party have been duly executed and delivered
by the Charterer and, assuming the due authorization, execution and delivery
hereof and thereof by the other parties hereto and thereto are legal, valid and
binding obligations of the Charterer, enforceable against the Charterer in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, liquidation,
moratorium or similar laws affecting creditors' or lessors' rights generally and
by the application of general equitable principles which may limit the
availability of certain remedies.
6.4 No Violation. The execution and delivery by the Charterer of
------------
this Agreement, the Pass Through Trust Agreement, the Pass Through Trust
Supplement and each other Operative Document to which it is a party do not and
will not, and the performance by the Charterer of its obligations under each
thereof do not and will not, (i) violate or be inconsistent with its charter
documents or by-laws, (ii) contravene any Governmental Rule or Governmental
Action applicable to it, which, in the case of such performance, noncompliance
with which would materially adversely affect the
24
<PAGE>
Vessel Interest or the ability of the Charterer to perform its obligations under
the Operative Documents; provided that no representation or warranty is made
--------
with respect to ERISA, (iii) contravene any provision of, or constitute a
default under, any indenture, mortgage, contract or other agreement or
instrument to which the Charterer is a party or by which it or any of its
properties are bound or (iv) result in or, require the creation or imposition of
any Lien (other than Permitted Liens) upon any of its properties or assets.
6.5 Consents and Approvals. On the Closing Date, all Governmental
----------------------
Actions which are required to have been taken, given, obtained, filed or
recorded, as the case may be, on or prior to the Closing Date by, from or with
any Governmental Authority and all other consents, filings or approvals which
are required to have been taken, given, obtained, filed or recorded, as the case
may be, on or prior to the Closing Date by, from or with any other Person, in
connection with the transactions contemplated by the Pass Through Trust
Agreement and the Operative Documents, or to authorize the execution, delivery
and performance by the Charterer and/or the Guarantor of the Guarantee, the Pass
Through Trust Agreement, the Pass Through Trust Supplement and the Operative
Documents to which either of them is a party, or the legality, validity, binding
effect or enforceability thereof as against the Charterer or the Guarantor,
other than those constituting filings, recordings or other actions of the types
referred to in Section 6.7, have been duly taken, given or obtained, as the case
may be, are in full force and effect on the Closing Date, are not subject to any
pending proceedings or appeals (administrative, judicial or otherwise) and are
adequate to authorize the consummation by the Charterer or the Guarantor of the
transactions contemplated by the Pass Through Trust Agreement, the Underwriting
Agreement and the Operative Documents and the performance by each of the
Charterer and the Guarantor of its obligations under such thereof to which it is
a party, except such as may be required to be taken, obtained, given,
accomplished or renewed from time to time in connection with the maintenance or
operation of the Vessel Interest or which are otherwise required in connection
with the transactions contemplated by the Operative Documents, which have been
applied for but which cannot be obtained, or which are not normally applied for
or taken, given or obtained, prior to the Closing Date, and which in the normal
course would be granted, provided that the failure to obtain such Governmental
--------
Actions, consents and approvals by the Closing Date would not materially
adversely affect the ability of the Charterer to perform its obligations under
this Agreement, the Pass Through Trust Agreement or any other Operative Document
to which it is or will be a party.
6.6 Securities Act. Neither the Charterer nor any Person authorized
--------------
on its behalf has directly or indirectly
25
<PAGE>
offered or sold the Pass Through Certificates, or solicited any offer to acquire
the same from, any Person other than in a manner required by the Securities Act.
Neither the Charterer nor any Person authorized to act on its behalf will take
any action which would subject the issuance or sale of any interest in the Trust
Estate or the Secured Note to the provisions of Section 5 of the Securities Act
or require the qualification of the Indenture under the Trust Indenture Act.
6.7 Title; Filings and Recordings. On or prior to the Closing Date,
-----------------------------
after giving effect to the transactions contemplated hereby, (a) title in and to
the Vessel Interest will be duly and effectively vested in the Owner Trust,
pursuant to the Bill of Sale free and clear of all Liens other than Permitted
Liens, (b) the filings and recordings listed in Schedule 3 will be all the
filings and recordings and other actions necessary or advisable to establish the
Owner Trust's right, title and interest in and to the Vessel Interest, and to
perfect the mortgage Lien on and security interest in the Indenture Estate
created by the Indenture and the Ship Mortgage, and all such filings and
recordings and other action will have been duly made, subject to requirements
for filing continuation statements at appropriate intervals and subject to
Permitted Liens, and (c) no other actions will be required to perfect such
mortgage Lien and security interest.
6.8 Chief Place of Business. The chief place of business and chief
-----------------------
executive office of the Charterer is in Fairfax, Virginia and the offices where
it keeps its records concerning the Vessel and its accounts and contract rights
are in Fairfax, Virginia.
6.9 Litigation. There is no action, suit, investigation or
----------
proceeding pending or, to the Actual Knowledge of the Charterer, threatened
against the Charterer or affecting it or its properties before any Governmental
Authority which, individually or in the aggregate (so far as the Charterer now
can reasonably foresee), is reasonably likely materially and adversely to affect
the consummation of the transactions under this Agreement, the Pass Through
Trust Agreement, the Pass Through Trust Supplement or any other Operative
Document to which it is or will be a party or the ability of the Charterer to
perform its obligations hereunder or thereunder.
6.10 No Default. No Charter Default or Charter Event of Default has
----------
occurred and is continuing.
6.11 Event of Loss. No Event of Loss has occurred.
-------------
6.12 Investment Company Act. The Charterer is not an "investment
----------------------
company" or a company "controlled" by an
26
<PAGE>
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
6.13 No Brokers' Fees. Neither the Charterer nor any Person acting
----------------
on its behalf has taken any actions the effect of which would be to cause the
Owner Trust, the Indenture Trustee or any Participant to be liable for any
brokers', finders' or agents' fees or commissions or costs of any nature or kind
claimed by or on behalf of brokers, finders or agents in respect of the
transactions contemplated by this Agreement other than fees payable to Morgan
Stanley & Co. Incorporated, all of which fees, commissions or costs are included
in Transaction Expenses or will be paid or indemnified against by the Charterer.
6.14 No Other Business or Liabilities. Except for activities and
--------------------------------
liabilities contemplated by Operative Documents and the U.K. Documents and
comparable documents relating to two Other Vessels and activities incidental
thereto, the Charterer has not engaged in any other business or activities or
incurred any liabilities.
6.15 Payment of Taxes, etc. All Taxes, fees and other charges
---------------------
payable on or prior to the Closing Date in connection with the execution,
delivery, recordation and filing of all documents and instruments, including the
Operative Documents, and the performance of the transactions contemplated by the
Operative Documents occurring on or prior to the Closing Date, have been paid in
full.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN OR IN ANY OTHER OPERATIVE DOCUMENT,
THE CHARTERER MAKES NOR SHALL THE CHARTERER BE DEEMED TO HAVE MADE, AND THE
CHARTERER HEREBY DISCLAIMS, ANY REPRESENTATION OR WARRANTY OTHER THAN THOSE
REFERRED TO IN THIS SECTION, IN ANY OFFICER'S CERTIFICATE OF THE CHARTERER OR
EXPRESSLY MADE IN ANY OTHER OPERATIVE DOCUMENT, EITHER EXPRESS OR IMPLIED, AS TO
THE DESIGN OR CONDITION OF THE VESSEL OR ANY PART THEREOF, THE MERCHANTABILITY
THEREOF OR THE FITNESS THEREOF FOR ANY PARTICULAR PURPOSE, THE ABILITY OF THE
VESSEL TO PERFORM ANY FUNCTION, THE QUALITY OF THE MATERIALS OR WORKMANSHIP
THEREOF OR CONFORMITY THEREOF TO SPECIFICATIONS, OR THE PRESENCE OR ABSENCE OF
ANY LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE; PROVIDED THAT THE
FOREGOING SHALL NOT EXCUSE THE PERFORMANCE BY THE CHARTERER OF ITS OBLIGATIONS
UNDER THIS AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT OR THE BILL OF SALE.
27
<PAGE>
SECTION 7. REPRESENTATIONS AND WARRANTIES
OF THE OWNER PARTICIPANT.
------------------------------
The Owner Participant represents and warrants to each of the other
parties hereto that:
7.1 Due Organization. The Owner Participant is a Cayman Islands
----------------
limited life company, duly organized, validly
existing and in good standing under the laws of the Cayman Islands and has the
corporate power and authority to enter into and perform its obligations under
this Agreement and each other Operative Document to which it is a party.
7.2 Authorization; Execution; Enforceability. The execution,
----------------------------------------
delivery and performance by the Owner Participant of this Agreement and each
other Operative Document to which it is a party and of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of the Owner Participant and do not and will not
require the consent or approval of any shareholder of the Owner Participant
which has not been obtained. This Agreement and each other Operative Document
to which the Owner Participant is a party have been duly authorized, executed
and delivered by the Owner Participant and, assuming the due authorization,
execution and delivery hereof and thereof by the other parties hereto and
thereto, are legal, valid and binding obligations of the Owner Participant,
enforceable against the Owner Participant in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, liquidation, moratorium or similar laws affecting
creditors' rights generally and by the application of general equitable
principles which may limit the availability of certain remedies. Any direction
given by the Owner Participant to the Owner Trust pursuant to the Trust
Agreement will have been duly authorized.
7.3 No Violation. The execution and delivery by the Owner
------------
Participant of this Agreement and each other Operative Document to which it is a
party do not and will not, and the performance by the Owner Participant of its
obligations under each thereof do not and will not, (i) violate or be
inconsistent with or in violation of its charter documents or by-laws, (ii)
contravene any Governmental Rule or Governmental Action applicable to it or
require any Governmental Action and (iii) contravene any provision of, or
constitute a default or require any consent under, any indenture, mortgage,
contract or other instrument to which the Owner Participant is a party or by
which it or any of its property is bound.
7.4 Owner Participant's Liens. There are no Owner Participant's
-------------------------
Liens on the Trust Estate or the Indenture
28
<PAGE>
Estate, or on any part of either thereof and the execution, delivery and
performance by the Owner Participant of the Operative Documents to which it is a
party will not subject the Trust Estate or the Indenture Estate to the Owner
Participant's Liens.
7.5 Acquisition for Investment. The Owner Participant is acquiring
--------------------------
its interest in the Trust Estate for its own account for investment and not with
a view to, or for sale in connection with, any distribution of any such interest
(it being understood that at all times the disposition of its property shall
remain within its control), except that the Owner Participant reserves the right
to transfer or assign any of or all such interest to the extent permitted by the
terms of this Agreement and the Trust Agreement.
7.6 Securities Act. Neither the Owner Participant nor any Person
--------------
authorized by the Owner Participant has directly or indirectly offered or sold
any interest in the Trust Estate, the Trust Agreement or the Secured Note, or in
any similar security relating to the Vessel Interest, or in any security the
offering of which for the purposes of the Securities Act would be deemed to be
part of the same offering as the offering of the aforementioned securities to,
or solicited any offer to acquire any of the same from, any Person other than,
in the case of the Secured Note, the Loan Participant, and neither the Owner
Participant nor any Person authorized to act on its behalf will take any action
which would subject the issuance or sale of any interest in the Trust Estate or
the Secured Note to the provisions of Section 5 of the Securities Act or require
the qualification of the Indenture under the Trust Indenture Act except to the
extent required under Section 15 hereof.
7.7 ERISA. The Owner Participant is not acquiring any part of its
-----
interest in the Trust Estate with the "plan assets" of any "employee benefit
plan" within the meaning of ERISA (or of any "plan" within the meaning of
Section 4975 of the Code), as interpreted by the Internal Revenue Service and
the U.S. Department of Labor in rules, regulations, releases, bulletins or as
interpreted under applicable case law.
7.8 Investment Company Act. Neither the Owner Participant nor any of
----------------------
its Affiliates is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
7.9 Litigation. There is no action, suit, investigation or
----------
proceeding pending or, to the Actual Knowledge of the Owner Participant,
threatened against the Owner Participant or its properties before any
Governmental Authority which, individually or in the aggregate (so far as
29
<PAGE>
the Owner Participant now can reasonably foresee), is reasonably likely
materially and adversely to affect the ability of the Owner Participant to
perform its obligations under this Agreement or any other Operative Document to
which it is or will be a party.
7.10 No Default. No Indenture Default or Indenture Event of Default
----------
attributable to the Owner Participant has occurred and is continuing.
7.11 Federal Reserve Regulations. The Owner Participant is not
---------------------------
engaged principally in, and does not have as one of its important activities,
the business of extending credit for the purpose of purchasing or carrying any
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System of the United States), and no part of the proceeds of
the Secured Note will be used by it to purchase or carry any such margin stock
or, assuming the accuracy of the representation set forth in Section 5.15, to
extend credit to others for the purpose of purchasing or carrying any such
margin stock or for any purpose that violates, or is inconsistent with, the
provisions of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System of the United States.
7.12 No Brokers' Fees. Neither the Owner Participant nor any Person
----------------
acting on its behalf has taken any actions the effect of which would be to cause
the Charterer or the Loan Participant to be liable for any brokers', finders' or
agents' fees or commissions or costs of any nature or kind claimed by or on
behalf of brokers, finders or agents in respect of the transactions contemplated
by this Agreement not included in Transaction Expenses.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE PASS THROUGH
TRUSTEE.
--------------------------------------------------
State Street Bank and Trust Company represents and warrants in its
individual capacity with respect to Sections 8.1, 8.2(a), 8.3, 8.4, 8.5(a), 8.6
and 8.7 and not in its individual capacity, but solely in its capacity as Pass
Through Trustee under the Pass Through Trust Agreement, with respect to Sections
8.2(b) and 8.5(b), to each of the other parties hereto that:
8.1 Due Organization. State Street Bank and Trust Company is a state
----------------
chartered trust company, duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts and has the corporate power
and authority to enter into and perform its obligations under this Agreement,
the Pass Through Trust Agreement and the Pass Through Trust Supplement.
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8.2 Authorization; Execution; Enforceability. (a) This Agreement,
----------------------------------------
the Pass Through Trust Agreement and the Pass Through Trust Supplement have been
duly authorized, executed and delivered by State Street Bank and Trust Company,
in its individual capacity and, assuming the due authorization, execution and
delivery hereof and thereof by the other parties hereto and thereto, are legal,
valid and binding obligations of State Street Bank and Trust Company in its
individual capacity (to the extent it is a party hereto or thereto in such
capacity), enforceable against it in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, liquidation, receivership, moratorium or similar
laws affecting creditors' rights generally and by the application of general
equitable principles which may limit the availability of certain remedies.
(b) This Agreement, the Pass Through Trust Agreement, the Pass Through
Trust Supplement and the Pass Through Certificates have been duly authorized,
executed and delivered by the Pass Through Trustee and, assuming the due
authorization, execution and delivery hereof and thereof by the other parties
hereto or thereto, are legal, valid and binding obligations of the Pass Through
Trustee, enforceable against it in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, liquidation, receivership, moratorium or similar
laws affecting creditors' rights generally and the application of general
equitable principles may limit the availability of certain remedies.
8.3 No Violation. The execution, delivery and performance by State
------------
Street Bank and Trust Company of this Agreement, the Pass Through Trust
Agreement and the Pass Through Trust Supplement the purchase by the Pass Through
Trustee of the Secured Note pursuant to this Agreement and the issuance of the
Pass Through Certificates pursuant to the Pass Through Trust Agreement and Pass
Through Trust Supplement are not and will not be inconsistent with its
constitutional documents or do not and will not contravene any Governmental Rule
of the United States of America or the Commonwealth of Massachusetts governing
with respect to its banking or trust powers, and will not contravene any
provision of, or constitute a default under, any indenture, mortgage, contract
or other instrument to which State Street Bank and Trust Company, in its
individual capacity, is a party, or by which it or any of its properties are
bound, or require any Governmental Action of the United States of America or the
Commonwealth of Massachusetts governing its banking or trust powers.
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8.4 Litigation. There is no action, suit, investigation or
----------
proceeding pending or, to the Actual Knowledge of State Street Bank and Trust
Company, threatened against it, whether in its individual capacity or as Pass
Through Trustee, before any Governmental Authority governing its banking or
trust powers which, individually or in the aggregate (so far as State Street
Bank and Trust Company now can reasonably foresee), is reasonably likely
materially and adversely to affect the ability of the Pass Through Trustee (in
either such capacity) to perform its obligations under this Agreement or the
Pass Through Trust Agreement (in either such capacity).
8.5 Pass Through Trustee's Liens. (a) There are no Pass Through
----------------------------
Trustee's Liens attributable to State Street Bank and Trust Company in its
individual capacity on the Pass Through Trust Property or on any part thereof.
(b) There are no Pass Through Trustee's Liens on the Pass Through
Trust Property or any part thereof.
8.6 Securities Act. State Street Bank and Trust Company has not
--------------
offered any interest in the Pass Through Certificates or any Secured Note or any
similar securities for sale to, or solicited any offer to acquire the same from,
anyone other than the Underwriter, and no responsible officer or responsible
employee of State Street Bank and Trust Company has knowledge of any such offer
or solicitation, except as set forth in the Operative Documents, the Pass
Through Trust Agreement and Underwriting Agreement.
SECTION 9. REPRESENTATIONS AND WARRANTIES OF THE TRUST COMPANY AND
OWNER TRUST.
-------------------------------------------------------
The Trust Company, in its individual capacity, represents and warrants
with respect to Sections 9.1, 9.2 (other than clause (b)(ii) thereof), 9.3, 9.4
(other than clause (b) thereto), 9.5, 9.6 (other than clause (b) thereto), 9.7
(as specified therein), 9.8 and 9.10, and in its capacity as Managing Trustee
represents and warrants with respect to Sections 9.2(b), 9.4(b), 9.6 (b), 9.7
(as specified therein), 9.9, 9.10, 9.11 and 9.12 to each of the other parties
hereto that:
9.1 Due Organization. The Trust Company is a Cayman Islands company
----------------
duly organized, validly existing and in good standing under the laws of the
Cayman Islands and has the corporate power and authority to enter into and
perform its obligations under the Trust Agreement, this Agreement and each other
Operative Document to which it is a party and assuming due authorization,
execution and delivery by the Owner Participant of the Trust Agreement and upon
due direction by
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the Owner Participant pursuant thereto, will have the power and authority to
enter into and perform its obligations as Managing Trustee under the Trust
Agreement, this Agreement and each other Operative Document to which the Owner
Trust is a party.
9.2 Authorization; Execution; Enforceability. (a) This Agreement,
----------------------------------------
the Trust Agreement and each other Operative Document to which the Trust Company
is a party have been duly authorized, executed and delivered by the Trust
Company and, assuming due authorization, execution and delivery by the other
parties hereto and thereto, are legal, valid and binding obligations of the
Trust Company enforceable against it in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, liquidation, moratorium or similar laws affecting
creditors' rights generally and by the application of general equitable
principles which may limit the availability of certain remedies.
(b) This Agreement and each other Operative Document to which the
Owner Trust is a party (i) have been (assuming due authorization, execution and
delivery by the Owner Participant of the Trust Agreement and upon due direction
by the Owner Participant pursuant thereto) duly authorized, executed and
delivered by one of its officers who is duly authorized to execute and deliver
such Operative Document on behalf of the Managing Trustee, and (ii) assuming due
authorization, execution and delivery by the other parties hereto and thereto,
are legal, valid and binding obligations of the Owner Trust enforceable against
it in accordance with their respective terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, liquidation,
moratorium or similar laws affecting creditors' rights generally and the
application of general equitable principles may limit the availability of
certain remedies and upon execution of the Secured Note by the Managing Trustee,
authentication thereof by the Indenture Trustee and delivery thereof against
payment or the giving of consideration therefor in accordance with the Indenture
and this Agreement, the Secured Note will be legal, valid and binding
obligations of the Owner Trust enforceable against it in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, liquidation, moratorium or similar laws
affecting creditors' rights generally and the application of general equitable
principles may limit the availability of certain remedies.
9.3 No Violation. (a) The execution and delivery by the Trust
------------
Company of the Trust Agreement and, to the extent it is a party hereto or
thereto in its individual capacity, this Agreement and each other Operative
Document, are not or
33
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will not be, and the performance by the Trust Company of its obligations under
each will not be, inconsistent with the charter documents or by-laws of the
Trust Company, do not and will not contravene any Cayman Islands Governmental
Rule governing its banking or trust powers relating to or affecting its capacity
to act as contemplated by the Trust Agreement or the other Operative Documents
to which it is a party and do not and will not contravene any provision of, or
constitute a default under, any indenture, mortgage, contract or other
instrument to which the Trust Company is a party or by which it or any of its
property is bound, or require any Cayman Islands Governmental Action relating to
or affecting its capacity to act as contemplated by the Trust Agreement or the
other Operative Documents to which it is or will be a party.
(b) The execution and delivery by the Owner Trust of each Operative
Document to which the Owner Trust is a party are not, and the performance by the
Owner Trust of its obligations under each will not be, inconsistent with the
charter documents or by-laws of the Trust Company, do not and will not
contravene any Cayman Islands Governmental Rule regulating its banking or trust
powers relating to or affecting its capacity to act as contemplated by the Trust
Agreement or the Owner Trust Documents and do not and will not contravene any
provision of, or constitute a default under, any indenture, mortgage, contract
or other instrument to which the Owner Trust is a party or by which it or its
property is bound or require any Cayman Islands Government Action relating to or
affecting its capacity to act as contemplated by the Trust Agreement or the
Owner Trust Documents.
9.4 No Default. (a) No Indenture Default or Indenture Event of
----------
Default attributable to the Trust Company has occurred and is continuing.
(b) No Indenture Default or Indenture Event of Default attributable
to the Owner Trustee has occurred and is continuing.
9.5 Litigation. (a) There is no action, suit, investigation or
----------
proceeding pending or, to the Actual Knowledge of the Trust Company, threatened
against the Trust Company before any Governmental Authority which, individually
or in the aggregate (so far as the Trust Company now can reasonably foresee), is
reasonably likely materially and adversely to affect the ability of the Trust
Company to perform its obligations under this Agreement or any other Operative
Document to which it is a party.
(b) There is no action, suit, investigation or proceeding pending or,
to the Actual Knowledge of the Trust Company, threatened against the Owner Trust
before any Governmental Authority.
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9.6 Owner's Liens. (a) There are no Owner's Liens attributable to
-------------
the Trust Company on the Trust Estate or the Indenture Estate, or on any part of
either thereof and the execution, delivery and performance by the Trust Company
of the Operative Documents to which the Trust Company is a party will not
subject the Trust Estate or the Indenture Estate to any the Owner's Liens.
(b) There are no Owner's Liens attributable to the Owner Trust on the
Trust Estate or the Indenture Estate, or on any part of either thereof and the
execution, delivery and performance by the Owner Trust of the Operative
Documents to which the Owner Trust is a party will not subject the Trust Estate
or the Indenture Estate to any the Owner's Liens.
9.7 Securities Act. None of the Trust Company, the Owner Trust or
--------------
any Person authorized by either of the Trust Company or the Owner Trust to act
on its behalf, has directly or indirectly offered or sold any interest in the
Trust Estate or the Secured Note, or in any similar security relating to the
Vessel Interest, or in any security the offering of which for the purposes of
the Securities Act would be deemed to be part of the same offering as the
offering of the aforementioned securities (collectively, any "Security") to, or
solicited any offer to acquire any of the same from, any Person, other than, in
the case of the Secured Note, the Loan Participant, and none of the Trust
Company, the Owner Trust or any Person authorized by either of the Trust Company
or Owner Trust to act on its behalf will take any action other than the sale of
the Secured Note to the Loan Participant that would subject the issuance or sale
of any interest in the Trust Estate or the Secured Note to the provisions of
Section 5 of the Securities Act or require the qualification of the Indenture
under the Trust Indenture Act it being understood that no Person has been
authorized to act on behalf of the Owner Trust or the Trust Company in
connection with the issuance and sale of any Security.
9.8 Chief Place of Business. The Trust Company's chief place of
-----------------------
business, chief executive office and office where the documents, accounts and
records relating to the transactions contemplated by this Agreement and each
other Operative Document are kept are located in Grand Cayman, Cayman Islands.
9.9 No Taxes Payable. Except for Taxes based upon the income of any
----------------
Person, there are no Taxes payable in the jurisdiction in which the principal
place of business of the Trust Company is located in connection with the
execution, delivery, consummation or recordation of this Agreement and the other
Operative Documents or upon or with respect to the Trust Estate or the Indenture
Estate and, solely because the Trust Company is a Cayman Islands company with
its principal
35
<PAGE>
place of business in the Cayman Islands and to the extent that it performs any
of its duties as Managing Trustee in the Cayman Islands, the consummation of the
transactions contemplated hereby and by the other Operative Documents
(including, without limitation, the filing of financing statements with respect
thereto or the sale or transfer of the Vessel Interest).
9.10 Title. On the Closing Date, the Owner Trust shall have received
-----
whatever title in and to the Vessel Interest as was conveyed to it by the Owner
Participant.
9.11 Federal Reserve Regulations. The Owner Trust is not engaged
---------------------------
principally in, and does not have as one of its important activities, the
business of extending credit for the purpose of purchasing or carrying any
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System of the United States), and no part of the proceeds of
the Secured Note will be used by it to purchase or carry any such margin stock
or, assuming the accuracy of the representation set forth in Section 5.15, to
extend credit to others for the purpose of purchasing or carrying any such
margin stock or for any purpose that violates, or is inconsistent with, the
provisions of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System of the United States.
9.12 No Other Activities. The Owner Trust has not engaged in any
-------------------
business or activities other than those contemplated by the Operative Documents
and the U.K. Documents and activities incidental thereto.
SECTION 10. REPRESENTATIONS AND WARRANTIES OF INDENTURE TRUSTEE.
---------------------------------------------------
State Street Bank and Trust Company represents and warrants in its
individual capacity with respect to Sections 10.1, 10.2(a), 10.3, 10.4 and
10.5(a), and not in its individual capacity, but solely in its capacity as
Indenture Trustee with respect to Sections 10.2(b) and 10.5(b), to each of the
other parties hereto that:
10.1 Due Organization. State Street Bank and Trust Company is a
----------------
state chartered trust company duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts and has the
corporate power and authority to enter into and perform its obligations under
this Agreement and each other Operative Document to which it is or will be a
party.
10.2 Authorization; Execution; Enforceability. (a) This Agreement
----------------------------------------
and each other Operative Document to which State Street Bank and Trust Company,
in its individual
36
<PAGE>
capacity is a party have been, duly authorized, executed and delivered by State
Street Bank and Trust Company, in its individual capacity and, assuming the due
authorization, execution and delivery hereof and thereof by the other parties
hereto and thereto, are legal, valid and binding obligations of the Indenture
Trustee in its individual capacity (to the extent it is a party hereto or
thereto in such capacity), enforceable against it in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, liquidation, receivership, moratorium or
similar laws affecting creditors' rights generally and the application of
general equitable principles may limit the availability of certain remedies.
Assuming due authorization, execution and delivery thereof by the Owner Trust,
the Secured Note issued on the Closing Date pursuant to the terms of this
Agreement and the Indenture on the Closing Date will have been duly
authenticated.
(b) This Agreement and each other Operative Document to which the
Indenture Trustee is a party have been duly authorized, executed and delivered
by the Indenture Trustee and, assuming the due authorization, execution and
delivery hereof and thereof by the other parties hereto or thereto, are legal,
valid and binding obligations of the Indenture Trustee, enforceable against it
in accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, liquidation,
receivership, moratorium or similar laws affecting creditors' rights generally
and the application of general equitable principles may limit the availability
of certain remedies.
10.3 No Violation. The execution and delivery by State Street Bank
------------
and Trust Company of this Agreement and each other Operative Document to which
it is a party are not and will not be, and the performance by it of its
obligations under each will not be, inconsistent with its charter documents or
do not and will not contravene any Governmental Rule of the United States of
America or the Commonwealth of Massachusetts governing with respect to its
banking or trust powers, and will not contravene any provision of, or constitute
a default under, any indenture, mortgage, contract or other instrument to which
State Street Bank and Trust Company, in its individual capacity, is a party, or
by which it or any of its properties are bound, or require any Governmental
Action of the United States of America or the Commonwealth of Massachusetts
governing its banking or trust powers.
10.4 Litigation. There is no action, suit, investigation or
----------
proceeding pending or, to the Actual Knowledge of the Indenture Trustee,
threatened against the Indenture
37
<PAGE>
Trustee, whether in its individual capacity or as Indenture Trustee, before any
Governmental Authority governing its banking or trust powers which, individually
or in the aggregate (so far as the Indenture Trustee now can reasonably
foresee), is reasonably likely materially and adversely to affect the ability of
the Indenture Trustee (in either such capacity) to perform its obligations under
this Agreement or any other Operative Document to which it is a party (in either
such capacity).
10.5 Indenture Trustee's Liens. (a) There are no Indenture
-------------------------
Trustee's Liens attributable to State Street Bank and Trust Company in its
individual capacity on the Indenture Estate or on any part thereof.
(b) There are no Indenture Trustee's Liens on the Indenture Estate or
any part thereof.
SECTION 11. CHARTERER COVENANTS.
-------------------
The Charterer covenants and agrees that:
11.1 Officer's Certificate. The Charterer will deliver to the Owner
---------------------
Participant, the Owner Trust and the Indenture Trustee on or before November 1
of each year during the Charter Period, an Officer's Certificate of the
Charterer to the effect that the signer is familiar with or has reviewed the
relevant terms of the Charter and the signer does not have knowledge of the
existence, as of the date of such certificate, of any condition or event which
constitutes a Charter Event of Default.
11.2 Maintenance of Corporate Existence, Etc. Subject to the
---------------------------------------
provisions of Section 11.3, the Charterer shall at all times maintain its
corporate existence and preserve and keep in full force and effect its rights
and franchises, the loss of which would have a material adverse effect on the
financial condition of the Charterer or its ability to comply with its
obligations under the Operative Documents.
11.3 Merger, Consolidation, Sale, Etc. So long as the Secured Note
--------------------------------
remains Outstanding or any amounts due and owing by the Charterer with respect
thereto to the Holders thereof under the Pass Through Trust Agreement or any
other Operative Document remain unpaid and so long as the Charter Period shall
not have expired or been terminated, the Charterer shall not consolidate with or
merge into any other corporation or convey, transfer or lease substantially all
of its assets as an entirety to any Person, unless:
(i) the corporation formed by such consolidation or into which the
Charterer is merged or the Person which acquires by conveyance, transfer or
lease substantially
38
<PAGE>
all of the assets of the Charterer as an entirety shall be a corporation
organized and existing under the laws of the United States of America or
any State or the District of Columbia, and shall execute and deliver to the
Owner Trust, the Owner Participant, the Indenture Trustee and the Pass
Through Trustee an agreement (in form and substance reasonably satisfactory
to each thereof) containing the assumption by such successor corporation of
the due and punctual performance and observance of each covenant and
condition of this Agreement, the Charter, the Pass Through Trust Agreement,
the Pass Through Trust Supplement and each other Operative Document to
which the Charterer is a party to be performed or observed by the
Charterer;
(ii) immediately after giving effect to such transaction, no Charter
Event of Default shall have occurred and be continuing;
(iii) the Charterer shall have delivered to the Owner Trust, the Owner
Participant and the Indenture Trustee an Officer's Certificate of the
Charterer, and an opinion of counsel to the Charterer (which may be the
Charterer's internal counsel), each stating that such consolidation,
merger, conveyance, transfer or lease and the assumption agreement
mentioned in clause (i) comply with this Section 11.3 and that all
conditions precedent herein provided for relating to such transaction have
been complied with (except that such opinion need not cover the matters
referred to in clause (ii) above and may rely, as to factual matters, on an
Officer's Certificate of the Charterer) and, in the case of such opinion,
that such assumption agreement has been duly authorized, executed and
delivered by such successor corporation and is enforceable against such
successor corporation in accordance with its terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally and by general
principles of equity; and
(iv) after giving effect to any consolidation, merger, conveyance,
transfer or lease of substantially all of the assets of the Charterer as an
entirety in accordance with this Section 11.3, the Guarantee shall remain
in full force and effect and shall constitute a full and unconditional
guaranty of the successor corporation's obligations under the Operative
Documents to which it is a party and the Pass Through Trust Agreement to
the same extent as the Charterer's obligations under such documents prior
to giving effect to any such consolidation, merger, conveyance, transfer
39
<PAGE>
or lease of substantially all of the assets of the Charterer.
Upon any consolidation or merger, or any conveyance, transfer or lease of
substantially all of the assets of the Charterer as an entirety in accordance
with this Section 11.3, the successor corporation formed by such consolidation
or into which the Charterer is merged or to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Charterer under this Agreement and the other Operative
Documents with the same effect as if such successor corporation had been named
as the Charterer herein. No such conveyance, transfer or lease of substantially
all of the assets of the Charterer as an entirety shall have the effect of
releasing the Charterer or any successor corporation which shall theretofore
have become such in the manner prescribed in this Section 11.3 from its
liability hereunder.
11.4 Change in Name or Chief Place of Business. The Charterer shall
-----------------------------------------
give notice to the Owner Trust, the Owner Participant and the Indenture Trustee
promptly after any change in its name or chief place of business or chief
executive office.
11.5 Further Assurances. The Charterer, at its own cost and expense,
------------------
will cause to be promptly and duly taken, executed, acknowledged and delivered
all such further acts, documents and assurances as the Owner Trust, the Owner
Participant, the Loan Participant or the Indenture Trustee reasonably may
request from time to time in order to carry out more effectively the intent and
purposes of this Agreement, the Pass Through Trust Agreement, the Pass Through
Trust Supplement and the other Operative Documents and the transactions
contemplated hereby and thereby. The Charterer, at its own cost and expense,
will cause the Indenture, the Ship Mortgage and the Charter, any supplements or
amendments thereto and restatements thereof and all financing statements,
fixture filings and other documents, to be recorded or filed at such places and
times and in such manner, as may be necessary, advisable or as may be reasonably
requested (x) by the Owner Trust, the Owner Participant, the Pass Through
Trustee or the Indenture Trustee in order to establish, preserve and protect the
interest of the Owner Trust in and to the Vessel Interest and the Owner Trust's
rights under this Agreement and the other Operative Documents and (y) so long as
any Secured Note is Outstanding, by the Indenture Trustee, the Loan Participant
or (unless the Indenture Trustee objects thereto) the Owner Trust in order to
establish, preserve, protect and perfect the mortgage and security interest of
the Indenture Trustee in the Indenture Estate granted or intended to be created
under the Indenture and the Ship Mortgage and the Indenture Trustee's rights
under this Agreement and the
40
<PAGE>
other Operative Documents, subject only to Permitted Liens. During the ninety
(90) day period prior to the fifth, tenth, fifteenth and twentieth anniversary
of the Closing Date the Charterer will cause to be prepared and delivered to the
Managing Trustee and the Indenture Trustee an opinion of one or more legal
counsel to the effect set forth in clauses (x) and (y) above subject to
exceptions and qualifications similar to those taken in the opinions delivered
as at the Closing Date and such other exceptions and qualifications as are
customary at the time of giving such opinion.
11.6 Inspection. (a) The Charterer shall permit the Indenture
----------
Trustee, (and any authorized representatives of any thereof), at such Person's
risk (including, without limitation, as to personal injury and death) and
expense, including, without limitation, the cost and expense for such Person's
transportation to and from the Vessel, and under conditions reasonably
acceptable to the Charterer and subject to Section 12.5 hereof, to visit and
inspect the Vessel, and have access to officers of the Charterer and MSCL, all
upon reasonable notice and at such reasonable times during normal business hours
and as may be reasonably requested; provided, however, that (A) unless there is
-------- -------
an existing Charter Event of Default, the Indenture Trustee may not make more
than one (1) such inspection in any calendar year without the Charterer's prior
written consent and (B) prior to any such inspection the Charterer shall have
been provided reasonable assurances than any Person conducting such inspection
is fully insured with respect thereto.
(b) No Person entitled to make any inspection or inquiry referred to
in this Section 11.6 shall have any duty to make such inspection or inquiry, or
shall incur any liability or obligation by reason of not making any such
inspection or inquiry.
11.7 Documentation of Vessels. The Charterer agrees that, at or
------------------------
before the time of delivery of the Vessel to the Owner Trust on the Delivery
Date, the Charterer shall cause the Vessel to be documented, on a provisional
basis, in the name of the Owner Trust at the Charterer's expense under the laws
and the flag of the Marshall Islands and shall cause the Vessel to be documented
on a permanent basis in the name of the Owner Trust promptly after the Delivery
Date. The Charterer shall throughout the Charter Period maintain the
documentation of the Vessel in the Marshall Islands (or in any other
jurisdiction selected by the Charterer provided such other jurisdiction provides
substantially equivalent (or better) protection for the rights of owner
participants, lessors, lenders and mortgagees for similar transactions as the
law of the Marshall Islands), and shall not do or suffer or permit to be done
anything which would prevent the maintenance of the documentation of the Vessel
under the laws
41
<PAGE>
and the flag of the Marshall Islands (or such other jurisdiction) or which would
constitute or result in a violation of any applicable law or regulation of the
Marshall Islands (or such other jurisdiction) non-compliance with which could
create any material risk of or danger of the sale, forfeiture or loss of any
material part of or interest in the Vessel, provided, however, that in the event
-------- -------
the Vessel is documented in a jurisdiction other than the Marshall Islands, the
Charterer shall make or cause to be made all filings and recordings or other
actions necessary or advisable to establish the Indenture Trustee's and the
Owner Trust's right, title and interest in and to the Vessel Interest, including
the execution, delivery and filing of a ship mortgage in form and substance
substantially similar to the Ship Mortgage with the appropriate governmental
agency of such jurisdiction, provided further, however that such ship mortgage
-------- ------- -------
shall not be adverse to the interests of the Owner Trust or the Indenture
Trustee in any material respect or increase either parties liability under the
Operative Documents.
11.8 No Petition. Unless otherwise agreed in writing by both the
-----------
Indenture Trustee and Owner Participant, the Charterer hereby agrees to the
fullest extent permitted by law that so long as the lien of the Indenture shall
not have been discharged, it will not at any time institute against the Owner
Trust, or join in the institution against the Owner Trust of any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law.
SECTION 12. OTHER COVENANTS AND AGREEMENTS.
------------------------------
12.1 Agreements of Owner Participant. The Owner Participant
-------------------------------
covenants and agrees that:
(a) Discharge of Liens. The Owner Participant will not create or
------------------
permit to exist at any time, and will, at its own cost and expense,
promptly take such action as may be necessary duly to discharge, or to
cause to be discharged, (i) all Owner Participant's Liens and (ii) all
Owner's Liens resulting from any act or failure to act by the Owner Trust
at the express direction of, or with express authorization from, the Owner
Participant on all or any part of the Vessel Interest, the Trust Estate,
the Indenture Estate, or title thereto or any interest therein. The Owner
Participant shall indemnify, protect, defend, save and keep harmless the
Charterer, the Loan Participant, and the Indenture Trustee from and against
any and all Claims that may be imposed on, incurred by or asserted against
such Person or the Vessel Interest arising out of or secured by the Owner
Participant's Liens or the Owner's Liens described in clause (ii) of the
preceding sentence.
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(b) Cooperation with Charterer. The Owner Participant shall, to the
--------------------------
extent reasonably so requested by the Charterer, cooperate with the
Charterer, at the Charterer's expense, to enable the Charterer to make the
filings and recordings listed in Schedule 3, including, without limitation,
at any time and from time to time, upon the request of the Charterer
promptly and duly executing and delivering, any and all such further
instruments and documents as the Charterer may reasonably request in order
to perform such covenants and to make such filings and recordings.
(c) Successor Owner Trustee. The Owner Participant shall not appoint
-----------------------
or cause or allow to be appointed a successor to either Owner Trustee or an
additional or separate trustee under the Trust Agreement without the prior
written consent of the Charterer. The Owner Participant shall cause any
such successor, additional or separate trustee, simultaneously with its
assumption of duties in such capacity, to take all actions as may be
reasonably requested by the Indenture Trustee, the Pass Through Trustee or
the Charterer (including, without limitation, the filing of financing
statements), at the Charterer's expense, in order to establish, preserve,
protect and perfect its interest in and to the Vessel Interest and its
rights under this Agreement and the other Operative Documents and, so long
as any Secured Note is Outstanding, the mortgage and security interest of
the Indenture Trustee in the Indenture Estate granted or intended to be
created under the Indenture and the Ship Mortgage and the Indenture
Trustee's rights under this Agreement and the other Operative Documents,
subject only to Permitted Liens.
(d) Performance of Obligations. The Owner Participant will perform
--------------------------
and comply with all obligations imposed on the Owner Participant pursuant
to the provisions of the Charter or the Indenture in accordance with the
terms and conditions of each thereof.
(e) Instructions to the Owner Trust. The Owner Participant will not
-------------------------------
instruct or otherwise direct the Owner Trust to take, or omit to take, any
action in violation of the express covenants and agreements of the Owner
Trust in any Operative Document. Subject to Section 5 hereof, the Owner
Participant will direct and instruct the Owner Trust to execute and deliver
the Operative Documents to which it is to be a party and to comply with its
obligations set forth therein. The Owner Participant will not unreasonably
withhold its consent to or authorization of any consent requested of the
Owner Trust under the terms of any Operative Document which by
43
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its terms is not to be unreasonably withheld by the Owner Trust.
(f) Termination of Trust Agreement. Prior to the expiration or
------------------------------
earlier termination of the Charter pursuant to its terms, the Owner
Participant will not terminate or revoke, or consent to the termination or
revocation of, the Trust Agreement, or, prior to the release of the Lien of
the Indenture on the Indenture Estate, amend or modify such Trust Agreement
in any manner that would materially adversely affect the Indenture Estate
or limit in any material manner the rights of the Indenture Trustee set
forth therein.
(g) Election to Retain Title. If the Owner Trust shall elect to
------------------------
retain title to the Vessel Interest pursuant to Section 18(e) of the
Charter, the Owner Participant will cause the Owner Trust to perform its
obligations under Section 18(e) in accordance with the terms thereof.
(h) Additional Financings and Refundings. The Owner Participant
------------------------------------
shall, to the extent reasonably so requested by the Charterer, cooperate
with the Charterer, (i) to facilitate the issuance of Additional Notes
permitted by the provisions of Section 2.08(a) of the Indenture and (ii) to
refund or refinance the Secured Note then Outstanding in accordance with
the terms of the Indenture.
12.2 Agreements of Trust Company and Owner Trust. The Trust Company,
-------------------------------------------
in its individual capacity, covenants and agrees with respect to Sections
12.2(a)(i) and 12.2(b) and the Owner Trust covenants and agrees with respect to
Sections 12.2(a)(ii), 12.2(c), 12.2(d), 12.2(e), 12.2(f), 12.2(g), 12.2(h),
12.2(i) and 12.2(j) that:
(a) Discharge of Liens. (i) The Trust Company will not create or
------------------
permit to exist at any time, and will, at its own cost and expense,
promptly take such action as may be necessary duly to discharge all Owner's
Liens on all or any part of the Vessel Interest, the Trust Estate, the
Indenture Estate, or title thereto or any interest therein attributable to
it. Except for the Owner Participant's obligation pursuant to Section
13.1(a)(ii), the Trust Company shall indemnify, protect, defend, save and
keep harmless the Charterer, the Owner Participant, the Loan Participant
and the Indenture Trustee from and against any and all Claims that may be
imposed on, incurred by or asserted against such Person or the Vessel
Interest arising out of or secured by any such Lien.
44
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(ii) The Owner Trust will not create or permit to exist at any
time, and will, at its own cost and expense, promptly take such action as
may be necessary duly to discharge all Owner's Liens on all or any part of
the Vessel Interest, the Trust Estate, the Indenture Estate, or title
thereto or any interest therein attributable to it.
(b) Change of Chief Place of Business. The Trust Company shall give
---------------------------------
notice to the Charterer, the Owner Participant and the Indenture Trustee
prior to any change in its chief place of business or chief executive
office, or the office where the records concerning the accounts, contract
rights or general intangibles relating to the transactions contemplated
hereby are kept.
(c) Cooperation with the Charterer. The Owner Trust shall, to the
------------------------------
extent reasonably so requested by the Charterer, cooperate with the
Charterer, at the Charterer's expense, to enable the Charterer to make the
filings and recordings listed in Schedule 3, including, without limitation,
at any time and from time to time, upon the request of the Charterer
promptly and duly executing and delivering any and all such further
instruments, documents and financing statements (and continuation
statements related thereto) as the Charterer may request in order to
perform such covenants and to make such filings and recordings.
(d) Notice of Transfer of Assets. The Owner Trust shall not transfer
----------------------------
any of the estates, properties, rights, powers, duties or trusts of the
Owner Trust to any successor trustee or to any additional or separate
trustee under the Trust Agreement without giving prior written notice of
such transfer to the Owner Participant, the Charterer, the Pass Through
Trustee and the Indenture Trustee in accordance with Section 11 of the
Trust Agreement.
(e) Certain Transfers; Termination. Except as expressly permitted
------------------------------
hereby or by the terms of any other Operative Document or required by the
terms of the Head Lease, the Owner Trust will not transfer the Vessel
Interest to any Person prior to the expiration or earlier termination of
the Charter pursuant to its terms, other than a successor Owner Trust
appointed in accordance with the provisions of Section 11 of the Trust
Agreement, or terminate the Trust Agreement or distribute all or any part
of the Trust Estate to any Person.
(f) Owner Trust's Activities. The Owner Trust will not incur any
------------------------
indebtedness for money borrowed, or enter into any other activity, except
as contemplated by the
45
<PAGE>
Operative Documents or as may be necessary or advisable to carry out its
obligations or enforce its rights thereunder.
(g) Notice of Indenture Event of Default. Promptly after the Owner
------------------------------------
Trust has Actual Knowledge that the Indenture Event of Default attributable
to the Owner Trust has occurred and is continuing, the Owner Trust shall
deliver to the Charterer a notice of such Indenture Event of Default which
is not also a Charter Event of Default describing the same in reasonable
detail and, together with such notice or as soon thereafter as possible, a
description of the action that the Owner Trust has taken, is taking and
proposes to take with respect thereto.
(h) ERISA. The Owner Trust agrees that (i) it shall not permit any
-----
ERISA plan sponsored or maintained by it, any ERISA Affiliate or any PTE
90-24 Affiliate thereof to purchase or hold the Pass Through Certificate
and (ii) neither it nor any PTE 90-24 Affiliate thereof shall act in a
fiduciary capacity with respect to the purchase or holding by any ERISA
plan of the Pass Through Certificates, in the case of (i) or (ii) which
would constitute a non-exempt "prohibited transaction" within the meaning
of Section 406 of ERISA or Section 4975 of the Code.
(i) Ownership for Tax Purposes. The Owner Trust will not take any
--------------------------
position inconsistent with its ownership of the Vessel Interest for U.S.
federal, state, or local income tax purposes.
(j) U.K. Documents. Owner Trust will not consent to any amendment or
--------------
modification to the U.K. Documents which would adversely affect the
Indenture Trustee, the holder of the Secured Note or the Pass Through
Trustee without the prior written consent of the Indenture Trustee.
12.3 Agreements of Pass Through Trustee. The Pass Through Trustee
----------------------------------
covenants and agrees that:
(a) Transfer of Secured Note. Any sale, transfer or assignment
------------------------
(including, without limitation, a transfer pursuant to the exercise of
remedies with respect to any Secured Note) by the Pass Through Trustee of
any Secured Note or of all or any part of its interest hereunder or under
the Indenture shall be on the express condition that the purchaser,
transferee or assignee, as the case may be, shall agree to be bound by the
terms and provisions applicable to the Pass Through Trustee contained in
this Agreement, the Secured Note and the Indenture. The acceptance by any
person of the Secured
46
<PAGE>
Note shall constitute such Person's agreement to be bound by the terms and
provisions of this Agreement and the Indenture. The Pass Through Trustee
will not make any such sale, transfer or assignment to any Person unless
such Person delivers to the Charterer, the Owner Trust, the Indenture
Trustee and the Owner Participant (i) a written representation and warranty
by such Person (or an opinion of counsel reasonably satisfactory to the
Charterer, the Owner Trust and the Owner Participant) that such sale,
transfer or assignment to and the holding of any such interest by, such
Person (1) will not result in a "prohibited transaction" as defined in
Section 406 of ERISA or Section 4975 of the Code, or (2) are covered by an
exemption contained in ERISA or an administrative exemption adopted
thereunder and (ii) a written undertaking by such Person that is
substantially identical to the covenant made by the Pass Through Trustee in
this Section 13.3(a) (including this clause (ii)).
(b) Instructions to Indenture Trustee. The Pass Through Trustee will
---------------------------------
not instruct or otherwise direct the Indenture Trustee to take, or omit to
take, any action in violation of the express covenants and agreements of
the Indenture Trustee in any Operative Document.
(c) ERISA. The Pass Through Trustee agrees that (i) it shall not
-----
permit any ERISA Plan sponsored or maintained by it, any ERISA Affiliate or
any PTE 90-24 Affiliate thereof to purchase or hold any Pass Through
Certificate and (ii) neither it nor any PTE 90-24 Affiliate thereof shall
act in a fiduciary capacity with respect to the purchase or holding by any
ERISA Plan of the Pass Through Certificates, in the case of (i) or (ii)
which would constitute a non-exempt "prohibited transaction" within the
meaning of Section 406 of ERISA or Section 4975 of the Code.
12.4 Agreements of Indenture Trustee. State Street Bank and Trust
-------------------------------
Company, in its individual capacity, to the extent set forth herein, and as
Indenture Trustee, covenant and agree, as follows:
(a) Discharge of Liens. State Street Bank and Trust Company
------------------
covenants and agrees in its individual capacity that it will not create or
permit to exist at any time, and will, at its own cost and expense,
promptly take such action as may be necessary to discharge, all of
Indenture Trustee's Liens on all or any part of any Vessel Interest, the
Trust Estate or Indenture Estate, or title thereto or any interest therein.
The Indenture Trustee shall indemnify, protect, defend, save and keep
harmless the Charterer, the Owner Participant, the Loan
47
<PAGE>
Participant and the Owner Trust from and against any and all Claims imposed
on, incurred by or asserted against such Person arising out of the
Indenture Trustee's Lien.
(b) Cooperation With the Charterer. The Indenture Trustee shall, to
------------------------------
the extent reasonably requested by the Charterer, cooperate with the
Charterer, at the Charterer's expense, to enable the Charterer to perform
the Indenture Trustee's covenants contained in Section 11.5 and to make the
filings and recordings listed in Schedule 3, including, without limitation,
at any time and from time to time, upon request of the Charterer promptly
and duly executing and delivering any and all such further instruments,
documents and financing statements (and continuation statements related
thereto) as the Charterer may request in order to perform such covenants
and to make such filings and recordings.
(c) Original Charter. Except to the extent otherwise required by the
----------------
Indenture and so long as it remains as Indenture Trustee, State Street Bank
and Trust Company agrees in its individual capacity that it will maintain
possession of the version of the Charter identified in a receipt therefor
executed by the Indenture Trustee as the original executed counterpart of
the Charter.
(d) Performance of Obligations. The Indenture Trustee will perform
--------------------------
and comply with the provisions of the Indenture which, upon satisfaction of
any applicable conditions set forth therein, require payment or the
tendering of performance to the Charterer.
12.5 Confidentiality. Each of the parties hereto agrees that all
---------------
matters relating to this Agreement, the other Operative Documents and the
transactions contemplated hereby shall be kept strictly confidential,
including, without limitation, the substance of its commercial terms, and
any disclosure of such matters shall be made only with the prior written
consent of the other parties hereto. The obligations set forth in this
Section shall survive any termination or rescission of this Agreement, the
Operative Documents, and the Pass Through Trust Agreement, as the case may
be. Nothing in this Section shall prevent, or require the consent of any
party to, any disclosure:
(a) required by the order of any court of competent jurisdiction;
(b) as may be required by any Governmental Rule or Governmental
Authority;
48
<PAGE>
(c) by either party to its legal and other professional advisers, or
in the course of or for the purpose of any arbitration or court
proceedings;
(d) of information which has otherwise become public information
through no breach of this Section 13.5 by the disclosing party or through
filings made with the SEC; or
(e) in the case of the Pass Through Trustee and Indenture Trustee as
may be reasonably necessary or desirable to perform its duties on behalf of
the holders of the Secured Notes and Pass Through Certificates.
12.6 Further Assurances. In the event of the sale of the Vessel pursuant
------------------
to Clause 23 of the Head Lease, the Owner Participant, the Charterer and the
Indenture Trustee shall take such steps and sign such documents as may
reasonably be required by the Owner Trust to effect such sale.
SECTION 13. INDEMNIFICATION.
---------------
13.1 General Indemnification.
-----------------------
(a) Indemnification. The Charterer agrees, whether or not any of the
---------------
transactions contemplated hereby shall be consummated, to assume liability for,
and to indemnify, protect, save and keep harmless each Indemnitee, on an After-
Tax Basis, from and against any and all Claims that may be imposed on, incurred
by or asserted against any Indemnitee, whether or not such Indemnitee shall also
be indemnified as to any such Claim by any other Person, in any way relating to
or arising out of (i) the Vessel or the Vessel Interest or any part thereof,
(ii) the Operative Documents, the U.K. Documents, the Pass Through Trust
Agreement, the Pass Through Trust Supplement, or the transactions contemplated
thereby or the issuance of the Secured Note or the Pass Through Certificates,
(iii) the manufacture, financing, refinancing, design, construction, inspection,
purchase, ownership, acquisition, acceptance, rejection, delivery, nondelivery,
possession, transportation, charter, sub-charter, sub-sub-subcharter,
mortgaging, granting of a security interest in, preparation, installation,
condition, transfer of title, rental, use, operation, storage, maintenance,
modification, alteration, repair, assembly, sale, return, abandonment or other
application or disposition of all or any part of the Vessel or the Vessel
Interest or any interest therein, including, without limitation, (A) Claims or
penalties arising from any violation of law or liability in tort (strict or
otherwise), (B) loss of or damage to any property or the environment (including,
without limitation, clean-up costs, response costs and costs of corrective
action) or death or injury to any Person, (C) latent or other defects, whether
or
49
<PAGE>
not discoverable, and (D) any claim for patent, trademark or copyright
infringement or (iv) any breach of or failure to perform or observe, or any
other breach of or failure to perform or observe, or any other non-compliance
with, any covenant, condition or agreement or other obligation to be performed
by the Charterer or the Guarantor under any Operative Document, or the falsity
of any representation or warranty of the Charterer or the Guarantor in any of
the Operative Documents, the Pass Through Trust Agreement or in any Officer's
Certificate delivered by the Charterer or the Guarantor; provided, however, that
-------- -------
the Charterer shall not be required to indemnify any Indemnitee under this
Section 13.1 for (1) any Claim in respect of the Vessel to the extent
attributable to acts, events, circumstances or conditions which arise, occur or
exist after the earlier of: (I) the return of possession of the Vessel Interest
to the Owner Trust or its designee pursuant to the terms of the Charter (other
than as a result of a Charter Event of Default) or (II) the payment by the
Charterer of all amounts required to be paid under the Charter following an
Event of Loss with respect to the Vessel, (2) any Claim to the extent resulting
from the willful misconduct or gross negligence of such Indemnitee (other than
willful misconduct or gross negligence imputed to such Indemnitee as a matter of
law without regard to any action or inaction of such Indemnitee and solely by
reason of its interest in the Vessel Interest), (3) any Transaction Expense or
any other expense or Claim expressly provided under any of the Operative
Documents to be paid or borne by such Indemnitee at its own expense (or without
reimbursement or indemnification), (4) any Claim to the extent resulting from
the offer, sale, disposition or transfer by such Indemnitee of all or part of
its interest in the Vessel Interest, the Secured Note, the Pass Through
Certificates or the Trust Estate, other than any such transfer or disposition
(i) resulting from a continuing Charter Event of Default, (ii) in connection
with an Event of Loss, or (iii) to a successor Owner Trustee, and, in each case,
without duplication of any amounts recovered pursuant to the Charter, (5) any
Claim to the extent resulting from a breach by such Indemnitee of any of its
representations, warranties or covenants in the Pass Through Trust Agreement or
in any of the Operative Documents or in any Officer's Certificate delivered
pursuant thereto, or to the extent resulting from a knowing violation of law by
such Indemnitee, unless such violation of law is the result of the failure of
any other party to comply with its obligations under any Operative Document to
which it is a party (other than, in the case of the Owner Participant, such a
failure by the Owner Trustee as a result of the direction or instruction of the
Owner Participant and, in the case of the Loan Participant, such failure by the
Indenture Trustee as a result of the direction or instruction of (or a vote or
consent in favor of such direction or instruction by) the Loan Participant), (6)
any Claims in respect of Taxes (other
than
50
<PAGE>
Taxes required to be paid to indemnify such Indemnitee under this Section 13.1
on an After-Tax Basis) whether or not the Charterer is obligated to indemnify
for such Taxes under Section 13.2, (7) any Claim principally resulting from any
business, transaction or other activity in which such Indemnitee is engaged,
other than the transactions contemplated hereby, by the Pass Through Trust
Agreement or by any of the other Operative Documents, except to the extent
resulting from a Charter Event of Default, (8) any Claim to the extent
attributable to the authorization or giving or withholding by such Indemnitee of
any future amendments, supplements, waivers or consents with respect to any
Operative Document or the Pass Through Trust Agreement, other than such as have
been requested by the Charterer or Guarantor, or such that occur as a result of
a Charter Event of Default that shall have occurred and is continuing, or such
as are expressly required by any Operative Document or the Pass Through Trust
Agreement, (9) any Claim resulting from any Lien resulting from any Claim
against such Indemnitee for which such Indemnitee is not indemnified hereunder
as a result of any other exclusion under this Section 13.1, (10) any Claim
resulting from the Indenture Event of Default which is not occasioned by a
Charter Event of Default or Charter Default, (11) with respect to the Owner
Trust, the Trust Company, the Resident Trustee and the Owner Participant, any
Claim resulting from the indemnity given by the Owner Participant pursuant to
Section 6.3 of the Trust Agreement or any indemnification pursuant thereto,
except to the extent that the indemnitee under such Section 6.3 would be
otherwise entitled to indemnification from the Charterer under this Section
13.1, (12) any Claim of the Pass Through Trustee to the extent that it is
indemnified by the Charterer pursuant to the Pass Through Trust Agreement, (13)
Claims against such Indemnitee resulting from a violation of ERISA or Section
4975 of the Code, other than, in the case of an Owner Participant, the making
and holding of its investment pursuant to this Participation Agreement or the
taking of any action at the request or direction of the Charterer, (14) any
claim which is an ordinary and usual operating or overhead expense of such
Indemnitee, (15) failure on the part of the Indenture Trustee, the Owner Trust
or the Pass Through Trustee, as the case may be, to distribute in accordance
with the Indenture, or the Trust Agreement, or the Pass Through Trust Agreement,
as the case may be, any amounts received and distributable by it thereunder,
(16) any Claim that constitutes or arises from such Indemnitee's exercise of its
contest rights with respect to a Permitted Lien attributable to such Indemnitee,
(17) any Claim of such Indemnitee relating to or arising from the inaccuracy,
incompleteness or misleading nature of any statement or representation included
in any registration statement issued in connection with any of an offer, sale or
disposition of any Secured Note, Pass Through Certificates or similar interest,
which statement or representation is based
51
<PAGE>
on written information supplied or made available by such Indemnitee
specifically for inclusion in such registration statement, (18) any Claim of
such Indemnitee (x) arising out of its inability to invest in another
transaction or for any other purpose as a result of such Indemnitee's
participation or investment of funds in connection with the transactions
contemplated by this Agreement, or (y) for which a payment of Termination Value
paid by a Charterer in accordance with the terms of the Operative Documents is
intended to compensate such Indemnitee, (19) any Claim to the extent that such
Claim would not have arisen but for the appointment of a successor or an
additional Owner Trustee without the consent of the Charterer, (20) any Claim to
the extent that such Claim relates to amounts payable by an Owner Participant to
the Indenture Trustee in respect of the Secured Note with respect to any Premium
thereon as a result of a Indenture Event of Default which is not occasioned by a
Charter Event of Default or any Premium payable by the Charterer or the Owner
Participant pursuant to Section 3.06 of the Indenture and (21) any Claim arising
from the negligence or strict liability of such Indemnitee to the extent
indemnity therefor would be in violation of applicable law.
(b) Notices. If the Charterer shall obtain knowledge of any action,
-------
suit, proceeding or written notice of any Claim indemnified against under this
Section 13.1, the Charterer shall give prompt notice thereof to the appropriate
Indemnitee or Indemnitees, as the case may be, and if any Indemnitee shall
obtain any such knowledge, such Indemnitee shall give prompt notice thereof to
the Charterer; provided that the failure of such Indemnitee to so notify the
--------
Charterer shall not affect the Charterer's indemnification obligations under
this Section 13.1 to such Indemnitee except to the extent of any damage to
Charterer resulting from such failure. With respect to any amount that the
Charterer is requested by an Indemnitee to pay by reason of this Section 13.1,
such Indemnitee shall, if so requested by the Charterer and prior to any
payment, submit such additional information in such Indemnitee's possession to
the Charterer as the Charterer may reasonably request properly to substantiate
the requested payment.
(c) Contests. Subject to the rights of insurers under policies of
--------
insurance maintained pursuant to Section 16 of the Charter, the Charterer shall
have the right, at its sole cost and expense, to investigate, and the right in
its sole discretion to defend or compromise, any Claim for which indemnification
is sought under this Section 13.1, and the Indemnitee shall cooperate, at the
Charterer's expense, with all reasonable requests of the Charterer in connection
therewith. The Charterer will provide the Indemnitee with such information not
within the control of such Indemnitee, as is in the Charterer's control or is
reasonably available to
52
<PAGE>
the Charterer, which such Indemnitee may reasonably request and shall otherwise
cooperate with such Indemnitee so as to enable such Indemnitee to fulfill its
obligations under this Section 13.1. Where the Charterer or the insurers under
a policy of insurance maintained by the Charterer undertake the defense of an
Indemnitee with respect to a Claim, no additional legal fees or expenses of such
Indemnitee in connection with the defense of such claim shall be indemnified
hereunder unless such fees or expenses were incurred at the request of the
Charterer or such insurers; provided, however, that if (i) in the written
-------- -------
opinion of counsel to such Indemnitee an actual or potential material conflict
of interest exists where it is advisable for such Indemnitee to be represented
by separate counsel or (ii) such Indemnitee has been indicted or otherwise
charged in a criminal complaint in connection with a Claim not excluded by
Section 13.1(a) and such Indemnitee informs the Charterer that such Indemnitee
desires to be represented by separate counsel, the reasonable fees and expenses
of such separate counsel shall be borne by the Charterer. Subject to the
requirements of any policy of insurance, an Indemnitee may participate at its
own expense in any judicial proceeding controlled by the Charterer pursuant to
the preceding provisions; provided that such party's participation does not, in
--------
the reasonable opinion of the independent counsel appointed by the Charterer or
its insurers to conduct such proceedings, significantly interfere with such
control; and such participation shall not constitute a waiver of the right to
receive the indemnification provided in this Section 13.1. Notwithstanding
anything to the contrary contained herein, (x) the Charterer shall not under any
circumstances be liable for the fees and expenses of more than one counsel for
each of (i) the Owner Participant and the Owner Trust (and their respective
successors and permitted assigns, agents and servants) and (ii) the Loan
Participants and the Indenture Trustee (and their respective successors and
permitted assigns, agents and servants), and (y) during the continuance of a
Charter Event of Default, the Charterer shall not compromise any Claim without
the consent of the applicable Indemnitee, such consent not to be unreasonably
withheld.
(d) Subrogation. Upon payment in full of any Claim by the Charterer
-----------
pursuant to this Section 13.1 to or on behalf of an Indemnitee, the Charterer,
without any further action, shall be subrogated to any and all claims that such
Indemnitee may have in respect of the matters against which such indemnity was
given (other than claims under any insurance policies maintained by such
Indemnitee). Such Indemnitee agrees to cooperate with the Charterer and to
execute such further instruments to permit the Charterer, at the Charterer's
expense, to pursue such claims, to the extent reasonably requested by the
Charterer.
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<PAGE>
(e) Refunds. Upon receipt by any Indemnitee of a repayment or
-------
reimbursement of all or any part of any Claim for which the Charterer shall have
paid for any Indemnitee or for which the Charterer shall have reimbursed any
Indemnitee pursuant to this Section 13.1, such Indemnitee shall pay to the
Charterer, as promptly as practicable after the receipt thereof, the amount of
such repayment or reimbursement plus any interest received by such Indemnitee on
such amount plus the amount of any tax savings realized by such Indemnitee as a
result of such payment made to the Charterer.
(f) Payments; Verification. Any amount payable to any Indemnitee
----------------------
pursuant to this Section 13.1 shall be paid to such Indemnitee promptly upon
receipt of a written demand therefor from such Indemnitee, accompanied by a
written statement describing the basis for such indemnity and the computation of
the amount so payable and, if requested by the Charterer, such determination
shall be verified by a nationally recognized independent accounting firm
mutually acceptable to the Charterer and the Indemnitee at the Charterer's
expense, unless such accounting firm determines that the amount payable by the
Charterer is less than 95 percent (95%) of the amount shown on such written
statement, in which case such verification shall be at such Indemnitee's
expense.
(g) Trustee's Fees. The Charterer shall pay the reasonable ongoing
--------------
fees and expenses of the Managing Trustee, Delaware Trustee, the Pass Through
Trustee and the Indenture Trustee for acting as such to the extent not included
in the Transaction Expenses. The Charterer shall have the right to receive and
review any substantiation relating to any such ongoing expense as it may
reasonably request.
13.2 General Tax Indemnification.
---------------------------
(a) Payment of Taxes. The Charterer agrees that each payment of Base
----------------
Hire and Termination Value pursuant to the Charter shall be free of all
withholding with respect to Taxes of any nature whatsoever, and in the event
that the Charterer shall be required by applicable law to make any such
withholding for any such payment, (x) Base Hire and Termination Value payable
shall be increased so that after making all required withholdings the Tax
Indemnitee receives an amount equal to the Hire it would have received had such
withholdings not been made, (y) the Charterer shall make such withholdings and
(z) the Charterer shall pay the full amount withheld to the relevant taxing
authority in accordance with applicable law. If for any reason, the Charterer
is required to make any payment to a taxing authority or to any Tax Indemnitee
as a result of the application of the preceding sentence or otherwise that
relates to or is a result of any Tax imposed on or with respect to any Tax
Indemnitee which Tax
54
<PAGE>
(in whole or in part) is not the responsibility of the Charterer under the terms
of this Section 13.2, then the Tax Indemnitee in respect of whom such Tax is an
excluded Tax hereunder shall, within 30 days after receipt of notice of payment
of the Tax and appropriate payment documentation with respect thereto, pay to
the Charterer an amount which equals the amount paid by the Charterer with
respect to or as a result of such Tax that is not the responsibility of the
Charterer (including any expenses or other charges borne by the Charterer)
increased by (but subject to the proviso in Section 13.2(f)) the amount of tax
savings to such Tax Indemnitee attributable to the making of such payment to the
Charterer. Each Tax Indemnitee also agrees (subject to the proviso in Section
13.2(f)) to reimburse the Charterer for any amounts withheld for which such Tax
Indemnitee obtains a credit or refund, within 30 days after receipt of such
credit or refund.
Except as provided in Section 13.2(b), the Charterer agrees to pay,
and to indemnify, protect, defend, save and keep harmless each Tax Indemnitee,
on an After-Tax Basis, whether or not any or all of the transactions
contemplated hereby are consummated in whole or in part, from and against any
and all taxes, impositions, fees, levies, assessments, duties, withholdings,
governmental claims or other charges of any nature whatsoever (together with any
related interest, fines, penalties or additions to tax), including, without
limitation, rental, income, withholding, sales, use, transfer, leasing, personal
property, excise, receipts, franchise, value-added, stamp, filing, recording,
documentation or license taxes, however imposed or asserted, by any United
States federal, state or local government or taxing authority (including any
possession or territory thereof) or any foreign government or taxing authority
or subdivision thereof, or any international taxing authority or any subdivision
or taxing authority of any thereof (all the foregoing being herein collectively
called "Taxes" or, separately, a "Tax"), upon or with respect to (i) the Vessel
----- ---
Interest or any portion thereof or interest therein, (ii) the acquisition,
purchase, sale, financing, chartering, subchartering, sub-subchartering and sub-
sub-subchartering, ownership, maintenance, repair, modification, replacement,
removal, substitution, redelivery, alteration, insuring, control, use,
operation, manufacture, assembly, delivery, possession, repossession, location,
storage, importation, exportation, refinancing, refunding, transfer of title,
registration, reregistration, transfer of registration, return or other
disposition thereof of all or any part of the Vessel Interest or any portion
thereof or interest therein, (iii) the rental payments (including, without
limitation, all Base Hire and Supplemental Hire), receipts or earnings arising
from the Vessel Interest or any portion thereof or interest therein, or payable
pursuant to the Charter, or any other payment or right to receive payment
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pursuant to the Operative Documents or the Pass Through Trust Agreement or Pass
Through Certificate (including, without limitation, any payment of principal,
interest, discount or premium on or with respect to the Secured Note), (iv) the
Operative Documents and any other documents contemplated hereby or thereby and
amendments and supplements thereto, or the issuance, refunding, refinancing or
resetting of the Secured Note or the Pass Through Certificate or any other
document executed and delivered in connection with the consummation of the
transactions contemplated by the Operative Documents or Pass Through Trust
Agreement or the interest of any Tax Indemnitee in any of the foregoing, or the
execution, amendment, issuance or delivery of any of the foregoing, (v) the
Indenture Estate or Trust Estate or Pass Through Trust or the property, or the
income or other proceeds received with respect to the property, held by the
Indenture Trustee under the Indenture or the Owner Trustee under the Trust
Agreement, or (vi) otherwise arising out of, with respect to, or in connection
with the transactions contemplated by the Operative Documents, the Pass Through
Certificate, or the Pass Through Trust Agreement.
(b) Exclusions from General Tax Indemnity. The provisions of Section
-------------------------------------
13.2(a) shall not apply to, and the Charterer shall have no liability to a Tax
Indemnitee under Section 13.2(a) with respect to:
(1) Taxes (other than such Taxes that are sales, use, rental,
property or ad valorem Taxes) imposed on, based on or measured by, net
-- -------
income, receipts, capital, net worth, excess profits or conduct of business
which are imposed by the United States federal, or any state or local
government therein, or any foreign or international taxing authority,
including any franchise or privilege Taxes, minimum Taxes, value added
Taxes imposed in lieu of net income Taxes, withholding Taxes (other than
withholding Taxes resulting from either the Owner Trust or Owner
Participant not being a United States person for United States federal
income tax purposes), and any Taxes on or measured by any items of tax
preference;
(2) Taxes, including, without limitation, sales and transfer
Taxes, that result from any voluntary or involuntary transfer by such Tax
Indemnitee of any interest in the Owner Participant, the Vessel Interest,
the Trust Estate or any portion of any of the foregoing, or any interest
arising out of the Operative Documents or Pass Through Trust Agreement or
the Secured Note or Pass Through Certificate; provided, however, that this
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Section 13.2(b)(2) shall not apply to any
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transfer that (A) relates to the exercise of remedies in connection with a
Charter Event of Default; (B) results from a Event of Default or from an
Event of Loss; or (C) results from the replacement, removal or substitution
of all or any part of the Vessel Interest;
(3) Taxes imposed by any jurisdiction that would not have been
imposed on a Tax Indemnitee but for its activities in such jurisdiction
unrelated to the transactions contemplated by the Operative Documents or
Pass Through Trust Agreement;
(4) Taxes that result from (A) the willful misconduct or gross
negligence of such Tax Indemnitee, (B) the breach or inaccuracy by such Tax
Indemnitee of any of its representations, covenants and obligations under
the Operative Documents, (C) the failure of a Tax Indemnitee to file tax
returns properly and on a timely basis or to claim a deduction or credit to
which it is entitled (provided that such Tax Indemnitee shall not be
obligated to claim a deduction or credit if it requests but fails to
receive an opinion of Dewey Ballantine or other independent counsel
selected by such Tax Indemnitee and reasonably acceptable to the Charterer
that it is entitled to claim such deduction or credit), or (D) the failure
of a Tax Indemnitee to comply with certification, reporting or other
similar requirements of the jurisdiction imposing such Tax; provided,
--------
however, that the exclusions set forth in subclauses (C) and (D) shall not
-------
apply if any such failure is the result of the failure of the Charterer to
(I) perform its obligations under Section 13.2(c), or to perform its duties
and responsibilities pursuant to any of the Operative Documents, (II)
timely and properly notify such Tax Indemnitee of the applicable filing,
certification, reporting or other similar requirements, or (III) provide
reasonable assistance in complying with any such requirement;
(5) Taxes which are attributable to any period or circumstance
occurring after the expiration or earlier termination of the Charter,
except to the extent attributable to (A) a failure of the Charterer to
fully discharge its obligations under the Charter, (B) Taxes imposed on or
with respect to any payments that are due after the expiration or earlier
termination of the Charter and which are attributable to a period or
circumstance occurring
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prior to such expiration or earlier termination or (C) Taxes that relate to
events, matters or circumstances occurring prior to such expiration or
earlier termination;
(6) Taxes which are based on or measured by fees or compensation
received by the Owner Trustee for acting as Owner Trustee under the Trust
Agreement, the Indenture Trustee for acting as Indenture Trustee under the
Indenture or Pass Through Trustee for acting as Pass Through Trustee under
the Pass Through Trust Agreement;
(7) other than with respect to Owner Participants and the
Shareholders therein, Taxes to the extent such Taxes would not have been
imposed on a Tax Indemnitee if such Tax Indemnitee were a United States
person for United States federal income tax purposes;
(8) any Tax that is being contested in accordance with the
provisions of Section 13.2(e) during the pendency of such contest, but only
for so long as such contest is continuing in accordance with such Section
and payment is not otherwise required pursuant to such Section;
(9) Taxes as to which any Tax Indemnitee fails to comply with its
contest obligations under Section 13.2(e) in any material respect, but only
to the extent such failure materially impairs the Charterer's contest
rights with respect to the Taxes that are the subject of the contest and is
not due to any act or failure to act by the Charterer; provided, however,
-------- -------
that this Section 13.2(b)(9) shall not constitute a waiver by the Charterer
of its rights, if any, to assert and sue upon any claims it may have
against the Tax Indemnitee by reason of its failure to comply with its
obligations under Section 13.2(e) of this Agreement;
(10) Taxes imposed as a result of the trust described in the Trust
Agreement or the Pass Through Trust not being treated as a grantor trust or
other conduit entity for federal, state or local tax purposes;
(11) any Taxes with respect to a transferee or subsequent
transferee to the extent of the excess of such Taxes over the amount of the
Taxes that would have been imposed had there not been a transfer by the
initial Tax Indemnitee after
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the Closing Date of (i) an interest in the Owner Participant, the Vessel
Interest, or of a beneficial interest in the Trust Estate or any portion of
any of the foregoing, or (ii) any interest arising under any Operative
Document or Pass Through Trust Agreement or any Secured Note or Pass
Through Certificate;
(12) Taxes which have been included in Owner's Cost;
(13) any Taxes imposed as a result of, or in connection with, any
"prohibited transaction," within the meaning of Section 4975 of the Code,
Section 406 or ERISA or any comparable laws of any governmental authority,
engaged in by any Tax Indemnitee other than, in the case of the Owner
Participant, the making and holding of its investment in the Interest or
the taking of any action at the request or direction of the Charterer;
(14) Taxes imposed on the Owner Trust resulting from a Lessor's
Lien;
(15) Taxes resulting from an amendment to an Operative Document
which is not consented to by the Charterer in writing; or
(16) any Tax in the nature of an intangible tax or similar tax upon
or with respect to the value of the interest of the Indenture Estate or a
Certificateholder, as the case may be, in any of the Secured Note or
Certificate imposed by any government or taxing authority.
Notwithstanding anything contained herein or any other Operative
Document to the contrary, the Charterer acknowledges and agrees to indemnify and
hold harmless the Owner Participant and Owner Trust against any and all
withholding Taxes (inclusive of any interest and penalties imposed for any
failure to timely withhold such Taxes) imposed on or with respect to any amounts
paid to Loan Participant as an indemnified Tax for purposes of this Section
13.2, unless such withholding is due to (i) the Owner Trust not being a United
States person for United States federal income tax purposes, (ii) a failure of
the Owner Participant or the Owner Trustee to comply with any provision of the
Operative Documents (including Section 13.2(b)(4)) except if such failure is the
result of the failure of the Charterer to perform its obligations under Section
13.2(c) or (iii) the breach or inaccuracy of any representations, covenants or
obligations by the Owner Participant or Owner Trust under the
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Operative Documents. If a Tax (including any related interest, fines, penalties
or addition to Tax) results from a failure of any Tax Indemnitee to comply with
its obligations under the Operative Documents or the Pass Through Trust
Agreement and the Charterer is required to indemnify another Tax Indemnitee
against the imposition of such Tax, then the Tax Indemnitee whose failure
resulted in the imposition of such Tax shall, within 30 days after receipt of
notice of payment of the Tax and appropriate payment documentation with respect
thereto, pay to the Charterer an amount which equals the amount paid by the
Charterer with respect to or as a result of such Tax (including any expenses or
other charges borne by the Charterer) increased by (but subject to the proviso
in Section 13.2(f)) the amount of tax savings to such Tax Indemnitee
attributable to the making of such payment to the Charterer.
The provisions of this Section 13.2(b) shall not apply to any Taxes
imposed in respect of the receipt or accrual of any indemnity payment made by
the Charterer pursuant to this Section 13.2 hereof.
(c) Reports. If any report, return, certification or statement is
-------
required to be filed with respect to any Tax that is subject to indemnification
under this Section 13.2, the Charterer shall timely prepare and file the same
(except for (i) any report, return or statement relating to any Taxes described
in Section 13.2(b)(1) or any Taxes in lieu of or enacted in substitution for any
of the foregoing or (ii) any other report, return, certification or statement
which the Tax Indemnitee has notified the Charterer that the Tax Indemnitee
intends to prepare and file); provided that such Tax Indemnitee shall have
--------
furnished the Charterer, at the Charterer's expense, with such information
reasonably necessary to prepare and file such returns as is within such Tax
Indemnitee's control. The Charterer shall either file such report, return,
certification or statement (so as to show the ownership of the Vessel Interest
in the Owner Trust) and send a copy of such report, return, certification or
statement to the Owner Participant and the Owner Trust, or, where not so
permitted to file, shall notify the Owner Participant and the Owner Trust of
such requirement within a reasonable period of time prior to the due date for
filing (without regard to any applicable extensions) and prepare and deliver
such report, return, certification or statement to the Owner Participant and the
Owner Trust. In addition, within a reasonable time prior to the time such
report, return, certification or statement is to be filed the Charterer shall,
to the extent permitted by law, cause all billings of such Taxes to be made to
each Tax Indemnitee in care of the Charterer, make payment thereof and furnish
written evidence of such payment. The Charterer shall furnish promptly upon
written request such data, records and documents as any Tax Indemnitee may
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reasonably require of the Charterer to enable such Tax Indemnitee to comply with
requirements of any taxing jurisdiction arising out of such Tax Indemnitee's
participation in the transactions contemplated by this Agreement, including,
without limitation, requirements relating to Taxes described in Section
13.2(b)(1).
(d) Payments. Any Tax indemnified hereunder shall be paid directly
--------
when due to the applicable taxing authority if direct payment is permitted, or
shall be reimbursed to a Tax Indemnitee on demand if paid by such Tax Indemnitee
in accordance herewith. Except as otherwise provided in this Section 13.2, all
amounts payable to a Tax Indemnitee hereunder shall be paid promptly in
immediately available funds, but in no event later than the later of (i) 10 days
after the date of such demand or (ii) 10 days before the date the Tax to which
such amount payable hereunder relates is due or is to be paid (ignoring
extension of time) and shall be accompanied by a written statement (which
written statement shall, at the Charterer's request, be verified by a nationally
recognized independent accounting firm mutually acceptable to the Charterer and
the Tax Indemnitee, such verification to be at the Charterer's expense unless
such accountants determine that the amount payable by the Charterer is less than
ninety-five percent (95%) of the amount shown on such written statement, in
which event it will be paid by the Tax Indemnitee) describing in reasonable
detail the Tax and the computation of the amount payable. In the case of a Tax
subject to indemnification under this Section 13.2 which is properly subject to
a contest in accordance with Section 13.2(e), the Charterer (i) shall be
obligated to make any advances with respect to such Tax whenever required under
Section 13.2(e) and (ii) shall pay such Tax (in the amount finally determined to
be owing in such contest) prior to the latest time permitted by the relevant
taxing authority for timely payment after a Final Determination.
(e) Contests; Refunds. (i) In the event a taxing jurisdiction makes
-----------------
a claim with respect to any Tax for which a Charterer may be liable under this
Section 13.2 (a "Tax Claim"), the Charterer may cause the applicable Tax
--- -----
Indemnitee to contest such Tax Claim as set forth herein. In the event any Tax
Indemnitee receives notice of a Tax Claim or potential Tax Claim which may be
indemnified under this Section 13.2, such Tax Indemnitee shall promptly notify
the Charterer thereof. If requested by the Charterer in writing within 30 days
of receipt of such notice (or, if sooner, on or before the last date upon which
the contest of such Tax can be initiated, provided that the Tax Indemnitee's
notice to the Charterer discloses such date), such Tax Indemnitee shall, upon
receipt of an indemnity satisfactory to it for all reasonable costs, expenses,
losses, legal and accountants' fees and disbursements, and for all penalties,
fines,
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additions to tax and interest, and at the expense of the Charterer, contest the
imposition of any Tax Claim by (1) resisting payment thereof, if such Tax
Indemnitee in its reasonable discretion shall determine such course of action to
be appropriate, (2) not paying the same except under protest, if protest is
necessary and proper, or (3) if payment shall be made, using reasonable efforts
to obtain a refund thereof in appropriate administrative and judicial
proceedings, or both; provided, however, that in no event will such Tax
-------- -------
Indemnitee be required to contest or continue to contest any Tax Claim unless
such Tax Indemnitee and the Owner Participant shall have reasonably determined
that the action to be taken will not result in any material risk of sale,
forfeiture or loss of, or the creation of any lien (except if the Charterer
shall have adequately bonded such lien, or otherwise made provision to protect
the interests of such Tax Indemnitee and the Owner Participant in a manner
reasonably satisfactory to such Tax Indemnitee and the Owner Participant) on,
the Vessel Interest, any part thereof or interest therein. If such contest
shall involve payment of the Tax Claim, the Charterer shall have advanced to
such Tax Indemnitee the amount of such payment plus interest, penalties and
additions to tax with respect thereto on an interest-free basis, and shall have
agreed to indemnify the Tax Indemnitee, on an After-Tax Basis, for any adverse
tax consequences resulting from such advance. If permitted by applicable law,
the Charterer may contest, at its own expense, the imposition of any Tax Claim
if the proviso in the second preceding sentence is satisfied. In any contest
controlled by the Tax Indemnitee, such Tax Indemnitee will consult with the
Charterer and permit the Charterer to participate in a reasonable manner in the
conduct of the contest.
A Tax Indemnitee shall not make, accept or enter into a settlement or
other compromise with respect to any Taxes indemnified pursuant to this Section
13.2 (which proceeding the Tax Indemnitee is required to continue), or forego or
terminate any such proceeding with respect to Taxes indemnified pursuant to this
Section 13.2, without the prior written consent of the Charterer.
Notwithstanding the foregoing, if a Tax Indemnitee refuses to contest any Tax
Claim or effects a settlement or compromise of any such Tax that the Tax
Indemnitee is required to contest or otherwise terminates any such contest
without such prior written consent of the Charterer, such Tax Indemnitee shall
be deemed to have waived its right to any indemnity payment by the Charterer
that would otherwise be payable by the Charterer pursuant to this Section 13.2
in respect of such Tax Claim.
(ii) Upon receipt by any Tax Indemnitee of a repayment or refund of
all or any part of any Tax which such Charterer shall have paid for, or
advanced to, such Tax Indemnitee or for which the Charterer shall have
reimbursed
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such Tax Indemnitee pursuant to this Section 13.2, such Tax Indemnitee shall pay
to the Charterer, as promptly as practicable after the receipt thereof, the
amount of such repayment or refund plus any interest received by, or credited
to, such Tax Indemnitee on such amounts net of Taxes thereon plus the amount of
any net tax savings actually realized by such Tax Indemnitee as a result of the
payment made to the Charterer; provided, however, that: (A) such Tax Indemnitee
-------- -------
shall not be obligated to make such payment with respect to any net tax savings
to the extent that the amount of such payment would exceed (x) all prior
indemnity payments (excluding costs and expenses incurred with respect to
contests) made by the Charterer with respect to such Tax pursuant to this
Section 13.2 and less (y) the amount of all prior payments by such Tax
Indemnitee to the Charterer hereunder with respect to such Tax (but any such
excess shall be applied against, and reduce pro tanto, any future payment due
--- -----
such Tax indemnitee pursuant to this Section 13.2); and (B) if there is (1) a
subsequent loss of any such tax savings or refund realized by the Tax Indemnitee
or (2) a reduction of an amount otherwise payable to a Tax Indemnitee hereunder
as a result of any such tax savings or refund, such loss or reduction shall be
treated as a Tax for which the Charterer must indemnify such Tax Indemnitee
pursuant to this Section 13.2.
(f) Tax Savings. If, by reason of any payment made to or for the
-----------
account of a Tax Indemnitee by the Charterer pursuant to this Section 13.2, such
Tax Indemnitee at any time realizes a reduction in any Taxes for which the
Charterer is not required to indemnify such Tax Indemnitee pursuant to this
Section 13.2 and which was not taken into account previously in computing such
payment by the Charterer to or for the account of such Tax Indemnitee, then such
Tax Indemnitee shall promptly pay to the Charterer an amount equal to such
actual reduction in Taxes, plus the amount of any additional reduction in Taxes
of such Tax Indemnitee attributable to the payment made by such Tax Indemnitee
to the Charterer pursuant to this sentence; provided, however, that: (A) such
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Tax Indemnitee shall not be obligated to make such payment with respect to any
net tax savings to the extent that the amount of such payment would exceed (x)
all prior indemnity payments (excluding costs and expenses incurred with respect
to contests) made by the Charterer with respect to such Tax pursuant to this
Section 13.2 and less (y) the amount of all prior payments by such Tax
Indemnitee to the Charterer hereunder with respect to such Tax (but any such
excess shall be applied against, and reduce pro tanto, any future payment due
--- -----
such Tax indemnitee pursuant to this Section 13.2); and (B) if there is a (i)
subsequent loss of any such tax savings or refund realized by the Tax Indemnitee
or (ii) a reduction of an amount otherwise payable to a Tax Indemnitee hereunder
as a result of any such tax savings or refund, such loss or
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reduction shall be treated as a Tax for which the Charterer must indemnify such
Tax Indemnitee pursuant to this Section 13.2.
13.3 Special Indemnity Relating to U.K. Documents. The Charterer
--------------------------------------------
agrees to indemnify, protect, save and keep harmless the Indenture Trustee, the
Pass Through Trustee and each holder of a Secured Note (the "Special
Indemnitees") from any losses, liabilities or expenses (collectively, "Losses")
suffered or incurred by any Special Indemnitee resulting from the obligations
(the "U.K. Obligations") of the Owner Trust under the U.K. Documents including,
without limitation of the generality of the foregoing, Losses incurred as a
result of an insolvency proceeding of the Owner Trust resulting from the U.K.
Obligations or Losses resulting from the failure of the Indenture Trustee to
receive Assigned Hire when due as a result of the actions of any holder of a
U.K. Obligation.
13.4 No Guarantee. Nothing in Sections 13.1, 13.2 or 13.3 shall be
------------
construed as a guaranty by the Charterer of any residual value in the Vessel
Interest or as a guaranty of the Secured Note.
SECTION 14. TRANSFER OF AN OWNER PARTICIPANT'S
INTEREST.
----------------------------------
14.1 Restrictions on Transfer. Without the prior written consent of,
------------------------
so long as the Charter shall be in effect, the Charterer, and, so long as the
Lien of the Indenture shall be in effect, the Indenture Trustee, the Owner
Participant shall not, directly or indirectly, assign, convey or otherwise
transfer (whether by consolidation, merger, sale of assets or otherwise) any of
its right, title or interest in and to the Trust Estate, this Agreement, the
Trust Agreement or any other Operative Document except in accordance with the
terms and conditions of this Section 15.
14.2 Permitted Transfers. The Owner Participant may transfer all or
-------------------
part of its right, title and interest in and to the Trust Estate (whether or not
the same shall then have been pledged or mortgaged under the Indenture, but
subject to the Lien of the Indenture if then in effect) and in and to this
Agreement and the other Operative Documents to any Person (a "Transferee") only
----------
in compliance with and upon satisfaction of the following conditions:
(a) the Transferee shall be (i) a financial institution, leasing
company or other investor whose net worth at the time is at least
$25,000,000 (or the obligations of which are guaranteed by an entity whose
net worth at the time is at least $25,000,000 pursuant to a guarantee in
form and substance reasonably satisfactory
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to the Charterer and the Indenture Trustee), (ii) an Affiliate of the Owner
Participant, or (iii) a solvent entity formed under the laws of the Cayman
Islands or any of the states of the United States at least 50% of the
equity interest in which is owned by one or more Affiliates of the
Guarantor; provided that in the case of Transferees under clauses (ii) or
--------
(iii) either (x) the Owner Participant shall guarantee the obligations of
such Transferee as Owner Participant under the Operative Documents pursuant
to a guarantee in form and substance reasonably satisfactory to the
Charterer and the Indenture Trustee, or (y) such Transferee shall have a
net worth at the time of such transfer of at least $25,000,000;
(b) no such transfer shall violate any provision of, or create a
relationship which would be in violation of, any applicable Governmental
Rules, including, without limitation, applicable securities laws, any
agreement to which the Owner Participant or the Transferee is a party or by
which it or any of its property is bound or any Governmental Actions;
(c) the Transferee shall enter into an agreement or agreements, in
form and substance reasonably satisfactory to the Charterer, the Owner
Trust and (if the Lien of the Indenture shall then be in effect) the
Indenture Trustee, whereby the Transferee shall confirm that it has the
requisite power and authority to enter into and to carry out the
transactions contemplated hereby and in each Operative Document to which
the Owner Participant is or will be a party, and that it shall be deemed a
party to each of such Operative Documents and shall agree to be bound by
all the terms of, and to undertake all the obligations of the transferor to
be performed on or after the date of such transfer contained in, each of
such Operative Documents, and whereby such Transferee shall make
representations and warranties reasonably requested by the Charterer, the
Owner Trust and the Indenture Trustee not exceeding the scope of the
representations and warranties contained in Section 7; provided that such
--------
Transferee delivers to the Charterer and the Indenture Trustee a written
representation and warranty (or an opinion of counsel reasonably
satisfactory to the Charterer and the Indenture Trustee) that such transfer
to and ownership by such Transferee (1) will not result in a "prohibited
transaction" as defined in Section 406 of ERISA or Section 4975 of the Code
or (2) are covered by an exemption contained in ERISA or an administrative
exemption thereunder;
(d) the transferring Owner Participant shall have provided 30 days
prior written notice of such transfer to
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the Indenture Trustee and the Charterer, which notice shall specify (i)
such information and be accompanied by evidence as shall be reasonably
necessary to establish compliance with this Section 15 and Section 12.7 of
the Trust Agreement (ii) the name and address (for the purpose of giving
notice as contemplated by the Operative Documents) of the Transferee;
(e) the transferring Owner Participant shall pay or cause to be paid
all reasonable fees, expenses, disbursements and costs (including, without
limitation, legal and other professional fees and expenses) incurred by the
Owner Trust, the Loan Participant, the Indenture Trustee or the Charterer
in connection with any transfer pursuant to this Section 14;
(f) the transferring Owner Participant or the Transferee shall have
delivered to the Charterer and, if the Lien of the Indenture shall then be
in effect, the Indenture Trustee, an opinion of counsel in form and
substance reasonably satisfactory to each of them, as to the due
authorization, execution, delivery and enforceability of the agreement or
agreements referred to in clauses (c) and (g) of this Section 14.2, and as
to the matters referred to in clause (b) of this Section 14.2; and
(g) the transferring Owner Participant or the Transferee shall agree
by an instrument in writing in form and substance reasonably satisfactory
to the Charterer to indemnify the Charterer against any increased tax
indemnity obligations the Charterer may have as a result of such
conveyance.
14.3 Effect of Transfer. From and after any transfer effected in
------------------
accordance with this Section 14, the Owner Participant making such transfer
shall be released, to the extent of the obligations assumed by the Transferee,
from its liability hereunder and under the other Operative Documents to which it
is or will be a party in respect of obligations to be performed on or after the
date of such transfer. Upon any transfer by the Owner Participant in accordance
with this Section 14, the Transferee shall be deemed an "Owner Participant" for
all purposes of the Operative Documents and each reference herein to the Owner
Participant making such transfer shall thereafter be deemed a reference to such
Transferee for all purposes, except as provided in the preceding sentence.
SECTION 15. MISCELLANEOUS.
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15.1 Survival. All agreements, representations, warranties and
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indemnities contained in this Agreement and the
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other Operative Documents and in any agreement, document or certificate
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive and continue in effect following the execution and delivery of
this Agreement and the other Operative Documents and the participation by the
Owner Participant and the Loan Participant in the payment of Owner's Cost as
contemplated hereby and by the other Operative Documents.
15.2 Binding Effect. All agreements, representations, warranties and
--------------
indemnities in this Agreement and the other Operative Documents and in any
agreement, document or certificate delivered pursuant hereto or thereto or in
connection herewith or therewith shall bind the Person making the same and its
successors and assigns, and shall inure to the benefit of each Person for whom
made and its successors and permitted assigns.
15.3 Notices. All communications, notices and consents provided for
-------
in this Agreement shall be in writing and shall be given in person or by courier
or by means of telecopy or other wire transmission (with request for assurance
of receipt in a manner typical with respect to communications of that type), or
mailed by registered or certified first class mail, return receipt requested,
addressed as set forth in Schedule 1 or at such other address as any such Person
may from time to time designate by notice duly given in accordance with the
provisions of this Section 15.3 to the other parties hereto. All such
communications, notices and consents given in such manner shall be deemed given
when received in accordance with this Section 15.3 (or when proffered to a
Person if receipt is refused).
15.4 Counterpart Execution. This Agreement may be executed in any
---------------------
number of counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
15.5 GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED
-------------
BY, AND BE CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BUT
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS THEREOF BUT APPLYING
WHERE MANDATORILY APPLICABLE THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA.
15.6 Amendments, Supplements, Etc. (a) Neither this Agreement nor
----------------------------
any of the terms hereof may be amended, supplemented, waived or modified orally,
but only by an instrument in writing signed by the party against which
enforcement of such change is sought.
67
<PAGE>
(b) Prior to the Charter Termination Date, neither the Trust
Agreement nor the Indenture may be amended, waived, supplemented or modified to
permit any action contrary to, or disturb the Charterer's rights under, the
Charter, or otherwise adversely affect the Charterer's rights, or increase the
Charterer's obligations or liabilities, under any Operative Document without the
consent of the Charterer.
15.7 Headings; Table of Contents. The division of this Agreement
---------------------------
into Sections, subsections and paragraphs, the provision of a table of contents
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation hereof.
15.8 Severability of Provisions. Any provision of this Agreement
--------------------------
which may be determined by competent authority to be invalid or unenforceable in
such jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without invalidating or rendering
unenforceable any remaining terms and provisions hereof, and any such invalidity
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. The parties shall
negotiate in good faith to replace such provision with an appropriate, legal
provision. To the extent permitted by applicable law, the parties hereto hereby
waive any provision thereof that renders any term or provision hereof invalid or
unenforceable in any respect.
15.9 Entire Agreement. This Agreement (including the schedules and
----------------
exhibits hereto), the Pass Through Trust Agreement, the Pass Through Trust
Supplement and the other Operative Documents, and all certificates, instruments
and other documents relating thereto delivered and to be delivered from time to
time pursuant to the Operative Documents and the Pass Through Trust Agreement,
supersede all agreements (other than any Operative Document) prior to the date
of this Agreement, written or oral, between or among any of the parties hereto
relating to the transactions contemplated hereby and thereby, not including the
Amended and Restated Joint Venture Agreement relating to the Vessel between
MOSAT, Saudi Maritime Holding Company and SAMCAY dated as of December 3, 1996.
15.10 Limitation of Liability of Managing Trustee, Indenture Trustee and
------------------------------------------------------------------
Pass Through Trustee. (a) It is expressly understood and agreed by and among
- --------------------
all of the parties hereto that, except as otherwise expressly provided herein or
in any other Operative Document (other than the Trust Agreement), (i) this
Agreement is executed and delivered by the Managing Trustee not in its
individual capacity, except to the extent expressly set forth herein, but solely
as Managing Trustee for the Owner Trust under the Trust Agreement
68
<PAGE>
in the exercise of the power and authority conferred and vested in it as the
Managing Trustee, (ii) certain of the representations, undertakings and
agreements made herein by the Managing Trustee are not personal representations,
undertakings and agreements, but are binding only on the Trust Estate and the
Managing Trustee, as trustee, (iii) except as set forth in the proviso to this
sentence, nothing herein contained shall be construed as creating any liability
of the Trust Company or any incorporator or any past, present or future
subscriber to the capital stock of, or stockholder, officer or director of, the
Trust Company to perform any covenant, whether express or implied, contained
herein, all such liability, if any, being expressly waived by each of the other
parties hereto and by any Person claiming by, through or under any such party,
and (iv) so far as the Managing Trustee is concerned, each of the other parties
hereto and any Person claiming by, through or under any such party shall (other
than with respect to Claims arising from the willful misconduct or gross
negligence of the Managing Trustee or its failure to distribute funds in
accordance with the terms of the Operative Documents) look solely to the Trust
Estate and the Indenture Estate for the performance of any obligation under any
of the instruments referred to herein; provided, however, that notwithstanding
-------- -------
anything in this Section 15.10 to the contrary, the Trust Company shall be
liable (A) in its individual capacity and as Managing Trustee to the Owner
Participant as expressly set forth in the Trust Agreement, (B) in its individual
capacity, in respect of the representations, warranties and agreements of the
Trust Company made in its individual capacity as expressly set forth herein
(including, without limitation, Sections 9) or in any other Operative Document
to which it is a party or in any Officer's Certificate of the Trust Company
delivered pursuant hereto, and (C) in its individual capacity for the
consequences of its own gross negligence or willful misconduct or its failure to
distribute funds in accordance with the terms of the Operative Documents to
which it is or will be a party (including, without limitation, willful breach of
contract).
(b) It is expressly understood and agreed by and among all of the
parties hereto that, except as otherwise expressly provided herein or in any
other Operative Document, (i) this Agreement is executed and delivered by State
Street Bank and Trust Company not in its individual capacity but solely as
trustee under the Indenture in the exercise of the power and authority conferred
and vested in it as such Indenture Trustee, (ii) certain of the representations,
undertakings and agreements made herein by the Indenture Trustee are not
personal representations, undertakings and agreements, but are binding only on
the Indenture Trustee, as trustee, (iii) except as set forth in the proviso to
this sentence, nothing herein contained shall be construed as creating any
liability of State Street Bank and Trust Company
69
<PAGE>
or any incorporator or any past, present or future subscriber to the capital
stock of, or stockholder, officer or director of, State Street Bank and Trust
Company to perform any covenant, whether express or implied, contained herein,
all such liability, if any, being expressly waived by each of the other parties
hereto and by any Person claiming by, through or under any such party, and (iv)
so far as the Indenture Trustee is concerned, each of the other parties hereto
and any Person claiming by, through or under any such party shall (other than
with respect to Claims arising from the willful misconduct or gross negligence
of the Indenture Trustee and for its failure to distribute funds in accordance
with the terms of the Operative Documents) look solely to the Indenture Trustee,
as trustee for the performance of any obligation under any of the instruments
referred to herein; provided, however, that notwithstanding anything in this
-------- -------
Section 15.10 to the contrary, State Street Bank and Trust Company shall be
liable (A) in its individual capacity, in respect of the representations,
warranties and agreements of the Indenture Trustee made in its individual
capacity as expressly set forth herein (including, without limitation, in
Section 10) or in any other Operative Document to which it is a party or in any
Officer's Certificate made in its individual capacity delivered pursuant hereto,
and (B) in its individual capacity for the consequences of its own gross
negligence or willful misconduct and for its failure to use ordinary care to
disburse funds in accordance with any Operative Document to which it is or will
be a party.
(c) It is expressly understood and agreed by and among all of the
parties hereto that, except as otherwise expressly provided herein or in the
Pass Through Trust Agreement, (i) this Agreement is executed and delivered by
State Street Bank and Trust Company not in its individual capacity but solely as
trustee under the Pass Through Trust Agreement in the exercise of the power and
authority conferred and vested in it as such Pass Through Trustee, (ii) certain
of the representations, undertakings and agreements made herein by the Pass
Through Trustee are not personal representations, undertakings and agreements,
but are binding only on the Pass Through Trustee, as trustee, (iii) except as
set forth in the proviso to this sentence, nothing herein contained shall be
construed as creating any liability of State Street Bank and Trust Company or
any incorporator or any past, present or future subscriber to the capital stock
of, or stockholder, officer or director of, State Street Bank and Trust Company
to perform any covenant, whether express or implied, contained herein, all such
liability, if any, being expressly waived by each of the other parties hereto
and by any Person claiming by, through or under any such party, and (iv) so far
as the Pass Through Trustee is concerned, each of the other parties hereto and
any Person claiming by, through or under any such party shall (other than with
respect to Claims arising from
70
<PAGE>
the willful misconduct or negligence of the Pass Through Trustee and for its
failure to distribute funds in accordance with the terms of the Pass Through
Trust Agreement) look solely to the Pass Through Trustee, as trustee for the
performance of any obligation under any of the instruments referred to herein;
provided, however, that notwithstanding anything in this Section 15.10 to the
- -------- -------
contrary, State Street Bank and Trust Company shall be liable (A) in its
individual capacity, in respect of the representations, warranties and
agreements of the Pass Through Trustee made in its individual capacity as
expressly set forth herein (including, without limitation, in Sections 8 and 11)
or in the Pass Through Trust Agreement or in any Officer's Certificate made in
its individual capacity delivered pursuant hereto, and (B) in its individual
capacity for the consequences of its own negligence or willful misconduct and
for its failure to use ordinary care to disburse funds in accordance with the
Pass Through Trust Agreement.
15.11 Jurisdiction; Service of Process. Any legal action or
--------------------------------
proceeding with respect to this Agreement or any other Operative Document to
which any party hereto is a signatory or against any such party or against the
Indenture Estate or Trust Estate may be brought, at the option of any such
party, in any of the courts in the State of New York or the Federal courts of
the United States of America located in the City of New York, and each party
hereto hereby unconditionally accepts the nonexclusive jurisdiction of the
aforesaid courts, expressly waiving any other jurisdiction to which any such
party may be entitled by reason of its present and future domicile. Each party
hereto irrevocably waives any objection it may now or hereafter have to the
laying of venue of any such action or proceeding in any of the aforesaid courts
and any claim it may now or hereafter have that any such action or proceeding
has been brought in an inconvenient forum. Each party hereto further
irrevocably consents to the service of process out of any of the aforesaid
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail to such party's address for notices specified
herein. Nothing herein shall affect the right to serve process in any other
manner permitted by law.
15.12 Instructions. By their respective execution and delivery of
------------
this Agreement, the Owner Participant and the Pass Through Trustee hereby
instruct the Owner Trust, the Managing Trustee and the Indenture Trustee to
execute and deliver this Agreement.
71
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be duly executed as of the date first above written.
CHARTERER: MOBIL MARINE FINANCE COMPANY I INC.
By: /s/ R.E. Sliwinski
--------------------------------
Name: R.E. Sliwinski
Title: Authorized Signatory
OWNER PARTICIPANT: SAMOCO L.L.C.
By: /s/ Bengt Hermelin
--------------------------------
Name: Bengt Hermelin
Title: Directory
MANAGING TRUSTEE: DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED, not in its
individual capacity except to the extent expressly
provided herein, but solely as Managing Trustee
By: /s/ J.H. Gullimare
---------------------------------
Name: J.H. Gullimare
Title: Authorized Signatory
OWNER TRUST: SAMOCO RAVEN TRUST
By: DEUTSCHE MORGAN GRENFELL
(CAYMAN) LIMITED, not in its
individual capacity, but solely
as Managing Trustee
By: /s/ J.H. Gullimare
---------------------------------
Name: J.H. Gullimare
Title: Authorized Signatory
[PARTICIPATION AGREEMENT - RAVEN]
<PAGE>
INDENTURE TRUSTEE: STATE STREET BANK AND TRUST COMPANY, not in its
individual capacity, except to the extent expressly set
forth herein, but solely as Indenture Trustee
By: /s/ Ruth A. Smith
-----------------------
Name: Ruth A. Smith
Title: Vice President
PASS THROUGH TRUSTEE: STATE STREET BANK AND TRUST COMPANY, not in its
individual capacity, except to the extent expressly set
forth herein, but solely as Pass Through Trustee and
Loan Participant
By: /s/ Ruth A. Smith
--------------------------
Name: Ruth A. Smith
Title: Vice President
[PARTICIPATION AGREEMENT - RAVEN]
<PAGE>
1-1
<PAGE>
SCHEDULE 1
to
Participation Agreement
-----------------------
ADDRESSES FOR NOTICES AND PAYMENTS
----------------------------------
CHARTERER:
---------
Mobil Marine Finance Company I Inc.
3225 Gallows Road
Fairfax, Virginia 22037-0001
Attention: Treasurer
Telecopier: 703-846-1469
OWNER PARTICIPANT:
-----------------
SAMOCO L.L.C.
c/o Maples and Calder
Ugland House
George Town
Grand Cayman
Cayman Islands
British West Indies
Attention: Julian Reddyhough
Telecopier: 809-949-8080
Method of Payment
-----------------
All payments to be made to [Owner Participant] shall be made to:
[]
[]
Notices
-------
All communications with respect to payments and all other communications
to be made to the address first set forth above.
MANAGING TRUSTEE OR THE TRUST COMPANY:
-------------------------------------
Deutsche Morgan Grenfell (Cayman) Limited
Elizabethan Square
P.O.Box 1984
George Town
Grand Cayman
Cayman Islands
1-2
<PAGE>
British West Indies
Attention: Managing Director
Telecopier: 809-949-8178
Method of Payment
-----------------
Deutsche Morgan Grenfell (Cayman) Limited
[ ]
[ ]
OWNER TRUST:
-----------
c/o Deutsche Morgan Grenfell (Cayman) Limited
Elizabethan Square
P.O.Box 1984
George Town
Grand Cayman
Cayman Islands
British West Indies
Attention: Managing Director
Telecopier: 809-949-8178
Method of Payment
-----------------
SAMOCO Raven Trust
[ ]
[ ]
INDENTURE TRUSTEE OR PASS THROUGH TRUSTEE:
-----------------------------------------
State Street Bank and Trust Company
Two International Place
Boston, MA 02110
Attention: Corporate Trust Department
Telecopier: 617-664-5371
Method of Payment
-----------------
State Street Bank and Trust Company
[ ]
[ ]
1-3
<PAGE>
SCHEDULE 2
to
Participation Agreement
-----------------------
INVESTMENT
----------
Seller: Owner Participant
Equity Investment:
Loan Participant Secured Note: $58,500,000 100%
2-1
<PAGE>
SCHEDULE 3
to
Participation Agreement
-----------------------
CERTAIN FILINGS AND RECORDINGS
------------------------------
A. Precautionary UCC-1 Financing Statements with regard to the Charter
filed with each of the following:
1. State Corporation Commission of Virginia
2. County Clerk's Office of Fairfax County, Virginia
B. UCC-1 Financing Statements with regard to the Indenture Estate filed
with the Secretary of State of Delaware.
C. Delivery of Notification Letter of the Assignment of Charterer's
Obligations Addressed to and Acknowledged by the Charterer.
D. Recordation of the Ship Mortgage with the Registry of the Republic
of the Marshall Islands.
E. Delivery of prescribed particulars of the charge created by the
Owner Trust under the Indenture together with an original of the
Indenture to the Registrar of Companies in England.
3-1
<PAGE>
EXHIBIT 99.6
================================================================================
PARTICIPATION AGREEMENT
among
MOBIL MARINE FINANCE COMPANY II INC.,
Charterer
DUMOCO L.L.C.,
Owner Participant
DUMOCO EAGLE TRUST,
Owner Trust
DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED,
Managing Trustee
STATE STREET BANK AND TRUST COMPANY,
Pass Through Trustee and Loan Participant
and
STATE STREET BANK AND TRUST COMPANY,
Indenture Trustee
Dated as of December 19, 1996
Lease Financing of One Very Large Crude Carrier
EAGLE
<PAGE>
TABLE OF CONTENTS
Page
RECITALS................................................. 1
SECTION 1. DEFINITIONS; INTERPRETATION.................. 2
SECTION 2. COMMITMENTS OF PARTICIPANTS; CLOSING;
FUNDING; TRANSACTION EXPENSES.............. 3
2.1 Commitment of Owner Participant.............. 3
2.2 Commitments of Pass Through Trustee;
Secured Note............................... 3
2.3 Expiration of Commitments.................... 3
2.4 Notice of Closing Dates...................... 3
2.5 Time and Place of Closing.................... 4
2.6 Delivery of Funds............................ 4
2.7 Application of Funds by Owner Trust.......... 4
2.8 Conclusion of U.K. Arrangements.............. 5
2.9 Actions on Closing Date...................... 5
2.10 Transaction Expenses........................ 5
2.11 Authorization to Owner Trust................ 6
SECTION 3. CONDITIONS TO CLOSING BY THE
CHARTERER. 6
3.1 Operative Documents.......................... 6
3.2 Legality, Etc................................ 7
3.3 Event of Loss................................ 7
3.4 Consents and Approvals....................... 7
3.5 Representations and Warranties;
Certificates............................... 8
3.6 Opinions..................................... 8
3.7 Litigation................................... 8
3.8 Sale of Pass Through Certificates............ 8
SECTION 4. CONDITIONS TO CLOSING BY THE PASS
THROUGH TRUSTEE............................ 9
4.1 Notice of Closing............................ 9
4.2 Operative Documents.......................... 9
4.3 Legality, Etc................................ 10
4.4 Event of Loss................................ 10
4.5 Insurance.................................... 10
4.6 Opinions..................................... 10
4.7 Taxes........................................ 11
4.8 Officer's Certificates....................... 11
4.9 Resolutions, Etc............................. 13
4.10 Litigation.................................. 14
4.11 Consents and Approvals...................... 15
4.12 Title; Filings and Recordings............... 15
4.13 Sale of Pass Through Certificates........... 16
4.14 No Default Under Charter.................... 16
4.15 U.K. Closing................................ 16
i
<PAGE>
Page
----
4.16 Investment.................................. 16
SECTION 5. CONDITIONS TO CLOSING BY OWNER
PARTICIPANT................ 16
5.1 Notice of Closing............................ 17
5.2 Operative Documents.......................... 17
5.3 Legality, Etc................................ 17
5.4 Event of Loss................................ 18
5.5 Insurance.................................... 18
5.6 Opinions..................................... 18
5.7 Taxes........................................ 19
5.8 Officer's Certificates....................... 19
5.9 Resolutions, Etc............................. 20
5.10 Litigation.................................. 22
5.11 Consents and Approvals...................... 22
5.12 Title; Filings and Recordings............... 23
5.13 Sale of Pass Through Certificates........... 23
5.14 No Default Under Charters................... 23
5.15 Loans....................................... 23
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE
CHARTERER.................................. 23
6.1 Due Organization............................. 24
6.2 Authorization................................ 24
6.3 Execution; Enforceability.................... 24
6.4 No Violation................................. 24
6.5 Consents and Approvals....................... 25
6.6 Securities Act............................... 25
6.7 Title; Filings and Recordings................ 26
6.8 Chief Place of Business...................... 26
6.9 Litigation................................... 26
6.10 No Default.................................. 26
6.11 Event of Loss............................... 26
6.12 Investment Company Act...................... 26
6.13 No Brokers' Fees............................ 27
6.14 No Other Business or Liabilities.......... 27
6.15 Payment of Taxes, etc....................... 27
SECTION 7. REPRESENTATIONS AND WARRANTIES
OF THE OWNER PARTICIPANT................... 28
7.1 Due Organization............................. 28
7.2 Authorization; Execution; Enforceability..... 28
7.3 No Violation................................. 28
7.4 Owner Participant's Liens.................... 28
7.5 Acquisition for Investment................... 29
7.6 Securities Act............................... 29
7.7 ERISA........................................ 29
7.8 Investment Company Act....................... 29
7.9 Litigation................................... 29
7.10 No Default.................................. 30
7.11 Federal Reserve Regulations................. 30
ii
<PAGE>
Page
----
7.12 No Brokers' Fees............................ 30
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE
PASS THROUGH TRUSTEE....................... 30
8.1 Due Organization............................. 30
8.2 Authorization; Execution; Enforceability..... 31
8.3 No Violation................................. 31
8.4 Litigation................................... 32
8.5 Pass Through Trustee's Liens................. 32
8.6 Securities Act............................... 32
SECTION 9. REPRESENTATIONS AND WARRANTIES OF THE
TRUST COMPANY AND OWNER TRUST.............. 32
9.1 Due Organization............................. 32
9.2 Authorization; Execution; Enforceability..... 33
9.3 No Violation................................. 33
9.4 No Default................................... 34
9.5 Litigation................................... 34
9.6 Owner's Liens................................ 35
9.7 Securities Act............................... 35
9.8 Chief Place of Business...................... 35
9.9 No Taxes Payable............................. 35
9.10 Title....................................... 36
9.11 Federal Reserve Regulations................. 36
SECTION 10. REPRESENTATIONS AND WARRANTIES OF
INDENTURE TRUSTEE.......................... 36
10.1 Due Organization............................ 36
10.2 Authorization; Execution;
Enforceability............................. 36
10.3 No Violation................................ 37
10.4 Litigation.................................. 37
10.5 Indenture Trustee's Liens................... 38
SECTION 11. CHARTERER COVENANTS......................... 38
11.1 Officer's Certificate....................... 38
11.2 Maintenance of Corporate Existence,
Etc........................................ 38
11.3 Merger, Consolidation, Sale, Etc............ 38
11.4 Change in Name or Chief Place of
Business................................... 40
11.5 Further Assurances.......................... 40
11.6 Inspection.................................. 41
11.7 Documentation of Vessels.................... 41
11.8 No Petition................................. 42
SECTION 12. OTHER COVENANTS AND AGREEMENTS.............. 42
12.1 Agreements of Owner Participant............. 42
12.2 Agreements of Trust Company and Owner
Trust...................................... 44
12.3 Agreements of Pass Through Trustee.......... 46
iii
<PAGE>
Page
----
12.4 Agreements of Indenture Trustee............. 47
12.5 Confidentiality............................. 48
12.6 Further Assurances.......................... 49
SECTION 13. INDEMNIFICATION...................... 49
13.1 General Indemnification..................... 49
13.2 General Tax Indemnification................. 54
13.3 Special Indemnity Relating to U.K.
Documents.................................. 64
13.4 No Guarantee................................ 64
SECTION 14. TRANSFER OF AN OWNER PARTICIPANT'S
INTEREST................... 64
14.1 Restrictions on Transfer.................... 64
14.2 Permitted Transfers......................... 64
14.3 Effect of Transfer.......................... 66
SECTION 15. MISCELLANEOUS............................... 66
15.1 Survival.................................... 66
15.2 Binding Effect.............................. 67
15.3 Notices..................................... 67
15.4 Counterpart Execution....................... 67
15.5 GOVERNING LAW............................... 67
15.6 Amendments, Supplements, Etc................ 67
15.7 Headings; Table of Contents................. 68
15.8 Severability of Provisions.................. 68
15.9 Entire Agreement............................ 68
15.10 Limitation of Liability of Managing
Trustee, Indenture Trustee and Pass
Through Trustee............................ 68
15.11 Jurisdiction; Service of Process........... 71
15.12 Instructions............................... 71
Appendix A Definitions
Schedules
Schedule 1 Addresses for Notices and Payments
Schedule 2 Equity Investment
Schedule 3 Certain Filings and Recordings
Exhibit A-1 Ralph N. Johanson, Jr., Esq., Managing
Counsel, Corporate Finance and Securities
of the Guarantor
Exhibit A-2 Dewey Ballantine, special counsel to the
Charterer and the Guarantor
iv
<PAGE>
Exhibit A-3 Haight, Gardner, Poor & Havens, special
Marshall Islands counsel
Exhibit A-4 Maples & Calder, special counsel to the
Owner Participant
Exhibit A-5 Morris, James, Hitchins & Williams, special
Delaware counsel to the Resident Trustee
and the Owner Trust
Exhibit A-6 Maples & Calder, special Cayman Islands
counsel to the Trust Company and the Owner
Trust
Exhibit A-7 Bingham, Dana & Gould, counsel to the
Indenture Trustee
Exhibit A-8 Bingham, Dana & Gould, counsel to the Pass
Through Trustee
Exhibit A-9 Dewey Ballantine, special New York counsel
to the Owner Participant
Exhibit A-10 Slaughter and May, special English counsel
to the Owner Participant
v
<PAGE>
PARTICIPATION AGREEMENT
-----------------------
THIS PARTICIPATION AGREEMENT, dated as of December 19, 1996, is among
MOBIL MARINE FINANCE COMPANY II INC., a Delaware corporation, DUMOCO L.L.C., a
Cayman Islands limited life company, STATE STREET BANK AND TRUST COMPANY, a
Massachusetts chartered trust company, not in its individual capacity except to
the extent expressly set forth herein but solely as Pass Through Trustee under
the Pass Through Trust Agreement, DUMOCO EAGLE TRUST, a trust created pursuant
to the Delaware Business Trust Act under the Trust Agreement, DEUTSCHE MORGAN
GRENFELL (CAYMAN) LIMITED, a Cayman Islands company, not in its individual
capacity except to the extent expressly set forth herein but solely as Managing
Trustee under the Trust Agreement, and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts chartered trust company, not in its individual capacity except to
the extent expressly set forth herein but solely as Indenture Trustee under the
Indenture.
RECITALS:
A. The Owner Trust desires to finance its acquisition of the Vessel
in part through the transactions contemplated by this Agreement.
B. Subject to the terms and conditions set forth herein, the Owner
Trust desires to charter the Vessel Interest to the Charterer pursuant to the
Charter and the Charterer desires to charter the Vessel Interest from the Owner
Trust pursuant to the Charter and to sub-charter the Vessel Interest to MSCL
pursuant to the Initial Subcharter.
C. Prior to the execution and delivery of this Agreement, the Owner
Participant, the Trust Company and the Resident Trustee have entered into the
Trust Agreement, pursuant to which the Trust Company has agreed, among other
things, to act as the Managing Trustee, and to hold the Trust Estate as Managing
Trustee for the benefit of the Owner Participant on the terms specified therein,
subject, however, to the Lien created under the Indenture.
D. Prior to the execution and delivery of this Agreement, the Owner
Trust and the U.K. Lessor have entered into the Conditional Sale Agreement,
pursuant to which the Owner Trust agreed, among other things, to sell to the
U.K. Lessor the Vessel and the U.K. Lessor has agreed to purchase the Vessel
from the Owner Trust on the terms specified therein;
E. Prior to the execution and delivery of this Agreement, the Owner
Trust and the U.K. Lessor have entered
<PAGE>
into a Head Lease with respect to the Vessel pursuant to which the U.K. Lessor
agreed, among other things, to lease the Vessel to the Owner Trust and the Owner
Trust has agreed to lease the Vessel from the U.K. Lessor on the terms specified
therein;
F. Concurrently with the execution and delivery of this Agreement,
the Owner Trust and the Charterer have entered into the Charter, pursuant to
which the Owner Trust agreed, among other things, to charter the Vessel Interest
to the Charterer and the Charterer has agreed to charter the Vessel Interest
from the Owner Trust on the terms specified therein.
G. Concurrently with the execution and delivery of this Agreement,
the Owner Trust and the Indenture Trustee have entered into the Indenture,
pursuant to which the Owner Trust, for the benefit of the Loan Participant, has
agreed, among other things, to mortgage and pledge unto the Indenture Trustee,
all of the Owner Trust's right, title and interest in and to the Indenture
Estate.
H. Concurrently with the execution and delivery of this Agreement,
the Pass Through Trustee, the Charterer and certain other Persons have entered
into the Pass Through Trust Agreement and the Pass Through Trust Supplement
pursuant to which, among other things, the Pass Through Certificates will be
issued.
I. Concurrently with the execution and delivery of this Agreement,
the Guarantor has entered into the Guarantee whereby the Guarantor will guaranty
the Charterer's obligations hereunder and under the other Operative Documents to
which the Charterer is a party.
J. The Owner Participant desires to participate in the payment of
Owner's Cost by providing its Investment to the Owner Trust. The Pass Through
Trustee, as a Loan Participant, desires to participate in the payment of Owner's
Cost by purchasing the Secured Note from the Owner Trust.
Accordingly, in consideration of the premises and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION.
---------------------------
For the purposes hereof, terms used herein and not otherwise defined
shall have the meanings assigned to them in Appendix A. References in this
Agreement to Sections, subsections, paragraphs, Schedules, Appendices and
Exhibits are to Sections, subsections and paragraphs in, and Schedules,
2
<PAGE>
Appendices and Exhibits to, this Agreement unless otherwise indicated.
SECTION 2. COMMITMENTS OF PARTICIPANTS; CLOSING; FUNDING;
TRANSACTION EXPENSES.
----------------------------------------------
2.1 Commitment of Owner Participant. Subject to the terms and
-------------------------------
conditions of this Agreement, the Owner Participant agrees to participate in the
payment of Owner's Cost by making an equity investment (the "Investment") in the
----------
beneficial ownership of the Vessel Interest on or before the Closing Date in the
amount shown on Schedule 2, and shall take and cause the Owner Trust to take, on
the Closing Date, the respective actions specified in Sections 2.8 and 2.9 to be
taken by the Owner Participant and the Owner Trust.
2.2 Commitments of Pass Through Trustee; Secured Note. Subject to
-------------------------------------------------
the terms and conditions of this Agreement, the Pass Through Trustee, as a Loan
Participant, agrees to participate on the Closing Date in the payment of the
Owner's Cost for the Vessel Interest by purchasing the Secured Note from the
Owner Trust at a purchase price equal to a percentage of the aggregate principal
amount payable at maturity of the Secured Note set forth in Schedule 2 and shall
take and cause the Indenture Trustee to take, on the Closing Date, the
respective actions specified in Section 2.9 to be taken by the Pass Through
Trustee, as a Loan Participant, and the Indenture Trustee. The Secured Note
shall be issued to the Pass Through Trustee, as a Loan Participant, under and in
accordance with the terms of the Indenture.
2.3 Expiration of Commitments. Unless the Owner Participant shall
-------------------------
agree to a later date, the Owner Participant's commitment to make the Investment
on the Closing Date pursuant to Section 2.1 shall expire if the Closing Date
shall not have occurred before midnight on the Cut-off Date. Unless the Pass
Through Trustee, as Loan Participant, shall agree to a later date, the Pass
Through Trustee's commitment, as a Loan Participant, to purchase the Secured
Note pursuant to Section 2.2 shall expire if the Closing Date or purchase shall
not have occurred before midnight on the Cut-off Date.
2.4 Notice of Closing Dates. On or before the second Business Day
-----------------------
prior to the Closing Date, the Charterer shall deliver to each Participant
written notice of the Closing Date, which notice shall contain (a) the date of
the Closing Date, (b) the amount of Owner's Cost with respect to the Vessel
Interest, (c) the amount of the Investment with respect to the Vessel Interest
and (d) the principal amount and purchase price of the Secured Note to be
purchased by the Pass Through Trustee, as a Loan Participant, on the Closing
3
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Date; provided, however, that the funding of the Owner Participant's Investment
-------- -------
or the funding of the purchase price for the Secured Note to be purchased by the
Pass Through Trustee, as a Loan Participant, on the Closing Date, as the case
may be, and the taking of the other actions contemplated to be taken hereby in
each case on the Closing Date shall be deemed a waiver of the requirement of
notice of the Closing Date set forth in this Section 2.4.
2.5 Time and Place of Closing. The closing on the Closing Date shall
-------------------------
commence at 9:15 a.m., New York City time, at the offices of Dewey Ballantine,
New York, New York, or at such other location in New York City as the Charterer
may specify in the notice of closing for the Closing Date delivered pursuant to
Section 2.4.
2.6 Delivery of Funds. Subject to the terms and conditions of this
-----------------
Agreement, on or before 9:15 a.m., New York City time, on the Closing Date, the
Owner Participant shall deliver to the Owner Trust by wire transfer of
immediately available funds an amount equal to any remaining Investment to be
made by the Owner Participant on the Closing Date and the Pass Through Trustee,
as a Loan Participant, shall deliver to the Owner Trust by wire transfer of
immediately available funds an amount equal to the purchase price of the Secured
Note to be purchased by the Pass Through Trustee, as a Loan Participant, on the
Closing Date, in each case to the account of the Owner Trust specified in
Schedule 1 or to such other account as shall be specified in writing by the
Owner Trust to the Owner Participant and the Pass Through Trustee, as a Loan
Participant, at least one Business Day prior to the Closing Date, which amounts
shall be held by the Owner Trust in trust, solely on behalf of the Participant
delivering or transferring such amount (and not as part of the Trust Estate),
until such Participant shall have instructed the Owner Trust that such amount is
available to be applied by the Owner Trust pursuant to Section 2.7. No
Participant shall be obligated to deliver such instruction if the conditions to
its participation set forth in Section 4 have not been met to its satisfaction
or waived by it.
2.7 Application of Funds by Owner Trust. On the Closing Date, upon
-----------------------------------
receipt by the Owner Trust of (a) the amount of the Investment to be made by the
Owner Participant on the Closing Date, (b) the purchase price of the Secured
Note to be paid by the Pass Through Trustee, as a Loan Participant, on the
Closing Date, and (c) the instruction pursuant to Section 2.6 that each of such
amounts is available to be applied by the Owner Trust pursuant to this Section
2.7, the Owner Trust shall cause such funds to be deposited in such amounts and
in such accounts as may be specified by the Owner Participant by written
instructions.
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2.8 Conclusion of U.K. Arrangements. (a) The parties recognize that
-------------------------------
it is the intention of the Owner Participant that, immediately following the
Closing Date, the U.K. Financing will be concluded by the satisfaction of the
conditions to the obligation of the U.K. Lessor to lease the Vessel to the Owner
Trust under the Head Lease. The Owner Participant agrees that the U.K.
Financing, if concluded, will be concluded on documents substantially in the
form of the documents delivered to the parties hereto with such changes as shall
not be materially adverse to any party hereto.
(b) The conclusion of the U.K. Financing is not a condition to the
issuance and sale of the Secured Note and the other transactions contemplated by
this Agreement and if for any reason the U.K. Financing is not concluded, the
parties agree, at the request and expense of the Owner Participant, to execute
such documents and take such actions as may be necessary or desirable to reflect
the abandonment of the U.K. Financing while maintaining in effect the
transactions contemplated by this Agreement; provided, however that the
-------- -------
execution of such documents and the taking of such actions shall not be adverse
to the interests of any such party in any material respect or increase its
liability under the Operative Documents.
2.9 Actions on Closing Date. Subject to satisfaction of the
-----------------------
applicable conditions precedent set forth in Sections 3, 4 and 5, on the Closing
Date:
(a) the Owner Participant shall make the Investment required to be
made by it on the Closing Date;
(b) the Pass Through Trustee, as a Loan Participant, shall pay to the
Owner Trust the purchase price for the Secured Note required to be
purchased by it on the Closing Date, the Owner Trust shall execute and
deliver to the Indenture Trustee the Secured Note, and the Indenture
Trustee shall authenticate and register the Secured Note and shall deliver
the Secured Note to the Pass Through Trustee, as a Loan Participant; and
(c) simultaneously therewith, the Owner Trust shall enter into the
Charter with the Owner Trust; and
(d) if the Delivery Date shall have occurred, the Charterer shall
sub-charter the Vessel Interest to MSCL pursuant to the Initial Subcharter.
2.10 Transaction Expenses. (a) If the transactions contemplated by
--------------------
this Agreement are consummated, the Owner Trust shall as soon as practicable
after the Closing Date pay, or reimburse the Charterer for, all related
Transaction Expenses accrued to the Closing Date and not
5
<PAGE>
theretofore paid by the Owner Trust, and the Owner Participant will provide to
the Owner Trust funds therefor and instructions with respect to the payment
thereof; provided that the underwriting commissions of Morgan Stanley & Co.
--------
Incorporated as underwriter of the Pass Through Certificates shall be paid by
the Owner Trust in immediately available funds on the Closing Date. If the
transactions contemplated by this Agreement to be consummated on the Closing
Date are not consummated for any reason whatsoever, the Charterer shall be
obligated to pay or reimburse the Owner Participant for all Transaction
Expenses.
(b) Each of the Transaction Expenses shall be evidenced by
appropriate bills or invoices. The Charterer shall have the right to receive
and review any substantiation relating to any Transaction Expenses or such
ongoing expenses as it may reasonably request.
2.11 Authorization to Owner Trust. The Owner Participant agrees that
----------------------------
on the Closing Date the receipt by the Owner Trust of an instruction from each
Participant pursuant to Section 2.6 making available the amount delivered by
such Participant to the Owner Trust shall constitute, without further act,
authorization and direction by such Participant to the Owner Trust to take the
actions contemplated to be taken by the Owner Trust on the Closing Date in the
Operative Documents, including, without limitation, the execution and delivery
of all other documents and instruments contemplated to be executed and delivered
by the Owner Trust on or prior to the Closing Date in the Operative Documents.
SECTION 3. CONDITIONS TO CLOSING BY THE CHARTERER.
---------------------------------------
The obligation of the Charterer pursuant to Section 2 to charter the
Vessel Interest from the Owner Trust and take the other actions contemplated by
Section 2 to be taken by it on the Closing Date are subject only to the
fulfillment on the Closing Date to the satisfaction of or waiver by the
Charterer of each of the following conditions precedent:
3.1 Operative Documents. Each of the following documents shall have
-------------------
been duly authorized, executed and delivered by the respective parties thereto
(other than the Charterer or the Guarantor):
(a) this Agreement;
(b) the Charter;
(c) the Bill of Sale;
(d) the Indenture;
6
<PAGE>
(e) the Secured Note;
(f) the Trust Agreement;
(g) the Ship Mortgage;
(h) the Pass Through Trust Agreement;
(i) the Pass Through Trust Supplement; and
(j) the Underwriting Agreement
and each such document shall be in full force and effect on the Closing
Date, and an executed counterpart of each of the same shall have been
delivered to the Charterer (except that the original Secured Note shall be
delivered only to the Pass Through Trustee).
3.2 Legality, Etc. No change shall have occurred after December 14,
-------------
1996 in Governmental Rules that, in the reasonable opinion of the Charterer,
would make it illegal or unduly burdensome for the Charterer, the Guarantor, the
Owner Trustee, the Indenture Trustee, the Pass Through Trustee or any
Participant to participate in any of the transactions contemplated by the
Operative Documents to be consummated on the Closing Date.
3.3 Event of Loss. No Event of Loss shall have occurred and no
-------------
action or proceeding shall have been commenced that could result in an Event of
Loss.
3.4 Consents and Approvals. On the Closing Date, all Governmental
----------------------
Actions required to be taken, given or obtained, as the case may be, by or from
any Governmental Authority which are required in connection with the
transactions contemplated by the Operative Documents and the Pass Through Trust
Agreement, or to authorize the execution, delivery and performance by the
Charterer and/or the Guarantor, as the case may be, of the Pass Through Trust
Agreement, the Underwriting Agreement, and the Operative Documents to which it
is a party, other than those constituting filings, recordings or other actions
of the types referred to in Section 4.12, shall have been duly taken, given or
obtained, as the case may be, shall be in full force and effect on the Closing
Date, shall not be subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and shall be adequate to authorize the
consummation of the transactions contemplated by the Pass Through Trust
Agreement, the Underwriting Agreement and the Operative Documents and the
performance by each of the Charterer and the Guarantor of its obligations under
such thereof to which it is a party, except such as may be required to be taken,
obtained, given, accomplished or renewed from time to time in connection
7
<PAGE>
with the delivery, maintenance or operation of the Vessel or which are otherwise
required in connection with the transactions contemplated by the Pass Through
Trust Agreement, the Underwriting Agreement and the Operative Documents which
have been applied for but which cannot be obtained, or which are not normally
applied for or taken, given or obtained, prior to the Closing Date, and which in
the normal course would be granted; provided that the failure to obtain such
--------
Governmental Actions, consents or approvals by the Closing Date would not
materially adversely affect the ability of (x) the Charterer to perform its
obligations under this Agreement, the Pass Through Trust Agreement or any other
Operative Document to which it is or will be a party or (y) the ability of the
Guarantor to perform its obligations under the Guarantee.
3.5 Representations and Warranties; Certificates. The
--------------------------------------------
representations and warranties of the Owner Participant, the Pass Through
Trustee, the Trust Company, the Owner Trust, and the Indenture Trustee contained
in Sections 7, 8, 9 and 10, respectively, shall be true and accurate on and as
of the Closing Date as though made on and as of such date, except to the extent
that such representations and warranties relate solely to an earlier date (in
which case the same shall be true and accurate as of such earlier date), and the
Charterer shall have received executed copies of each of the certificates
referred to in Section 4.8 and Section 4.9 (other than Sections 4.8(a) and (f)
and Sections 4.9(a) and (f)) required to be delivered on the Closing Date, which
certificates shall be dated the Closing Date.
3.6 Opinions. A signed original of each opinion referred to in
--------
Section 4.6 (other than Sections 4.6(a), 4.6(b) and 4.6(i)) shall have been
addressed to and delivered to the Charterer.
3.7 Litigation. There shall be no actions, suits, investigations or
----------
proceedings pending or, to the knowledge of the Charterer, threatened against
the Charterer, the Guarantor, the Owner Participant, the Pass Through Trustee,
the Owner Trust or the Indenture Trustee or the properties of any of such
Persons before any Governmental Authority to set aside, restrain, enjoin or
prevent the consummation of this Agreement or the transactions contemplated
hereby or by any of the other Operative Documents, the Pass Through Trust
Agreement or the Underwriting Agreement.
3.8 Sale of Pass Through Certificates. The Pass Through Certificates
---------------------------------
shall have been issued pursuant to the Pass Through Trust Agreement and sold
pursuant to the Underwriting Agreement and the Underwriters shall have
transferred to the Pass Through Trustee in immediately available funds an amount
equal to the purchase price for the
8
<PAGE>
Pass Through Certificates sold pursuant to the Pass Through Trust Agreement.
SECTION 4. CONDITIONS TO CLOSING BY THE PASS THROUGH
TRUSTEE
-----------------------------------------
The obligations of the Pass Through Trustee pursuant to Section 2 to
purchase the Secured Notes and to take the other actions contemplated by Section
2 to be taken by it on the Closing Date are subject only to the fulfillment on
the Closing Date to the satisfaction of (including, with respect to writings,
such writings being in form and substance reasonably satisfactory to the
addressee or the beneficiary thereof) or waiver by the Pass Through Trustee of
each of the following conditions precedent (other than in the case of the Pass
Through Trustee, Sections 4.8(e) and 4.9(e)), except that the obligations of
such Pass Through Trustee shall not be subject to such Pass Through Trustee's
own performance or, if the Pass Through Trustee shall have the power to cause
another Person to perform, the Pass Through Trustee's failure to cause such
performance:
4.1 Notice of Closing. The Participants shall have received the
-----------------
notice of closing for such Closing Date required to be delivered pursuant to
Section 2.4.
4.2 Operative Documents. Each of the following documents shall have
-------------------
been duly authorized, executed and delivered by the respective parties thereto:
(a) this Agreement;
(b) the Charter;
(c) the Bill of Sale;
(d) the Indenture;
(e) the Secured Note;
(f) the Trust Agreement;
(g) the Parent Guarantee; and
(h) he Ship Mortgage;
and each such document, the Lessor's Security Assignment, the Pass Through Trust
Agreement and the Pass Through Trust Supplement shall be in full force and
effect on the Closing Date, and no event or condition shall have occurred that,
with or without the lapse of time or the giving of notice, shall give any other
party thereto the right to terminate such document and an executed counterpart
(or a true, correct and
9
<PAGE>
complete copy) of each of the same shall have been delivered to the Pass Through
Trustee.
4.3 Legality, Etc. No change shall have occurred after December 12,
-------------
1996 in Governmental Rules that, in the reasonable opinion of the Pass Through
Trustee, would make it illegal or unduly burdensome for the Trust Company, the
Resident Trustee, the Owner Trust, the Charterer, the Guarantor, the Indenture
Trustee, the Pass Through Trustee in its individual capacity or any Participant
to participate in any of the transactions contemplated by the Operative
Documents to be consummated on the Closing Date.
4.4 Event of Loss. No Event of Loss shall have occurred and no
-------------
action or proceeding shall have been commenced that could result in an Event of
Loss.
4.5 Insurance. If the Delivery Date has occurred, insurance
---------
complying in all respects with the provisions of Section 13.1 of the Charter
shall be in full force and effect and the Owner Participant, the Pass Through
Trustee and the Indenture Trustee shall have received a certificate of an
independent insurance broker or consultant, which broker or consultant may be
the Charterer's independent insurance broker or consultant, dated the Closing
Date, setting forth the insurance obtained by or on behalf of the Charterer in
accordance with Section 13.1(a) of the Charter and as then in effect, stating
that such insurance is in full force and effect and that all premiums then due
thereon have been paid and an Officer's Certificate of the Charterer, dated the
Closing Date, stating that such insurance complies in all respects with the
provisions of such Section 13.1(a).
4.6 Opinions. Opinions dated the Closing Date of the following
--------
counsel, each such opinion substantially in the form of the indicated Exhibit
hereto (with such changes to such form as contemplated by such Exhibit) and
addressed as provided in such Exhibit (or, in lieu of including the Underwriter
as an addressee, such counsel may deliver a reliance letter to the Underwriter),
shall have been executed and delivered by such counsel:
(a) Ralph N. Johanson, Jr., Esq., Managing Counsel, Corporate Finance
and Securities of the Guarantor, substantially in the form of Exhibit A-1;
(b) Dewey Ballantine, special counsel to the Charterer and the
Guarantor, substantially in the form of Exhibit A-2;
(c) Haight, Gardner, Poor & Havens, special Marshall Islands counsel,
substantially in the form of Exhibit A-3;
10
<PAGE>
(d) Maples & Calder, special counsel to the Owner Participant,
substantially in the form of Exhibit A-4;
(e) Morris, James, Hitchins & Williams, special Delaware counsel to
the Resident Trustee and the Owner Trust, substantially in the form of
Exhibit A-5;
(f) Maples & Calder, special Cayman Islands counsel to the Trust
Company and the Owner Trust, substantially in the form of Exhibit A-6;
(g) Bingham, Dana & Gould, counsel to the Indenture Trustee,
substantially in the form of Exhibit A-7;
(h) Bingham, Dana & Gould, counsel to the Pass Through Trustee,
substantially in the form of Exhibit A-8;
(i) Dewey Ballantine, special New York counsel to the Owner
Participant, substantially in the form of Exhibit A-9; and
(j) Slaughter and May, special English counsel to the Owner
Participant, substantially in the form of Exhibit A-10.
4.7 Taxes. All Taxes, fees and other charges, if any, payable on or
-----
prior to the Closing Date in connection with the execution, delivery,
recordation and filing of all documents and instruments referred to in Section
4.12 below, this Agreement or any other Operative Document, or in connection
with the acquisition by the Owner Trustee on the Closing Date of the Vessel
Interest, the issuance and sale of the Secured Note and the Pass Through
Certificates and the subjecting of the Vessel Interest to the Lien of the
Indenture, shall have been duly paid in full by the Charterer.
4.8 Officer's Certificates. On the Closing Date, the following
----------------------
statements shall be true and the Pass Through Trustee and the Indenture Trustee
shall have received:
(a) an Officer's Certificate of the Charterer, dated the Closing
Date, stating that (A) the representations and warranties of the Charterer
contained in Section 6 are true and accurate on and as of the Closing Date
as though made on and as of such date except to the extent that such
representations and warranties specifically relate solely to an earlier
date (in which case such representations and warranties shall have been
true and accurate on and as of such earlier date) and (B) each Operative
Document to which it is a party and the Pass Through Trust Agreement remain
in full force and effect with respect to it;
11
<PAGE>
(b) an Officer's Certificate of the Owner Participant, dated the Closing
Date, stating that (i) the representations and warranties of the Owner
Participant contained in Section 7 are true and accurate on and as of the
Closing Date as though made on and as of such date except to the extent
that such representations and warranties specifically relate solely to an
earlier date (in which case such representations and warranties shall have
been true and accurate on and as of such earlier date); and (ii) each
Operative Document to which it is a party remains in full force and effect
with respect to it;
(c) an Officer's Certificate of each of the Trust Company and the
Managing Trustee, dated the Closing Date, stating that (i) the
representations and warranties of the Trust Company and the Managing
Trustee contained in Section 9 are true and accurate on and as of the
Closing Date as though made on and as of such date except to the extent
that such representations and warranties specifically relate solely to an
earlier date (in which case such representations and warranties shall have
been true and accurate on and as of such earlier date); and (ii) each
Operative Document to which it is a party remains in full force and effect
with respect to it;
(d) an Officer's Certificate of the Indenture Trustee, dated the
Closing Date, stating that (i) the representations and warranties of the
Indenture Trustee contained in Section 10 are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which case such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) each
Operative Document to which it is a party remains in full force and effect
with respect to it;
(e) an Officer's Certificate of the Pass Through Trustee, dated the
Closing Date, stating that (i) the representations and warranties of the
Pass Through Trustee contained in Section 8 are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which case such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) each
of the Participation Agreement and the Pass Through Trust Agreement remain
in full force and effect with respect to it; and
12
<PAGE>
(f) an Officer's Certificate of the Guarantor, dated the Closing Date,
stating that (i) the representations and warranties of the Guarantor
contained in Section 1.1 of the Guarantee are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which are such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) each
of the Guarantee and the Pass Through Trust Agreement remains in full force
and effect with respect to it.
4.9 Resolutions, Etc. The Loan Participant and the Indenture Trustee
-----------------
shall have received the following, in each case in form and substance reasonably
satisfactory to such Person:
(a) a Secretary's or an Assistant Secretary's certificate of the
Charterer, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Charterer of each Operative Document to
which it is a party, and the Pass Through Trust Agreement and the
transactions contemplated thereby, certified to be in full force and effect
without modification as of the Closing Date, (ii) its charter documents,
(iii) its by-laws, and (iv) the incumbency and signature of persons
authorized to execute and deliver such documents on behalf of the
Charterer;
(b) a Secretary's or an Assistant Secretary's certificate of the Owner
Participant, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Owner Participant of each Operative
Document to which it is a party, and the transactions contemplated thereby,
certified to be in full force and effect without modification as of the
Closing Date, (ii) its charter documents, (iii) its by-laws, and (iv) the
incumbency and signature of persons authorized to execute and deliver such
documents on behalf of the Owner Participant;
(c) a Secretary's or an Assistant Secretary's certificate of the Trust
Company, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Trust Company of each Operative Document to
which it is a party, and the transactions contemplated thereby, certified
to be in full force and effect without modification as of the Closing Date,
(ii) its charter documents, (iii) its by-
13
<PAGE>
laws, and (iv) the incumbency and signature of persons authorized to
execute and deliver such documents on behalf of the Trust Company;
(d) a Secretary's or an Assistant Secretary's certificate of the
Indenture Trustee, dated the Closing Date, attaching and certifying as to
(i) resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Indenture Trustee of each Operative
Document to which it is a party, and the transactions contemplated thereby,
certified to be in full force and effect without modification as of the
Closing Date, (ii) its charter documents, (iii) its by-laws, and (iv) the
incumbency and signature of persons authorized to execute and deliver such
documents on behalf of the Indenture Trustee;
(e) a Secretary's or an Assistant Secretary's certificate of the Pass
Through Trustee, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors or an appropriate committee thereof
duly authorizing the execution, delivery and performance by the Pass
Through Trustee of the Pass Through Trust Agreement, the Pass Through Trust
Supplement and the Participation Agreement, and the transactions
contemplated thereby, certified to be in full force and effect without
modification as of the Closing Date, (ii) its charter documents, (iii) its
by-laws, and (iv) the incumbency and signature of persons authorized to
execute and deliver such documents on behalf of the Pass Through Trustee;
and
(f) a Secretary's or an Assistant Secretary's certificate of the
Guarantor, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Guarantor of the Guarantee and its
obligations thereunder, certified to be in full force and effect without
modification as of the Closing Date, (ii) its charter documents, (iii) its
by-laws and (iv) the incumbency and signature of persons authorized to
execute and deliver the Guarantee on behalf of the Guarantor.
4.10 Litigation. There shall be no actions, suits, investigations or
----------
proceedings pending or, to the knowledge of the Owner Participant, the Owner
Trust, the Indenture Trustee, the Charterer, or the Guarantor threatened against
any of such Persons or the properties of any of such Persons before any
Governmental Authority to set aside, restrain, enjoin or prevent the
consummation of this Agreement or the transactions contemplated hereby or by any
of the other Operative
14
<PAGE>
Documents, the Pass Through Trust Agreement, the Pass Through Trust Supplement
or the Underwriting Agreement.
4.11 Consents and Approvals. On the Closing Date, all Governmental
----------------------
Actions which are required to have been taken, given, obtained, filed or
recorded, as the case may be, on or prior to the Closing Date by, from or with
any Governmental Authority, and all other consents, filings or approvals which
are required to have been taken, given, obtained, filed or recorded, as the case
may be, on or prior to the Closing Date by, from or with any other Person, in
connection with the transactions contemplated by the Operative Documents and the
Pass Through Trust Agreement, or to authorize the execution, delivery and
performance by the Charterer, the Guarantor, the Owner Participant, the Owner
Trustee, the Indenture Trustee or the Pass Through Trustee of the Pass Through
Trust Agreement and each of the Operative Documents to which it is a party, or
the legality, validity, binding effect or enforceability thereof as against the
Charterer or the Guarantor, other than those constituting filings, recordings or
other actions of the type referred to in Section 4.12, shall have been duly
taken, given or obtained, as the case may be, shall be in full force and effect
on the Closing Date, shall not be subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and shall be adequate to authorize the
consummation of the transactions contemplated by the Pass Through Trust
Agreement, the Underwriting Agreement and the Operative Documents and the
performance by the Charterer and the Guarantor of its obligations under such
thereof to which it is a party, except such as may be required to be taken,
obtained, given, accomplished or renewed from time to time in connection with
the maintenance or operation of the Vessel or which is otherwise required in
connection with the transactions contemplated by the Pass Through Trust
Agreement, the Underwriting Agreement and the Operative Documents which have
been applied for but which cannot be obtained, or which are not normally applied
for or taken, given or obtained, prior to the Closing Date, and which in the
normal course would be granted; provided that the failure to obtain such
--------
Governmental Actions, consents or approvals by the Closing Date would not
materially adversely affect the ability of (x) the Charterer to perform its
obligations under this Agreement, the Pass Through Trust Agreement or any other
Operative Document to which it is or will be a party or (y) the Guarantor to
perform its obligations under the Guarantee.
4.12 Title; Filings and Recordings. On or prior to the Closing Date,
-----------------------------
(a) title to the Vessel shall have been duly and effectively vested in the Owner
Trust pursuant to the Bill of Sale, free and clear of all Liens other than
Permitted Liens, all filings and recordings or other actions necessary or
advisable to establish the Owner Trust's right, title and
15
<PAGE>
interest in and to the Vessel Interest, and to perfect the mortgage Lien on and
security interest in the Indenture Estate created by the Indenture and the Ship
Mortgage (including, without limitation, all filings and recordings necessary to
register the Owner Trust's title to the Vessel in the Marshall Islands and the
filing of the Ship Mortgage in the Office of the Maritime Administrator of the
Marshall Islands registry), shall have been duly made, subject to requirements
for filing continuation statements at appropriate intervals and subject to
Permitted Liens, and (b) no other action shall be required to perfect such
mortgage Lien and security interest.
4.13 Sale of Pass Through Certificates. The Charterer, the Other
---------------------------------
Charterer and the Guarantor shall have entered into the Underwriting Agreement,
the Pass Through Trust Agreement and the Pass Through Trust Supplement, and the
Pass Through Certificates shall have been issued pursuant to the Pass Through
Trust Agreement and sold pursuant to the Underwriting Agreement and the
Underwriters shall have transferred to the Pass Through Trustee in immediately
available funds an amount equal to the purchase price for the Pass Through
Certificates.
4.14 No Default Under Charter. The Vessel shall have been duly
------------------------
accepted by the Charterer under the Charter and in evidence thereof the Pass
Through Trustee and the Indenture Trustee shall have received a protocol of
delivery and acceptance executed by Charterer and no Charter Default or Charter
Event of Default shall have occurred and be continuing.
4.15 U.K. Closing. The Pass Through Trustee and Indenture Trustee
------------
shall have received copies of the executed Head Lease, Conditional Sale
Agreement, Lessee Support Agreement, Lessor's Security Assignment and the U.K.
Lessor's Mortgage and each such document shall have terms reasonably
satisfactory to it.
4.16 Investment. The Owner Participant shall have made available to
----------
the Owner Trust the full amount of its Investment on the Closing Date pursuant
to Section 2.
SECTION 5. CONDITIONS TO CLOSING BY OWNER
PARTICIPANT.
------------------------------
The obligations of the Owner Participant pursuant to Section 2 to
participate in the payment of Owner's Cost and to take the other actions
contemplated by Section 2 to be taken by it on the Closing Date are subject only
to the fulfillment on the Closing Date to the satisfaction of (including, with
respect to writings, such writings being in form and substance reasonably
satisfactory to the addressee or the beneficiary thereof) or waiver by the Owner
Participant of each of the
16
<PAGE>
following conditions precedent (other than (i) in the case of the Owner
Participant, Sections 5.6 (d) and (i) except that the obligations of the Owner
Participant shall not be subject to the Owner Participant's own performance or,
if the Owner Participant shall have the power to cause another Person to
perform, the Owner Participant's failure to cause such performance:
5.1 Notice of Closing. The Owner Participant shall have received the
-----------------
notice of closing for such Closing Date required to be delivered pursuant to
Section 2.4.
5.2 Operative Documents. Each of the following documents shall have
-------------------
been duly authorized, executed and delivered by the respective parties thereto:
(a) this Agreement;
(b) the Charter;
(c) the Bill of Sale;
(d) the Indenture;
(e) the Secured Note;
(f) the Trust Agreement;
(g) the Guarantee;
(h) the Ship Mortgage; and
(i) the U.K. Lessor's Mortgage;
and each such document, the Pass Through Trust Agreement and the Pass Through
Trust Supplement shall be in full force and effect on the Closing Date, and no
event or condition shall have occurred that, with or without the lapse of time
or the giving of notice, shall give any other party thereto the right to
terminate such document and an executed counterpart (or a true, correct and
complete copy) of each of the same shall have been delivered to the Owner
Participant.
5.3 Legality, Etc. No change shall have occurred after December 14,
-------------
1996 in Governmental Rules that, in the reasonable opinion of the Owner
Participant, would make it illegal or unduly burdensome for the Trust Company,
the Owner Trust, the Charterer, the Guarantor, the Indenture Trustee or any
Participant to participate in any of the transactions contemplated by the
Operative Documents to be consummated on the Closing Date.
17
<PAGE>
5.4 Event of Loss. No Event of Loss shall have occurred and no
-------------
action or proceeding shall have been commenced that could result in an Event of
Loss.
5.5 Insurance. If the Delivery Date has occurred, insurance
---------
complying in all respects with the provisions of Section 13.1 of the Charter
shall be in full force and effect and the Owner Participant and the Indenture
Trustee shall have received a certificate of an independent insurance broker or
consultant, which broker or consultant may be the Charterer's independent
insurance broker or consultant, dated the Closing Date, setting forth the
insurance obtained by or on behalf of the Charterer in accordance with Section
13.1(a) of the Charter and as then in effect, stating that such insurance is in
full force and effect and that all premiums then due thereon have been paid and
an Officer's Certificate of the Charterer, dated the Closing Date, stating that
such insurance complies in all respects with the provisions of such Section
13.1(a).
5.6 Opinions. Opinions dated the Closing Date of the following
--------
counsel, each such opinion substantially in the form of the indicated Exhibit
hereto (with such changes to such form as contemplated by such Exhibit) and
addressed as provided in such Exhibit (or, in lieu of including the Underwriter
as an addressee, such counsel may deliver a reliance letter to the Underwriter),
shall have been executed and delivered by such counsel:
(a) Ralph N. Johanson, Jr., Esq., Managing Counsel, Corporate Finance
and Securities of the Guarantor, substantially in the form of Exhibit A-1;
(b) Dewey Ballantine, special counsel to the Charterer and the
Guarantor, substantially in the form of Exhibit A-2;
(c) Haight, Gardner, Poor & Havens, special Marshall Islands counsel,
substantially in the form of Exhibit A-3;
(d) Maples & Calder, special counsel to the Owner Participant,
substantially in the form of Exhibit A-4;
(e) Morris, James, Hitchins & Williams, special Delaware counsel to
the Resident Trustee and the Owner Trustee, substantially in the form of
Exhibit A-5;
(f) Maples & Calder, special Cayman Islands counsel to the Trust
Company and the Owner Trustee, substantially in the form of Exhibit A-6;
18
<PAGE>
(g) Bingham, Dana & Gould, counsel to the Indenture Trustee,
substantially in the form of Exhibit A-7;
(h) Bingham, Dana & Gould, counsel to the Pass Through Trustee,
substantially in the form of Exhibit A-8;
(i) Dewey Ballantine, special New York counsel to the Owner
Participant, substantially in the form of Exhibit A-9; and
(j) Slaughter and May, special English counsel to the Owner
Participant, substantially in the form of Exhibit A-10.
5.7 Taxes. All Taxes, fees and other charges, if any, payable on or
-----
prior to the Closing Date in connection with the execution, delivery,
recordation and filing of all documents and instruments referred to in Section
5.12 below, this Agreement or any other Operative Document, or in connection
with the acquisition by the Owner Trustee on the Closing Date of the Vessel
Interest, the issuance and sale of the Secured Note and the Pass Through
Certificates and the subjecting of the Vessel Interest to the Lien of the
Indenture, shall have been duly paid in full by the Charterer.
5.8 Officer's Certificates. On the Closing Date, the following
----------------------
statements shall be true and the Owner Participant and the Owner Trust shall
have received:
(a) an Officer's Certificate of the Charterer, dated the Closing
Date, stating that (A) the representations and warranties of the Charterer
contained in Section 6 are true and accurate on and as of the Closing Date
as though made on and as of such date except to the extent that such
representations and warranties specifically relate solely to an earlier
date (in which case such representations and warranties shall have been
true and accurate on and as of such earlier date) and (B) each Operative
Document to which it is a party and the Pass Through Trust Agreement remain
in full force and effect with respect to it;
(b) an Officer's Certificate of each of the Trust Company and the
Managing Trustee, dated the Closing Date, stating that (i) the
representations and warranties of the Trust Company and the Owner Trust
contained in Section 9, as the case may be, are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which case such representations and warranties shall
have been true and accurate on and as of such
19
<PAGE>
earlier date); and (ii) each Operative Document to which it is a party
remains in full force and effect with respect to it;
(c) an Officer's Certificate of the Indenture Trustee, dated the
Closing Date, stating that (i) the representations and warranties of the
Indenture Trustee contained in Section 10 are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which case such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) each
Operative Document to which it is a party remains in full force and effect
with respect to it;
(d) an Officer's Certificate of the Pass Through Trustee, dated the
Closing Date, stating that (i) the representations and warranties of the
Pass Through Trustee contained in Section 8 are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which case such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) each
of the Participation Agreement, the Pass Through Trust Agreement and the
Pass Through Trust Supplement remain in full force and effect with respect
to it; and
(e) an Officer's Certificate of the Guarantor, dated the Closing Date,
stating that (i) the representations and warranties of the Guarantor
contained in Section 1.1 of the Guarantee are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which are such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) the
Guarantee remains in full force and effect.
5.9 Resolutions, Etc. The Owner Participant and the Owner Trust
-----------------
shall have received the following, in each case in form and substance reasonably
satisfactory to the Owner Participant:
(a) a Secretary's or an Assistant Secretary's certificate of the
Charterer, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Charterer of each
20
<PAGE>
Operative Document to which it is a party, and the Pass Through Trust
Agreement and the transactions contemplated thereby, certified to be in
full force and effect without modification as of the Closing Date, (ii) its
charter documents, (iii) its by-laws, and (iv) the incumbency and signature
of persons authorized to execute and deliver such documents on behalf of
the Charterer;
(b) a Secretary's or an Assistant Secretary's certificate of the Trust
Company, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Trust Company of each Operative Document to
which it is a party, and the transactions contemplated thereby, certified
to be in full force and effect without modification as of the Closing Date,
(ii) its charter documents, (iii) its by-laws, and (iv) the incumbency and
signature of persons authorized to execute and deliver such documents on
its behalf;
(c) a Secretary's or an Assistant Secretary's certificate of the
Indenture Trustee, dated the Closing Date, attaching and certifying as to
(i) resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Indenture Trustee of each Operative
Document to which it is a party, and the transactions contemplated thereby,
certified to be in full force and effect without modification as of the
Closing Date, (ii) its charter documents, (iii) its by-laws, and (iv) the
incumbency and signature of persons authorized to execute and deliver such
documents on behalf of the Indenture Trustee;
(d) a Secretary's or an Assistant Secretary's certificate of the Pass
Through Trustee, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors or an appropriate committee thereof
duly authorizing the execution, delivery and performance by the Pass
Through Trustee of the Pass Through Trust Agreement, the Pass Through Trust
Supplement, and the Participation Agreement, and the transactions
contemplated thereby, certified to be in full force and effect without
modification as of the Closing Date, (ii) its charter documents, (iii) its
by-laws, and (iv) the incumbency and signature of persons authorized to
execute and deliver such documents on behalf of the Pass Through Trustee;
and
(e) a Secretary's or an Assistant Secretary's certificate of the
Guarantor, dated the Closing Date, attaching and certifying as to (i)
resolutions of its
21
<PAGE>
Board of Directors duly authorizing the execution, delivery and performance
by the Guarantor of the Guarantee and its obligations thereunder, certified
to be in full force and effect without modification as of the Closing Date,
(ii) its charter documents, (iii) its by-laws and (iv) the incumbency and
signature of persons authorized to execute and deliver the Guarantee on
behalf of the Guarantor.
5.10 Litigation. There shall be no actions, suits, investigations or
----------
proceedings pending or, to the knowledge of the Owner Participant, the
Charterer, the Guarantor, the Owner Trust or the Indenture Trustee, threatened
against any of such Persons or the properties of any of such Persons before any
Governmental Authority to set aside, restrain, enjoin or prevent the
consummation of this Agreement or the transactions contemplated hereby or by any
of the other Operative Documents, the Pass Through Trust Agreement, the Pass
Through Trust Supplement or the Underwriting Agreement.
5.11 Consents and Approvals. On the Closing Date, all Governmental
----------------------
Actions which are required to have been taken, given, obtained, filed or
recorded, as the case may be, on or prior to the Closing Date by, from or with
any Governmental Authority, and all other consents, filings or approvals which
are required to have been taken, given, obtained, filed or recorded, as the case
may be, on or prior to the Closing Date by, from or with any other Person, in
connection with the transactions contemplated by the Operative Documents and the
Pass Through Trust Agreement, or to authorize the execution, delivery and
performance by the Charterer, the Guarantor, the Owner Participant, the Owner
Trust, the Indenture Trustee or the Pass Through Trustee of the Pass Through
Trust Agreement and each of the Operative Documents to which it is a party, or
the legality, validity, binding effect or enforceability thereof as against the
Charterer or the Guarantor, other than those constituting filings, recordings or
other actions of the type referred to in Section 5.12, shall have been duly
taken, given or obtained, as the case may be, shall be in full force and effect
on the Closing Date, shall not be subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and shall be adequate to authorize the
consummation of the transactions contemplated by the Pass Through Trust
Agreement, the Underwriting Agreement and the Operative Documents and the
performance by the Charterer and the Guarantor of its obligations under such
thereof to which it is a party, except such as may be required to be taken,
obtained, given, accomplished or renewed from time to time in connection with
the maintenance or operation of the Vessel or which is otherwise required in
connection with the transactions contemplated by the Pass Through Trust
Agreement, the Underwriting Agreement and the Operative Documents which have
22
<PAGE>
been applied for but which cannot be obtained, or which are not normally applied
for or taken, given or obtained, prior to the Closing Date, and which in the
normal course would be granted; provided that the failure to obtain such
--------
Governmental Actions, consents or approvals by the Closing Date would not
materially adversely affect the ability of (x) the Charterer to perform its
obligations under this Agreement, the Pass Through Trust Agreement or any other
Operative Document to which it is or will be a party or (y) the Guarantor to
perform its obligations under the Guarantee.
5.12 Title; Filings and Recordings. On or prior to the Closing Date,
-----------------------------
(a) title to the Vessel Interest shall have been duly and effectively vested in
the Owner Trust pursuant to the Bill of Sale, free and clear of all Liens other
than Permitted Liens, all filings and recordings necessary to establish the
Owner Trust's right, title and interest in and to the Vessel Interest, and to
perfect the mortgage Lien on and security interest in the Indenture Estate
created by the Indenture and the Ship Mortgage (including, without limitation,
all filings and recordings necessary to register the Owner Trust's title to the
Vessel in the Marshall Islands and the filing of the Ship Mortgage in the Office
of the Maritime Administrator of the Marshall Islands registry), shall have been
duly made, subject to requirements for filing continuation statements at
appropriate intervals and subject to Permitted Liens, and (b) no other action
shall be required to perfect such mortgage Lien and security interest.
5.13 Sale of Pass Through Certificates. The Charterer, the Other
---------------------------------
Charterer and the Guarantor shall have entered into the Underwriting Agreement,
the Pass Through Trust Agreement and the Pass Through Trust Supplement, and the
Pass Through Certificates shall have been issued pursuant to the Pass Through
Trust Agreement and sold pursuant to the Underwriting Agreement and the
Underwriters shall have transferred to the Pass Through Trustee in immediately
available funds an amount equal to the purchase price for the Pass Through
Certificates.
5.14 No Default Under Charters. No Charter Default or Charter Event
-------------------------
of Default shall have occurred and be continuing.
5.15 Loans. The Pass Through Trustee shall have purchased the
-----
Secured Note required to be purchased by it on the Closing Date pursuant to
Section 2.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE CHARTERER.
------------------------------------------------
The Charterer represents and warrants to each of the other parties
hereto that:
23
<PAGE>
6.1 Due Organization. The Charterer is a corporation duly organized,
----------------
validly existing and in good standing under the laws of the State of Delaware
and has the corporate power and authority to carry on its business as presently
conducted and as it is contemplated it will be conducted in connection with the
Vessel Interest, to own or hold under lease or charter its properties, and to
enter into and perform its obligations under this Agreement, the Pass Through
Trust Agreement and each other Operative Document to which it is a party. The
Charterer has not failed to qualify to do business in any jurisdiction where
failure so to qualify could reasonably be expected to materially adversely
affect its ability to perform any of its obligations under this Agreement, the
Pass Through Trust Agreement, the Pass Through Trust Supplement or any other
Operative Document to which it is a party.
6.2 Authorization. The execution, delivery and performance by the
-------------
Charterer of this Agreement, the Pass Through Trust Agreement, the Pass Through
Trust Supplement and each other Operative Document to which it is a party and of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of the Charterer and do not and will
not require the consent or approval of any shareholder of the Charterer or any
trustee or holder of any indebtedness or other obligation of the Charterer.
6.3 Execution; Enforceability. This Agreement, the Pass Through
-------------------------
Trust Agreement, the Pass Through Trust Supplement and each other Operative
Document to which the Charterer is a party have been duly executed and delivered
by the Charterer and, assuming the due authorization, execution and delivery
hereof and thereof by the other parties hereto and thereto are legal, valid and
binding obligations of the Charterer, enforceable against the Charterer in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, liquidation,
moratorium or similar laws affecting creditors' or lessors' rights generally and
by the application of general equitable principles which may limit the
availability of certain remedies.
6.4 No Violation. The execution and delivery by the Charterer of
------------
this Agreement, the Pass Through Trust Agreement, the Pass Through Trust
Supplement and each other Operative Document to which it is a party do not and
will not, and the performance by the Charterer of its obligations under each
thereof do not and will not, (i) violate or be inconsistent with its charter
documents or by-laws, (ii) contravene any Governmental Rule or Governmental
Action applicable to it, which, in the case of such performance, noncompliance
with which would materially adversely affect the
24
<PAGE>
Vessel Interest or the ability of the Charterer to perform its obligations under
the Operative Documents; provided that no representation or warranty is made
--------
with respect to ERISA, (iii) contravene any provision of, or constitute a
default under, any indenture, mortgage, contract or other agreement or
instrument to which the Charterer is a party or by which it or any of its
properties are bound or (iv) result in or, require the creation or imposition of
any Lien (other than Permitted Liens) upon any of its properties or assets.
6.5 Consents and Approvals. On the Closing Date, all Governmental
----------------------
Actions which are required to have been taken, given, obtained, filed or
recorded, as the case may be, on or prior to the Closing Date by, from or with
any Governmental Authority and all other consents, filings or approvals which
are required to have been taken, given, obtained, filed or recorded, as the case
may be, on or prior to the Closing Date by, from or with any other Person, in
connection with the transactions contemplated by the Pass Through Trust
Agreement and the Operative Documents, or to authorize the execution, delivery
and performance by the Charterer and/or the Guarantor of the Guarantee, the Pass
Through Trust Agreement, the Pass Through Trust Supplement and the Operative
Documents to which either of them is a party, or the legality, validity, binding
effect or enforceability thereof as against the Charterer or the Guarantor,
other than those constituting filings, recordings or other actions of the types
referred to in Section 6.7, have been duly taken, given or obtained, as the case
may be, are in full force and effect on the Closing Date, are not subject to any
pending proceedings or appeals (administrative, judicial or otherwise) and are
adequate to authorize the consummation by the Charterer or the Guarantor of the
transactions contemplated by the Pass Through Trust Agreement, the Underwriting
Agreement and the Operative Documents and the performance by each of the
Charterer and the Guarantor of its obligations under such thereof to which it is
a party, except such as may be required to be taken, obtained, given,
accomplished or renewed from time to time in connection with the maintenance or
operation of the Vessel Interest or which are otherwise required in connection
with the transactions contemplated by the Operative Documents, which have been
applied for but which cannot be obtained, or which are not normally applied for
or taken, given or obtained, prior to the Closing Date, and which in the normal
course would be granted, provided that the failure to obtain such Governmental
--------
Actions, consents and approvals by the Closing Date would not materially
adversely affect the ability of the Charterer to perform its obligations under
this Agreement, the Pass Through Trust Agreement or any other Operative Document
to which it is or will be a party.
6.6 Securities Act. Neither the Charterer nor any Person authorized
--------------
on its behalf has directly or indirectly
25
<PAGE>
offered or sold the Pass Through Certificates, or solicited any offer to acquire
the same from, any Person other than in a manner required by the Securities Act.
Neither the Charterer nor any Person authorized to act on its behalf will take
any action which would subject the issuance or sale of any interest in the Trust
Estate or the Secured Note to the provisions of Section 5 of the Securities Act
or require the qualification of the Indenture under the Trust Indenture Act.
6.7 Title; Filings and Recordings. On or prior to the Closing Date,
-----------------------------
after giving effect to the transactions contemplated hereby, (a) title in and to
the Vessel Interest will be duly and effectively vested in the Owner Trust,
pursuant to the Bill of Sale free and clear of all Liens other than Permitted
Liens, (b) the filings and recordings listed in Schedule 3 will be all the
filings and recordings and other actions necessary or advisable to establish the
Owner Trust's right, title and interest in and to the Vessel Interest, and to
perfect the mortgage Lien on and security interest in the Indenture Estate
created by the Indenture and the Ship Mortgage, and all such filings and
recordings and other action will have been duly made, subject to requirements
for filing continuation statements at appropriate intervals and subject to
Permitted Liens, and (c) no other actions will be required to perfect such
mortgage Lien and security interest.
6.8 Chief Place of Business. The chief place of business and chief
-----------------------
executive office of the Charterer is in Fairfax, Virginia and the offices where
it keeps its records concerning the Vessel and its accounts and contract rights
are in Fairfax, Virginia.
6.9 Litigation. There is no action, suit, investigation or
----------
proceeding pending or, to the Actual Knowledge of the Charterer, threatened
against the Charterer or affecting it or its properties before any Governmental
Authority which, individually or in the aggregate (so far as the Charterer now
can reasonably foresee), is reasonably likely materially and adversely to affect
the consummation of the transactions under this Agreement, the Pass Through
Trust Agreement, the Pass Through Trust Supplement or any other Operative
Document to which it is or will be a party or the ability of the Charterer to
perform its obligations hereunder or thereunder.
6.10 No Default. No Charter Default or Charter Event of Default has
----------
occurred and is continuing.
6.11 Event of Loss. No Event of Loss has occurred.
-------------
6.12 Investment Company Act. The Charterer is not an "investment
----------------------
company" or a company "controlled" by an
26
<PAGE>
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
6.13 No Brokers' Fees. Neither the Charterer nor any Person acting
----------------
on its behalf has taken any actions the effect of which would be to cause the
Owner Trust, the Indenture Trustee or any Participant to be liable for any
brokers', finders' or agents' fees or commissions or costs of any nature or kind
claimed by or on behalf of brokers, finders or agents in respect of the
transactions contemplated by this Agreement other than fees payable to Morgan
Stanley & Co. Incorporated, all of which fees, commissions or costs are included
in Transaction Expenses or will be paid or indemnified against by the Charterer.
6.14 No Other Business or Liabilities. Except for activities and
--------------------------------
liabilities contemplated by Operative Documents and the U.K. Documents and
comparable documents relating to two Other Vessels and activities incidental
thereto, the Charterer has not engaged in any other business or activities or
incurred any liabilities.
6.15 Payment of Taxes, etc. All Taxes, fees and other charges
---------------------
payable on or prior to the Closing Date in connection with the execution,
delivery, recordation and filing of all documents and instruments, including the
Operative Documents, and the performance of the transactions contemplated by the
Operative Documents occurring on or prior to the Closing Date, have been paid in
full.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN OR IN ANY OTHER OPERATIVE DOCUMENT,
THE CHARTERER MAKES NOR SHALL THE CHARTERER BE DEEMED TO HAVE MADE, AND THE
CHARTERER HEREBY DISCLAIMS, ANY REPRESENTATION OR WARRANTY OTHER THAN THOSE
REFERRED TO IN THIS SECTION, IN ANY OFFICER'S CERTIFICATE OF THE CHARTERER OR
EXPRESSLY MADE IN ANY OTHER OPERATIVE DOCUMENT, EITHER EXPRESS OR IMPLIED, AS TO
THE DESIGN OR CONDITION OF THE VESSEL OR ANY PART THEREOF, THE MERCHANTABILITY
THEREOF OR THE FITNESS THEREOF FOR ANY PARTICULAR PURPOSE, THE ABILITY OF THE
VESSEL TO PERFORM ANY FUNCTION, THE QUALITY OF THE MATERIALS OR WORKMANSHIP
THEREOF OR CONFORMITY THEREOF TO SPECIFICATIONS, OR THE PRESENCE OR ABSENCE OF
ANY LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE; PROVIDED THAT THE
FOREGOING SHALL NOT EXCUSE THE PERFORMANCE BY THE CHARTERER OF ITS OBLIGATIONS
UNDER THIS AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT OR THE BILL OF SALE.
27
<PAGE>
SECTION 7. REPRESENTATIONS AND WARRANTIES OF THE OWNER PARTICIPANT.
--------------------------------------------------------
The Owner Participant represents and warrants to each of the other
parties hereto that:
7.1 Due Organization. The Owner Participant is a Cayman Islands
----------------
limited life company, duly organized, validly
existing and in good standing under the laws of the Cayman Islands and has the
corporate power and authority to enter into and perform its obligations under
this Agreement and each other Operative Document to which it is a party.
7.2 Authorization; Execution; Enforceability. The execution,
----------------------------------------
delivery and performance by the Owner Participant of this Agreement and each
other Operative Document to which it is a party and of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of the Owner Participant and do not and will not
require the consent or approval of any shareholder of the Owner Participant
which has not been obtained. This Agreement and each other Operative Document
to which the Owner Participant is a party have been duly authorized, executed
and delivered by the Owner Participant and, assuming the due authorization,
execution and delivery hereof and thereof by the other parties hereto and
thereto, are legal, valid and binding obligations of the Owner Participant,
enforceable against the Owner Participant in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, liquidation, moratorium or similar laws affecting
creditors' rights generally and by the application of general equitable
principles which may limit the availability of certain remedies. Any direction
given by the Owner Participant to the Owner Trust pursuant to the Trust
Agreement will have been duly authorized.
7.3 No Violation. The execution and delivery by the Owner
------------
Participant of this Agreement and each other Operative Document to which it is a
party do not and will not, and the performance by the Owner Participant of its
obligations under each thereof do not and will not, (i) violate or be
inconsistent with or in violation of its charter documents or by-laws, (ii)
contravene any Governmental Rule or Governmental Action applicable to it or
require any Governmental Action and (iii) contravene any provision of, or
constitute a default or require any consent under, any indenture, mortgage,
contract or other instrument to which the Owner Participant is a party or by
which it or any of its property is bound.
7.4 Owner Participant's Liens. There are no Owner Participant's
-------------------------
Liens on the Trust Estate or the Indenture
28
<PAGE>
Estate, or on any part of either thereof and the execution, delivery and
performance by the Owner Participant of the Operative Documents to which it is a
party will not subject the Trust Estate or the Indenture Estate to the Owner
Participant's Liens.
7.5 Acquisition for Investment. The Owner Participant is acquiring
--------------------------
its interest in the Trust Estate for its own account for investment and not with
a view to, or for sale in connection with, any distribution of any such interest
(it being understood that at all times the disposition of its property shall
remain within its control), except that the Owner Participant reserves the right
to transfer or assign any of or all such interest to the extent permitted by the
terms of this Agreement and the Trust Agreement.
7.6 Securities Act. Neither the Owner Participant nor any Person
--------------
authorized by the Owner Participant has directly or indirectly offered or sold
any interest in the Trust Estate, the Trust Agreement or the Secured Note, or in
any similar security relating to the Vessel Interest, or in any security the
offering of which for the purposes of the Securities Act would be deemed to be
part of the same offering as the offering of the aforementioned securities to,
or solicited any offer to acquire any of the same from, any Person other than,
in the case of the Secured Note, the Loan Participant, and neither the Owner
Participant nor any Person authorized to act on its behalf will take any action
which would subject the issuance or sale of any interest in the Trust Estate or
the Secured Note to the provisions of Section 5 of the Securities Act or require
the qualification of the Indenture under the Trust Indenture Act except to the
extent required under Section 15 hereof.
7.7 ERISA. The Owner Participant is not acquiring any part of its
-----
interest in the Trust Estate with the "plan assets" of any "employee benefit
plan" within the meaning of ERISA (or of any "plan" within the meaning of
Section 4975 of the Code), as interpreted by the Internal Revenue Service and
the U.S. Department of Labor in rules, regulations, releases, bulletins or as
interpreted under applicable case law.
7.8 Investment Company Act. Neither the Owner Participant nor any of
----------------------
its Affiliates is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
7.9 Litigation. There is no action, suit, investigation or
----------
proceeding pending or, to the Actual Knowledge of the Owner Participant,
threatened against the Owner Participant or its properties before any
Governmental Authority which, individually or in the aggregate (so far as
29
<PAGE>
the Owner Participant now can reasonably foresee), is reasonably likely
materially and adversely to affect the ability of the Owner Participant to
perform its obligations under this Agreement or any other Operative Document to
which it is or will be a party.
7.10 No Default. No Indenture Default or Indenture Event of Default
----------
attributable to the Owner Participant has occurred and is continuing.
7.11 Federal Reserve Regulations. The Owner Participant is not
---------------------------
engaged principally in, and does not have as one of its important activities,
the business of extending credit for the purpose of purchasing or carrying any
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System of the United States), and no part of the proceeds of
the Secured Note will be used by it to purchase or carry any such margin stock
or, assuming the accuracy of the representation set forth in Section 5.15, to
extend credit to others for the purpose of purchasing or carrying any such
margin stock or for any purpose that violates, or is inconsistent with, the
provisions of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System of the United States.
7.12 No Brokers' Fees. Neither the Owner Participant nor any Person
----------------
acting on its behalf has taken any actions the effect of which would be to cause
the Charterer or the Loan Participant to be liable for any brokers', finders' or
agents' fees or commissions or costs of any nature or kind claimed by or on
behalf of brokers, finders or agents in respect of the transactions contemplated
by this Agreement not included in Transaction Expenses.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE PASS THROUGH
TRUSTEE.
--------------------------------------------------
State Street Bank and Trust Company represents and warrants in its
individual capacity with respect to Sections 8.1, 8.2(a), 8.3, 8.4, 8.5(a), 8.6
and 8.7 and not in its individual capacity, but solely in its capacity as Pass
Through Trustee under the Pass Through Trust Agreement, with respect to Sections
8.2(b) and 8.5(b), to each of the other parties hereto that:
8.1 Due Organization. State Street Bank and Trust Company is a state
----------------
chartered trust company, duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts and has the corporate power
and authority to enter into and perform its obligations under this Agreement,
the Pass Through Trust Agreement and the Pass Through Trust Supplement.
30
<PAGE>
8.2 Authorization; Execution; Enforceability. (a) This Agreement,
----------------------------------------
the Pass Through Trust Agreement and the Pass Through Trust Supplement have been
duly authorized, executed and delivered by State Street Bank and Trust Company,
in its individual capacity and, assuming the due authorization, execution and
delivery hereof and thereof by the other parties hereto and thereto, are legal,
valid and binding obligations of State Street Bank and Trust Company in its
individual capacity (to the extent it is a party hereto or thereto in such
capacity), enforceable against it in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, liquidation, receivership, moratorium or similar
laws affecting creditors' rights generally and by the application of general
equitable principles which may limit the availability of certain remedies.
(b) This Agreement, the Pass Through Trust Agreement, the Pass Through
Trust Supplement and the Pass Through Certificates have been duly authorized,
executed and delivered by the Pass Through Trustee and, assuming the due
authorization, execution and delivery hereof and thereof by the other parties
hereto or thereto, are legal, valid and binding obligations of the Pass Through
Trustee, enforceable against it in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, liquidation, receivership, moratorium or similar
laws affecting creditors' rights generally and the application of general
equitable principles may limit the availability of certain remedies.
8.3 No Violation. The execution, delivery and performance by State
------------
Street Bank and Trust Company of this Agreement, the Pass Through Trust
Agreement and the Pass Through Trust Supplement the purchase by the Pass Through
Trustee of the Secured Note pursuant to this Agreement and the issuance of the
Pass Through Certificates pursuant to the Pass Through Trust Agreement and Pass
Through Trust Supplement are not and will not be inconsistent with its
constitutional documents or do not and will not contravene any Governmental Rule
of the United States of America or the Commonwealth of Massachusetts governing
with respect to its banking or trust powers, and will not contravene any
provision of, or constitute a default under, any indenture, mortgage, contract
or other instrument to which State Street Bank and Trust Company, in its
individual capacity, is a party, or by which it or any of its properties are
bound, or require any Governmental Action of the United States of America or the
Commonwealth of Massachusetts governing its banking or trust powers.
31
<PAGE>
8.4 Litigation. There is no action, suit, investigation or
----------
proceeding pending or, to the Actual Knowledge of State Street Bank and Trust
Company, threatened against it, whether in its individual capacity or as Pass
Through Trustee, before any Governmental Authority governing its banking or
trust powers which, individually or in the aggregate (so far as State Street
Bank and Trust Company now can reasonably foresee), is reasonably likely
materially and adversely to affect the ability of the Pass Through Trustee (in
either such capacity) to perform its obligations under this Agreement or the
Pass Through Trust Agreement (in either such capacity).
8.5 Pass Through Trustee's Liens. (a) There are no Pass Through
----------------------------
Trustee's Liens attributable to State Street Bank and Trust Company in its
individual capacity on the Pass Through Trust Property or on any part thereof.
(b) There are no Pass Through Trustee's Liens on the Pass Through
Trust Property or any part thereof.
8.6 Securities Act. State Street Bank and Trust Company has not
--------------
offered any interest in the Pass Through Certificates or any Secured Note or any
similar securities for sale to, or solicited any offer to acquire the same from,
anyone other than the Underwriter, and no responsible officer or responsible
employee of State Street Bank and Trust Company has knowledge of any such offer
or solicitation, except as set forth in the Operative Documents, the Pass
Through Trust Agreement and Underwriting Agreement.
SECTION 9. REPRESENTATIONS AND WARRANTIES OF THE TRUST COMPANY AND
OWNER TRUST.
-------------------------------------------------------
The Trust Company, in its individual capacity, represents and warrants
with respect to Sections 9.1, 9.2 (other than clause (b)(ii) thereof), 9.3, 9.4
(other than clause (b) thereto), 9.5, 9.6 (other than clause (b) thereto), 9.7
(as specified therein), 9.8 and 9.10, and in its capacity as Managing Trustee
represents and warrants with respect to Sections 9.2(b), 9.4(b), 9.6 (b), 9.7
(as specified therein), 9.9, 9.10, 9.11 and 9.12 to each of the other parties
hereto that:
9.1 Due Organization. The Trust Company is a Cayman Islands company
----------------
duly organized, validly existing and in good standing under the laws of the
Cayman Islands and has the corporate power and authority to enter into and
perform its obligations under the Trust Agreement, this Agreement and each other
Operative Document to which it is a party and assuming due authorization,
execution and delivery by the Owner Participant of the Trust Agreement and upon
due direction by
32
<PAGE>
the Owner Participant pursuant thereto, will have the power and authority to
enter into and perform its obligations as Managing Trustee under the Trust
Agreement, this Agreement and each other Operative Document to which the Owner
Trust is a party.
9.2 Authorization; Execution; Enforceability. (a) This Agreement,
----------------------------------------
the Trust Agreement and each other Operative Document to which the Trust Company
is a party have been duly authorized, executed and delivered by the Trust
Company and, assuming due authorization, execution and delivery by the other
parties hereto and thereto, are legal, valid and binding obligations of the
Trust Company enforceable against it in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, liquidation, moratorium or similar laws affecting
creditors' rights generally and by the application of general equitable
principles which may limit the availability of certain remedies.
(b) This Agreement and each other Operative Document to which the
Owner Trust is a party (i) have been (assuming due authorization, execution and
delivery by the Owner Participant of the Trust Agreement and upon due direction
by the Owner Participant pursuant thereto) duly authorized, executed and
delivered by one of its officers who is duly authorized to execute and deliver
such Operative Document on behalf of the Managing Trustee, and (ii) assuming due
authorization, execution and delivery by the other parties hereto and thereto,
are legal, valid and binding obligations of the Owner Trust enforceable against
it in accordance with their respective terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, liquidation,
moratorium or similar laws affecting creditors' rights generally and the
application of general equitable principles may limit the availability of
certain remedies and upon execution of the Secured Note by the Managing Trustee,
authentication thereof by the Indenture Trustee and delivery thereof against
payment or the giving of consideration therefor in accordance with the Indenture
and this Agreement, the Secured Note will be legal, valid and binding
obligations of the Owner Trust enforceable against it in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, liquidation, moratorium or similar laws
affecting creditors' rights generally and the application of general equitable
principles may limit the availability of certain remedies.
9.3 No Violation. (a) The execution and delivery by the Trust
------------
Company of the Trust Agreement and, to the extent it is a party hereto or
thereto in its individual capacity, this Agreement and each other Operative
Document, are not or
33
<PAGE>
will not be, and the performance by the Trust Company of its obligations under
each will not be, inconsistent with the charter documents or by-laws of the
Trust Company, do not and will not contravene any Cayman Islands Governmental
Rule governing its banking or trust powers relating to or affecting its capacity
to act as contemplated by the Trust Agreement or the other Operative Documents
to which it is a party and do not and will not contravene any provision of, or
constitute a default under, any indenture, mortgage, contract or other
instrument to which the Trust Company is a party or by which it or any of its
property is bound, or require any Cayman Islands Governmental Action relating to
or affecting its capacity to act as contemplated by the Trust Agreement or the
other Operative Documents to which it is or will be a party.
(b) The execution and delivery by the Owner Trust of each Operative
Document to which the Owner Trust is a party are not, and the performance by the
Owner Trust of its obligations under each will not be, inconsistent with the
charter documents or by-laws of the Trust Company, do not and will not
contravene any Cayman Islands Governmental Rule regulating its banking or trust
powers relating to or affecting its capacity to act as contemplated by the Trust
Agreement or the Owner Trust Documents and do not and will not contravene any
provision of, or constitute a default under, any indenture, mortgage, contract
or other instrument to which the Owner Trust is a party or by which it or its
property is bound or require any Cayman Islands Government Action relating to or
affecting its capacity to act as contemplated by the Trust Agreement or the
Owner Trust Documents.
9.4 No Default. (a) No Indenture Default or Indenture Event of
----------
Default attributable to the Trust Company has occurred and is continuing.
(b) No Indenture Default or Indenture Event of Default attributable
to the Owner Trustee has occurred and is continuing.
9.5 Litigation. (a) There is no action, suit, investigation or
----------
proceeding pending or, to the Actual Knowledge of the Trust Company, threatened
against the Trust Company before any Governmental Authority which, individually
or in the aggregate (so far as the Trust Company now can reasonably foresee), is
reasonably likely materially and adversely to affect the ability of the Trust
Company to perform its obligations under this Agreement or any other Operative
Document to which it is a party.
(b) There is no action, suit, investigation or proceeding pending or,
to the Actual Knowledge of the Trust Company, threatened against the Owner Trust
before any Governmental Authority.
34
<PAGE>
9.6 Owner's Liens. (a) There are no Owner's Liens attributable to
-------------
the Trust Company on the Trust Estate or the Indenture Estate, or on any part of
either thereof and the execution, delivery and performance by the Trust Company
of the Operative Documents to which the Trust Company is a party will not
subject the Trust Estate or the Indenture Estate to any the Owner's Liens.
(b) There are no Owner's Liens attributable to the Owner Trust on the
Trust Estate or the Indenture Estate, or on any part of either thereof and the
execution, delivery and performance by the Owner Trust of the Operative
Documents to which the Owner Trust is a party will not subject the Trust Estate
or the Indenture Estate to any the Owner's Liens.
9.7 Securities Act. None of the Trust Company, the Owner Trust or
--------------
any Person authorized by either of the Trust Company or the Owner Trust to act
on its behalf, has directly or indirectly offered or sold any interest in the
Trust Estate or the Secured Note, or in any similar security relating to the
Vessel Interest, or in any security the offering of which for the purposes of
the Securities Act would be deemed to be part of the same offering as the
offering of the aforementioned securities (collectively, any "Security") to, or
solicited any offer to acquire any of the same from, any Person, other than, in
the case of the Secured Note, the Loan Participant, and none of the Trust
Company, the Owner Trust or any Person authorized by either of the Trust Company
or Owner Trust to act on its behalf will take any action other than the sale of
the Secured Note to the Loan Participant that would subject the issuance or sale
of any interest in the Trust Estate or the Secured Note to the provisions of
Section 5 of the Securities Act or require the qualification of the Indenture
under the Trust Indenture Act it being understood that no Person has been
authorized to act on behalf of the Owner Trust or the Trust Company in
connection with the issuance and sale of any Security.
9.8 Chief Place of Business. The Trust Company's chief place of
-----------------------
business, chief executive office and office where the documents, accounts and
records relating to the transactions contemplated by this Agreement and each
other Operative Document are kept are located in Grand Cayman, Cayman Islands.
9.9 No Taxes Payable. Except for Taxes based upon the income of any
----------------
Person, there are no Taxes payable in the jurisdiction in which the principal
place of business of the Trust Company is located in connection with the
execution, delivery, consummation or recordation of this Agreement and the other
Operative Documents or upon or with respect to the Trust Estate or the Indenture
Estate and, solely because the Trust Company is a Cayman Islands company with
its principal
35
<PAGE>
place of business in the Cayman Islands and to the extent that it performs any
of its duties as Managing Trustee in the Cayman Islands, the consummation of the
transactions contemplated hereby and by the other Operative Documents
(including, without limitation, the filing of financing statements with respect
thereto or the sale or transfer of the Vessel Interest).
9.10 Title. On the Closing Date, the Owner Trust shall have received
-----
whatever title in and to the Vessel Interest as was conveyed to it by the Owner
Participant.
9.11 Federal Reserve Regulations. The Owner Trust is not engaged
---------------------------
principally in, and does not have as one of its important activities, the
business of extending credit for the purpose of purchasing or carrying any
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System of the United States), and no part of the proceeds of
the Secured Note will be used by it to purchase or carry any such margin stock
or, assuming the accuracy of the representation set forth in Section 5.15, to
extend credit to others for the purpose of purchasing or carrying any such
margin stock or for any purpose that violates, or is inconsistent with, the
provisions of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System of the United States.
9.12 No Other Activities. The Owner Trust has not engaged in any
-------------------
business or activities other than those contemplated by the Operative Documents
and the U.K. Documents and activities incidental thereto.
SECTION 10. REPRESENTATIONS AND WARRANTIES OF INDENTURE TRUSTEE.
----------------------------------------------------
State Street Bank and Trust Company represents and warrants in its
individual capacity with respect to Sections 10.1, 10.2(a), 10.3, 10.4 and
10.5(a), and not in its individual capacity, but solely in its capacity as
Indenture Trustee with respect to Sections 10.2(b) and 10.5(b), to each of the
other parties hereto that:
10.1 Due Organization. State Street Bank and Trust Company is a
----------------
state chartered trust company duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts and has the
corporate power and authority to enter into and perform its obligations under
this Agreement and each other Operative Document to which it is or will be a
party.
10.2 Authorization; Execution; Enforceability. (a) This Agreement
----------------------------------------
and each other Operative Document to which State Street Bank and Trust Company,
in its individual
36
<PAGE>
capacity is a party have been, duly authorized, executed and delivered by State
Street Bank and Trust Company, in its individual capacity and, assuming the due
authorization, execution and delivery hereof and thereof by the other parties
hereto and thereto, are legal, valid and binding obligations of the Indenture
Trustee in its individual capacity (to the extent it is a party hereto or
thereto in such capacity), enforceable against it in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, liquidation, receivership, moratorium or
similar laws affecting creditors' rights generally and the application of
general equitable principles may limit the availability of certain remedies.
Assuming due authorization, execution and delivery thereof by the Owner Trust,
the Secured Note issued on the Closing Date pursuant to the terms of this
Agreement and the Indenture on the Closing Date will have been duly
authenticated.
(b) This Agreement and each other Operative Document to which the
Indenture Trustee is a party have been duly authorized, executed and delivered
by the Indenture Trustee and, assuming the due authorization, execution and
delivery hereof and thereof by the other parties hereto or thereto, are legal,
valid and binding obligations of the Indenture Trustee, enforceable against it
in accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, liquidation,
receivership, moratorium or similar laws affecting creditors' rights generally
and the application of general equitable principles may limit the availability
of certain remedies.
10.3 No Violation. The execution and delivery by State Street Bank
------------
and Trust Company of this Agreement and each other Operative Document to which
it is a party are not and will not be, and the performance by it of its
obligations under each will not be, inconsistent with its charter documents or
do not and will not contravene any Governmental Rule of the United States of
America or the Commonwealth of Massachusetts governing with respect to its
banking or trust powers, and will not contravene any provision of, or constitute
a default under, any indenture, mortgage, contract or other instrument to which
State Street Bank and Trust Company, in its individual capacity, is a party, or
by which it or any of its properties are bound, or require any Governmental
Action of the United States of America or the Commonwealth of Massachusetts
governing its banking or trust powers.
10.4 Litigation. There is no action, suit, investigation or
----------
proceeding pending or, to the Actual Knowledge of the Indenture Trustee,
threatened against the Indenture
37
<PAGE>
Trustee, whether in its individual capacity or as Indenture Trustee, before any
Governmental Authority governing its banking or trust powers which, individually
or in the aggregate (so far as the Indenture Trustee now can reasonably
foresee), is reasonably likely materially and adversely to affect the ability of
the Indenture Trustee (in either such capacity) to perform its obligations under
this Agreement or any other Operative Document to which it is a party (in either
such capacity).
10.5 Indenture Trustee's Liens. (a) There are no Indenture
-------------------------
Trustee's Liens attributable to State Street Bank and Trust Company in its
individual capacity on the Indenture Estate or on any part thereof.
(b) There are no Indenture Trustee's Liens on the Indenture Estate or
any part thereof.
SECTION 11. CHARTERER COVENANTS.
-------------------
The Charterer covenants and agrees that:
11.1 Officer's Certificate. The Charterer will deliver to the Owner
---------------------
Participant, the Owner Trust and the Indenture Trustee on or before November 1
of each year during the Charter Period, an Officer's Certificate of the
Charterer to the effect that the signer is familiar with or has reviewed the
relevant terms of the Charter and the signer does not have knowledge of the
existence, as of the date of such certificate, of any condition or event which
constitutes a Charter Event of Default.
11.2 Maintenance of Corporate Existence, Etc. Subject to the
---------------------------------------
provisions of Section 11.3, the Charterer shall at all times maintain its
corporate existence and preserve and keep in full force and effect its rights
and franchises, the loss of which would have a material adverse effect on the
financial condition of the Charterer or its ability to comply with its
obligations under the Operative Documents.
11.3 Merger, Consolidation, Sale, Etc. So long as the Secured Note
--------------------------------
remains Outstanding or any amounts due and owing by the Charterer with respect
thereto to the Holders thereof under the Pass Through Trust Agreement or any
other Operative Document remain unpaid and so long as the Charter Period shall
not have expired or been terminated, the Charterer shall not consolidate with or
merge into any other corporation or convey, transfer or lease substantially all
of its assets as an entirety to any Person, unless:
(i) the corporation formed by such consolidation or into which the
Charterer is merged or the Person which acquires by conveyance, transfer or
lease substantially
38
<PAGE>
all of the assets of the Charterer as an entirety shall be a corporation
organized and existing under the laws of the United States of America or
any State or the District of Columbia, and shall execute and deliver to the
Owner Trust, the Owner Participant, the Indenture Trustee and the Pass
Through Trustee an agreement (in form and substance reasonably satisfactory
to each thereof) containing the assumption by such successor corporation of
the due and punctual performance and observance of each covenant and
condition of this Agreement, the Charter, the Pass Through Trust Agreement,
the Pass Through Trust Supplement and each other Operative Document to
which the Charterer is a party to be performed or observed by the
Charterer;
(ii) immediately after giving effect to such transaction, no Charter
Event of Default shall have occurred and be continuing;
(iii) the Charterer shall have delivered to the Owner Trust, the Owner
Participant and the Indenture Trustee an Officer's Certificate of the
Charterer, and an opinion of counsel to the Charterer (which may be the
Charterer's internal counsel), each stating that such consolidation,
merger, conveyance, transfer or lease and the assumption agreement
mentioned in clause (i) comply with this Section 11.3 and that all
conditions precedent herein provided for relating to such transaction have
been complied with (except that such opinion need not cover the matters
referred to in clause (ii) above and may rely, as to factual matters, on an
Officer's Certificate of the Charterer) and, in the case of such opinion,
that such assumption agreement has been duly authorized, executed and
delivered by such successor corporation and is enforceable against such
successor corporation in accordance with its terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally and by general
principles of equity; and
(iv) after giving effect to any consolidation, merger, conveyance,
transfer or lease of substantially all of the assets of the Charterer as an
entirety in accordance with this Section 11.3, the Guarantee shall remain
in full force and effect and shall constitute a full and unconditional
guaranty of the successor corporation's obligations under the Operative
Documents to which it is a party and the Pass Through Trust Agreement to
the same extent as the Charterer's obligations under such documents prior
to giving effect to any such consolidation, merger, conveyance, transfer
39
<PAGE>
or lease of substantially all of the assets of the Charterer.
Upon any consolidation or merger, or any conveyance, transfer or lease of
substantially all of the assets of the Charterer as an entirety in accordance
with this Section 11.3, the successor corporation formed by such consolidation
or into which the Charterer is merged or to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Charterer under this Agreement and the other Operative
Documents with the same effect as if such successor corporation had been named
as the Charterer herein. No such conveyance, transfer or lease of substantially
all of the assets of the Charterer as an entirety shall have the effect of
releasing the Charterer or any successor corporation which shall theretofore
have become such in the manner prescribed in this Section 11.3 from its
liability hereunder.
11.4 Change in Name or Chief Place of Business. The Charterer shall
-----------------------------------------
give notice to the Owner Trust, the Owner Participant and the Indenture Trustee
promptly after any change in its name or chief place of business or chief
executive office.
11.5 Further Assurances. The Charterer, at its own cost and expense,
------------------
will cause to be promptly and duly taken, executed, acknowledged and delivered
all such further acts, documents and assurances as the Owner Trust, the Owner
Participant, the Loan Participant or the Indenture Trustee reasonably may
request from time to time in order to carry out more effectively the intent and
purposes of this Agreement, the Pass Through Trust Agreement, the Pass Through
Trust Supplement and the other Operative Documents and the transactions
contemplated hereby and thereby. The Charterer, at its own cost and expense,
will cause the Indenture, the Ship Mortgage and the Charter, any supplements or
amendments thereto and restatements thereof and all financing statements,
fixture filings and other documents, to be recorded or filed at such places and
times and in such manner, as may be necessary, advisable or as may be reasonably
requested (x) by the Owner Trust, the Owner Participant, the Pass Through
Trustee or the Indenture Trustee in order to establish, preserve and protect the
interest of the Owner Trust in and to the Vessel Interest and the Owner Trust's
rights under this Agreement and the other Operative Documents and (y) so long as
any Secured Note is Outstanding, by the Indenture Trustee, the Loan Participant
or (unless the Indenture Trustee objects thereto) the Owner Trust in order to
establish, preserve, protect and perfect the mortgage and security interest of
the Indenture Trustee in the Indenture Estate granted or intended to be created
under the Indenture and the Ship Mortgage and the Indenture Trustee's rights
under this Agreement and the
40
<PAGE>
other Operative Documents, subject only to Permitted Liens. During the ninety
(90) day period prior to the fifth, tenth, fifteenth and twentieth anniversary
of the Closing Date the Charterer will cause to be prepared and delivered to the
Managing Trustee and the Indenture Trustee an opinion of one or more legal
counsel to the effect set forth in clauses (x) and (y) above subject to
exceptions and qualifications similar to those taken in the opinions delivered
as at the Closing Date and such other exceptions and qualifications as are
customary at the time of giving such opinion.
11.6 Inspection. (a) The Charterer shall permit the Indenture
----------
Trustee, (and any authorized representatives of any thereof), at such Person's
risk (including, without limitation, as to personal injury and death) and
expense, including, without limitation, the cost and expense for such Person's
transportation to and from the Vessel, and under conditions reasonably
acceptable to the Charterer and subject to Section 12.5 hereof, to visit and
inspect the Vessel, and have access to officers of the Charterer and MSCL, all
upon reasonable notice and at such reasonable times during normal business hours
and as may be reasonably requested; provided, however, that (A) unless there is
-------- -------
an existing Charter Event of Default, the Indenture Trustee may not make more
than one (1) such inspection in any calendar year without the Charterer's prior
written consent and (B) prior to any such inspection the Charterer shall have
been provided reasonable assurances than any Person conducting such inspection
is fully insured with respect thereto.
(b) No Person entitled to make any inspection or inquiry referred to
in this Section 11.6 shall have any duty to make such inspection or inquiry, or
shall incur any liability or obligation by reason of not making any such
inspection or inquiry.
11.7 Documentation of Vessels. The Charterer agrees that, at or
------------------------
before the time of delivery of the Vessel to the Owner Trust on the Delivery
Date, the Charterer shall cause the Vessel to be documented, on a provisional
basis, in the name of the Owner Trust at the Charterer's expense under the laws
and the flag of the Marshall Islands and shall cause the Vessel to be documented
on a permanent basis in the name of the Owner Trust promptly after the Delivery
Date. The Charterer shall throughout the Charter Period maintain the
documentation of the Vessel in the Marshall Islands (or in any other
jurisdiction selected by the Charterer provided such other jurisdiction provides
substantially equivalent (or better) protection for the rights of owner
participants, lessors, lenders and mortgagees for similar transactions as the
law of the Marshall Islands), and shall not do or suffer or permit to be done
anything which would prevent the maintenance of the documentation of the Vessel
under the laws
41
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and the flag of the Marshall Islands (or such other jurisdiction) or which would
constitute or result in a violation of any applicable law or regulation of the
Marshall Islands (or such other jurisdiction) non-compliance with which could
create any material risk of or danger of the sale, forfeiture or loss of any
material part of or interest in the Vessel, provided, however, that in the event
-------- -------
the Vessel is documented in a jurisdiction other than the Marshall Islands, the
Charterer shall make or cause to be made all filings and recordings or other
actions necessary or advisable to establish the Indenture Trustee's and the
Owner Trust's right, title and interest in and to the Vessel Interest, including
the execution, delivery and filing of a ship mortgage in form and substance
substantially similar to the Ship Mortgage with the appropriate governmental
agency of such jurisdiction, provided further, however that such ship mortgage
-------- ------- -------
shall not be adverse to the interests of the Owner Trust or the Indenture
Trustee in any material respect or increase either parties liability under the
Operative Documents.
11.8 No Petition. Unless otherwise agreed in writing by both the
-----------
Indenture Trustee and Owner Participant, the Charterer hereby agrees to the
fullest extent permitted by law that so long as the lien of the Indenture shall
not have been discharged, it will not at any time institute against the Owner
Trust, or join in the institution against the Owner Trust of any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law.
SECTION 12. OTHER COVENANTS AND AGREEMENTS.
------------------------------
12.1 Agreements of Owner Participant. The Owner Participant
-------------------------------
covenants and agrees that:
(a) Discharge of Liens. The Owner Participant will not create or
------------------
permit to exist at any time, and will, at its own cost and expense,
promptly take such action as may be necessary duly to discharge, or to
cause to be discharged, (i) all Owner Participant's Liens and (ii) all
Owner's Liens resulting from any act or failure to act by the Owner Trust
at the express direction of, or with express authorization from, the Owner
Participant on all or any part of the Vessel Interest, the Trust Estate,
the Indenture Estate, or title thereto or any interest therein. The Owner
Participant shall indemnify, protect, defend, save and keep harmless the
Charterer, the Loan Participant, and the Indenture Trustee from and against
any and all Claims that may be imposed on, incurred by or asserted against
such Person or the Vessel Interest arising out of or secured by the Owner
Participant's Liens or the Owner's Liens described in clause (ii) of the
preceding sentence.
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(b) Cooperation with Charterer. The Owner Participant shall, to the
--------------------------
extent reasonably so requested by the Charterer, cooperate with the
Charterer, at the Charterer's expense, to enable the Charterer to make the
filings and recordings listed in Schedule 3, including, without limitation,
at any time and from time to time, upon the request of the Charterer
promptly and duly executing and delivering, any and all such further
instruments and documents as the Charterer may reasonably request in order
to perform such covenants and to make such filings and recordings.
(c) Successor Owner Trustee. The Owner Participant shall not appoint
-----------------------
or cause or allow to be appointed a successor to either Owner Trustee or an
additional or separate trustee under the Trust Agreement without the prior
written consent of the Charterer. The Owner Participant shall cause any
such successor, additional or separate trustee, simultaneously with its
assumption of duties in such capacity, to take all actions as may be
reasonably requested by the Indenture Trustee, the Pass Through Trustee or
the Charterer (including, without limitation, the filing of financing
statements), at the Charterer's expense, in order to establish, preserve,
protect and perfect its interest in and to the Vessel Interest and its
rights under this Agreement and the other Operative Documents and, so long
as any Secured Note is Outstanding, the mortgage and security interest of
the Indenture Trustee in the Indenture Estate granted or intended to be
created under the Indenture and the Ship Mortgage and the Indenture
Trustee's rights under this Agreement and the other Operative Documents,
subject only to Permitted Liens.
(d) Performance of Obligations. The Owner Participant will perform
--------------------------
and comply with all obligations imposed on the Owner Participant pursuant
to the provisions of the Charter or the Indenture in accordance with the
terms and conditions of each thereof.
(e) Instructions to the Owner Trust. The Owner Participant will not
-------------------------------
instruct or otherwise direct the Owner Trust to take, or omit to take, any
action in violation of the express covenants and agreements of the Owner
Trust in any Operative Document. Subject to Section 5 hereof, the Owner
Participant will direct and instruct the Owner Trust to execute and deliver
the Operative Documents to which it is to be a party and to comply with its
obligations set forth therein. The Owner Participant will not unreasonably
withhold its consent to or authorization of any consent requested of the
Owner Trust under the terms of any Operative Document which by
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its terms is not to be unreasonably withheld by the Owner Trust.
(f) Termination of Trust Agreement. Prior to the expiration or
------------------------------
earlier termination of the Charter pursuant to its terms, the Owner
Participant will not terminate or revoke, or consent to the termination or
revocation of, the Trust Agreement, or, prior to the release of the Lien of
the Indenture on the Indenture Estate, amend or modify such Trust Agreement
in any manner that would materially adversely affect the Indenture Estate
or limit in any material manner the rights of the Indenture Trustee set
forth therein.
(g) Election to Retain Title. If the Owner Trust shall elect to
------------------------
retain title to the Vessel Interest pursuant to Section 18(e) of the
Charter, the Owner Participant will cause the Owner Trust to perform its
obligations under Section 18(e) in accordance with the terms thereof.
(h) Additional Financings and Refundings. The Owner Participant
------------------------------------
shall, to the extent reasonably so requested by the Charterer, cooperate
with the Charterer, (i) to facilitate the issuance of Additional Notes
permitted by the provisions of Section 2.08(a) of the Indenture and (ii) to
refund or refinance the Secured Note then Outstanding in accordance with
the terms of the Indenture.
12.2 Agreements of Trust Company and Owner Trust. The Trust Company,
-------------------------------------------
in its individual capacity, covenants and agrees with respect to Sections
12.2(a)(i) and 12.2(b) and the Owner Trust covenants and agrees with respect to
Sections 12.2(a)(ii), 12.2(c), 12.2(d), 12.2(e), 12.2(f), 12.2(g), 12.2(h),
12.2(i) and 12.2(j) that:
(a) Discharge of Liens. (i) The Trust Company will not create or
------------------
permit to exist at any time, and will, at its own cost and expense,
promptly take such action as may be necessary duly to discharge all Owner's
Liens on all or any part of the Vessel Interest, the Trust Estate, the
Indenture Estate, or title thereto or any interest therein attributable to
it. Except for the Owner Participant's obligation pursuant to Section
13.1(a)(ii), the Trust Company shall indemnify, protect, defend, save and
keep harmless the Charterer, the Owner Participant, the Loan Participant
and the Indenture Trustee from and against any and all Claims that may be
imposed on, incurred by or asserted against such Person or the Vessel
Interest arising out of or secured by any such Lien.
44
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(ii) The Owner Trust will not create or permit to exist at any
time, and will, at its own cost and expense, promptly take such action as
may be necessary duly to discharge all Owner's Liens on all or any part of
the Vessel Interest, the Trust Estate, the Indenture Estate, or title
thereto or any interest therein attributable to it.
(b) Change of Chief Place of Business. The Trust Company shall give
---------------------------------
notice to the Charterer, the Owner Participant and the Indenture Trustee
prior to any change in its chief place of business or chief executive
office, or the office where the records concerning the accounts, contract
rights or general intangibles relating to the transactions contemplated
hereby are kept.
(c) Cooperation with the Charterer. The Owner Trust shall, to the
------------------------------
extent reasonably so requested by the Charterer, cooperate with the
Charterer, at the Charterer's expense, to enable the Charterer to make the
filings and recordings listed in Schedule 3, including, without limitation,
at any time and from time to time, upon the request of the Charterer
promptly and duly executing and delivering any and all such further
instruments, documents and financing statements (and continuation
statements related thereto) as the Charterer may request in order to
perform such covenants and to make such filings and recordings.
(d) Notice of Transfer of Assets. The Owner Trust shall not transfer
----------------------------
any of the estates, properties, rights, powers, duties or trusts of the
Owner Trust to any successor trustee or to any additional or separate
trustee under the Trust Agreement without giving prior written notice of
such transfer to the Owner Participant, the Charterer, the Pass Through
Trustee and the Indenture Trustee in accordance with Section 11 of the
Trust Agreement.
(e) Certain Transfers; Termination. Except as expressly permitted
------------------------------
hereby or by the terms of any other Operative Document or required by the
terms of the Head Lease, the Owner Trust will not transfer the Vessel
Interest to any Person prior to the expiration or earlier termination of
the Charter pursuant to its terms, other than a successor Owner Trust
appointed in accordance with the provisions of Section 11 of the Trust
Agreement, or terminate the Trust Agreement or distribute all or any part
of the Trust Estate to any Person.
(f) Owner Trust's Activities. The Owner Trust will not incur any
------------------------
indebtedness for money borrowed, or enter into any other activity, except
as contemplated by the
45
<PAGE>
Operative Documents or as may be necessary or advisable to carry out its
obligations or enforce its rights thereunder.
(g) Notice of Indenture Event of Default. Promptly after the Owner
------------------------------------
Trust has Actual Knowledge that the Indenture Event of Default attributable
to the Owner Trust has occurred and is continuing, the Owner Trust shall
deliver to the Charterer a notice of such Indenture Event of Default which
is not also a Charter Event of Default describing the same in reasonable
detail and, together with such notice or as soon thereafter as possible, a
description of the action that the Owner Trust has taken, is taking and
proposes to take with respect thereto.
(h) ERISA. The Owner Trust agrees that (i) it shall not permit any
-----
ERISA plan sponsored or maintained by it, any ERISA Affiliate or any PTE
90-24 Affiliate thereof to purchase or hold the Pass Through Certificate
and (ii) neither it nor any PTE 90-24 Affiliate thereof shall act in a
fiduciary capacity with respect to the purchase or holding by any ERISA
plan of the Pass Through Certificates, in the case of (i) or (ii) which
would constitute a non-exempt "prohibited transaction" within the meaning
of Section 406 of ERISA or Section 4975 of the Code.
(i) Ownership for Tax Purposes. The Owner Trust will not take any
--------------------------
position inconsistent with its ownership of the Vessel Interest for U.S.
federal, state, or local income tax purposes.
(j) U.K. Documents. Owner Trust will not consent to any amendment or
--------------
modification to the U.K. Documents which would adversely affect the
Indenture Trustee, the holder of the Secured Note or the Pass Through
Trustee without the prior written consent of the Indenture Trustee.
12.3 Agreements of Pass Through Trustee. The Pass Through Trustee
----------------------------------
covenants and agrees that:
(a) Transfer of Secured Note. Any sale, transfer or assignment
------------------------
(including, without limitation, a transfer pursuant to the exercise of
remedies with respect to any Secured Note) by the Pass Through Trustee of
any Secured Note or of all or any part of its interest hereunder or under
the Indenture shall be on the express condition that the purchaser,
transferee or assignee, as the case may be, shall agree to be bound by the
terms and provisions applicable to the Pass Through Trustee contained in
this Agreement, the Secured Note and the
46
<PAGE>
Indenture. The acceptance by any person of the Secured Note shall
constitute such Person's agreement to be bound by the terms and provisions
of this Agreement and the Indenture. The Pass Through Trustee will not
make any such sale, transfer or assignment to any Person unless such Person
delivers to the Charterer, the Owner Trust, the Indenture Trustee and the
Owner Participant (i) a written representation and warranty by such Person
(or an opinion of counsel reasonably satisfactory to the Charterer, the
Owner Trust and the Owner Participant) that such sale, transfer or
assignment to and the holding of any such interest by, such Person (1) will
not result in a "prohibited transaction" as defined in Section 406 of ERISA
or Section 4975 of the Code, or (2) are covered by an exemption contained
in ERISA or an administrative exemption adopted thereunder and (ii) a
written undertaking by such Person that is substantially identical to the
covenant made by the Pass Through Trustee in this Section 13.3(a)
(including this clause (ii)).
(b) Instructions to Indenture Trustee. The Pass Through Trustee will
---------------------------------
not instruct or otherwise direct the Indenture Trustee to take, or omit to
take, any action in violation of the express covenants and agreements of
the Indenture Trustee in any Operative Document.
(c) ERISA. The Pass Through Trustee agrees that (i) it shall not
-----
permit any ERISA Plan sponsored or maintained by it, any ERISA Affiliate or
any PTE 90-24 Affiliate thereof to purchase or hold any Pass Through
Certificate and (ii) neither it nor any PTE 90-24 Affiliate thereof shall
act in a fiduciary capacity with respect to the purchase or holding by any
ERISA Plan of the Pass Through Certificates, in the case of (i) or (ii)
which would constitute a non-exempt "prohibited transaction" within the
meaning of Section 406 of ERISA or Section 4975 of the Code.
12.4 Agreements of Indenture Trustee. State Street Bank and Trust
-------------------------------
Company, in its individual capacity, to the extent set forth herein, and as
Indenture Trustee, covenant and agree, as follows:
(a) Discharge of Liens. State Street Bank and Trust Company
------------------
covenants and agrees in its individual capacity that it will not create or
permit to exist at any time, and will, at its own cost and expense,
promptly take such action as may be necessary to discharge, all of
Indenture Trustee's Liens on all or any part of any Vessel Interest, the
Trust Estate or Indenture Estate, or title thereto or any interest therein.
The Indenture Trustee shall indemnify, protect, defend, save and keep
47
<PAGE>
harmless the Charterer, the Owner Participant, the Loan Participant and the
Owner Trust from and against any and all Claims imposed on, incurred by or
asserted against such Person arising out of the Indenture Trustee's Lien.
(b) Cooperation With the Charterer. The Indenture Trustee shall, to
------------------------------
the extent reasonably requested by the Charterer, cooperate with the
Charterer, at the Charterer's expense, to enable the Charterer to perform
the Indenture Trustee's covenants contained in Section 11.5 and to make the
filings and recordings listed in Schedule 3, including, without limitation,
at any time and from time to time, upon request of the Charterer promptly
and duly executing and delivering any and all such further instruments,
documents and financing statements (and continuation statements related
thereto) as the Charterer may request in order to perform such covenants
and to make such filings and recordings.
(c) Original Charter. Except to the extent otherwise required by the
----------------
Indenture and so long as it remains as Indenture Trustee, State Street Bank
and Trust Company agrees in its individual capacity that it will maintain
possession of the version of the Charter identified in a receipt therefor
executed by the Indenture Trustee as the original executed counterpart of
the Charter.
(d) Performance of Obligations. The Indenture Trustee will perform
--------------------------
and comply with the provisions of the Indenture which, upon satisfaction of
any applicable conditions set forth therein, require payment or the
tendering of performance to the Charterer.
12.5 Confidentiality. Each of the parties hereto agrees that all
---------------
matters relating to this Agreement, the other Operative Documents and the
transactions contemplated hereby shall be kept strictly confidential,
including, without limitation, the substance of its commercial terms, and
any disclosure of such matters shall be made only with the prior written
consent of the other parties hereto. The obligations set forth in this
Section shall survive any termination or rescission of this Agreement, the
Operative Documents, and the Pass Through Trust Agreement, as the case may
be. Nothing in this Section shall prevent, or require the consent of any
party to, any disclosure:
(a) required by the order of any court of competent jurisdiction;
(b) as may be required by any Governmental Rule or Governmental
Authority;
48
<PAGE>
(c) by either party to its legal and other professional advisers, or
in the course of or for the purpose of any arbitration or court
proceedings;
(d) of information which has otherwise become public information
through no breach of this Section 13.5 by the disclosing party or through
filings made with the SEC; or
(e) in the case of the Pass Through Trustee and Indenture Trustee as
may be reasonably necessary or desirable to perform its duties on behalf of
the holders of the Secured Notes and Pass Through Certificates.
12.6 Further Assurances. In the event of the sale of the Vessel pursuant
------------------
to Clause 23 of the Head Lease, the Owner Participant, the Charterer and the
Indenture Trustee shall take such steps and sign such documents as may
reasonably be required by the Owner Trust to effect such sale.
SECTION 13. INDEMNIFICATION.
---------------
13.1 General Indemnification.
-----------------------
(a) Indemnification. The Charterer agrees, whether or not any of the
---------------
transactions contemplated hereby shall be consummated, to assume liability for,
and to indemnify, protect, save and keep harmless each Indemnitee, on an After-
Tax Basis, from and against any and all Claims that may be imposed on, incurred
by or asserted against any Indemnitee, whether or not such Indemnitee shall also
be indemnified as to any such Claim by any other Person, in any way relating to
or arising out of (i) the Vessel or the Vessel Interest or any part thereof,
(ii) the Operative Documents, the U.K. Documents, the Pass Through Trust
Agreement, the Pass Through Trust Supplement, or the transactions contemplated
thereby or the issuance of the Secured Note or the Pass Through Certificates,
(iii) the manufacture, financing, refinancing, design, construction, inspection,
purchase, ownership, acquisition, acceptance, rejection, delivery, nondelivery,
possession, transportation, charter, sub-charter, sub-sub-subcharter,
mortgaging, granting of a security interest in, preparation, installation,
condition, transfer of title, rental, use, operation, storage, maintenance,
modification, alteration, repair, assembly, sale, return, abandonment or other
application or disposition of all or any part of the Vessel or the Vessel
Interest or any interest therein, including, without limitation, (A) Claims or
penalties arising from any violation of law or liability in tort (strict or
otherwise), (B) loss of or damage to any property or the environment (including,
without limitation, clean-up costs, response costs and costs of corrective
action) or death or injury to any Person, (C) latent or other defects, whether
or
49
<PAGE>
not discoverable, and (D) any claim for patent, trademark or copyright
infringement or (iv) any breach of or failure to perform or observe, or any
other breach of or failure to perform or observe, or any other non-compliance
with, any covenant, condition or agreement or other obligation to be performed
by the Charterer or the Guarantor under any Operative Document, or the falsity
of any representation or warranty of the Charterer or the Guarantor in any of
the Operative Documents, the Pass Through Trust Agreement or in any Officer's
Certificate delivered by the Charterer or the Guarantor; provided, however, that
-------- -------
the Charterer shall not be required to indemnify any Indemnitee under this
Section 13.1 for (1) any Claim in respect of the Vessel to the extent
attributable to acts, events, circumstances or conditions which arise, occur or
exist after the earlier of: (I) the return of possession of the Vessel Interest
to the Owner Trust or its designee pursuant to the terms of the Charter (other
than as a result of a Charter Event of Default) or (II) the payment by the
Charterer of all amounts required to be paid under the Charter following an
Event of Loss with respect to the Vessel, (2) any Claim to the extent resulting
from the willful misconduct or gross negligence of such Indemnitee (other than
willful misconduct or gross negligence imputed to such Indemnitee as a matter of
law without regard to any action or inaction of such Indemnitee and solely by
reason of its interest in the Vessel Interest), (3) any Transaction Expense or
any other expense or Claim expressly provided under any of the Operative
Documents to be paid or borne by such Indemnitee at its own expense (or without
reimbursement or indemnification), (4) any Claim to the extent resulting from
the offer, sale, disposition or transfer by such Indemnitee of all or part of
its interest in the Vessel Interest, the Secured Note, the Pass Through
Certificates or the Trust Estate, other than any such transfer or disposition
(i) resulting from a continuing Charter Event of Default, (ii) in connection
with an Event of Loss, or (iii) to a successor Owner Trustee, and, in each case,
without duplication of any amounts recovered pursuant to the Charter, (5) any
Claim to the extent resulting from a breach by such Indemnitee of any of its
representations, warranties or covenants in the Pass Through Trust Agreement or
in any of the Operative Documents or in any Officer's Certificate delivered
pursuant thereto, or to the extent resulting from a knowing violation of law by
such Indemnitee, unless such violation of law is the result of the failure of
any other party to comply with its obligations under any Operative Document to
which it is a party (other than, in the case of the Owner Participant, such a
failure by the Owner Trustee as a result of the direction or instruction of the
Owner Participant and, in the case of the Loan Participant, such failure by the
Indenture Trustee as a result of the direction or instruction of (or a vote or
consent in favor of such direction or instruction by) the Loan Participant), (6)
any Claims in respect of Taxes (other than
50
<PAGE>
Taxes required to be paid to indemnify such Indemnitee under this Section 13.1
on an After-Tax Basis) whether or not the Charterer is obligated to indemnify
for such Taxes under Section 13.2, (7) any Claim principally resulting from any
business, transaction or other activity in which such Indemnitee is engaged,
other than the transactions contemplated hereby, by the Pass Through Trust
Agreement or by any of the other Operative Documents, except to the extent
resulting from a Charter Event of Default, (8) any Claim to the extent
attributable to the authorization or giving or withholding by such Indemnitee of
any future amendments, supplements, waivers or consents with respect to any
Operative Document or the Pass Through Trust Agreement, other than such as have
been requested by the Charterer or Guarantor, or such that occur as a result of
a Charter Event of Default that shall have occurred and is continuing, or such
as are expressly required by any Operative Document or the Pass Through Trust
Agreement, (9) any Claim resulting from any Lien resulting from any Claim
against such Indemnitee for which such Indemnitee is not indemnified hereunder
as a result of any other exclusion under this Section 13.1, (10) any Claim
resulting from the Indenture Event of Default which is not occasioned by a
Charter Event of Default or Charter Default, (11) with respect to the Owner
Trust, the Trust Company, the Resident Trustee and the Owner Participant, any
Claim resulting from the indemnity given by the Owner Participant pursuant to
Section 6.3 of the Trust Agreement or any indemnification pursuant thereto,
except to the extent that the indemnitee under such Section 6.3 would be
otherwise entitled to indemnification from the Charterer under this Section
13.1, (12) any Claim of the Pass Through Trustee to the extent that it is
indemnified by the Charterer pursuant to the Pass Through Trust Agreement, (13)
Claims against such Indemnitee resulting from a violation of ERISA or Section
4975 of the Code, other than, in the case of an Owner Participant, the making
and holding of its investment pursuant to this Participation Agreement or the
taking of any action at the request or direction of the Charterer, (14) any
claim which is an ordinary and usual operating or overhead expense of such
Indemnitee, (15) failure on the part of the Indenture Trustee, the Owner Trust
or the Pass Through Trustee, as the case may be, to distribute in accordance
with the Indenture, or the Trust Agreement, or the Pass Through Trust Agreement,
as the case may be, any amounts received and distributable by it thereunder,
(16) any Claim that constitutes or arises from such Indemnitee's exercise of its
contest rights with respect to a Permitted Lien attributable to such Indemnitee,
(17) any Claim of such Indemnitee relating to or arising from the inaccuracy,
incompleteness or misleading nature of any statement or representation included
in any registration statement issued in connection with any of an offer, sale or
disposition of any Secured Note, Pass Through Certificates or similar interest,
which statement or representation is based
51
<PAGE>
on written information supplied or made available by such Indemnitee
specifically for inclusion in such registration statement, (18) any Claim of
such Indemnitee (x) arising out of its inability to invest in another
transaction or for any other purpose as a result of such Indemnitee's
participation or investment of funds in connection with the transactions
contemplated by this Agreement, or (y) for which a payment of Termination Value
paid by a Charterer in accordance with the terms of the Operative Documents is
intended to compensate such Indemnitee, (19) any Claim to the extent that such
Claim would not have arisen but for the appointment of a successor or an
additional Owner Trustee without the consent of the Charterer, (20) any Claim to
the extent that such Claim relates to amounts payable by an Owner Participant to
the Indenture Trustee in respect of the Secured Note with respect to any Premium
thereon as a result of a Indenture Event of Default which is not occasioned by a
Charter Event of Default or any Premium payable by the Charterer or the Owner
Participant pursuant to Section 3.06 of the Indenture and (21) any Claim arising
from the negligence or strict liability of such Indemnitee to the extent
indemnity therefor would be in violation of applicable law.
(b) Notices. If the Charterer shall obtain knowledge of any action,
-------
suit, proceeding or written notice of any Claim indemnified against under this
Section 13.1, the Charterer shall give prompt notice thereof to the appropriate
Indemnitee or Indemnitees, as the case may be, and if any Indemnitee shall
obtain any such knowledge, such Indemnitee shall give prompt notice thereof to
the Charterer; provided that the failure of such Indemnitee to so notify the
--------
Charterer shall not affect the Charterer's indemnification obligations under
this Section 13.1 to such Indemnitee except to the extent of any damage to
Charterer resulting from such failure. With respect to any amount that the
Charterer is requested by an Indemnitee to pay by reason of this Section 13.1,
such Indemnitee shall, if so requested by the Charterer and prior to any
payment, submit such additional information in such Indemnitee's possession to
the Charterer as the Charterer may reasonably request properly to substantiate
the requested payment.
(c) Contests. Subject to the rights of insurers under policies of
--------
insurance maintained pursuant to Section 16 of the Charter, the Charterer shall
have the right, at its sole cost and expense, to investigate, and the right in
its sole discretion to defend or compromise, any Claim for which indemnification
is sought under this Section 13.1, and the Indemnitee shall cooperate, at the
Charterer's expense, with all reasonable requests of the Charterer in connection
therewith. The Charterer will provide the Indemnitee with such information not
within the control of such Indemnitee, as is in the Charterer's control or is
reasonably available to
52
<PAGE>
the Charterer, which such Indemnitee may reasonably request and shall otherwise
cooperate with such Indemnitee so as to enable such Indemnitee to fulfill its
obligations under this Section 13.1. Where the Charterer or the insurers under
a policy of insurance maintained by the Charterer undertake the defense of an
Indemnitee with respect to a Claim, no additional legal fees or expenses of such
Indemnitee in connection with the defense of such claim shall be indemnified
hereunder unless such fees or expenses were incurred at the request of the
Charterer or such insurers; provided, however, that if (i) in the written
-------- -------
opinion of counsel to such Indemnitee an actual or potential material conflict
of interest exists where it is advisable for such Indemnitee to be represented
by separate counsel or (ii) such Indemnitee has been indicted or otherwise
charged in a criminal complaint in connection with a Claim not excluded by
Section 13.1(a) and such Indemnitee informs the Charterer that such Indemnitee
desires to be represented by separate counsel, the reasonable fees and expenses
of such separate counsel shall be borne by the Charterer. Subject to the
requirements of any policy of insurance, an Indemnitee may participate at its
own expense in any judicial proceeding controlled by the Charterer pursuant to
the preceding provisions; provided that such party's participation does not, in
--------
the reasonable opinion of the independent counsel appointed by the Charterer or
its insurers to conduct such proceedings, significantly interfere with such
control; and such participation shall not constitute a waiver of the right to
receive the indemnification provided in this Section 13.1. Notwithstanding
anything to the contrary contained herein, (x) the Charterer shall not under any
circumstances be liable for the fees and expenses of more than one counsel for
each of (i) the Owner Participant and the Owner Trust (and their respective
successors and permitted assigns, agents and servants) and (ii) the Loan
Participants and the Indenture Trustee (and their respective successors and
permitted assigns, agents and servants), and (y) during the continuance of a
Charter Event of Default, the Charterer shall not compromise any Claim without
the consent of the applicable Indemnitee, such consent not to be unreasonably
withheld.
(d) Subrogation. Upon payment in full of any Claim by the Charterer
-----------
pursuant to this Section 13.1 to or on behalf of an Indemnitee, the Charterer,
without any further action, shall be subrogated to any and all claims that such
Indemnitee may have in respect of the matters against which such indemnity was
given (other than claims under any insurance policies maintained by such
Indemnitee). Such Indemnitee agrees to cooperate with the Charterer and to
execute such further instruments to permit the Charterer, at the Charterer's
expense, to pursue such claims, to the extent reasonably requested by the
Charterer.
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(e) Refunds. Upon receipt by any Indemnitee of a repayment or
-------
reimbursement of all or any part of any Claim for which the Charterer shall have
paid for any Indemnitee or for which the Charterer shall have reimbursed any
Indemnitee pursuant to this Section 13.1, such Indemnitee shall pay to the
Charterer, as promptly as practicable after the receipt thereof, the amount of
such repayment or reimbursement plus any interest received by such Indemnitee on
such amount plus the amount of any tax savings realized by such Indemnitee as a
result of such payment made to the Charterer.
(f) Payments; Verification. Any amount payable to any Indemnitee
----------------------
pursuant to this Section 13.1 shall be paid to such Indemnitee promptly upon
receipt of a written demand therefor from such Indemnitee, accompanied by a
written statement describing the basis for such indemnity and the computation of
the amount so payable and, if requested by the Charterer, such determination
shall be verified by a nationally recognized independent accounting firm
mutually acceptable to the Charterer and the Indemnitee at the Charterer's
expense, unless such accounting firm determines that the amount payable by the
Charterer is less than 95 percent (95%) of the amount shown on such written
statement, in which case such verification shall be at such Indemnitee's
expense.
(g) Trustee's Fees. The Charterer shall pay the reasonable ongoing
--------------
fees and expenses of the Managing Trustee, Delaware Trustee, the Pass Through
Trustee and the Indenture Trustee for acting as such to the extent not included
in the Transaction Expenses. The Charterer shall have the right to receive and
review any substantiation relating to any such ongoing expense as it may
reasonably request.
13.2 General Tax Indemnification.
---------------------------
(a) Payment of Taxes. The Charterer agrees that each payment of Base
----------------
Hire and Termination Value pursuant to the Charter shall be free of all
withholding with respect to Taxes of any nature whatsoever, and in the event
that the Charterer shall be required by applicable law to make any such
withholding for any such payment, (x) Base Hire and Termination Value payable
shall be increased so that after making all required withholdings the Tax
Indemnitee receives an amount equal to the Hire it would have received had such
withholdings not been made, (y) the Charterer shall make such withholdings and
(z) the Charterer shall pay the full amount withheld to the relevant taxing
authority in accordance with applicable law. If for any reason, the Charterer
is required to make any payment to a taxing authority or to any Tax Indemnitee
as a result of the application of the preceding sentence or otherwise that
relates to or is a result of any Tax imposed on or with respect to any Tax
Indemnitee which Tax
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(in whole or in part) is not the responsibility of the Charterer under the terms
of this Section 13.2, then the Tax Indemnitee in respect of whom such Tax is an
excluded Tax hereunder shall, within 30 days after receipt of notice of payment
of the Tax and appropriate payment documentation with respect thereto, pay to
the Charterer an amount which equals the amount paid by the Charterer with
respect to or as a result of such Tax that is not the responsibility of the
Charterer (including any expenses or other charges borne by the Charterer)
increased by (but subject to the proviso in Section 13.2(f)) the amount of tax
savings to such Tax Indemnitee attributable to the making of such payment to the
Charterer. Each Tax Indemnitee also agrees (subject to the proviso in Section
13.2(f)) to reimburse the Charterer for any amounts withheld for which such Tax
Indemnitee obtains a credit or refund, within 30 days after receipt of such
credit or refund.
Except as provided in Section 13.2(b), the Charterer agrees to pay,
and to indemnify, protect, defend, save and keep harmless each Tax Indemnitee,
on an After-Tax Basis, whether or not any or all of the transactions
contemplated hereby are consummated in whole or in part, from and against any
and all taxes, impositions, fees, levies, assessments, duties, withholdings,
governmental claims or other charges of any nature whatsoever (together with any
related interest, fines, penalties or additions to tax), including, without
limitation, rental, income, withholding, sales, use, transfer, leasing, personal
property, excise, receipts, franchise, value-added, stamp, filing, recording,
documentation or license taxes, however imposed or asserted, by any United
States federal, state or local government or taxing authority (including any
possession or territory thereof) or any foreign government or taxing authority
or subdivision thereof, or any international taxing authority or any subdivision
or taxing authority of any thereof (all the foregoing being herein collectively
called "Taxes" or, separately, a "Tax"), upon or with respect to (i) the Vessel
----- ---
Interest or any portion thereof or interest therein, (ii) the acquisition,
purchase, sale, financing, chartering, subchartering, sub-subchartering and sub-
sub-subchartering, ownership, maintenance, repair, modification, replacement,
removal, substitution, redelivery, alteration, insuring, control, use,
operation, manufacture, assembly, delivery, possession, repossession, location,
storage, importation, exportation, refinancing, refunding, transfer of title,
registration, reregistration, transfer of registration, return or other
disposition thereof of all or any part of the Vessel Interest or any portion
thereof or interest therein, (iii) the rental payments (including, without
limitation, all Base Hire and Supplemental Hire), receipts or earnings arising
from the Vessel Interest or any portion thereof or interest therein, or payable
pursuant to the Charter, or any other payment or right to receive payment
55
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pursuant to the Operative Documents or the Pass Through Trust Agreement or Pass
Through Certificate (including, without limitation, any payment of principal,
interest, discount or premium on or with respect to the Secured Note), (iv) the
Operative Documents and any other documents contemplated hereby or thereby and
amendments and supplements thereto, or the issuance, refunding, refinancing or
resetting of the Secured Note or the Pass Through Certificate or any other
document executed and delivered in connection with the consummation of the
transactions contemplated by the Operative Documents or Pass Through Trust
Agreement or the interest of any Tax Indemnitee in any of the foregoing, or the
execution, amendment, issuance or delivery of any of the foregoing, (v) the
Indenture Estate or Trust Estate or Pass Through Trust or the property, or the
income or other proceeds received with respect to the property, held by the
Indenture Trustee under the Indenture or the Owner Trustee under the Trust
Agreement, or (vi) otherwise arising out of, with respect to, or in connection
with the transactions contemplated by the Operative Documents, the Pass Through
Certificate, or the Pass Through Trust Agreement.
(b) Exclusions from General Tax Indemnity. The provisions of Section
-------------------------------------
13.2(a) shall not apply to, and the Charterer shall have no liability to a Tax
Indemnitee under Section 13.2(a) with respect to:
(1) Taxes (other than such Taxes that are sales, use, rental,
property or ad valorem Taxes) imposed on, based on or measured by, net
-- -------
income, receipts, capital, net worth, excess profits or conduct of business
which are imposed by the United States federal, or any state or local
government therein, or any foreign or international taxing authority,
including any franchise or privilege Taxes, minimum Taxes, value added
Taxes imposed in lieu of net income Taxes, withholding Taxes (other than
withholding Taxes resulting from either the Owner Trust or Owner
Participant not being a United States person for United States federal
income tax purposes), and any Taxes on or measured by any items of tax
preference;
(2) Taxes, including, without limitation, sales and transfer
Taxes, that result from any voluntary or involuntary transfer by such Tax
Indemnitee of any interest in the Owner Participant, the Vessel Interest,
the Trust Estate or any portion of any of the foregoing, or any interest
arising out of the Operative Documents or Pass Through Trust Agreement or
the Secured Note or Pass Through Certificate; provided, however, that this
-------- -------
Section 13.2(b)(2) shall not apply to any
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transfer that (A) relates to the exercise of remedies in connection with a
Charter Event of Default; (B) results from a Event of Default or from an
Event of Loss; or (C) results from the replacement, removal or substitution
of all or any part of the Vessel Interest;
(3) Taxes imposed by any jurisdiction that would not have been
imposed on a Tax Indemnitee but for its activities in such jurisdiction
unrelated to the transactions contemplated by the Operative Documents or
Pass Through Trust Agreement;
(4) Taxes that result from (A) the willful misconduct or gross
negligence of such Tax Indemnitee, (B) the breach or inaccuracy by such Tax
Indemnitee of any of its representations, covenants and obligations under
the Operative Documents, (C) the failure of a Tax Indemnitee to file tax
returns properly and on a timely basis or to claim a deduction or credit to
which it is entitled (provided that such Tax Indemnitee shall not be
obligated to claim a deduction or credit if it requests but fails to
receive an opinion of Dewey Ballantine or other independent counsel
selected by such Tax Indemnitee and reasonably acceptable to the Charterer
that it is entitled to claim such deduction or credit), or (D) the failure
of a Tax Indemnitee to comply with certification, reporting or other
similar requirements of the jurisdiction imposing such Tax; provided,
--------
however, that the exclusions set forth in subclauses (C) and (D) shall not
-------
apply if any such failure is the result of the failure of the Charterer to
(I) perform its obligations under Section 13.2(c), or to perform its duties
and responsibilities pursuant to any of the Operative Documents, (II)
timely and properly notify such Tax Indemnitee of the applicable filing,
certification, reporting or other similar requirements, or (III) provide
reasonable assistance in complying with any such requirement;
(5) Taxes which are attributable to any period or circumstance
occurring after the expiration or earlier termination of the Charter,
except to the extent attributable to (A) a failure of the Charterer to
fully discharge its obligations under the Charter, (B) Taxes imposed on or
with respect to any payments that are due after the expiration or earlier
termination of the Charter and which are attributable to a period or
circumstance occurring
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prior to such expiration or earlier termination or (C) Taxes that relate to
events, matters or circumstances occurring prior to such expiration or
earlier termination;
(6) Taxes which are based on or measured by fees or compensation
received by the Owner Trustee for acting as Owner Trustee under the Trust
Agreement, the Indenture Trustee for acting as Indenture Trustee under the
Indenture or Pass Through Trustee for acting as Pass Through Trustee under
the Pass Through Trust Agreement;
(7) other than with respect to Owner Participants and the
Shareholders therein, Taxes to the extent such Taxes would not have been
imposed on a Tax Indemnitee if such Tax Indemnitee were a United States
person for United States federal income tax purposes;
(8) any Tax that is being contested in accordance with the
provisions of Section 13.2(e) during the pendency of such contest, but only
for so long as such contest is continuing in accordance with such Section
and payment is not otherwise required pursuant to such Section;
(9) Taxes as to which any Tax Indemnitee fails to comply with its
contest obligations under Section 13.2(e) in any material respect, but only
to the extent such failure materially impairs the Charterer's contest
rights with respect to the Taxes that are the subject of the contest and is
not due to any act or failure to act by the Charterer; provided, however,
-------- -------
that this Section 13.2(b)(9) shall not constitute a waiver by the Charterer
of its rights, if any, to assert and sue upon any claims it may have
against the Tax Indemnitee by reason of its failure to comply with its
obligations under Section 13.2(e) of this Agreement;
(10) Taxes imposed as a result of the trust described in the Trust
Agreement or the Pass Through Trust not being treated as a grantor trust or
other conduit entity for federal, state or local tax purposes;
(11) any Taxes with respect to a transferee or subsequent
transferee to the extent of the excess of such Taxes over the amount of the
Taxes that would have been imposed had there not been a transfer by the
initial Tax Indemnitee after
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the Closing Date of (i) an interest in the Owner Participant, the Vessel
Interest, or of a beneficial interest in the Trust Estate or any portion of
any of the foregoing, or (ii) any interest arising under any Operative
Document or Pass Through Trust Agreement or any Secured Note or Pass
Through Certificate;
(12) Taxes which have been included in Owner's Cost;
(13) any Taxes imposed as a result of, or in connection with, any
"prohibited transaction," within the meaning of Section 4975 of the Code,
Section 406 or ERISA or any comparable laws of any governmental authority,
engaged in by any Tax Indemnitee other than, in the case of the Owner
Participant, the making and holding of its investment in the Interest or
the taking of any action at the request or direction of the Charterer;
(14) Taxes imposed on the Owner Trust resulting from a Lessor's
Lien;
(15) Taxes resulting from an amendment to an Operative Document
which is not consented to by the Charterer in writing; or
(16) any Tax in the nature of an intangible tax or similar tax upon
or with respect to the value of the interest of the Indenture Estate or a
Certificateholder, as the case may be, in any of the Secured Note or
Certificate imposed by any government or taxing authority.
Notwithstanding anything contained herein or any other Operative
Document to the contrary, the Charterer acknowledges and agrees to indemnify and
hold harmless the Owner Participant and Owner Trust against any and all
withholding Taxes (inclusive of any interest and penalties imposed for any
failure to timely withhold such Taxes) imposed on or with respect to any amounts
paid to Loan Participant as an indemnified Tax for purposes of this Section
13.2, unless such withholding is due to (i) the Owner Trust not being a United
States person for United States federal income tax purposes, (ii) a failure of
the Owner Participant or the Owner Trustee to comply with any provision of the
Operative Documents (including Section 13.2(b)(4)) except if such failure is the
result of the failure of the Charterer to perform its obligations under Section
13.2(c) or (iii) the breach or inaccuracy of any representations, covenants or
obligations by the Owner Participant or Owner Trust under the
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Operative Documents. If a Tax (including any related interest, fines, penalties
or addition to Tax) results from a failure of any Tax Indemnitee to comply with
its obligations under the Operative Documents or the Pass Through Trust
Agreement and the Charterer is required to indemnify another Tax Indemnitee
against the imposition of such Tax, then the Tax Indemnitee whose failure
resulted in the imposition of such Tax shall, within 30 days after receipt of
notice of payment of the Tax and appropriate payment documentation with respect
thereto, pay to the Charterer an amount which equals the amount paid by the
Charterer with respect to or as a result of such Tax (including any expenses or
other charges borne by the Charterer) increased by (but subject to the proviso
in Section 13.2(f)) the amount of tax savings to such Tax Indemnitee
attributable to the making of such payment to the Charterer.
The provisions of this Section 13.2(b) shall not apply to any Taxes
imposed in respect of the receipt or accrual of any indemnity payment made by
the Charterer pursuant to this Section 13.2 hereof.
(c) Reports. If any report, return, certification or statement is
-------
required to be filed with respect to any Tax that is subject to indemnification
under this Section 13.2, the Charterer shall timely prepare and file the same
(except for (i) any report, return or statement relating to any Taxes described
in Section 13.2(b)(1) or any Taxes in lieu of or enacted in substitution for any
of the foregoing or (ii) any other report, return, certification or statement
which the Tax Indemnitee has notified the Charterer that the Tax Indemnitee
intends to prepare and file); provided that such Tax Indemnitee shall have
--------
furnished the Charterer, at the Charterer's expense, with such information
reasonably necessary to prepare and file such returns as is within such Tax
Indemnitee's control. The Charterer shall either file such report, return,
certification or statement (so as to show the ownership of the Vessel Interest
in the Owner Trust) and send a copy of such report, return, certification or
statement to the Owner Participant and the Owner Trust, or, where not so
permitted to file, shall notify the Owner Participant and the Owner Trust of
such requirement within a reasonable period of time prior to the due date for
filing (without regard to any applicable extensions) and prepare and deliver
such report, return, certification or statement to the Owner Participant and the
Owner Trust. In addition, within a reasonable time prior to the time such
report, return, certification or statement is to be filed the Charterer shall,
to the extent permitted by law, cause all billings of such Taxes to be made to
each Tax Indemnitee in care of the Charterer, make payment thereof and furnish
written evidence of such payment. The Charterer shall furnish promptly upon
written request such data, records and documents as any Tax Indemnitee may
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reasonably require of the Charterer to enable such Tax Indemnitee to comply with
requirements of any taxing jurisdiction arising out of such Tax Indemnitee's
participation in the transactions contemplated by this Agreement, including,
without limitation, requirements relating to Taxes described in Section
13.2(b)(1).
(d) Payments. Any Tax indemnified hereunder shall be paid directly
--------
when due to the applicable taxing authority if direct payment is permitted, or
shall be reimbursed to a Tax Indemnitee on demand if paid by such Tax Indemnitee
in accordance herewith. Except as otherwise provided in this Section 13.2, all
amounts payable to a Tax Indemnitee hereunder shall be paid promptly in
immediately available funds, but in no event later than the later of (i) 10 days
after the date of such demand or (ii) 10 days before the date the Tax to which
such amount payable hereunder relates is due or is to be paid (ignoring
extension of time) and shall be accompanied by a written statement (which
written statement shall, at the Charterer's request, be verified by a nationally
recognized independent accounting firm mutually acceptable to the Charterer and
the Tax Indemnitee, such verification to be at the Charterer's expense unless
such accountants determine that the amount payable by the Charterer is less than
ninety-five percent (95%) of the amount shown on such written statement, in
which event it will be paid by the Tax Indemnitee) describing in reasonable
detail the Tax and the computation of the amount payable. In the case of a Tax
subject to indemnification under this Section 13.2 which is properly subject to
a contest in accordance with Section 13.2(e), the Charterer (i) shall be
obligated to make any advances with respect to such Tax whenever required under
Section 13.2(e) and (ii) shall pay such Tax (in the amount finally determined to
be owing in such contest) prior to the latest time permitted by the relevant
taxing authority for timely payment after a Final Determination.
(e) Contests; Refunds. (i) In the event a taxing jurisdiction makes
-----------------
a claim with respect to any Tax for which a Charterer may be liable under this
Section 13.2 (a "Tax Claim"), the Charterer may cause the applicable Tax
--- -----
Indemnitee to contest such Tax Claim as set forth herein. In the event any Tax
Indemnitee receives notice of a Tax Claim or potential Tax Claim which may be
indemnified under this Section 13.2, such Tax Indemnitee shall promptly notify
the Charterer thereof. If requested by the Charterer in writing within 30 days
of receipt of such notice (or, if sooner, on or before the last date upon which
the contest of such Tax can be initiated, provided that the Tax Indemnitee's
notice to the Charterer discloses such date), such Tax Indemnitee shall, upon
receipt of an indemnity satisfactory to it for all reasonable costs, expenses,
losses, legal and accountants' fees and disbursements, and for all penalties,
fines,
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additions to tax and interest, and at the expense of the Charterer, contest the
imposition of any Tax Claim by (1) resisting payment thereof, if such Tax
Indemnitee in its reasonable discretion shall determine such course of action to
be appropriate, (2) not paying the same except under protest, if protest is
necessary and proper, or (3) if payment shall be made, using reasonable efforts
to obtain a refund thereof in appropriate administrative and judicial
proceedings, or both; provided, however, that in no event will such Tax
-------- -------
Indemnitee be required to contest or continue to contest any Tax Claim unless
such Tax Indemnitee and the Owner Participant shall have reasonably determined
that the action to be taken will not result in any material risk of sale,
forfeiture or loss of, or the creation of any lien (except if the Charterer
shall have adequately bonded such lien, or otherwise made provision to protect
the interests of such Tax Indemnitee and the Owner Participant in a manner
reasonably satisfactory to such Tax Indemnitee and the Owner Participant) on,
the Vessel Interest, any part thereof or interest therein. If such contest
shall involve payment of the Tax Claim, the Charterer shall have advanced to
such Tax Indemnitee the amount of such payment plus interest, penalties and
additions to tax with respect thereto on an interest-free basis, and shall have
agreed to indemnify the Tax Indemnitee, on an After-Tax Basis, for any adverse
tax consequences resulting from such advance. If permitted by applicable law,
the Charterer may contest, at its own expense, the imposition of any Tax Claim
if the proviso in the second preceding sentence is satisfied. In any contest
controlled by the Tax Indemnitee, such Tax Indemnitee will consult with the
Charterer and permit the Charterer to participate in a reasonable manner in the
conduct of the contest.
A Tax Indemnitee shall not make, accept or enter into a settlement or
other compromise with respect to any Taxes indemnified pursuant to this Section
13.2 (which proceeding the Tax Indemnitee is required to continue), or forego or
terminate any such proceeding with respect to Taxes indemnified pursuant to this
Section 13.2, without the prior written consent of the Charterer.
Notwithstanding the foregoing, if a Tax Indemnitee refuses to contest any Tax
Claim or effects a settlement or compromise of any such Tax that the Tax
Indemnitee is required to contest or otherwise terminates any such contest
without such prior written consent of the Charterer, such Tax Indemnitee shall
be deemed to have waived its right to any indemnity payment by the Charterer
that would otherwise be payable by the Charterer pursuant to this Section 13.2
in respect of such Tax Claim.
(ii) Upon receipt by any Tax Indemnitee of a repayment or refund of
all or any part of any Tax which such Charterer shall have paid for, or
advanced to, such Tax Indemnitee or for which the Charterer shall have
reimbursed
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such Tax Indemnitee pursuant to this Section 13.2, such Tax Indemnitee shall pay
to the Charterer, as promptly as practicable after the receipt thereof, the
amount of such repayment or refund plus any interest received by, or credited
to, such Tax Indemnitee on such amounts net of Taxes thereon plus the amount of
any net tax savings actually realized by such Tax Indemnitee as a result of the
payment made to the Charterer; provided, however, that: (A) such Tax Indemnitee
-------- -------
shall not be obligated to make such payment with respect to any net tax savings
to the extent that the amount of such payment would exceed (x) all prior
indemnity payments (excluding costs and expenses incurred with respect to
contests) made by the Charterer with respect to such Tax pursuant to this
Section 13.2 and less (y) the amount of all prior payments by such Tax
Indemnitee to the Charterer hereunder with respect to such Tax (but any such
excess shall be applied against, and reduce pro tanto, any future payment due
--- -----
such Tax indemnitee pursuant to this Section 13.2); and (B) if there is (1) a
subsequent loss of any such tax savings or refund realized by the Tax Indemnitee
or (2) a reduction of an amount otherwise payable to a Tax Indemnitee hereunder
as a result of any such tax savings or refund, such loss or reduction shall be
treated as a Tax for which the Charterer must indemnify such Tax Indemnitee
pursuant to this Section 13.2.
(f) Tax Savings. If, by reason of any payment made to or for the
-----------
account of a Tax Indemnitee by the Charterer pursuant to this Section 13.2, such
Tax Indemnitee at any time realizes a reduction in any Taxes for which the
Charterer is not required to indemnify such Tax Indemnitee pursuant to this
Section 13.2 and which was not taken into account previously in computing such
payment by the Charterer to or for the account of such Tax Indemnitee, then such
Tax Indemnitee shall promptly pay to the Charterer an amount equal to such
actual reduction in Taxes, plus the amount of any additional reduction in Taxes
of such Tax Indemnitee attributable to the payment made by such Tax Indemnitee
to the Charterer pursuant to this sentence; provided, however, that: (A) such
-------- -------
Tax Indemnitee shall not be obligated to make such payment with respect to any
net tax savings to the extent that the amount of such payment would exceed (x)
all prior indemnity payments (excluding costs and expenses incurred with respect
to contests) made by the Charterer with respect to such Tax pursuant to this
Section 13.2 and less (y) the amount of all prior payments by such Tax
Indemnitee to the Charterer hereunder with respect to such Tax (but any such
excess shall be applied against, and reduce pro tanto, any future payment due
--- -----
such Tax indemnitee pursuant to this Section 13.2); and (B) if there is a (i)
subsequent loss of any such tax savings or refund realized by the Tax Indemnitee
or (ii) a reduction of an amount otherwise payable to a Tax Indemnitee hereunder
as a result of any such tax savings or refund, such loss or
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reduction shall be treated as a Tax for which the Charterer must indemnify such
Tax Indemnitee pursuant to this Section 13.2.
13.3 Special Indemnity Relating to U.K. Documents. The Charterer
--------------------------------------------
agrees to indemnify, protect, save and keep harmless the Indenture Trustee, the
Pass Through Trustee and each holder of a Secured Note (the "Special
Indemnitees") from any losses, liabilities or expenses (collectively, "Losses")
suffered or incurred by any Special Indemnitee resulting from the obligations
(the "U.K. Obligations") of the Owner Trust under the U.K. Documents including,
without limitation of the generality of the foregoing, Losses incurred as a
result of an insolvency proceeding of the Owner Trust resulting from the U.K.
Obligations or Losses resulting from the failure of the Indenture Trustee to
receive Assigned Hire when due as a result of the actions of any holder of a
U.K. Obligation.
13.4 No Guarantee. Nothing in Sections 13.1, 13.2 or 13.3 shall be
------------
construed as a guaranty by the Charterer of any residual value in the Vessel
Interest or as a guaranty of the Secured Note.
SECTION 14. TRANSFER OF AN OWNER PARTICIPANT'S
INTEREST.
----------------------------------
14.1 Restrictions on Transfer. Without the prior written consent of,
------------------------
so long as the Charter shall be in effect, the Charterer, and, so long as the
Lien of the Indenture shall be in effect, the Indenture Trustee, the Owner
Participant shall not, directly or indirectly, assign, convey or otherwise
transfer (whether by consolidation, merger, sale of assets or otherwise) any of
its right, title or interest in and to the Trust Estate, this Agreement, the
Trust Agreement or any other Operative Document except in accordance with the
terms and conditions of this Section 15.
14.2 Permitted Transfers. The Owner Participant may transfer all or
-------------------
part of its right, title and interest in and to the Trust Estate (whether or not
the same shall then have been pledged or mortgaged under the Indenture, but
subject to the Lien of the Indenture if then in effect) and in and to this
Agreement and the other Operative Documents to any Person (a "Transferee") only
----------
in compliance with and upon satisfaction of the following conditions:
(a) the Transferee shall be (i) a financial institution, leasing
company or other investor whose net worth at the time is at least
$25,000,000 (or the obligations of which are guaranteed by an entity whose
net worth at the time is at least $25,000,000 pursuant to a guarantee in
form and substance reasonably satisfactory
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to the Charterer and the Indenture Trustee), (ii) an Affiliate of the Owner
Participant, or (iii) a solvent entity formed under the laws of the Cayman
Islands or any of the states of the United States at least 50% of the
equity interest in which is owned by one or more Affiliates of the
Guarantor; provided that in the case of Transferees under clauses (ii) or
--------
(iii) either (x) the Owner Participant shall guarantee the obligations of
such Transferee as Owner Participant under the Operative Documents pursuant
to a guarantee in form and substance reasonably satisfactory to the
Charterer and the Indenture Trustee, or (y) such Transferee shall have a
net worth at the time of such transfer of at least $25,000,000;
(b) no such transfer shall violate any provision of, or create a
relationship which would be in violation of, any applicable Governmental
Rules, including, without limitation, applicable securities laws, any
agreement to which the Owner Participant or the Transferee is a party or by
which it or any of its property is bound or any Governmental Actions;
(c) the Transferee shall enter into an agreement or agreements, in
form and substance reasonably satisfactory to the Charterer, the Owner
Trust and (if the Lien of the Indenture shall then be in effect) the
Indenture Trustee, whereby the Transferee shall confirm that it has the
requisite power and authority to enter into and to carry out the
transactions contemplated hereby and in each Operative Document to which
the Owner Participant is or will be a party, and that it shall be deemed a
party to each of such Operative Documents and shall agree to be bound by
all the terms of, and to undertake all the obligations of the transferor to
be performed on or after the date of such transfer contained in, each of
such Operative Documents, and whereby such Transferee shall make
representations and warranties reasonably requested by the Charterer, the
Owner Trust and the Indenture Trustee not exceeding the scope of the
representations and warranties contained in Section 7; provided that such
--------
Transferee delivers to the Charterer and the Indenture Trustee a written
representation and warranty (or an opinion of counsel reasonably
satisfactory to the Charterer and the Indenture Trustee) that such transfer
to and ownership by such Transferee (1) will not result in a "prohibited
transaction" as defined in Section 406 of ERISA or Section 4975 of the Code
or (2) are covered by an exemption contained in ERISA or an administrative
exemption thereunder;
(d) the transferring Owner Participant shall have provided 30 days
prior written notice of such transfer to
65
<PAGE>
the Indenture Trustee and the Charterer, which notice shall specify (i)
such information and be accompanied by evidence as shall be reasonably
necessary to establish compliance with this Section 15 and Section 12.7 of
the Trust Agreement (ii) the name and address (for the purpose of giving
notice as contemplated by the Operative Documents) of the Transferee;
(e) the transferring Owner Participant shall pay or cause to be paid
all reasonable fees, expenses, disbursements and costs (including, without
limitation, legal and other professional fees and expenses) incurred by the
Owner Trust, the Loan Participant, the Indenture Trustee or the Charterer
in connection with any transfer pursuant to this Section 14;
(f) the transferring Owner Participant or the Transferee shall have
delivered to the Charterer and, if the Lien of the Indenture shall then be
in effect, the Indenture Trustee, an opinion of counsel in form and
substance reasonably satisfactory to each of them, as to the due
authorization, execution, delivery and enforceability of the agreement or
agreements referred to in clauses (c) and (g) of this Section 14.2, and as
to the matters referred to in clause (b) of this Section 14.2; and
(g) the transferring Owner Participant or the Transferee shall agree
by an instrument in writing in form and substance reasonably satisfactory
to the Charterer to indemnify the Charterer against any increased tax
indemnity obligations the Charterer may have as a result of such
conveyance.
14.3 Effect of Transfer. From and after any transfer effected in
------------------
accordance with this Section 14, the Owner Participant making such transfer
shall be released, to the extent of the obligations assumed by the Transferee,
from its liability hereunder and under the other Operative Documents to which it
is or will be a party in respect of obligations to be performed on or after the
date of such transfer. Upon any transfer by the Owner Participant in accordance
with this Section 14, the Transferee shall be deemed an "Owner Participant" for
all purposes of the Operative Documents and each reference herein to the Owner
Participant making such transfer shall thereafter be deemed a reference to such
Transferee for all purposes, except as provided in the preceding sentence.
SECTION 15. MISCELLANEOUS.
-------------
15.1 Survival. All agreements, representations, warranties and
--------
indemnities contained in this Agreement and the
66
<PAGE>
other Operative Documents and in any agreement, document or certificate
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive and continue in effect following the execution and delivery of
this Agreement and the other Operative Documents and the participation by the
Owner Participant and the Loan Participant in the payment of Owner's Cost as
contemplated hereby and by the other Operative Documents.
15.2 Binding Effect. All agreements, representations, warranties and
--------------
indemnities in this Agreement and the other Operative Documents and in any
agreement, document or certificate delivered pursuant hereto or thereto or in
connection herewith or therewith shall bind the Person making the same and its
successors and assigns, and shall inure to the benefit of each Person for whom
made and its successors and permitted assigns.
15.3 Notices. All communications, notices and consents provided for
-------
in this Agreement shall be in writing and shall be given in person or by courier
or by means of telecopy or other wire transmission (with request for assurance
of receipt in a manner typical with respect to communications of that type), or
mailed by registered or certified first class mail, return receipt requested,
addressed as set forth in Schedule 1 or at such other address as any such Person
may from time to time designate by notice duly given in accordance with the
provisions of this Section 15.3 to the other parties hereto. All such
communications, notices and consents given in such manner shall be deemed given
when received in accordance with this Section 15.3 (or when proffered to a
Person if receipt is refused).
15.4 Counterpart Execution. This Agreement may be executed in any
---------------------
number of counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
15.5 GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED
-------------
BY, AND BE CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BUT
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS THEREOF BUT APPLYING
WHERE MANDATORILY APPLICABLE THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA.
15.6 Amendments, Supplements, Etc. (a) Neither this Agreement nor
----------------------------
any of the terms hereof may be amended, supplemented, waived or modified orally,
but only by an instrument in writing signed by the party against which
enforcement of such change is sought.
67
<PAGE>
(b) Prior to the Charter Termination Date, neither the Trust
Agreement nor the Indenture may be amended, waived, supplemented or modified to
permit any action contrary to, or disturb the Charterer's rights under, the
Charter, or otherwise adversely affect the Charterer's rights, or increase the
Charterer's obligations or liabilities, under any Operative Document without the
consent of the Charterer.
15.7 Headings; Table of Contents. The division of this Agreement
---------------------------
into Sections, subsections and paragraphs, the provision of a table of contents
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation hereof.
15.8 Severability of Provisions. Any provision of this Agreement
--------------------------
which may be determined by competent authority to be invalid or unenforceable in
such jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without invalidating or rendering
unenforceable any remaining terms and provisions hereof, and any such invalidity
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. The parties shall
negotiate in good faith to replace such provision with an appropriate, legal
provision. To the extent permitted by applicable law, the parties hereto hereby
waive any provision thereof that renders any term or provision hereof invalid or
unenforceable in any respect.
15.9 Entire Agreement. This Agreement (including the schedules and
----------------
exhibits hereto), the Pass Through Trust Agreement, the Pass Through Trust
Supplement and the other Operative Documents, and all certificates, instruments
and other documents relating thereto delivered and to be delivered from time to
time pursuant to the Operative Documents and the Pass Through Trust Agreement,
supersede all agreements (other than any Operative Document) prior to the date
of this Agreement, written or oral, between or among any of the parties hereto
relating to the transactions contemplated hereby and thereby, not including the
Joint Venture Agreement relating to the Vessel between MOSAT and Dubai
Investments PJSC dated November 25, 1996.
15.10 Limitation of Liability of Managing Trustee, Indenture Trustee
--------------------------------------------------------------
and Pass Through Trustee. (a) It is expressly understood and agreed by and
- ------------------------
among all of the parties hereto that, except as otherwise expressly provided
herein or in any other Operative Document (other than the Trust Agreement), (i)
this Agreement is executed and delivered by the Managing Trustee not in its
individual capacity, except to the extent expressly set forth herein, but solely
as Managing Trustee for the Owner Trust under the Trust Agreement in the
exercise of the power and authority conferred and
68
<PAGE>
vested in it as the Managing Trustee, (ii) certain of the representations,
undertakings and agreements made herein by the Managing Trustee are not personal
representations, undertakings and agreements, but are binding only on the Trust
Estate and the Managing Trustee, as trustee, (iii) except as set forth in the
proviso to this sentence, nothing herein contained shall be construed as
creating any liability of the Trust Company or any incorporator or any past,
present or future subscriber to the capital stock of, or stockholder, officer or
director of, the Trust Company to perform any covenant, whether express or
implied, contained herein, all such liability, if any, being expressly waived by
each of the other parties hereto and by any Person claiming by, through or under
any such party, and (iv) so far as the Managing Trustee is concerned, each of
the other parties hereto and any Person claiming by, through or under any such
party shall (other than with respect to Claims arising from the willful
misconduct or gross negligence of the Managing Trustee or its failure to
distribute funds in accordance with the terms of the Operative Documents) look
solely to the Trust Estate and the Indenture Estate for the performance of any
obligation under any of the instruments referred to herein; provided, however,
-------- -------
that notwithstanding anything in this Section 15.10 to the contrary, the Trust
Company shall be liable (A) in its individual capacity and as Managing Trustee
to the Owner Participant as expressly set forth in the Trust Agreement, (B) in
its individual capacity, in respect of the representations, warranties and
agreements of the Trust Company made in its individual capacity as expressly set
forth herein (including, without limitation, Sections 9) or in any other
Operative Document to which it is a party or in any Officer's Certificate of the
Trust Company delivered pursuant hereto, and (C) in its individual capacity for
the consequences of its own gross negligence or willful misconduct or its
failure to distribute funds in accordance with the terms of the Operative
Documents to which it is or will be a party (including, without limitation,
willful breach of contract).
(b) It is expressly understood and agreed by and among all of the
parties hereto that, except as otherwise expressly provided herein or in any
other Operative Document, (i) this Agreement is executed and delivered by State
Street Bank and Trust Company not in its individual capacity but solely as
trustee under the Indenture in the exercise of the power and authority conferred
and vested in it as such Indenture Trustee, (ii) certain of the representations,
undertakings and agreements made herein by the Indenture Trustee are not
personal representations, undertakings and agreements, but are binding only on
the Indenture Trustee, as trustee, (iii) except as set forth in the proviso to
this sentence, nothing herein contained shall be construed as creating any
liability of State Street Bank and Trust Company or any incorporator or any
past, present or future subscriber
69
<PAGE>
to the capital stock of, or stockholder, officer or director of, State Street
Bank and Trust Company to perform any covenant, whether express or implied,
contained herein, all such liability, if any, being expressly waived by each of
the other parties hereto and by any Person claiming by, through or under any
such party, and (iv) so far as the Indenture Trustee is concerned, each of the
other parties hereto and any Person claiming by, through or under any such party
shall (other than with respect to Claims arising from the willful misconduct or
gross negligence of the Indenture Trustee and for its failure to distribute
funds in accordance with the terms of the Operative Documents) look solely to
the Indenture Trustee, as trustee for the performance of any obligation under
any of the instruments referred to herein; provided, however, that
-------- -------
notwithstanding anything in this Section 15.10 to the contrary, State Street
Bank and Trust Company shall be liable (A) in its individual capacity, in
respect of the representations, warranties and agreements of the Indenture
Trustee made in its individual capacity as expressly set forth herein
(including, without limitation, in Section 10) or in any other Operative
Document to which it is a party or in any Officer's Certificate made in its
individual capacity delivered pursuant hereto, and (B) in its individual
capacity for the consequences of its own gross negligence or willful misconduct
and for its failure to use ordinary care to disburse funds in accordance with
any Operative Document to which it is or will be a party.
(c) It is expressly understood and agreed by and among all of the
parties hereto that, except as otherwise expressly provided herein or in the
Pass Through Trust Agreement, (i) this Agreement is executed and delivered by
State Street Bank and Trust Company not in its individual capacity but solely as
trustee under the Pass Through Trust Agreement in the exercise of the power and
authority conferred and vested in it as such Pass Through Trustee, (ii) certain
of the representations, undertakings and agreements made herein by the Pass
Through Trustee are not personal representations, undertakings and agreements,
but are binding only on the Pass Through Trustee, as trustee, (iii) except as
set forth in the proviso to this sentence, nothing herein contained shall be
construed as creating any liability of State Street Bank and Trust Company or
any incorporator or any past, present or future subscriber to the capital stock
of, or stockholder, officer or director of, State Street Bank and Trust Company
to perform any covenant, whether express or implied, contained herein, all such
liability, if any, being expressly waived by each of the other parties hereto
and by any Person claiming by, through or under any such party, and (iv) so far
as the Pass Through Trustee is concerned, each of the other parties hereto and
any Person claiming by, through or under any such party shall (other than with
respect to Claims arising from the willful misconduct or negligence of the Pass
Through
70
<PAGE>
Trustee and for its failure to distribute funds in accordance with the terms of
the Pass Through Trust Agreement) look solely to the Pass Through Trustee, as
trustee for the performance of any obligation under any of the instruments
referred to herein; provided, however, that notwithstanding anything in this
-------- -------
Section 15.10 to the contrary, State Street Bank and Trust Company shall be
liable (A) in its individual capacity, in respect of the representations,
warranties and agreements of the Pass Through Trustee made in its individual
capacity as expressly set forth herein (including, without limitation, in
Sections 8 and 11) or in the Pass Through Trust Agreement or in any Officer's
Certificate made in its individual capacity delivered pursuant hereto, and (B)
in its individual capacity for the consequences of its own negligence or willful
misconduct and for its failure to use ordinary care to disburse funds in
accordance with the Pass Through Trust Agreement.
15.11 Jurisdiction; Service of Process. Any legal action or
--------------------------------
proceeding with respect to this Agreement or any other Operative Document to
which any party hereto is a signatory or against any such party or against the
Indenture Estate or Trust Estate may be brought, at the option of any such
party, in any of the courts in the State of New York or the Federal courts of
the United States of America located in the City of New York, and each party
hereto hereby unconditionally accepts the nonexclusive jurisdiction of the
aforesaid courts, expressly waiving any other jurisdiction to which any such
party may be entitled by reason of its present and future domicile. Each party
hereto irrevocably waives any objection it may now or hereafter have to the
laying of venue of any such action or proceeding in any of the aforesaid courts
and any claim it may now or hereafter have that any such action or proceeding
has been brought in an inconvenient forum. Each party hereto further
irrevocably consents to the service of process out of any of the aforesaid
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail to such party's address for notices specified
herein. Nothing herein shall affect the right to serve process in any other
manner permitted by law.
15.12 Instructions. By their respective execution and delivery of
------------
this Agreement, the Owner Participant and the Pass Through Trustee hereby
instruct the Owner Trust, the Managing Trustee and the Indenture Trustee to
execute and deliver this Agreement.
71
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be duly executed as of the date first above written.
CHARTERER: MOBIL MARINE FINANCE COMPANY II INC.
By: /s/ R.E. Sliwinski
------------------------
Name: R.E. Sliwinski
Title: Authorized Signatory
OWNER PARTICIPANT: DUMOCO L.L.C.
By: /s/ R.E. Sliwinski
------------------------
Name: R.E. Sliwinski
Title: Authorized Signatory
MANAGING TRUSTEE: DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED, not in its
individual capacity except to the extent expressly
provided herein, but solely as Managing Trustee
By: /s/ J.H. Gullimare
------------------------
Name: J.H. Gullimare
Title: Authorized Signatory
OWNER TRUST: DUMOCO EAGLE TRUST
By: DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED, not in
its individual capacity, except to the extent
expressly set forth herein, but solely as Managing
Trustee
By: /s/ J.H. Gullimare
------------------------
Name: J.H. Gullimare
Title: Authorized Signatory
[PARTICIPATION AGREEMENT - EAGLE]
<PAGE>
INDENTURE TRUSTEE: STATE STREET BANK AND TRUST COMPANY, not in its
individual capacity, except to the extent expressly set
forth herein, but solely as Indenture Trustee
By: /s/ Ruth A. Smith
-----------------------
Name: Ruth A. Smith
Title: Vice President
PASS THROUGH TRUSTEE: STATE STREET BANK AND TRUST COMPANY, not in its
individual capacity, except to the extent expressly set
forth herein, but solely as Pass Through Trustee and
Loan Participant
By: /s/ Ruth A. Smith
-------------------------
Name: Ruth A. Smith
Title: Vice President
[PARTICIPATION AGREEMENT - EAGLE]
<PAGE>
APPENDIX A
DEFINITIONS
1-1
<PAGE>
SCHEDULE 1
to
Participation Agreement
-----------------------
ADDRESSES FOR NOTICES AND PAYMENTS
----------------------------------
CHARTERER:
---------
Mobil Marine Finance Company II Inc.
3225 Gallows Road
Fairfax, Virginia 22037-0001
Attention: Treasurer
Telecopier: 703-846-1469
OWNER PARTICIPANT:
-----------------
DUMOCO L.L.C.
c/o Maples and Calder
Ugland House
George Town
Grand Cayman
Cayman Islands
British West Indies
Attention: Julian Reddyhough
Telecopier: 809-949-8080
Method of Payment
-----------------
All payments to be made to [Owner Participant] shall be made to:
]
]
Notices
-------
All communications with respect to payments and all other communications
to be made to the address first set forth above.
MANAGING TRUSTEE OR THE TRUST COMPANY:
-------------------------------------
Deutsche Morgan Grenfell (Cayman) Limited
Elizabethan Square
P.O.Box 1984
George Town
Grand Cayman
Cayman Islands
1-2
<PAGE>
British West Indies
Attention: Managing Director
Telecopier: 809-949-8178
Method of Payment
-----------------
Deutsche Morgan Grenfell (Cayman) Limited
[ ]
[ ]
OWNER TRUST:
-----------
c/o Deutsche Morgan Grenfell (Cayman) Limited
Elizabethan Square
P.O.Box 1984
George Town
Grand Cayman
Cayman Islands
British West Indies
Attention: Managing Director
Telecopier: 809-949-8178
Method of Payment
-----------------
DUMOCO Eagle Trust
[ ]
[ ]
INDENTURE TRUSTEE OR PASS THROUGH TRUSTEE:
-----------------------------------------
State Street Bank and Trust Company
Two International Place
Boston, MA 02110
Attention: Corporate Trust Department
Telecopier: 617-664-5371
Method of Payment
-----------------
State Street Bank and Trust Company
[ ]
[ ]
1-3
<PAGE>
SCHEDULE 2
to
Participation Agreement
-----------------------
INVESTMENT
----------
Seller: Owner Participant
Equity Investment:
Loan Participant Secured Note: $47,800,000 100%
2-1
<PAGE>
SCHEDULE 3
to
Participation Agreement
-----------------------
CERTAIN FILINGS AND RECORDINGS
------------------------------
A. Precautionary UCC-1 Financing Statements with regard to the Charter
filed with each of the following:
1. State Corporation Commission of Virginia
2. County Clerk's Office of Fairfax County, Virginia
B. UCC-1 Financing Statements with regard to the Indenture Estate filed
with the Secretary of State of Delaware.
C. Delivery of Notification Letter of the Assignment of Charterer's
Obligations Addressed to and Acknowledged by the Charterer.
D. Recordation of the Ship Mortgage with the Registry of the Republic
of the Marshall Islands.
E. Delivery of prescribed particulars of the charge created by the
Owner Trust under the Indenture together with an original of the
Indenture to the Registrar of Companies in England.
3-1
<PAGE>
EXHIBIT 99.7
================================================================================
PARTICIPATION AGREEMENT
among
MOBIL MARINE FINANCE COMPANY I INC.,
Charterer
SAMOCO L.L.C.,
Owner Participant
SAMOCO 1233 TRUST,
Owner Trust
DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED,
Managing Trustee
STATE STREET BANK AND TRUST COMPANY,
Pass Through Trustee and Loan Participant
and
STATE STREET BANK AND TRUST COMPANY,
Indenture Trustee
Dated as of December 19, 1996
================================================================================
Lease Financing of One Very Large Crude Carrier
Hull No. 1233
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
RECITALS................................................. 1
SECTION 1. DEFINITIONS; INTERPRETATION.................. 2
SECTION 2. COMMITMENTS OF PARTICIPANTS; CLOSING;
FUNDING; TRANSACTION EXPENSES.............. 3
2.1 Commitment of Owner Participant.............. 3
2.2 Commitments of Pass Through Trustee;
Secured Note............................... 3
2.3 Expiration of Commitments.................... 3
2.4 Notice of Closing Dates...................... 3
2.5 Time and Place of Closing.................... 4
2.6 Delivery of Funds............................ 4
2.7 Application of Funds by Owner Trust.......... 4
2.8 Conclusion of U.K. Arrangements.............. 5
2.9 Actions on Closing Date...................... 5
2.10 Transaction Expenses........................ 5
2.11 Authorization to Owner Trust................ 6
SECTION 3. CONDITIONS TO CLOSING BY THE
CHARTERER. 6
3.1 Operative Documents.......................... 6
3.2 Legality, Etc................................ 7
3.3 Event of Loss................................ 7
3.4 Consents and Approvals....................... 7
3.5 Representations and Warranties;
Certificates............................... 8
3.6 Opinions..................................... 8
3.7 Litigation................................... 8
3.8 Sale of Pass Through Certificates............ 8
SECTION 4. CONDITIONS TO CLOSING BY THE PASS
THROUGH TRUSTEE............................ 9
4.1 Notice of Closing............................ 9
4.2 Operative Documents.......................... 9
4.3 Legality, Etc................................ 9
4.4 Event of Loss................................ 10
4.5 Insurance.................................... 10
4.6 Opinions..................................... 10
4.7 Taxes........................................ 11
4.8 Officer's Certificates....................... 11
4.9 Resolutions, Etc............................. 13
4.10 Litigation.................................. 14
4.11 Consents and Approvals...................... 14
4.12 Title; Filings and Recordings............... 15
4.13 Sale of Pass Through Certificates........... 16
4.14 No Default Under Charter.................... 16
4.15 U.K. Closing................................ 16
i
<PAGE>
Page
----
4.16 Investment.................................. 16
SECTION 5. CONDITIONS TO CLOSING BY OWNER
PARTICIPANT................ 16
5.1 Notice of Closing............................ 17
5.2 Operative Documents.......................... 17
5.3 Legality, Etc................................ 17
5.4 Event of Loss................................ 17
5.5 Insurance.................................... 17
5.6 Opinions..................................... 18
5.7 Taxes........................................ 19
5.8 Officer's Certificates....................... 19
5.9 Resolutions, Etc............................. 20
5.10 Litigation.................................. 22
5.11 Consents and Approvals...................... 22
5.12 Title; Filings and Recordings............... 23
5.13 Sale of Pass Through Certificates........... 23
5.14 No Default Under Charters................... 23
5.15 Loans....................................... 23
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE
CHARTERER.................................. 23
6.1 Due Organization............................. 23
6.2 Authorization................................ 24
6.3 Execution; Enforceability.................... 24
6.4 No Violation................................. 24
6.5 Consents and Approvals....................... 25
6.6 Securities Act............................... 25
6.7 Title; Filings and Recordings................ 26
6.8 Chief Place of Business...................... 26
6.9 Litigation................................... 26
6.10 No Default.................................. 26
6.11 Event of Loss............................... 26
6.12 Investment Company Act...................... 26
6.13 No Brokers' Fees............................ 27
6.14 No Other Business or Liabilities.......... 27
6.15 Payment of Taxes, etc....................... 27
SECTION 7. REPRESENTATIONS AND WARRANTIES
OF THE OWNER PARTICIPANT................... 27
7.1 Due Organization............................. 27
7.2 Authorization; Execution; Enforceability..... 28
7.3 No Violation................................. 28
7.4 Owner Participant's Liens.................... 28
7.5 Acquisition for Investment................... 28
7.6 Securities Act............................... 29
7.7 ERISA........................................ 29
7.8 Investment Company Act....................... 29
7.9 Litigation................................... 29
7.10 No Default.................................. 30
7.11 Federal Reserve Regulations................. 30
ii
<PAGE>
Page
----
7.12 No Brokers' Fees............................ 30
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE
PASS THROUGH TRUSTEE....................... 30
8.1 Due Organization............................. 30
8.2 Authorization; Execution; Enforceability..... 30
8.3 No Violation................................. 31
8.4 Litigation................................... 31
8.5 Pass Through Trustee's Liens................. 32
8.6 Securities Act............................... 32
SECTION 9. REPRESENTATIONS AND WARRANTIES OF THE
TRUST COMPANY AND OWNER TRUST.............. 32
9.1 Due Organization............................. 32
9.2 Authorization; Execution; Enforceability..... 33
9.3 No Violation................................. 33
9.4 No Default................................... 34
9.5 Litigation................................... 34
9.6 Owner's Liens................................ 34
9.7 Securities Act............................... 35
9.8 Chief Place of Business...................... 35
9.9 No Taxes Payable............................. 35
9.10 Title....................................... 36
9.11 Federal Reserve Regulations................. 36
SECTION 10. REPRESENTATIONS AND WARRANTIES OF
INDENTURE TRUSTEE.......................... 36
10.1 Due Organization............................ 36
10.2 Authorization; Execution;
Enforceability............................. 36
10.3 No Violation................................ 37
10.4 Litigation.................................. 37
10.5 Indenture Trustee's Liens................... 38
SECTION 11. CHARTERER COVENANTS......................... 38
11.1 Officer's Certificate....................... 38
11.2 Maintenance of Corporate Existence,
Etc........................................ 38
11.3 Merger, Consolidation, Sale, Etc............ 38
11.4 Change in Name or Chief Place of
Business................................... 40
11.5 Further Assurances.......................... 40
11.6 Inspection.................................. 41
11.7 Documentation of Vessels.................... 41
11.8 No Petition................................. 42
SECTION 12. OTHER COVENANTS AND AGREEMENTS.............. 42
12.1 Agreements of Owner Participant............. 42
12.2 Agreements of Trust Company and Owner
Trust...................................... 44
12.3 Agreements of Pass Through Trustee.......... 46
iii
<PAGE>
Page
----
12.4 Agreements of Indenture Trustee............. 47
12.5 Confidentiality............................. 48
12.6 Further Assurances.......................... 49
SECTION 13. INDEMNIFICATION...................... 49
13.1 General Indemnification..................... 49
13.2 General Tax Indemnification................. 54
13.3 Special Indemnity Relating to U.K.
Documents.................................. 64
13.4 No Guarantee................................ 64
SECTION 14. TRANSFER OF AN OWNER PARTICIPANT'S
INTEREST................... 64
14.1 Restrictions on Transfer.................... 64
14.2 Permitted Transfers......................... 64
14.3 Effect of Transfer.......................... 66
SECTION 15. MISCELLANEOUS............................... 66
15.1 Survival.................................... 66
15.2 Binding Effect.............................. 67
15.3 Notices..................................... 67
15.4 Counterpart Execution....................... 67
15.5 GOVERNING LAW............................... 67
15.6 Amendments, Supplements, Etc................ 67
15.7 Headings; Table of Contents................. 68
15.8 Severability of Provisions.................. 68
15.9 Entire Agreement............................ 68
15.10 Limitation of Liability of Managing
Trustee, Indenture Trustee and Pass
Through Trustee............................ 68
15.11 Jurisdiction; Service of Process........... 71
15.12 Instructions............................... 71
Appendix A Definitions
Schedules
Schedule 1 Addresses for Notices and Payments
Schedule 2 Equity Investment
Schedule 3 Certain Filings and Recordings
Schedule 4 Certain Exceptions
Exhibit A-1 Ralph N. Johanson, Jr., Esq., Managing
Counsel, Corporate Finance and Securities
of the Guarantor
Exhibit A-2 Dewey Ballantine, special counsel to the
Charterer and the Guarantor
iv
<PAGE>
Exhibit A-3 Haight, Gardner, Poor & Havens, special
Marshall Islands counsel
Exhibit A-4 Maples & Calder, special counsel to the
Owner Participant
Exhibit A-5 Morris, James, Hitchins & Williams, special
Delaware counsel to the Resident Trustee
and the Owner Trust
Exhibit A-6 Maples & Calder, special Cayman Islands
counsel to the Trust Company and the Owner
Trust
Exhibit A-7 Bingham, Dana & Gould, counsel to the
Indenture Trustee
Exhibit A-8 Bingham, Dana & Gould, counsel to the Pass
Through Trustee
Exhibit A-9 Dewey Ballantine, special New York counsel
to the Owner Participant
Exhibit A-10 Slaughter and May, special English counsel
to the Owner Participant
v
<PAGE>
PARTICIPATION AGREEMENT
-----------------------
THIS PARTICIPATION AGREEMENT, dated as of December 19, 1996, is among
MOBIL MARINE FINANCE COMPANY I INC., a Delaware corporation, SAMOCO L.L.C., a
Cayman Islands limited life company, STATE STREET BANK AND TRUST COMPANY, a
Massachusetts chartered trust company, not in its individual capacity except to
the extent expressly set forth herein but solely as Pass Through Trustee under
the Pass Through Trust Agreement, SAMOCO 1233 TRUST, a trust created pursuant to
the Delaware Business Trust Act under the Trust Agreement, DEUTSCHE MORGAN
GRENFELL (CAYMAN) LIMITED, a Cayman Islands company, not in its individual
capacity except to the extent expressly set forth herein but solely as Managing
Trustee under the Trust Agreement, and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts chartered trust company, not in its individual capacity except to
the extent expressly set forth herein but solely as Indenture Trustee under the
Indenture.
RECITALS:
A. The Owner Trust desires to finance its acquisition of the Vessel
in part through the transactions contemplated by this Agreement.
B. Subject to the terms and conditions set forth herein, the Owner
Trust desires to charter the Vessel Interest to the Charterer pursuant to the
Charter and the Charterer desires to charter the Vessel Interest from the Owner
Trust pursuant to the Charter and to sub-charter the Vessel Interest to MSCL
pursuant to the Initial Subcharter.
C. Prior to the execution and delivery of this Agreement, the Owner
Participant, the Trust Company and the Resident Trustee have entered into the
Trust Agreement, pursuant to which the Trust Company has agreed, among other
things, to act as the Managing Trustee, and to hold the Trust Estate as Managing
Trustee for the benefit of the Owner Participant on the terms specified therein,
subject, however, to the Lien created under the Indenture.
D. Prior to the execution and delivery of this Agreement, the Owner
Trust and the U.K. Lessor have entered into the Conditional Sale Agreement,
pursuant to which the Owner Trust agreed, among other things, to sell to the
U.K. Lessor the Vessel and the U.K. Lessor has agreed to purchase the Vessel
from the Owner Trust on the terms specified therein;
E. Prior to the execution and delivery of this Agreement, the Owner
Trust and the U.K. Lessor have entered
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into a Head Lease with respect to the Vessel pursuant to which the U.K. Lessor
agreed, among other things, to lease the Vessel to the Owner Trust and the Owner
Trust has agreed to lease the Vessel from the U.K. Lessor on the terms specified
therein;
F. Concurrently with the execution and delivery of this Agreement,
the Owner Trust and the Charterer have entered into the Charter, pursuant to
which the Owner Trust agreed, among other things, to charter the Vessel Interest
to the Charterer and the Charterer has agreed to charter the Vessel Interest
from the Owner Trust on the terms specified therein.
G. Concurrently with the execution and delivery of this Agreement,
the Owner Trust and the Indenture Trustee have entered into the Indenture,
pursuant to which the Owner Trust, for the benefit of the Loan Participant, has
agreed, among other things, to mortgage and pledge unto the Indenture Trustee,
all of the Owner Trust's right, title and interest in and to the Indenture
Estate.
H. Concurrently with the execution and delivery of this Agreement,
the Pass Through Trustee, the Charterer and certain other Persons have entered
into the Pass Through Trust Agreement and the Pass Through Trust Supplement
pursuant to which, among other things, the Pass Through Certificates will be
issued.
I. Concurrently with the execution and delivery of this Agreement,
the Guarantor has entered into the Guarantee whereby the Guarantor will guaranty
the Charterer's obligations hereunder and under the other Operative Documents to
which the Charterer is a party.
J. The Owner Participant desires to participate in the payment of
Owner's Cost by providing its Investment to the Owner Trust. The Pass Through
Trustee, as a Loan Participant, desires to participate in the payment of Owner's
Cost by purchasing the Secured Note from the Owner Trust.
Accordingly, in consideration of the premises and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION.
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For the purposes hereof, terms used herein and not otherwise defined
shall have the meanings assigned to them in Appendix A. References in this
Agreement to Sections, subsections, paragraphs, Schedules, Appendices and
Exhibits are to Sections, subsections and paragraphs in, and Schedules,
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Appendices and Exhibits to, this Agreement unless otherwise indicated.
SECTION 2. COMMITMENTS OF PARTICIPANTS; CLOSING; FUNDING;
TRANSACTION EXPENSES.
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2.1 Commitment of Owner Participant. Subject to the terms and
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conditions of this Agreement, the Owner Participant agrees to participate in the
payment of Owner's Cost by making an equity investment (the "Investment") in the
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beneficial ownership of the Vessel Interest on or before the Closing Date in the
amount shown on Schedule 2, and shall take and cause the Owner Trust to take, on
the Closing Date, the respective actions specified in Sections 2.8 and 2.9 to be
taken by the Owner Participant and the Owner Trust.
2.2 Commitments of Pass Through Trustee; Secured Note. Subject to
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the terms and conditions of this Agreement, the Pass Through Trustee, as a Loan
Participant, agrees to participate on the Closing Date in the payment of the
Owner's Cost for the Vessel Interest by purchasing the Secured Note from the
Owner Trust at a purchase price equal to a percentage of the aggregate principal
amount payable at maturity of the Secured Note set forth in Schedule 2 and shall
take and cause the Indenture Trustee to take, on the Closing Date, the
respective actions specified in Section 2.9 to be taken by the Pass Through
Trustee, as a Loan Participant, and the Indenture Trustee. The Secured Note
shall be issued to the Pass Through Trustee, as a Loan Participant, under and in
accordance with the terms of the Indenture.
2.3 Expiration of Commitments. Unless the Owner Participant shall
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agree to a later date, the Owner Participant's commitment to make the Investment
on the Closing Date pursuant to Section 2.1 shall expire if the Closing Date
shall not have occurred before midnight on the Cut-off Date. Unless the Pass
Through Trustee, as Loan Participant, shall agree to a later date, the Pass
Through Trustee's commitment, as a Loan Participant, to purchase the Secured
Note pursuant to Section 2.2 shall expire if the Closing Date or purchase shall
not have occurred before midnight on the Cut-off Date.
2.4 Notice of Closing Dates. On or before the second Business Day
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prior to the Closing Date, the Charterer shall deliver to each Participant
written notice of the Closing Date, which notice shall contain (a) the date of
the Closing Date, (b) the amount of Owner's Cost with respect to the Vessel
Interest, (c) the amount of the Investment with respect to the Vessel Interest
and (d) the principal amount and purchase price of the Secured Note to be
purchased by the Pass Through Trustee, as a Loan Participant, on the Closing
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Date; provided, however, that the funding of the Owner Participant's Investment
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or the funding of the purchase price for the Secured Note to be purchased by the
Pass Through Trustee, as a Loan Participant, on the Closing Date, as the case
may be, and the taking of the other actions contemplated to be taken hereby in
each case on the Closing Date shall be deemed a waiver of the requirement of
notice of the Closing Date set forth in this Section 2.4.
2.5 Time and Place of Closing. The closing on the Closing Date shall
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commence at 9:15 a.m., New York City time, at the offices of Dewey Ballantine,
New York, New York, or at such other location in New York City as the Charterer
may specify in the notice of closing for the Closing Date delivered pursuant to
Section 2.4.
2.6 Delivery of Funds. Subject to the terms and conditions of this
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Agreement, on or before 9:15 a.m., New York City time, on the Closing Date, the
Owner Participant shall deliver to the Owner Trust by wire transfer of
immediately available funds an amount equal to any remaining Investment to be
made by the Owner Participant on the Closing Date and the Pass Through Trustee,
as a Loan Participant, shall deliver to the Owner Trust by wire transfer of
immediately available funds an amount equal to the purchase price of the Secured
Note to be purchased by the Pass Through Trustee, as a Loan Participant, on the
Closing Date, in each case to the account of the Owner Trust specified in
Schedule 1 or to such other account as shall be specified in writing by the
Owner Trust to the Owner Participant and the Pass Through Trustee, as a Loan
Participant, at least one Business Day prior to the Closing Date, which amounts
shall be held by the Owner Trust in trust, solely on behalf of the Participant
delivering or transferring such amount (and not as part of the Trust Estate),
until such Participant shall have instructed the Owner Trust that such amount is
available to be applied by the Owner Trust pursuant to Section 2.7. No
Participant shall be obligated to deliver such instruction if the conditions to
its participation set forth in Section 4 have not been met to its satisfaction
or waived by it.
2.7 Application of Funds by Owner Trust. On the Closing Date, upon
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receipt by the Owner Trust of (a) the amount of the Investment to be made by the
Owner Participant on the Closing Date, (b) the purchase price of the Secured
Note to be paid by the Pass Through Trustee, as a Loan Participant, on the
Closing Date, and (c) the instruction pursuant to Section 2.6 that each of such
amounts is available to be applied by the Owner Trust pursuant to this Section
2.7, the Owner Trust shall cause such funds to be deposited in such amounts and
in such accounts as may be specified by the Owner Participant by written
instructions.
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2.8 Conclusion of U.K. Arrangements. (a) The parties recognize that
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it is the intention of the Owner Participant that, immediately following the
Closing Date, the U.K. Financing will be concluded by the satisfaction of the
conditions to the obligation of the U.K. Lessor to lease the Vessel to the Owner
Trust under the Head Lease. The Owner Participant agrees that the U.K.
Financing, if concluded, will be concluded on documents substantially in the
form of the documents delivered to the parties hereto with such changes as shall
not be materially adverse to any party hereto.
(b) The conclusion of the U.K. Financing is not a condition to the
issuance and sale of the Secured Note and the other transactions contemplated by
this Agreement and if for any reason the U.K. Financing is not concluded, the
parties agree, at the request and expense of the Owner Participant, to execute
such documents and take such actions as may be necessary or desirable to reflect
the abandonment of the U.K. Financing while maintaining in effect the
transactions contemplated by this Agreement; provided, however that the
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execution of such documents and the taking of such actions shall not be adverse
to the interests of any such party in any material respect or increase its
liability under the Operative Documents.
2.9 Actions on Closing Date. Subject to satisfaction of the
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applicable conditions precedent set forth in Sections 3, 4 and 5, on the Closing
Date:
(a) the Owner Participant shall make the Investment required to be
made by it on the Closing Date;
(b) the Pass Through Trustee, as a Loan Participant, shall pay to the
Owner Trust the purchase price for the Secured Note required to be
purchased by it on the Closing Date, the Owner Trust shall execute and
deliver to the Indenture Trustee the Secured Note, and the Indenture
Trustee shall authenticate and register the Secured Note and shall deliver
the Secured Note to the Pass Through Trustee, as a Loan Participant; and
(c) simultaneously therewith, the Owner Trust shall enter into the
Charter with the Owner Trust; and
(d) if the Delivery Date shall have occurred, the Charterer shall
sub-charter the Vessel Interest to MSCL pursuant to the Initial Subcharter.
2.10 Transaction Expenses. (a) If the transactions contemplated by
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this Agreement are consummated, the Owner Trust shall as soon as practicable
after the Closing Date pay, or reimburse the Charterer for, all related
Transaction Expenses accrued to the Closing Date and not
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theretofore paid by the Owner Trust, and the Owner Participant will provide to
the Owner Trust funds therefor and instructions with respect to the payment
thereof; provided that the underwriting commissions of Morgan Stanley & Co.
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Incorporated as underwriter of the Pass Through Certificates shall be paid by
the Owner Trust in immediately available funds on the Closing Date. If the
transactions contemplated by this Agreement to be consummated on the Closing
Date are not consummated for any reason whatsoever, the Charterer shall be
obligated to pay or reimburse the Owner Participant for all Transaction
Expenses.
(b) Each of the Transaction Expenses shall be evidenced by
appropriate bills or invoices. The Charterer shall have the right to receive
and review any substantiation relating to any Transaction Expenses or such
ongoing expenses as it may reasonably request.
2.11 Authorization to Owner Trust. The Owner Participant agrees that
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on the Closing Date the receipt by the Owner Trust of an instruction from each
Participant pursuant to Section 2.6 making available the amount delivered by
such Participant to the Owner Trust shall constitute, without further act,
authorization and direction by such Participant to the Owner Trust to take the
actions contemplated to be taken by the Owner Trust on the Closing Date in the
Operative Documents, including, without limitation, the execution and delivery
of all other documents and instruments contemplated to be executed and delivered
by the Owner Trust on or prior to the Closing Date in the Operative Documents.
SECTION 3. CONDITIONS TO CLOSING BY THE
CHARTERER.
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The obligation of the Charterer pursuant to Section 2 to charter the
Vessel Interest from the Owner Trust and take the other actions contemplated by
Section 2 to be taken by it on the Closing Date are subject only to the
fulfillment on the Closing Date to the satisfaction of or waiver by the
Charterer of each of the following conditions precedent:
3.1 Operative Documents. Each of the following documents shall have
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been duly authorized, executed and delivered by the respective parties thereto
(other than the Charterer or the Guarantor):
(a) this Agreement;
(b) the Charter;
(c) the Assignment of Construction Contract;
(d) the Indenture;
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(e) the Secured Note;
(f) the Trust Agreement;
(g) the Pass Through Trust Agreement;
(h) the Pass Through Trust Supplement; and
(i) the Underwriting Agreement
and each such document shall be in full force and effect on the Closing
Date, and an executed counterpart of each of the same shall have been
delivered to the Charterer (except that the original Secured Note shall be
delivered only to the Pass Through Trustee).
3.2 Legality, Etc. No change shall have occurred after December 14,
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1996 in Governmental Rules that, in the reasonable opinion of the Charterer,
would make it illegal or unduly burdensome for the Charterer, the Guarantor, the
Owner Trustee, the Indenture Trustee, the Pass Through Trustee or any
Participant to participate in any of the transactions contemplated by the
Operative Documents to be consummated on the Closing Date.
3.3 Event of Loss. No Event of Loss shall have occurred and no
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action or proceeding shall have been commenced that could result in an Event of
Loss.
3.4 Consents and Approvals. On the Closing Date, all Governmental
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Actions required to be taken, given or obtained, as the case may be, by or from
any Governmental Authority which are required in connection with the
transactions contemplated by the Operative Documents and the Pass Through Trust
Agreement, or to authorize the execution, delivery and performance by the
Charterer and/or the Guarantor, as the case may be, of the Pass Through Trust
Agreement, the Underwriting Agreement, and the Operative Documents to which it
is a party, other than those constituting filings, recordings or other actions
of the types referred to in Section 4.12, shall have been duly taken, given or
obtained, as the case may be, shall be in full force and effect on the Closing
Date, shall not be subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and shall be adequate to authorize the
consummation of the transactions contemplated by the Pass Through Trust
Agreement, the Underwriting Agreement and the Operative Documents and the
performance by each of the Charterer and the Guarantor of its obligations under
such thereof to which it is a party, except such as may be required to be taken,
obtained, given, accomplished or renewed from time to time in connection
with the delivery, maintenance or operation of the Vessel or which are otherwise
required in connection with the
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transactions contemplated by the Pass Through Trust Agreement, the Underwriting
Agreement and the Operative Documents which have been applied for but which
cannot be obtained, or which are not normally applied for or taken, given or
obtained, prior to the Closing Date, and which in the normal course would be
granted; provided that the failure to obtain such Governmental Actions, consents
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or approvals by the Closing Date would not materially adversely affect the
ability of (x) the Charterer to perform its obligations under this Agreement,
the Pass Through Trust Agreement or any other Operative Document to which it is
or will be a party or (y) the ability of the Guarantor to perform its
obligations under the Guarantee.
3.5 Representations and Warranties; Certificates. The
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representations and warranties of the Owner Participant, the Pass Through
Trustee, the Trust Company, the Owner Trust, and the Indenture Trustee contained
in Sections 7, 8, 9 and 10, respectively, shall be true and accurate on and as
of the Closing Date as though made on and as of such date, except to the extent
that such representations and warranties relate solely to an earlier date (in
which case the same shall be true and accurate as of such earlier date), and the
Charterer shall have received executed copies of each of the certificates
referred to in Section 4.8 and Section 4.9 (other than Sections 4.8(a) and (f)
and Sections 4.9(a) and (f)) required to be delivered on the Closing Date, which
certificates shall be dated the Closing Date.
3.6 Opinions. A signed original of each opinion referred to in
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Section 4.6 (other than Sections 4.6(a), 4.6(b) and 4.6(i)) shall have been
addressed to and delivered to the Charterer.
3.7 Litigation. There shall be no actions, suits, investigations or
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proceedings pending or, to the knowledge of the Charterer, threatened against
the Charterer, the Guarantor, the Owner Participant, the Pass Through Trustee,
the Owner Trust or the Indenture Trustee or the properties of any of such
Persons before any Governmental Authority to set aside, restrain, enjoin or
prevent the consummation of this Agreement or the transactions contemplated
hereby or by any of the other Operative Documents, the Pass Through Trust
Agreement or the Underwriting Agreement.
3.8 Sale of Pass Through Certificates. The Pass Through Certificates
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shall have been issued pursuant to the Pass Through Trust Agreement and sold
pursuant to the Underwriting Agreement and the Underwriters shall have
transferred to the Pass Through Trustee in immediately available funds an amount
equal to the purchase price for the Pass Through Certificates sold pursuant to
the Pass Through Trust Agreement.
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SECTION 4. CONDITIONS TO CLOSING BY THE PASS
TRUSTEE THROUGH
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The obligations of the Pass Through Trustee pursuant to Section 2 to
purchase the Secured Notes and to take the other actions contemplated by Section
2 to be taken by it on the Closing Date are subject only to the fulfillment on
the Closing Date to the satisfaction of (including, with respect to writings,
such writings being in form and substance reasonably satisfactory to the
addressee or the beneficiary thereof) or waiver by the Pass Through Trustee of
each of the following conditions precedent (other than in the case of the Pass
Through Trustee, Sections 4.8(e) and 4.9(e)), except that the obligations of
such Pass Through Trustee shall not be subject to such Pass Through Trustee's
own performance or, if the Pass Through Trustee shall have the power to cause
another Person to perform, the Pass Through Trustee's failure to cause such
performance:
4.1 Notice of Closing. The Participants shall have received the
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notice of closing for such Closing Date required to be delivered pursuant to
Section 2.4.
4.2 Operative Documents. Each of the following documents shall have
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been duly authorized, executed and delivered by the respective parties thereto:
(a) this Agreement;
(b) the Charter;
(c) the Assignment of Construction Contract;
(d) the Indenture;
(e) the Secured Note;
(f) the Trust Agreement; and
(g) the Parent Guarantee;
and each such document, the Lessor's Security Assignment, the Pass Through Trust
Agreement and the Pass Through Trust Supplement shall be in full force and
effect on the Closing Date, and no event or condition shall have occurred that,
with or without the lapse of time or the giving of notice, shall give any other
party thereto the right to terminate such document and an executed counterpart
(or a true, correct and complete copy) of each of the same shall have been
delivered to the Pass Through Trustee.
4.3 Legality, Etc. No change shall have occurred after December 12,
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1996 in Governmental Rules that, in the
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reasonable opinion of the Pass Through Trustee, would make it illegal or unduly
burdensome for the Trust Company, the Resident Trustee, the Owner Trust, the
Charterer, the Guarantor, the Indenture Trustee, the Pass Through Trustee in its
individual capacity or any Participant to participate in any of the transactions
contemplated by the Operative Documents to be consummated on the Closing Date.
4.4 Event of Loss. No Event of Loss shall have occurred and no
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action or proceeding shall have been commenced that could result in an Event of
Loss.
4.5 Insurance. If the Delivery Date has occurred, insurance
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complying in all respects with the provisions of Section 13.1 of the Charter
shall be in full force and effect and the Owner Participant, the Pass Through
Trustee and the Indenture Trustee shall have received a certificate of an
independent insurance broker or consultant, which broker or consultant may be
the Charterer's independent insurance broker or consultant, dated the Closing
Date, setting forth the insurance obtained by or on behalf of the Charterer in
accordance with Section 13.1(a) of the Charter and as then in effect, stating
that such insurance is in full force and effect and that all premiums then due
thereon have been paid and an Officer's Certificate of the Charterer, dated the
Closing Date, stating that such insurance complies in all respects with the
provisions of such Section 13.1(a).
4.6 Opinions. Opinions dated the Closing Date of the following
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counsel, each such opinion substantially in the form of the indicated Exhibit
hereto (with such changes to such form as contemplated by such Exhibit) and
addressed as provided in such Exhibit (or, in lieu of including the Underwriter
as an addressee, such counsel may deliver a reliance letter to the Underwriter),
shall have been executed and delivered by such counsel:
(a) Ralph N. Johanson, Jr., Esq., Managing Counsel, Corporate Finance
and Securities of the Guarantor, substantially in the form of Exhibit A-1;
(b) Dewey Ballantine, special counsel to the Charterer and the
Guarantor, substantially in the form of Exhibit A-2;
(c) Haight, Gardner, Poor & Havens, special Marshall Islands counsel,
substantially in the form of Exhibit A-3;
(d) Maples & Calder, special counsel to the Owner Participant,
substantially in the form of Exhibit A-4;
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(e) Morris, James, Hitchins & Williams, special Delaware counsel to
the Resident Trustee and the Owner Trust, substantially in the form of
Exhibit A-5;
(f) Maples & Calder, special Cayman Islands counsel to the Trust
Company and the Owner Trust, substantially in the form of Exhibit A-6;
(g) Bingham, Dana & Gould, counsel to the Indenture Trustee,
substantially in the form of Exhibit A-7;
(h) Bingham, Dana & Gould, counsel to the Pass Through Trustee,
substantially in the form of Exhibit A-8;
(i) Dewey Ballantine, special New York counsel to the Owner
Participant, substantially in the form of Exhibit A-9; and
(j) Slaughter and May, special English counsel to the Owner
Participant, substantially in the form of Exhibit A-10.
4.7 Taxes. All Taxes, fees and other charges, if any, payable on or
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prior to the Closing Date in connection with the execution, delivery,
recordation and filing of all documents and instruments referred to in Section
4.12 below, this Agreement or any other Operative Document, or in connection
with the acquisition by the Owner Trustee on the Closing Date of the Vessel
Interest, the issuance and sale of the Secured Note and the Pass Through
Certificates and the subjecting of the Vessel Interest to the Lien of the
Indenture, shall have been duly paid in full by the Charterer.
4.8 Officer's Certificates. On the Closing Date, the following
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statements shall be true and the Pass Through Trustee and the Indenture Trustee
shall have received:
(a) an Officer's Certificate of the Charterer, dated the Closing
Date, stating that (A) the representations and warranties of the Charterer
contained in Section 6 are true and accurate on and as of the Closing Date
as though made on and as of such date except to the extent that such
representations and warranties specifically relate solely to an earlier
date (in which case such representations and warranties shall have been
true and accurate on and as of such earlier date) and (B) each Operative
Document to which it is a party and the Pass Through Trust Agreement remain
in full force and effect with respect to it;
(b) an Officer's Certificate of the Owner Participant, dated the
Closing Date, stating that (i) the
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representations and warranties of the Owner Participant contained in
Section 7 are true and accurate on and as of the Closing Date as though
made on and as of such date except to the extent that such representations
and warranties specifically relate solely to an earlier date (in which case
such representations and warranties shall have been true and accurate on
and as of such earlier date); and (ii) each Operative Document to which it
is a party remains in full force and effect with respect to it;
(c) an Officer's Certificate of each of the Trust Company and the
Managing Trustee, dated the Closing Date, stating that (i) the
representations and warranties of the Trust Company and the Managing
Trustee contained in Section 9 are true and accurate on and as of the
Closing Date as though made on and as of such date except to the extent
that such representations and warranties specifically relate solely to an
earlier date (in which case such representations and warranties shall have
been true and accurate on and as of such earlier date); and (ii) each
Operative Document to which it is a party remains in full force and effect
with respect to it;
(d) an Officer's Certificate of the Indenture Trustee, dated the
Closing Date, stating that (i) the representations and warranties of the
Indenture Trustee contained in Section 10 are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which case such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) each
Operative Document to which it is a party remains in full force and effect
with respect to it;
(e) an Officer's Certificate of the Pass Through Trustee, dated the
Closing Date, stating that (i) the representations and warranties of the
Pass Through Trustee contained in Section 8 are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which case such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) each
of the Participation Agreement and the Pass Through Trust Agreement remain
in full force and effect with respect to it; and
(f) an Officer's Certificate of the Guarantor, dated the Closing Date,
stating that (i) the representations and warranties of the Guarantor
contained
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in Section 1.1 of the Guarantee are true and accurate on and as of the
Closing Date as though made on and as of such date except to the extent
that such representations and warranties specifically relate solely to an
earlier date (in which are such representations and warranties shall have
been true and accurate on and as of such earlier date); and (ii) each of
the Guarantee and the Pass Through Trust Agreement remains in full force
and effect with respect to it.
4.9 Resolutions, Etc. The Loan Participant and the Indenture Trustee
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shall have received the following, in each case in form and substance reasonably
satisfactory to such Person:
(a) a Secretary's or an Assistant Secretary's certificate of the
Charterer, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Charterer of each Operative Document to
which it is a party, and the Pass Through Trust Agreement and the
transactions contemplated thereby, certified to be in full force and effect
without modification as of the Closing Date, (ii) its charter documents,
(iii) its by-laws, and (iv) the incumbency and signature of persons
authorized to execute and deliver such documents on behalf of the
Charterer;
(b) a Secretary's or an Assistant Secretary's certificate of the Owner
Participant, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Owner Participant of each Operative
Document to which it is a party, and the transactions contemplated thereby,
certified to be in full force and effect without modification as of the
Closing Date, (ii) its charter documents, (iii) its by-laws, and (iv) the
incumbency and signature of persons authorized to execute and deliver such
documents on behalf of the Owner Participant;
(c) a Secretary's or an Assistant Secretary's certificate of the Trust
Company, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Trust Company of each Operative Document to
which it is a party, and the transactions contemplated thereby, certified
to be in full force and effect without modification as of the Closing Date,
(ii) its charter documents, (iii) its by-laws, and (iv) the incumbency and
signature of persons authorized to execute and deliver such documents on
behalf of the Trust Company;
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(d) a Secretary's or an Assistant Secretary's certificate of the Indenture
Trustee, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Indenture Trustee of each Operative
Document to which it is a party, and the transactions contemplated thereby,
certified to be in full force and effect without modification as of the
Closing Date, (ii) its charter documents, (iii) its by-laws, and (iv) the
incumbency and signature of persons authorized to execute and deliver such
documents on behalf of the Indenture Trustee;
(e) a Secretary's or an Assistant Secretary's certificate of the Pass
Through Trustee, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors or an appropriate committee thereof
duly authorizing the execution, delivery and performance by the Pass
Through Trustee of the Pass Through Trust Agreement, the Pass Through Trust
Supplement and the Participation Agreement, and the transactions
contemplated thereby, certified to be in full force and effect without
modification as of the Closing Date, (ii) its charter documents, (iii) its
by-laws, and (iv) the incumbency and signature of persons authorized to
execute and deliver such documents on behalf of the Pass Through Trustee;
and
(f) a Secretary's or an Assistant Secretary's certificate of the
Guarantor, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Guarantor of the Guarantee and its
obligations thereunder, certified to be in full force and effect without
modification as of the Closing Date, (ii) its charter documents, (iii) its
by-laws and (iv) the incumbency and signature of persons authorized to
execute and deliver the Guarantee on behalf of the Guarantor.
4.10 Litigation. There shall be no actions, suits, investigations or
----------
proceedings pending or, to the knowledge of the Owner Participant, the Owner
Trust, the Indenture Trustee, the Charterer, or the Guarantor threatened against
any of such Persons or the properties of any of such Persons before any
Governmental Authority to set aside, restrain, enjoin or prevent the
consummation of this Agreement or the transactions contemplated hereby or by any
of the other Operative Documents, the Pass Through Trust Agreement, the Pass
Through Trust Supplement or the Underwriting Agreement.
4.11 Consents and Approvals. On the Closing Date, all Governmental
----------------------
Actions which are required to have been
14
<PAGE>
taken, given, obtained, filed or recorded, as the case may be, on or prior to
the Closing Date by, from or with any Governmental Authority, and all other
consents, filings or approvals which are required to have been taken, given,
obtained, filed or recorded, as the case may be, on or prior to the Closing Date
by, from or with any other Person, in connection with the transactions
contemplated by the Operative Documents and the Pass Through Trust Agreement, or
to authorize the execution, delivery and performance by the Charterer, the
Guarantor, the Owner Participant, the Owner Trustee, the Indenture Trustee or
the Pass Through Trustee of the Pass Through Trust Agreement and each of the
Operative Documents to which it is a party, or the legality, validity, binding
effect or enforceability thereof as against the Charterer or the Guarantor,
other than those constituting filings, recordings or other actions of the type
referred to in Section 4.12, shall have been duly taken, given or obtained, as
the case may be, shall be in full force and effect on the Closing Date, shall
not be subject to any pending proceedings or appeals (administrative, judicial
or otherwise) and shall be adequate to authorize the consummation of the
transactions contemplated by the Pass Through Trust Agreement, the Underwriting
Agreement and the Operative Documents and the performance by the Charterer and
the Guarantor of its obligations under such thereof to which it is a party,
except such as may be required to be taken, obtained, given, accomplished or
renewed from time to time in connection with the maintenance or operation of the
Vessel or which is otherwise required in connection with the transactions
contemplated by the Pass Through Trust Agreement, the Underwriting Agreement and
the Operative Documents which have been applied for but which cannot be
obtained, or which are not normally applied for or taken, given or obtained,
prior to the Closing Date, and which in the normal course would be granted;
provided that the failure to obtain such Governmental Actions, consents or
- --------
approvals by the Closing Date would not materially adversely affect the ability
of (x) the Charterer to perform its obligations under this Agreement, the Pass
Through Trust Agreement or any other Operative Document to which it is or will
be a party or (y) the Guarantor to perform its obligations under the Guarantee.
4.12 Title; Filings and Recordings. On the Closing Date, (a) all of
-----------------------------
the Owner Participant's right, title and interest in and to the Construction
Contract and the Payment Guarantee Letter shall have been duly and effectively
transferred to the Owner Trust pursuant to the Assignment of Construction
Contract, free and clear of all Liens other than Permitted Liens, and, except as
set forth in Schedule 4, all filings and recordings and other action necessary
or advisable to establish the Owner Trust's right, title and interest in and to
the Construction Contract and the Payment Guarantee Letter, and to perfect the
security interest in the
15
<PAGE>
Construction Contract and the Indenture Estate created by the Indenture, shall
have been duly made, subject to requirements for filing continuation statements
at appropriate intervals and subject to Permitted Liens, and (b) no other action
shall be required to perfect such mortgage Lien and security interest.
4.13 Sale of Pass Through Certificates. The Charterer, the Other
---------------------------------
Charterer and the Guarantor shall have entered into the Underwriting Agreement,
the Pass Through Trust Agreement and the Pass Through Trust Supplement, and the
Pass Through Certificates shall have been issued pursuant to the Pass Through
Trust Agreement and sold pursuant to the Underwriting Agreement and the
Underwriters shall have transferred to the Pass Through Trustee in immediately
available funds an amount equal to the purchase price for the Pass Through
Certificates.
4.14 No Default Under Charter. The Vessel shall have been duly
------------------------
accepted by the Charterer under the Charter and in evidence thereof the Pass
Through Trustee and the Indenture Trustee shall have received a protocol of
delivery and acceptance executed by Charterer and no Charter Default or Charter
Event of Default shall have occurred and be continuing.
4.15 U.K. Closing. The Pass Through Trustee and Indenture Trustee
------------
shall have received copies of the executed Head Lease, Conditional Sale
Agreement, Lessee Support Agreement, Lessor's Security Assignment and the U.K.
Lessor's Mortgage and each such document shall have terms reasonably
satisfactory to it.
4.16 Investment. The Owner Participant shall have made available to
----------
the Owner Trust the full amount of its Investment on the Closing Date pursuant
to Section 2.
SECTION 5. CONDITIONS TO CLOSING BY OWNER
PARTICIPANT.
--------------------------------------
The obligations of the Owner Participant pursuant to Section 2 to
participate in the payment of Owner's Cost and to take the other actions
contemplated by Section 2 to be taken by it on the Closing Date are subject only
to the fulfillment on the Closing Date to the satisfaction of (including, with
respect to writings, such writings being in form and substance reasonably
satisfactory to the addressee or the beneficiary thereof) or waiver by the Owner
Participant of each of the following conditions precedent (other than (i) in the
case of the Owner Participant, Sections 5.6 (d) and (i) except that the
obligations of the Owner Participant shall not be subject to the Owner
Participant's own performance or, if the Owner Participant shall have the power
to cause another Person to
16
<PAGE>
perform, the Owner Participant's failure to cause such performance:
5.1 Notice of Closing. The Owner Participant shall have received the
-----------------
notice of closing for such Closing Date required to be delivered pursuant to
Section 2.4.
5.2 Operative Documents. Each of the following documents shall have
-------------------
been duly authorized, executed and delivered by the respective parties thereto:
(a) this Agreement;
(b) the Charter;
(c) the Assignment of Construction Contract;
(d) the Indenture;
(e) the Secured Note;
(f) the Trust Agreement;
(g) the Guarantee;
(h) the Ship Mortgage; and
(i) the U.K. Lessor's Mortgage;
and each such document, the Pass Through Trust Agreement and the Pass Through
Trust Supplement shall be in full force and effect on the Closing Date, and no
event or condition shall have occurred that, with or without the lapse of time
or the giving of notice, shall give any other party thereto the right to
terminate such document and an executed counterpart (or a true, correct and
complete copy) of each of the same shall have been delivered to the Owner
Participant.
5.3 Legality, Etc. No change shall have occurred after December 14,
-------------
1996 in Governmental Rules that, in the reasonable opinion of the Owner
Participant, would make it illegal or unduly burdensome for the Trust Company,
the Owner Trust, the Charterer, the Guarantor, the Indenture Trustee or any
Participant to participate in any of the transactions contemplated by the
Operative Documents to be consummated on the Closing Date.
5.4 Event of Loss. No Event of Loss shall have occurred and no
-------------
action or proceeding shall have been commenced that could result in an Event of
Loss.
5.5 Insurance. If the Delivery Date has occurred, insurance
---------
complying in all respects with the provisions of
17
<PAGE>
Section 13.1 of the Charter shall be in full force and effect and the Owner
Participant and the Indenture Trustee shall have received a certificate of an
independent insurance broker or consultant, which broker or consultant may be
the Charterer's independent insurance broker or consultant, dated the Closing
Date, setting forth the insurance obtained by or on behalf of the Charterer in
accordance with Section 13.1(a) of the Charter and as then in effect, stating
that such insurance is in full force and effect and that all premiums then due
thereon have been paid and an Officer's Certificate of the Charterer, dated the
Closing Date, stating that such insurance complies in all respects with the
provisions of such Section 13.1(a).
5.6 Opinions. Opinions dated the Closing Date of the following
--------
counsel, each such opinion substantially in the form of the indicated Exhibit
hereto (with such changes to such form as contemplated by such Exhibit) and
addressed as provided in such Exhibit (or, in lieu of including the Underwriter
as an addressee, such counsel may deliver a reliance letter to the Underwriter),
shall have been executed and delivered by such counsel:
(a) Ralph N. Johanson, Jr., Esq., Managing Counsel, Corporate Finance
and Securities of the Guarantor, substantially in the form of Exhibit A-1;
(b) Dewey Ballantine, special counsel to the Charterer and the
Guarantor, substantially in the form of Exhibit A-2;
(c) Haight, Gardner, Poor & Havens, special Marshall Islands counsel,
substantially in the form of Exhibit A-3;
(d) Maples & Calder, special counsel to the Owner Participant,
substantially in the form of Exhibit A-4;
(e) Morris, James, Hitchins & Williams, special Delaware counsel to
the Resident Trustee and the Owner Trustee, substantially in the form of
Exhibit A-5;
(f) Maples & Calder, special Cayman Islands counsel to the Trust
Company and the Owner Trustee, substantially in the form of Exhibit A-6;
(g) Bingham, Dana & Gould, counsel to the Indenture Trustee,
substantially in the form of Exhibit A-7;
(h) Bingham, Dana & Gould, counsel to the Pass Through Trustee,
substantially in the form of Exhibit A-8;
18
<PAGE>
(i) Dewey Ballantine, special New York counsel to the Owner
Participant, substantially in the form of Exhibit A-9; and
(j) Slaughter and May, special English counsel to the Owner
Participant, substantially in the form of Exhibit A-10.
5.7 Taxes. All Taxes, fees and other charges, if any, payable on or
-----
prior to the Closing Date in connection with the execution, delivery,
recordation and filing of all documents and instruments referred to in Section
5.12 below, this Agreement or any other Operative Document, or in connection
with the acquisition by the Owner Trustee on the Closing Date of the Vessel
Interest, the issuance and sale of the Secured Note and the Pass Through
Certificates and the subjecting of the Vessel Interest to the Lien of the
Indenture, shall have been duly paid in full by the Charterer.
5.8 Officer's Certificates. On the Closing Date, the following
----------------------
statements shall be true and the Owner Participant and the Owner Trust shall
have received:
(a) an Officer's Certificate of the Charterer, dated the Closing
Date, stating that (A) the representations and warranties of the Charterer
contained in Section 6 are true and accurate on and as of the Closing Date
as though made on and as of such date except to the extent that such
representations and warranties specifically relate solely to an earlier
date (in which case such representations and warranties shall have been
true and accurate on and as of such earlier date) and (B) each Operative
Document to which it is a party and the Pass Through Trust Agreement remain
in full force and effect with respect to it;
(b) an Officer's Certificate of each of the Trust Company and the
Managing Trustee, dated the Closing Date, stating that (i) the
representations and warranties of the Trust Company and the Owner Trust
contained in Section 9, as the case may be, are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which case such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) each
Operative Document to which it is a party remains in full force and effect
with respect to it;
(c) an Officer's Certificate of the Indenture Trustee, dated the
Closing Date, stating that (i) the representations and warranties of the
Indenture Trustee
19
<PAGE>
contained in Section 10 are true and accurate on and as of the Closing Date
as though made on and as of such date except to the extent that such
representations and warranties specifically relate solely to an earlier
date (in which case such representations and warranties shall have been
true and accurate on and as of such earlier date); and (ii) each Operative
Document to which it is a party remains in full force and effect with
respect to it;
(d) an Officer's Certificate of the Pass Through Trustee, dated the
Closing Date, stating that (i) the representations and warranties of the
Pass Through Trustee contained in Section 8 are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which case such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) each
of the Participation Agreement, the Pass Through Trust Agreement and the
Pass Through Trust Supplement remain in full force and effect with respect
to it; and
(e) an Officer's Certificate of the Guarantor, dated the Closing Date,
stating that (i) the representations and warranties of the Guarantor
contained in Section 1.1 of the Guarantee are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which are such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) the
Guarantee remains in full force and effect.
5.9 Resolutions, Etc. The Owner Participant and the Owner Trust
-----------------
shall have received the following, in each case in form and substance reasonably
satisfactory to the Owner Participant:
(a) a Secretary's or an Assistant Secretary's certificate of the
Charterer, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Charterer of each Operative Document to
which it is a party, and the Pass Through Trust Agreement and the
transactions contemplated thereby, certified to be in full force and effect
without modification as of the Closing Date, (ii) its charter documents,
(iii) its by-laws, and (iv) the incumbency and signature of persons
authorized to execute and deliver such documents on behalf of the
Charterer;
20
<PAGE>
(b) a Secretary's or an Assistant Secretary's certificate of the Trust
Company, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Trust Company of each Operative Document to
which it is a party, and the transactions contemplated thereby, certified
to be in full force and effect without modification as of the Closing Date,
(ii) its charter documents, (iii) its by-laws, and (iv) the incumbency and
signature of persons authorized to execute and deliver such documents on
its behal f;
(c) a Secretary's or an Assistant Secretary's certificate of the
Indenture Trustee, dated the Closing Date, attaching and certifying as to
(i) resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Indenture Trustee of each Operative
Document to which it is a party, and the transactions contemplated thereby,
certified to be in full force and effect without modification as of the
Closing Date, (ii) its charter documents, (iii) its by-laws, and (iv) the
incumbency and signature of persons authorized to execute and deliver such
documents on behalf of the Indenture Trustee;
(d) a Secretary's or an Assistant Secretary's certificate of the Pass
Through Trustee, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors or an appropriate committee thereof
duly authorizing the execution, delivery and performance by the Pass
Through Trustee of the Pass Through Trust Agreement, the Pass Through Trust
Supplement, and the Participation Agreement, and the transactions
contemplated thereby, certified to be in full force and effect without
modification as of the Closing Date, (ii) its charter documents, (iii) its
by-laws, and (iv) the incumbency and signature of persons authorized to
execute and deliver such documents on behalf of the Pass Through Trustee;
and
(e) a Secretary's or an Assistant Secretary's certificate of the
Guarantor, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Guarantor of the Guarantee and its
obligations thereunder, certified to be in full force and effect without
modification as of the Closing Date, (ii) its charter documents, (iii) its
by-laws and (iv) the incumbency and signature of persons authorized to
execute and deliver the Guarantee on behalf of the Guarantor.
21
<PAGE>
5.10 Litigation. There shall be no actions, suits, investigations or
----------
proceedings pending or, to the knowledge of the Owner Participant, the
Charterer, the Guarantor, the Owner Trust or the Indenture Trustee, threatened
against any of such Persons or the properties of any of such Persons before any
Governmental Authority to set aside, restrain, enjoin or prevent the
consummation of this Agreement or the transactions contemplated hereby or by any
of the other Operative Documents, the Pass Through Trust Agreement, the Pass
Through Trust Supplement or the Underwriting Agreement.
5.11 Consents and Approvals. On the Closing Date, all Governmental
----------------------
Actions which are required to have been taken, given, obtained, filed or
recorded, as the case may be, on or prior to the Closing Date by, from or with
any Governmental Authority, and all other consents, filings or approvals which
are required to have been taken, given, obtained, filed or recorded, as the case
may be, on or prior to the Closing Date by, from or with any other Person, in
connection with the transactions contemplated by the Operative Documents and the
Pass Through Trust Agreement, or to authorize the execution, delivery and
performance by the Charterer, the Guarantor, the Owner Participant, the Owner
Trust, the Indenture Trustee or the Pass Through Trustee of the Pass Through
Trust Agreement and each of the Operative Documents to which it is a party, or
the legality, validity, binding effect or enforceability thereof as against the
Charterer or the Guarantor, other than those constituting filings, recordings or
other actions of the type referred to in Section 5.12, shall have been duly
taken, given or obtained, as the case may be, shall be in full force and effect
on the Closing Date, shall not be subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and shall be adequate to authorize the
consummation of the transactions contemplated by the Pass Through Trust
Agreement, the Underwriting Agreement and the Operative Documents and the
performance by the Charterer and the Guarantor of its obligations under such
thereof to which it is a party, except such as may be required to be taken,
obtained, given, accomplished or renewed from time to time in connection with
the maintenance or operation of the Vessel or which is otherwise required in
connection with the transactions contemplated by the Pass Through Trust
Agreement, the Underwriting Agreement and the Operative Documents which have
been applied for but which cannot be obtained, or which are not normally applied
for or taken, given or obtained, prior to the Closing Date, and which in the
normal course would be granted; provided that the failure to obtain such
--------
Governmental Actions, consents or approvals by the Closing Date would not
materially adversely affect the ability of (x) the Charterer to perform its
obligations under this Agreement, the Pass Through Trust Agreement or any other
Operative Document to
22
<PAGE>
which it is or will be a party or (y) the Guarantor to perform its obligations
under the Guarantee.
5.12 Title; Filings and Recordings. On or prior to the Closing Date,
-----------------------------
(a) all of the Owner Participant's right, title and interest in and to the
Construction Contract and the Payment Guarantee Letter shall have been duly and
effectively transferred to the Owner Trust pursuant to the Assignment of
Construction Contract, free and clear of all Liens other than Permitted Liens,
and, except as set forth in Schedule 4, all filings and recordings or other
actions necessary or advisable to establish the Owner Trust's right, title and
interest in and to the Construction Contract and the Payment Guarantee Letter,
and to perfect the security interest in the Construction Contract and the
Indenture Estate created by the Indenture and the Ship Mortgage (including,
without limitation, all filings and recordings necessary to register the Owner
Trust's title to the Vessel in the Marshall Islands and the filing of the Ship
Mortgage in the Office of the Maritime Administrator of the Marshall Islands
registry), shall have been duly made, subject to requirements for filing
continuation statements at appropriate intervals and subject to Permitted Liens,
and (b) no other action shall be required to perfect such mortgage Lien and
security interest.
5.13 Sale of Pass Through Certificates. The Charterer, the Other
---------------------------------
Charterer and the Guarantor shall have entered into the Underwriting Agreement,
the Pass Through Trust Agreement and the Pass Through Trust Supplement, and the
Pass Through Certificates shall have been issued pursuant to the Pass Through
Trust Agreement and sold pursuant to the Underwriting Agreement and the
Underwriters shall have transferred to the Pass Through Trustee in immediately
available funds an amount equal to the purchase price for the Pass Through
Certificates.
5.14 No Default Under Charters. No Charter Default or Charter Event
-------------------------
of Default shall have occurred and be continuing.
5.15 Loans. The Pass Through Trustee shall have purchased the
-----
Secured Note required to be purchased by it on the Closing Date pursuant to
Section 2.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF
THE CHARTERER.
-------------------------------
The Charterer represents and warrants to each of the other parties
hereto that:
6.1 Due Organization. The Charterer is a corporation duly organized,
----------------
validly existing and in good standing under the laws of the State of Delaware
and has the
23
<PAGE>
corporate power and authority to carry on its business as presently conducted
and as it is contemplated it will be conducted in connection with the Vessel
Interest, to own or hold under lease or charter its properties, and to enter
into and perform its obligations under this Agreement, the Pass Through Trust
Agreement and each other Operative Document to which it is a party. The
Charterer has not failed to qualify to do business in any jurisdiction where
failure so to qualify could reasonably be expected to materially adversely
affect its ability to perform any of its obligations under this Agreement, the
Pass Through Trust Agreement, the Pass Through Trust Supplement or any other
Operative Document to which it is a party.
6.2 Authorization. The execution, delivery and performance by the
-------------
Charterer of this Agreement, the Pass Through Trust Agreement, the Pass Through
Trust Supplement and each other Operative Document to which it is a party and of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of the Charterer and do not and will
not require the consent or approval of any shareholder of the Charterer or any
trustee or holder of any indebtedness or other obligation of the Charterer.
6.3 Execution; Enforceability. This Agreement, the Pass Through
-------------------------
Trust Agreement, the Pass Through Trust Supplement and each other Operative
Document to which the Charterer is a party have been duly executed and delivered
by the Charterer and, assuming the due authorization, execution and delivery
hereof and thereof by the other parties hereto and thereto are legal, valid and
binding obligations of the Charterer, enforceable against the Charterer in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, liquidation,
moratorium or similar laws affecting creditors' or lessors' rights generally and
by the application of general equitable principles which may limit the
availability of certain remedies.
6.4 No Violation. The execution and delivery by the Charterer of
------------
this Agreement, the Pass Through Trust Agreement, the Pass Through Trust
Supplement and each other Operative Document to which it is a party do not and
will not, and the performance by the Charterer of its obligations under each
thereof do not and will not, (i) violate or be inconsistent with its charter
documents or by-laws, (ii) contravene any Governmental Rule or Governmental
Action applicable to it, which, in the case of such performance, noncompliance
with which would materially adversely affect the Vessel Interest or the ability
of the Charterer to perform its obligations under the Operative Documents;
provided that no representation or warranty is made with respect to ERISA,
- --------
24
<PAGE>
(iii) contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other agreement or instrument to which the Charterer is a
party or by which it or any of its properties are bound or (iv) result in or,
require the creation or imposition of any Lien (other than Permitted Liens) upon
any of its properties or assets.
6.5 Consents and Approvals. On the Closing Date, all Governmental
----------------------
Actions which are required to have been taken, given, obtained, filed or
recorded, as the case may be, on or prior to the Closing Date by, from or with
any Governmental Authority and all other consents, filings or approvals which
are required to have been taken, given, obtained, filed or recorded, as the case
may be, on or prior to the Closing Date by, from or with any other Person, in
connection with the transactions contemplated by the Pass Through Trust
Agreement and the Operative Documents, or to authorize the execution, delivery
and performance by the Charterer and/or the Guarantor of the Guarantee, the Pass
Through Trust Agreement, the Pass Through Trust Supplement and the Operative
Documents to which either of them is a party, or the legality, validity, binding
effect or enforceability thereof as against the Charterer or the Guarantor,
other than those constituting filings, recordings or other actions of the types
referred to in Section 6.7, have been duly taken, given or obtained, as the case
may be, are in full force and effect on the Closing Date, are not subject to any
pending proceedings or appeals (administrative, judicial or otherwise) and are
adequate to authorize the consummation by the Charterer or the Guarantor of the
transactions contemplated by the Pass Through Trust Agreement, the Underwriting
Agreement and the Operative Documents and the performance by each of the
Charterer and the Guarantor of its obligations under such thereof to which it is
a party, except such as may be required to be taken, obtained, given,
accomplished or renewed from time to time in connection with the maintenance or
operation of the Vessel Interest or which are otherwise required in connection
with the transactions contemplated by the Operative Documents, which have been
applied for but which cannot be obtained, or which are not normally applied for
or taken, given or obtained, prior to the Closing Date, and which in the normal
course would be granted, provided that the failure to obtain such Governmental
--------
Actions, consents and approvals by the Closing Date would not materially
adversely affect the ability of the Charterer to perform its obligations under
this Agreement, the Pass Through Trust Agreement or any other Operative Document
to which it is or will be a party.
6.6 Securities Act. Neither the Charterer nor any Person authorized
--------------
on its behalf has directly or indirectly offered or sold the Pass Through
Certificates, or solicited any offer to acquire the same from, any Person other
than in a manner required by the Securities Act. Neither the
25
<PAGE>
Charterer nor any Person authorized to act on its behalf will take any action
which would subject the issuance or sale of any interest in the Trust Estate or
the Secured Note to the provisions of Section 5 of the Securities Act or require
the qualification of the Indenture under the Trust Indenture Act.
6.7 Title; Filings and Recordings. On the Closing Date, (a) all of
-----------------------------
the Owner Participant's right, title and interest in and to the Construction
Contract and Payment Guarantee Letter shall have been duly and effectively
transferred to the Owner Trust pursuant to the Assignment of Construction
Contract, free and clear of all Liens other than Permitted Liens, and, except as
set forth in Schedule 4, all filings and recordings and other action necessary
or advisable to establish the Owner Trust's right, title and interest in and to
the Construction Contract and Payment Guarantee Letter, and to perfect the
mortgage Lien on security interest in the Construction Contract and the
Indenture Estate created by the Indenture, shall have been duly made, subject to
requirements for filing continuation statements at appropriate intervals and
subject to Permitted Liens, and (b) no other action shall be required to perfect
such mortgage Lien and security interest.
6.8 Chief Place of Business. The chief place of business and chief
-----------------------
executive office of the Charterer is in Fairfax, Virginia and the offices where
it keeps its records concerning the Vessel and its accounts and contract rights
are in Fairfax, Virginia.
6.9 Litigation. There is no action, suit, investigation or
----------
proceeding pending or, to the Actual Knowledge of the Charterer, threatened
against the Charterer or affecting it or its properties before any Governmental
Authority which, individually or in the aggregate (so far as the Charterer now
can reasonably foresee), is reasonably likely materially and adversely to affect
the consummation of the transactions under this Agreement, the Pass Through
Trust Agreement, the Pass Through Trust Supplement or any other Operative
Document to which it is or will be a party or the ability of the Charterer to
perform its obligations hereunder or thereunder.
6.10 No Default. No Charter Default or Charter Event of Default has
----------
occurred and is continuing.
6.11 Event of Loss. No Event of Loss has occurred.
-------------
6.12 Investment Company Act. The Charterer is not an "investment
----------------------
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
26
<PAGE>
6.13 No Brokers' Fees. Neither the Charterer nor any Person acting
----------------
on its behalf has taken any actions the effect of which would be to cause the
Owner Trust, the Indenture Trustee or any Participant to be liable for any
brokers', finders' or agents' fees or commissions or costs of any nature or kind
claimed by or on behalf of brokers, finders or agents in respect of the
transactions contemplated by this Agreement other than fees payable to Morgan
Stanley & Co. Incorporated, all of which fees, commissions or costs are included
in Transaction Expenses or will be paid or indemnified against by the Charterer.
6.14 No Other Business or Liabilities. Except for activities and
--------------------------------
liabilities contemplated by Operative Documents and the U.K. Documents and
comparable documents relating to two Other Vessels and activities incidental
thereto, the Charterer has not engaged in any other business or activities or
incurred any liabilities.
6.15 Payment of Taxes, etc. All Taxes, fees and other charges
---------------------
payable on or prior to the Closing Date in connection with the execution,
delivery, recordation and filing of all documents and instruments, including the
Operative Documents, and the performance of the transactions contemplated by the
Operative Documents occurring on or prior to the Closing Date, have been paid in
full.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN OR IN ANY OTHER OPERATIVE DOCUMENT,
THE CHARTERER MAKES NOR SHALL THE CHARTERER BE DEEMED TO HAVE MADE, AND THE
CHARTERER HEREBY DISCLAIMS, ANY REPRESENTATION OR WARRANTY OTHER THAN THOSE
REFERRED TO IN THIS SECTION, IN ANY OFFICER'S CERTIFICATE OF THE CHARTERER OR
EXPRESSLY MADE IN ANY OTHER OPERATIVE DOCUMENT, EITHER EXPRESS OR IMPLIED, AS TO
THE DESIGN OR CONDITION OF THE VESSEL OR ANY PART THEREOF, THE MERCHANTABILITY
THEREOF OR THE FITNESS THEREOF FOR ANY PARTICULAR PURPOSE, THE ABILITY OF THE
VESSEL TO PERFORM ANY FUNCTION, THE QUALITY OF THE MATERIALS OR WORKMANSHIP
THEREOF OR CONFORMITY THEREOF TO SPECIFICATIONS, OR THE PRESENCE OR ABSENCE OF
ANY LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE; PROVIDED THAT THE
FOREGOING SHALL NOT EXCUSE THE PERFORMANCE BY THE CHARTERER OF ITS OBLIGATIONS
UNDER THIS AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT OR THE BILL OF SALE.
SECTION 7. REPRESENTATIONS AND WARRANTIES
OF THE OWNER PARTICIPANT.
-------------------------------
The Owner Participant represents and warrants to each of the other
parties hereto that:
7.1 Due Organization. The Owner Participant is a Cayman Islands
----------------
limited life company, duly organized, validly
27
<PAGE>
existing and in good standing under the laws of the Cayman Islands and has the
corporate power and authority to enter into and perform its obligations under
this Agreement and each other Operative Document to which it is a party.
7.2 Authorization; Execution; Enforceability. The execution,
----------------------------------------
delivery and performance by the Owner Participant of this Agreement and each
other Operative Document to which it is a party and of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of the Owner Participant and do not and will not
require the consent or approval of any shareholder of the Owner Participant
which has not been obtained. This Agreement and each other Operative Document
to which the Owner Participant is a party have been duly authorized, executed
and delivered by the Owner Participant and, assuming the due authorization,
execution and delivery hereof and thereof by the other parties hereto and
thereto, are legal, valid and binding obligations of the Owner Participant,
enforceable against the Owner Participant in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, liquidation, moratorium or similar laws affecting
creditors' rights generally and by the application of general equitable
principles which may limit the availability of certain remedies. Any direction
given by the Owner Participant to the Owner Trust pursuant to the Trust
Agreement will have been duly authorized.
7.3 No Violation. The execution and delivery by the Owner
------------
Participant of this Agreement and each other Operative Document to which it is a
party do not and will not, and the performance by the Owner Participant of its
obligations under each thereof do not and will not, (i) violate or be
inconsistent with or in violation of its charter documents or by-laws, (ii)
contravene any Governmental Rule or Governmental Action applicable to it or,
except as set forth in Schedule 4, require any Governmental Action and (iii)
contravene any provision of, or constitute a default or require any consent
under, any indenture, mortgage, contract or other instrument to which the Owner
Participant is a party or by which it or any of its property is bound.
7.4 Owner Participant's Liens. There are no Owner Participant's
-------------------------
Liens on the Trust Estate or the Indenture Estate, or on any part of either
thereof and the execution, delivery and performance by the Owner Participant of
the Operative Documents to which it is a party will not subject the Trust Estate
or the Indenture Estate to the Owner Participant's Liens.
7.5 Acquisition for Investment. The Owner Participant is acquiring
--------------------------
its interest in the Trust Estate for
28
<PAGE>
its own account for investment and not with a view to, or for sale in connection
with, any distribution of any such interest (it being understood that at all
times the disposition of its property shall remain within its control), except
that the Owner Participant reserves the right to transfer or assign any of or
all such interest to the extent permitted by the terms of this Agreement and the
Trust Agreement.
7.6 Securities Act. Neither the Owner Participant nor any Person
--------------
authorized by the Owner Participant has directly or indirectly offered or sold
any interest in the Trust Estate, the Trust Agreement or the Secured Note, or in
any similar security relating to the Vessel Interest, or in any security the
offering of which for the purposes of the Securities Act would be deemed to be
part of the same offering as the offering of the aforementioned securities to,
or solicited any offer to acquire any of the same from, any Person other than,
in the case of the Secured Note, the Loan Participant, and neither the Owner
Participant nor any Person authorized to act on its behalf will take any action
which would subject the issuance or sale of any interest in the Trust Estate or
the Secured Note to the provisions of Section 5 of the Securities Act or require
the qualification of the Indenture under the Trust Indenture Act except to the
extent required under Section 15 hereof.
7.7 ERISA. The Owner Participant is not acquiring any part of its
-----
interest in the Trust Estate with the "plan assets" of any "employee benefit
plan" within the meaning of ERISA (or of any "plan" within the meaning of
Section 4975 of the Code), as interpreted by the Internal Revenue Service and
the U.S. Department of Labor in rules, regulations, releases, bulletins or as
interpreted under applicable case law.
7.8 Investment Company Act. Neither the Owner Participant nor any of
----------------------
its Affiliates is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
7.9 Litigation. There is no action, suit, investigation or
----------
proceeding pending or, to the Actual Knowledge of the Owner Participant,
threatened against the Owner Participant or its properties before any
Governmental Authority which, individually or in the aggregate (so far as the
Owner Participant now can reasonably foresee), is reasonably likely materially
and adversely to affect the ability of the Owner Participant to perform its
obligations under this Agreement or any other Operative Document to which it is
or will be a party.
29
<PAGE>
7.10 No Default. No Indenture Default or Indenture Event of Default
----------
attributable to the Owner Participant has occurred and is continuing.
7.11 Federal Reserve Regulations. The Owner Participant is not
---------------------------
engaged principally in, and does not have as one of its important activities,
the business of extending credit for the purpose of purchasing or carrying any
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System of the United States), and no part of the proceeds of
the Secured Note will be used by it to purchase or carry any such margin stock
or, assuming the accuracy of the representation set forth in Section 5.15, to
extend credit to others for the purpose of purchasing or carrying any such
margin stock or for any purpose that violates, or is inconsistent with, the
provisions of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System of the United States.
7.12 No Brokers' Fees. Neither the Owner Participant nor any Person
----------------
acting on its behalf has taken any actions the effect of which would be to cause
the Charterer or the Loan Participant to be liable for any brokers', finders' or
agents' fees or commissions or costs of any nature or kind claimed by or on
behalf of brokers, finders or agents in respect of the transactions contemplated
by this Agreement not included in Transaction Expenses.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF
THE PASS THROUGH TRUSTEE.
---------------------------------
State Street Bank and Trust Company represents and warrants in its
individual capacity with respect to Sections 8.1, 8.2(a), 8.3, 8.4, 8.5(a), 8.6
and 8.7 and not in its individual capacity, but solely in its capacity as Pass
Through Trustee under the Pass Through Trust Agreement, with respect to Sections
8.2(b) and 8.5(b), to each of the other parties hereto that:
8.1 Due Organization. State Street Bank and Trust Company is a state
----------------
chartered trust company, duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts and has the corporate power
and authority to enter into and perform its obligations under this Agreement,
the Pass Through Trust Agreement and the Pass Through Trust Supplement.
8.2 Authorization; Execution; Enforceability. (a) This Agreement,
----------------------------------------
the Pass Through Trust Agreement and the Pass Through Trust Supplement have been
duly authorized, executed and delivered by State Street Bank and Trust Company,
in its individual capacity and, assuming the due
30
<PAGE>
authorization, execution and delivery hereof and thereof by the other parties
hereto and thereto, are legal, valid and binding obligations of State Street
Bank and Trust Company in its individual capacity (to the extent it is a party
hereto or thereto in such capacity), enforceable against it in accordance with
their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, liquidation, receivership,
moratorium or similar laws affecting creditors' rights generally and by the
application of general equitable principles which may limit the availability of
certain remedies.
(b) This Agreement, the Pass Through Trust Agreement, the Pass Through
Trust Supplement and the Pass Through Certificates have been duly authorized,
executed and delivered by the Pass Through Trustee and, assuming the due
authorization, execution and delivery hereof and thereof by the other parties
hereto or thereto, are legal, valid and binding obligations of the Pass Through
Trustee, enforceable against it in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, liquidation, receivership, moratorium or similar
laws affecting creditors' rights generally and the application of general
equitable principles may limit the availability of certain remedies.
8.3 No Violation. The execution, delivery and performance by State
------------
Street Bank and Trust Company of this Agreement, the Pass Through Trust
Agreement and the Pass Through Trust Supplement the purchase by the Pass Through
Trustee of the Secured Note pursuant to this Agreement and the issuance of the
Pass Through Certificates pursuant to the Pass Through Trust Agreement and Pass
Through Trust Supplement are not and will not be inconsistent with its
constitutional documents or do not and will not contravene any Governmental Rule
of the United States of America or the Commonwealth of Massachusetts governing
with respect to its banking or trust powers, and will not contravene any
provision of, or constitute a default under, any indenture, mortgage, contract
or other instrument to which State Street Bank and Trust Company, in its
individual capacity, is a party, or by which it or any of its properties are
bound, or require any Governmental Action of the United States of America or the
Commonwealth of Massachusetts governing its banking or trust powers.
8.4 Litigation. There is no action, suit, investigation or
----------
proceeding pending or, to the Actual Knowledge of State Street Bank and Trust
Company, threatened against it, whether in its individual capacity or as Pass
Through Trustee, before any Governmental Authority governing its banking or
trust powers which, individually or in the
31
<PAGE>
aggregate (so far as State Street Bank and Trust Company now can reasonably
foresee), is reasonably likely materially and adversely to affect the ability of
the Pass Through Trustee (in either such capacity) to perform its obligations
under this Agreement or the Pass Through Trust Agreement (in either such
capacity).
8.5 Pass Through Trustee's Liens. (a) There are no Pass Through
----------------------------
Trustee's Liens attributable to State Street Bank and Trust Company in its
individual capacity on the Pass Through Trust Property or on any part thereof.
(b) There are no Pass Through Trustee's Liens on the Pass Through
Trust Property or any part thereof.
8.6 Securities Act. State Street Bank and Trust Company has not
--------------
offered any interest in the Pass Through Certificates or any Secured Note or any
similar securities for sale to, or solicited any offer to acquire the same from,
anyone other than the Underwriter, and no responsible officer or responsible
employee of State Street Bank and Trust Company has knowledge of any such offer
or solicitation, except as set forth in the Operative Documents, the Pass
Through Trust Agreement and Underwriting Agreement.
SECTION 9. REPRESENTATIONS AND WARRANTIES OF
THE TRUST COMPANY AND OWNER TRUST.
----------------------------------
The Trust Company, in its individual capacity, represents and warrants
with respect to Sections 9.1, 9.2 (other than clause (b)(ii) thereof), 9.3, 9.4
(other than clause (b) thereto), 9.5, 9.6 (other than clause (b) thereto), 9.7
(as specified therein), 9.8 and 9.10, and in its capacity as Managing Trustee
represents and warrants with respect to Sections 9.2(b), 9.4(b), 9.6 (b), 9.7
(as specified therein), 9.9, 9.10, 9.11 and 9.12 to each of the other parties
hereto that:
9.1 Due Organization. The Trust Company is a Cayman Islands company
----------------
duly organized, validly existing and in good standing under the laws of the
Cayman Islands and has the corporate power and authority to enter into and
perform its obligations under the Trust Agreement, this Agreement and each other
Operative Document to which it is a party and assuming due authorization,
execution and delivery by the Owner Participant of the Trust Agreement and upon
due direction by the Owner Participant pursuant thereto, will have the power and
authority to enter into and perform its obligations as Managing Trustee under
the Trust Agreement, this Agreement and each other Operative Document to which
the Owner Trust is a party.
32
<PAGE>
9.2 Authorization; Execution; Enforceability. (a) This Agreement,
----------------------------------------
the Trust Agreement and each other Operative Document to which the Trust Company
is a party have been duly authorized, executed and delivered by the Trust
Company and, assuming due authorization, execution and delivery by the other
parties hereto and thereto, are legal, valid and binding obligations of the
Trust Company enforceable against it in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, liquidation, moratorium or similar laws affecting
creditors' rights generally and by the application of general equitable
principles which may limit the availability of certain remedies.
(b) This Agreement and each other Operative Document to which the
Owner Trust is a party (i) have been (assuming due authorization, execution and
delivery by the Owner Participant of the Trust Agreement and upon due direction
by the Owner Participant pursuant thereto) duly authorized, executed and
delivered by one of its officers who is duly authorized to execute and deliver
such Operative Document on behalf of the Managing Trustee, and (ii) assuming due
authorization, execution and delivery by the other parties hereto and thereto,
are legal, valid and binding obligations of the Owner Trust enforceable against
it in accordance with their respective terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, liquidation,
moratorium or similar laws affecting creditors' rights generally and the
application of general equitable principles may limit the availability of
certain remedies and upon execution of the Secured Note by the Managing Trustee,
authentication thereof by the Indenture Trustee and delivery thereof against
payment or the giving of consideration therefor in accordance with the Indenture
and this Agreement, the Secured Note will be legal, valid and binding
obligations of the Owner Trust enforceable against it in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, liquidation, moratorium or similar laws
affecting creditors' rights generally and the application of general equitable
principles may limit the availability of certain remedies.
9.3 No Violation. (a) The execution and delivery by the Trust
------------
Company of the Trust Agreement and, to the extent it is a party hereto or
thereto in its individual capacity, this Agreement and each other Operative
Document, are not or will not be, and the performance by the Trust Company of
its obligations under each will not be, inconsistent with the charter documents
or by-laws of the Trust Company, do not and will not contravene any Cayman
Islands Governmental Rule governing its banking or trust powers relating to or
affecting its capacity to act as contemplated by the Trust Agreement or
33
<PAGE>
the other Operative Documents to which it is a party and do not and will not
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which the Trust Company is a party or
by which it or any of its property is bound, or require any Cayman Islands
Governmental Action relating to or affecting its capacity to act as contemplated
by the Trust Agreement or the other Operative Documents to which it is or will
be a party.
(b) The execution and delivery by the Owner Trust of each Operative
Document to which the Owner Trust is a party are not, and the performance by the
Owner Trust of its obligations under each will not be, inconsistent with the
charter documents or by-laws of the Trust Company, do not and will not
contravene any Cayman Islands Governmental Rule regulating its banking or trust
powers relating to or affecting its capacity to act as contemplated by the Trust
Agreement or the Owner Trust Documents and do not and will not contravene any
provision of, or constitute a default under, any indenture, mortgage, contract
or other instrument to which the Owner Trust is a party or by which it or its
property is bound or require any Cayman Islands Government Action relating to or
affecting its capacity to act as contemplated by the Trust Agreement or the
Owner Trust Documents.
9.4 No Default. (a) No Indenture Default or Indenture Event of
----------
Default attributable to the Trust Company has occurred and is continuing.
(b) No Indenture Default or Indenture Event of Default attributable
to the Owner Trustee has occurred and is continuing.
9.5 Litigation. (a) There is no action, suit, investigation or
----------
proceeding pending or, to the Actual Knowledge of the Trust Company, threatened
against the Trust Company before any Governmental Authority which, individually
or in the aggregate (so far as the Trust Company now can reasonably foresee), is
reasonably likely materially and adversely to affect the ability of the Trust
Company to perform its obligations under this Agreement or any other Operative
Document to which it is a party.
(b) There is no action, suit, investigation or proceeding pending or,
to the Actual Knowledge of the Trust Company, threatened against the Owner Trust
before any Governmental Authority.
9.6 Owner's Liens. (a) There are no Owner's Liens attributable to
-------------
the Trust Company on the Trust Estate or the Indenture Estate, or on any part of
either thereof and the execution, delivery and performance by the Trust Company
of the Operative Documents to which the Trust Company is a party
34
<PAGE>
will not subject the Trust Estate or the Indenture Estate to any the Owner's
Liens.
(b) There are no Owner's Liens attributable to the Owner Trust on the
Trust Estate or the Indenture Estate, or on any part of either thereof and the
execution, delivery and performance by the Owner Trust of the Operative
Documents to which the Owner Trust is a party will not subject the Trust Estate
or the Indenture Estate to any the Owner's Liens.
9.7 Securities Act. None of the Trust Company, the Owner Trust or
--------------
any Person authorized by either of the Trust Company or the Owner Trust to act
on its behalf, has directly or indirectly offered or sold any interest in the
Trust Estate or the Secured Note, or in any similar security relating to the
Vessel Interest, or in any security the offering of which for the purposes of
the Securities Act would be deemed to be part of the same offering as the
offering of the aforementioned securities (collectively, any "Security") to, or
solicited any offer to acquire any of the same from, any Person, other than, in
the case of the Secured Note, the Loan Participant, and none of the Trust
Company, the Owner Trust or any Person authorized by either of the Trust Company
or Owner Trust to act on its behalf will take any action other than the sale of
the Secured Note to the Loan Participant that would subject the issuance or sale
of any interest in the Trust Estate or the Secured Note to the provisions of
Section 5 of the Securities Act or require the qualification of the Indenture
under the Trust Indenture Act it being understood that no Person has been
authorized to act on behalf of the Owner Trust or the Trust Company in
connection with the issuance and sale of any Security.
9.8 Chief Place of Business. The Trust Company's chief place of
-----------------------
business, chief executive office and office where the documents, accounts and
records relating to the transactions contemplated by this Agreement and each
other Operative Document are kept are located in Grand Cayman, Cayman Islands.
9.9 No Taxes Payable. Except for Taxes based upon the income of any
----------------
Person, there are no Taxes payable in the jurisdiction in which the principal
place of business of the Trust Company is located in connection with the
execution, delivery, consummation or recordation of this Agreement and the other
Operative Documents or upon or with respect to the Trust Estate or the Indenture
Estate and, solely because the Trust Company is a Cayman Islands company with
its principal place of business in the Cayman Islands and to the extent that it
performs any of its duties as Managing Trustee in the Cayman Islands, the
consummation of the transactions contemplated hereby and by the other Operative
Documents (including, without limitation, the filing of financing
35
<PAGE>
statements with respect thereto or the sale or transfer of the Vessel Interest).
9.10 Title. On the Closing Date, the Owner Trust shall have received
-----
whatever interest in and to the Construction Contract and the Payment Guarantee
Letter as was conveyed to it by the Owner Participant.
9.11 Federal Reserve Regulations. The Owner Trust is not engaged
---------------------------
principally in, and does not have as one of its important activities, the
business of extending credit for the purpose of purchasing or carrying any
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System of the United States), and no part of the proceeds of
the Secured Note will be used by it to purchase or carry any such margin stock
or, assuming the accuracy of the representation set forth in Section 5.15, to
extend credit to others for the purpose of purchasing or carrying any such
margin stock or for any purpose that violates, or is inconsistent with, the
provisions of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System of the United States.
9.12 No Other Activities. The Owner Trust has not engaged in any
-------------------
business or activities other than those contemplated by the Operative Documents
and the U.K. Documents and activities incidental thereto.
SECTION 10. REPRESENTATIONS AND WARRANTIES OF
INDENTURE TRUSTEE.
---------------------------------
State Street Bank and Trust Company represents and warrants in its
individual capacity with respect to Sections 10.1, 10.2(a), 10.3, 10.4 and
10.5(a), and not in its individual capacity, but solely in its capacity as
Indenture Trustee with respect to Sections 10.2(b) and 10.5(b), to each of the
other parties hereto that:
10.1 Due Organization. State Street Bank and Trust Company is a
----------------
state chartered trust company duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts and has the
corporate power and authority to enter into and perform its obligations under
this Agreement and each other Operative Document to which it is or will be a
party.
10.2 Authorization; Execution; Enforceability. (a) This Agreement
----------------------------------------
and each other Operative Document to which State Street Bank and Trust Company,
in its individual capacity is a party have been, duly authorized, executed and
delivered by State Street Bank and Trust Company, in its individual capacity
and, assuming the due authorization, execution and delivery hereof and thereof
by the other parties
36
<PAGE>
hereto and thereto, are legal, valid and binding obligations of the Indenture
Trustee in its individual capacity (to the extent it is a party hereto or
thereto in such capacity), enforceable against it in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, liquidation, receivership, moratorium or
similar laws affecting creditors' rights generally and the application of
general equitable principles may limit the availability of certain remedies.
Assuming due authorization, execution and delivery thereof by the Owner Trust,
the Secured Note issued on the Closing Date pursuant to the terms of this
Agreement and the Indenture on the Closing Date will have been duly
authenticated.
(b) This Agreement and each other Operative Document to which the
Indenture Trustee is a party have been duly authorized, executed and delivered
by the Indenture Trustee and, assuming the due authorization, execution and
delivery hereof and thereof by the other parties hereto or thereto, are legal,
valid and binding obligations of the Indenture Trustee, enforceable against it
in accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, liquidation,
receivership, moratorium or similar laws affecting creditors' rights generally
and the application of general equitable principles may limit the availability
of certain remedies.
10.3 No Violation. The execution and delivery by State Street Bank
------------
and Trust Company of this Agreement and each other Operative Document to which
it is a party are not and will not be, and the performance by it of its
obligations under each will not be, inconsistent with its charter documents or
do not and will not contravene any Governmental Rule of the United States of
America or the Commonwealth of Massachusetts governing with respect to its
banking or trust powers, and will not contravene any provision of, or constitute
a default under, any indenture, mortgage, contract or other instrument to which
State Street Bank and Trust Company, in its individual capacity, is a party, or
by which it or any of its properties are bound, or require any Governmental
Action of the United States of America or the Commonwealth of Massachusetts
governing its banking or trust powers.
10.4 Litigation. There is no action, suit, investigation or
----------
proceeding pending or, to the Actual Knowledge of the Indenture Trustee,
threatened against the Indenture Trustee, whether in its individual capacity or
as Indenture Trustee, before any Governmental Authority governing its banking or
trust powers which, individually or in the aggregate (so far as the Indenture
Trustee now can reasonably
37
<PAGE>
foresee), is reasonably likely materially and adversely to affect the ability of
the Indenture Trustee (in either such capacity) to perform its obligations under
this Agreement or any other Operative Document to which it is a party (in either
such capacity).
10.5 Indenture Trustee's Liens. (a) There are no Indenture
-------------------------
Trustee's Liens attributable to State Street Bank and Trust Company in its
individual capacity on the Indenture Estate or on any part thereof.
(b) There are no Indenture Trustee's Liens on the Indenture Estate or
any part thereof.
SECTION 11. CHARTERER COVENANTS.
-------------------
The Charterer covenants and agrees that:
11.1 Officer's Certificate. The Charterer will deliver to the Owner
---------------------
Participant, the Owner Trust and the Indenture Trustee on or before November 1
of each year during the Charter Period, an Officer's Certificate of the
Charterer to the effect that the signer is familiar with or has reviewed the
relevant terms of the Charter and the signer does not have knowledge of the
existence, as of the date of such certificate, of any condition or event which
constitutes a Charter Event of Default.
11.2 Maintenance of Corporate Existence, Etc. Subject to the
---------------------------------------
provisions of Section 11.3, the Charterer shall at all times maintain its
corporate existence and preserve and keep in full force and effect its rights
and franchises, the loss of which would have a material adverse effect on the
financial condition of the Charterer or its ability to comply with its
obligations under the Operative Documents.
11.3 Merger, Consolidation, Sale, Etc. So long as the Secured Note
--------------------------------
remains Outstanding or any amounts due and owing by the Charterer with respect
thereto to the Holders thereof under the Pass Through Trust Agreement or any
other Operative Document remain unpaid and so long as the Charter Period shall
not have expired or been terminated, the Charterer shall not consolidate with or
merge into any other corporation or convey, transfer or lease substantially all
of its assets as an entirety to any Person, unless:
(i) the corporation formed by such consolidation or into which the
Charterer is merged or the Person which acquires by conveyance, transfer or
lease substantially all of the assets of the Charterer as an entirety shall
be a corporation organized and existing under the laws of the United States
of America or any State or the District of Columbia, and shall execute and
deliver to the Owner
38
<PAGE>
Trust, the Owner Participant, the Indenture Trustee and the Pass Through
Trustee an agreement (in form and substance reasonably satisfactory to each
thereof) containing the assumption by such successor corporation of the due
and punctual performance and observance of each covenant and condition of
this Agreement, the Charter, the Pass Through Trust Agreement, the Pass
Through Trust Supplement and each other Operative Document to which the
Charterer is a party to be performed or observed by the Charterer;
(ii) immediately after giving effect to such transaction, no Charter
Event of Default shall have occurred and be continuing;
(iii) the Charterer shall have delivered to the Owner Trust, the Owner
Participant and the Indenture Trustee an Officer's Certificate of the
Charterer, and an opinion of counsel to the Charterer (which may be the
Charterer's internal counsel), each stating that such consolidation,
merger, conveyance, transfer or lease and the assumption agreement
mentioned in clause (i) comply with this Section 11.3 and that all
conditions precedent herein provided for relating to such transaction have
been complied with (except that such opinion need not cover the matters
referred to in clause (ii) above and may rely, as to factual matters, on an
Officer's Certificate of the Charterer) and, in the case of such opinion,
that such assumption agreement has been duly authorized, executed and
delivered by such successor corporation and is enforceable against such
successor corporation in accordance with its terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally and by general
principles of equity; and
(iv) after giving effect to any consolidation, merger, conveyance,
transfer or lease of substantially all of the assets of the Charterer as an
entirety in accordance with this Section 11.3, the Guarantee shall remain
in full force and effect and shall constitute a full and unconditional
guaranty of the successor corporation's obligations under the Operative
Documents to which it is a party and the Pass Through Trust Agreement to
the same extent as the Charterer's obligations under such documents prior
to giving effect to any such consolidation, merger, conveyance, transfer or
lease of substantially all of the assets of the Charterer.
Upon any consolidation or merger, or any conveyance, transfer or lease of
substantially all of the assets of the Charterer
39
<PAGE>
as an entirety in accordance with this Section 11.3, the successor corporation
formed by such consolidation or into which the Charterer is merged or to which
such conveyance, transfer or lease is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Charterer under this
Agreement and the other Operative Documents with the same effect as if such
successor corporation had been named as the Charterer herein. No such
conveyance, transfer or lease of substantially all of the assets of the
Charterer as an entirety shall have the effect of releasing the Charterer or any
successor corporation which shall theretofore have become such in the manner
prescribed in this Section 11.3 from its liability hereunder.
11.4 Change in Name or Chief Place of Business. The Charterer shall
-----------------------------------------
give notice to the Owner Trust, the Owner Participant and the Indenture Trustee
promptly after any change in its name or chief place of business or chief
executive office.
11.5 Further Assurances. The Charterer, at its own cost and expense,
------------------
will cause to be promptly and duly taken, executed, acknowledged and delivered
all such further acts, documents and assurances as the Owner Trust, the Owner
Participant, the Loan Participant or the Indenture Trustee reasonably may
request from time to time in order to carry out more effectively the intent and
purposes of this Agreement, the Pass Through Trust Agreement, the Pass Through
Trust Supplement and the other Operative Documents and the transactions
contemplated hereby and thereby. The Charterer, at its own cost and expense,
will cause the Indenture, the Ship Mortgage and the Charter, any supplements or
amendments thereto and restatements thereof and all financing statements,
fixture filings and other documents, to be recorded or filed at such places and
times and in such manner, as may be necessary, advisable or as may be reasonably
requested (x) by the Owner Trust, the Owner Participant, the Pass Through
Trustee or the Indenture Trustee in order to establish, preserve and protect the
interest of the Owner Trust in and to the Vessel Interest and the Owner Trust's
rights under this Agreement and the other Operative Documents and (y) so long as
any Secured Note is Outstanding, by the Indenture Trustee, the Loan Participant
or (unless the Indenture Trustee objects thereto) the Owner Trust in order to
establish, preserve, protect and perfect the mortgage and security interest of
the Indenture Trustee in the Indenture Estate granted or intended to be created
under the Indenture and the Ship Mortgage and the Indenture Trustee's rights
under this Agreement and the other Operative Documents, subject only to
Permitted Liens. During the ninety (90) day period prior to the fifth, tenth,
fifteenth and twentieth anniversary of the Closing Date the Charterer will cause
to be prepared and delivered to the Managing Trustee and the Indenture Trustee
an opinion of one
40
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or more legal counsel to the effect set forth in clauses (x) and (y) above
subject to exceptions and qualifications similar to those taken in the opinions
delivered as at the Closing Date and such other exceptions and qualifications as
are customary at the time of giving such opinion.
11.6 Inspection. (a) The Charterer shall permit the Indenture
----------
Trustee, (and any authorized representatives of any thereof), at such Person's
risk (including, without limitation, as to personal injury and death) and
expense, including, without limitation, the cost and expense for such Person's
transportation to and from the Vessel, and under conditions reasonably
acceptable to the Charterer and subject to Section 12.5 hereof, to visit and
inspect the Vessel, and have access to officers of the Charterer and MSCL, all
upon reasonable notice and at such reasonable times during normal business hours
and as may be reasonably requested; provided, however, that (A) unless there is
-------- -------
an existing Charter Event of Default, the Indenture Trustee may not make more
than one (1) such inspection in any calendar year without the Charterer's prior
written consent and (B) prior to any such inspection the Charterer shall have
been provided reasonable assurances than any Person conducting such inspection
is fully insured with respect thereto.
(b) No Person entitled to make any inspection or inquiry referred to
in this Section 11.6 shall have any duty to make such inspection or inquiry, or
shall incur any liability or obligation by reason of not making any such
inspection or inquiry.
11.7 Documentation of Vessels. The Charterer agrees that, at or
------------------------
before the time of delivery of the Vessel to the Owner Trust on the Delivery
Date, the Charterer shall cause the Vessel to be documented, on a provisional
basis, in the name of the Owner Trust at the Charterer's expense under the laws
and the flag of the Marshall Islands and shall cause the Vessel to be documented
on a permanent basis in the name of the Owner Trust promptly after the Delivery
Date. The Charterer shall throughout the Charter Period maintain the
documentation of the Vessel in the Marshall Islands (or in any other
jurisdiction selected by the Charterer provided such other jurisdiction provides
substantially equivalent (or better) protection for the rights of owner
participants, lessors, lenders and mortgagees for similar transactions as the
law of the Marshall Islands), and shall not do or suffer or permit to be done
anything which would prevent the maintenance of the documentation of the Vessel
under the laws and the flag of the Marshall Islands (or such other jurisdiction)
or which would constitute or result in a violation of any applicable law or
regulation of the Marshall Islands (or such other jurisdiction) non-compliance
with which could create any material risk of or danger of the sale, for-
41
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feiture or loss of any material part of or interest in the Vessel, provided,
--------
however, that in the event the Vessel is documented in a jurisdiction other than
- -------
the Marshall Islands, the Charterer shall make or cause to be made all filings
and recordings or other actions necessary or advisable to establish the
Indenture Trustee's and the Owner Trust's right, title and interest in and to
the Vessel Interest, including the execution, delivery and filing of a ship
mortgage in form and substance substantially similar to the Ship Mortgage with
the appropriate governmental agency of such jurisdiction, provided further,
-------- -------
however that such ship mortgage shall not be adverse to the interests of the
- -------
Owner Trust or the Indenture Trustee in any material respect or increase either
parties liability under the Operative Documents.
11.8 No Petition. Unless otherwise agreed in writing by both the
-----------
Indenture Trustee and Owner Participant, the Charterer hereby agrees to the
fullest extent permitted by law that so long as the lien of the Indenture shall
not have been discharged, it will not at any time institute against the Owner
Trust, or join in the institution against the Owner Trust of any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law.
SECTION 12. OTHER COVENANTS AND AGREEMENTS.
------------------------------
12.1 Agreements of Owner Participant. The Owner Participant
-------------------------------
covenants and agrees that:
(a) Discharge of Liens. The Owner Participant will not create or
------------------
permit to exist at any time, and will, at its own cost and expense,
promptly take such action as may be necessary duly to discharge, or to
cause to be discharged, (i) all Owner Participant's Liens and (ii) all
Owner's Liens resulting from any act or failure to act by the Owner Trust
at the express direction of, or with express authorization from, the Owner
Participant on all or any part of the Vessel Interest, the Trust Estate,
the Indenture Estate, or title thereto or any interest therein. The Owner
Participant shall indemnify, protect, defend, save and keep harmless the
Charterer, the Loan Participant, and the Indenture Trustee from and against
any and all Claims that may be imposed on, incurred by or asserted against
such Person or the Vessel Interest arising out of or secured by the Owner
Participant's Liens or the Owner's Liens described in clause (ii) of the
preceding sentence.
(b) Cooperation with Charterer. The Owner Participant shall, to the
--------------------------
extent reasonably so requested by the Charterer, cooperate with the
Charterer, at the Charterer's expense, to enable the Charterer to make the
42
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filings and recordings listed in Schedule 3, including, without limitation,
at any time and from time to time, upon the request of the Charterer
promptly and duly executing and delivering, any and all such further
instruments and documents as the Charterer may reasonably request in order
to perform such covenants and to make such filings and recordings.
(c) Successor Owner Trustee. The Owner Participant shall not appoint
-----------------------
or cause or allow to be appointed a successor to either Owner Trustee or an
additional or separate trustee under the Trust Agreement without the prior
written consent of the Charterer. The Owner Participant shall cause any
such successor, additional or separate trustee, simultaneously with its
assumption of duties in such capacity, to take all actions as may be
reasonably requested by the Indenture Trustee, the Pass Through Trustee or
the Charterer (including, without limitation, the filing of financing
statements), at the Charterer's expense, in order to establish, preserve,
protect and perfect its interest in and to the Vessel Interest and its
rights under this Agreement and the other Operative Documents and, so long
as any Secured Note is Outstanding, the mortgage and security interest of
the Indenture Trustee in the Indenture Estate granted or intended to be
created under the Indenture and the Ship Mortgage and the Indenture
Trustee's rights under this Agreement and the other Operative Documents,
subject only to Permitted Liens.
(d) Performance of Obligations. The Owner Participant will perform
--------------------------
and comply with all obligations imposed on the Owner Participant pursuant
to the provisions of the Charter or the Indenture in accordance with the
terms and conditions of each thereof.
(e) Instructions to the Owner Trust. The Owner Participant will not
-------------------------------
instruct or otherwise direct the Owner Trust to take, or omit to take, any
action in violation of the express covenants and agreements of the Owner
Trust in any Operative Document. Subject to Section 5 hereof, the Owner
Participant will direct and instruct the Owner Trust to execute and deliver
the Operative Documents to which it is to be a party and to comply with its
obligations set forth therein. The Owner Participant will not unreasonably
withhold its consent to or authorization of any consent requested of the
Owner Trust under the terms of any Operative Document which by its terms is
not to be unreasonably withheld by the Owner Trust.
(f) Termination of Trust Agreement. Prior to the expiration or
------------------------------
earlier termination of the Charter pursuant
43
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to its terms, the Owner Participant will not terminate or revoke, or
consent to the termination or revocation of, the Trust Agreement, or, prior
to the release of the Lien of the Indenture on the Indenture Estate, amend
or modify such Trust Agreement in any manner that would materially
adversely affect the Indenture Estate or limit in any material manner the
rights of the Indenture Trustee set forth therein.
(g) Election to Retain Title. If the Owner Trust shall elect to
------------------------
retain title to the Vessel Interest pursuant to Section 18(e) of the
Charter, the Owner Participant will cause the Owner Trust to perform its
obligations under Section 18(e) in accordance with the terms thereof.
(h) Additional Financings and Refundings. The Owner Participant
------------------------------------
shall, to the extent reasonably so requested by the Charterer, cooperate
with the Charterer, (i) to facilitate the issuance of Additional Notes
permitted by the provisions of Section 2.08(a) of the Indenture and (ii) to
refund or refinance the Secured Note then Outstanding in accordance with
the terms of the Indenture.
12.2 Agreements of Trust Company and Owner Trust. The Trust Company,
-------------------------------------------
in its individual capacity, covenants and agrees with respect to Sections
12.2(a)(i) and 12.2(b) and the Owner Trust covenants and agrees with respect to
Sections 12.2(a)(ii), 12.2(c), 12.2(d), 12.2(e), 12.2(f), 12.2(g), 12.2(h),
12.2(i) and 12.2(j) that:
(a) Discharge of Liens. (i) The Trust Company will not create or
------------------
permit to exist at any time, and will, at its own cost and expense,
promptly take such action as may be necessary duly to discharge all Owner's
Liens on all or any part of the Vessel Interest, the Trust Estate, the
Indenture Estate, or title thereto or any interest therein attributable to
it. Except for the Owner Participant's obligation pursuant to Section
13.1(a)(ii), the Trust Company shall indemnify, protect, defend, save and
keep harmless the Charterer, the Owner Participant, the Loan Participant
and the Indenture Trustee from and against any and all Claims that may be
imposed on, incurred by or asserted against such Person or the Vessel
Interest arising out of or secured by any such Lien.
(ii) The Owner Trust will not create or permit to exist at any
time, and will, at its own cost and expense, promptly take such action as
may be necessary duly to discharge all Owner's Liens on all or any part of
the Vessel Interest, the Trust Estate, the Indenture
44
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Estate, or title thereto or any interest therein attributable to it.
(b) Change of Chief Place of Business. The Trust Company shall give
---------------------------------
notice to the Charterer, the Owner Participant and the Indenture Trustee
prior to any change in its chief place of business or chief executive
office, or the office where the records concerning the accounts, contract
rights or general intangibles relating to the transactions contemplated
hereby are kept.
(c) Cooperation with the Charterer. The Owner Trust shall, to the
------------------------------
extent reasonably so requested by the Charterer, cooperate with the
Charterer, at the Charterer's expense, to enable the Charterer to make the
filings and recordings listed in Schedule 3, including, without limitation,
at any time and from time to time, upon the request of the Charterer
promptly and duly executing and delivering any and all such further
instruments, documents and financing statements (and continuation
statements related thereto) as the Charterer may request in order to
perform such covenants and to make such filings and recordings.
(d) Notice of Transfer of Assets. The Owner Trust shall not transfer
----------------------------
any of the estates, properties, rights, powers, duties or trusts of the
Owner Trust to any successor trustee or to any additional or separate
trustee under the Trust Agreement without giving prior written notice of
such transfer to the Owner Participant, the Charterer, the Pass Through
Trustee and the Indenture Trustee in accordance with Section 11 of the
Trust Agreement.
(e) Certain Transfers; Termination. Except as expressly permitted
------------------------------
hereby or by the terms of any other Operative Document or required by the
terms of the Head Lease, the Owner Trust will not transfer the Vessel
Interest to any Person prior to the expiration or earlier termination of
the Charter pursuant to its terms, other than a successor Owner Trust
appointed in accordance with the provisions of Section 11 of the Trust
Agreement, or terminate the Trust Agreement or distribute all or any part
of the Trust Estate to any Person.
(f) Owner Trust's Activities. The Owner Trust will not incur any
------------------------
indebtedness for money borrowed, or enter into any other activity, except
as contemplated by the Operative Documents or as may be necessary or
advisable to carry out its obligations or enforce its rights thereunder.
45
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(g) Notice of Indenture Event of Default. Promptly after the Owner
------------------------------------
Trust has Actual Knowledge that the Indenture Event of Default attributable
to the Owner Trust has occurred and is continuing, the Owner Trust shall
deliver to the Charterer a notice of such Indenture Event of Default which
is not also a Charter Event of Default describing the same in reasonable
detail and, together with such notice or as soon thereafter as possible, a
description of the action that the Owner Trust has taken, is taking and
proposes to take with respect thereto.
(h) ERISA. The Owner Trust agrees that (i) it shall not permit any
-----
ERISA plan sponsored or maintained by it, any ERISA Affiliate or any PTE
90-24 Affiliate thereof to purchase or hold the Pass Through Certificate
and (ii) neither it nor any PTE 90-24 Affiliate thereof shall act in a
fiduciary capacity with respect to the purchase or holding by any ERISA
plan of the Pass Through Certificates, in the case of (i) or (ii) which
would constitute a non-exempt "prohibited transaction" within the meaning
of Section 406 of ERISA or Section 4975 of the Code.
(i) Ownership for Tax Purposes. The Owner Trust will not take any
--------------------------
position inconsistent with its ownership of the Vessel Interest for U.S.
federal, state, or local income tax purposes.
(j) U.K. Documents. Owner Trust will not consent to any amendment
--------------
or modification to the U.K. Documents which would adversely affect the
Indenture Trustee, the holder of the Secured Note or the Pass Through
Trustee without the prior written consent of the Indenture Trustee.
12.3 Agreements of Pass Through Trustee. The Pass Through Trustee
----------------------------------
covenants and agrees that:
(a) Transfer of Secured Note. Any sale, transfer or assignment
------------------------
(including, without limitation, a transfer pursuant to the exercise of
remedies with respect to any Secured Note) by the Pass Through Trustee of
any Secured Note or of all or any part of its interest hereunder or under
the Indenture shall be on the express condition that the purchaser,
transferee or assignee, as the case may be, shall agree to be bound by the
terms and provisions applicable to the Pass Through Trustee contained in
this Agreement, the Secured Note and the Indenture. The acceptance by any
person of the Secured Note shall constitute such Person's agreement to be
bound by the terms and provisions of this Agreement and the Indenture. The
Pass Through Trustee will not make any
46
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such sale, transfer or assignment to any Person unless such Person delivers
to the Charterer, the Owner Trust, the Indenture Trustee and the Owner
Participant (i) a written representation and warranty by such Person (or an
opinion of counsel reasonably satisfactory to the Charterer, the Owner
Trust and the Owner Participant) that such sale, transfer or assignment to
and the holding of any such interest by, such Person (1) will not result in
a "prohibited transaction" as defined in Section 406 of ERISA or Section
4975 of the Code, or (2) are covered by an exemption contained in ERISA or
an administrative exemption adopted thereunder and (ii) a written
undertaking by such Person that is substantially identical to the covenant
made by the Pass Through Trustee in this Section 13.3(a) (including this
clause (ii)).
(b) Instructions to Indenture Trustee. The Pass Through Trustee will
---------------------------------
not instruct or otherwise direct the Indenture Trustee to take, or omit to
take, any action in violation of the express covenants and agreements of
the Indenture Trustee in any Operative Document.
(c) ERISA. The Pass Through Trustee agrees that (i) it shall not
-----
permit any ERISA Plan sponsored or maintained by it, any ERISA Affiliate or
any PTE 90-24 Affiliate thereof to purchase or hold any Pass Through
Certificate and (ii) neither it nor any PTE 90-24 Affiliate thereof shall
act in a fiduciary capacity with respect to the purchase or holding by any
ERISA Plan of the Pass Through Certificates, in the case of (i) or (ii)
which would constitute a non-exempt "prohibited transaction" within the
meaning of Section 406 of ERISA or Section 4975 of the Code.
12.4 Agreements of Indenture Trustee. State Street Bank and Trust
-------------------------------
Company, in its individual capacity, to the extent set forth herein, and as
Indenture Trustee, covenant and agree, as follows:
(a) Discharge of Liens. State Street Bank and Trust Company
------------------
covenants and agrees in its individual capacity that it will not create or
permit to exist at any time, and will, at its own cost and expense,
promptly take such action as may be necessary to discharge, all of
Indenture Trustee's Liens on all or any part of any Vessel Interest, the
Trust Estate or Indenture Estate, or title thereto or any interest therein.
The Indenture Trustee shall indemnify, protect, defend, save and keep
harmless the Charterer, the Owner Participant, the Loan Participant and the
Owner Trust from and against any and all Claims imposed on, incurred by or
asserted against such Person arising out of the Indenture Trustee's Lien.
47
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(b) Cooperation With the Charterer. The Indenture Trustee shall, to the
------------------------------
extent reasonably requested by the Charterer, cooperate with the Charterer,
at the Charterer's expense, to enable the Charterer to perform the
Indenture Trustee's covenants contained in Section 11.5 and to make the
filings and recordings listed in Schedule 3, including, without limitation,
at any time and from time to time, upon request of the Charterer promptly
and duly executing and delivering any and all such further instruments,
documents and financing statements (and continuation statements related
thereto) as the Charterer may request in order to perform such covenants
and to make such filings and recordings.
(c) Original Charter. Except to the extent otherwise required by the
----------------
Indenture and so long as it remains as Indenture Trustee, State Street Bank
and Trust Company agrees in its individual capacity that it will maintain
possession of the version of the Charter identified in a receipt therefor
executed by the Indenture Trustee as the original executed counterpart of
the Charter.
(d) Performance of Obligations. The Indenture Trustee will perform
--------------------------
and comply with the provisions of the Indenture which, upon satisfaction of
any applicable conditions set forth therein, require payment or the
tendering of performance to the Charterer.
12.5 Confidentiality. Each of the parties hereto agrees that all
---------------
matters relating to this Agreement, the other Operative Documents and the
transactions contemplated hereby shall be kept strictly confidential,
including, without limitation, the substance of its commercial terms, and
any disclosure of such matters shall be made only with the prior written
consent of the other parties hereto. The obligations set forth in this
Section shall survive any termination or rescission of this Agreement, the
Operative Documents, and the Pass Through Trust Agreement, as the case may
be. Nothing in this Section shall prevent, or require the consent of any
party to, any disclosure:
(a) required by the order of any court of competent jurisdiction;
(b) as may be required by any Governmental Rule or Governmental
Authority;
(c) by either party to its legal and other professional advisers, or
in the course of or for the purpose of any arbitration or court
proceedings;
48
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(d) of information which has otherwise become public information
through no breach of this Section 13.5 by the disclosing party or through
filings made with the SEC; or
(e) in the case of the Pass Through Trustee and Indenture Trustee as
may be reasonably necessary or desirable to perform its duties on behalf of
the holders of the Secured Notes and Pass Through Certificates.
12.6 Further Assurances. In the event of the sale of the Vessel pursuant
------------------
to Clause 23 of the Head Lease, the Owner Participant, the Charterer and the
Indenture Trustee shall take such steps and sign such documents as may
reasonably be required by the Owner Trust to effect such sale.
SECTION 13. INDEMNIFICATION.
---------------
13.1 General Indemnification.
-----------------------
(a) Indemnification. The Charterer agrees, whether or not any of the
---------------
transactions contemplated hereby shall be consummated, to assume liability for,
and to indemnify, protect, save and keep harmless each Indemnitee, on an After-
Tax Basis, from and against any and all Claims that may be imposed on, incurred
by or asserted against any Indemnitee, whether or not such Indemnitee shall also
be indemnified as to any such Claim by any other Person, in any way relating to
or arising out of (i) the Vessel or the Vessel Interest or any part thereof,
(ii) the Operative Documents, the U.K. Documents, the Pass Through Trust
Agreement, the Pass Through Trust Supplement, or the transactions contemplated
thereby or the issuance of the Secured Note or the Pass Through Certificates,
(iii) the manufacture, financing, refinancing, design, construction, inspection,
purchase, ownership, acquisition, acceptance, rejection, delivery, nondelivery,
possession, transportation, charter, sub-charter, sub-sub-subcharter,
mortgaging, granting of a security interest in, preparation, installation,
condition, transfer of title, rental, use, operation, storage, maintenance,
modification, alteration, repair, assembly, sale, return, abandonment or other
application or disposition of all or any part of the Vessel or the Vessel
Interest or any interest therein, including, without limitation, (A) Claims or
penalties arising from any violation of law or liability in tort (strict or
otherwise), (B) loss of or damage to any property or the environment (including,
without limitation, clean-up costs, response costs and costs of corrective
action) or death or injury to any Person, (C) latent or other defects, whether
or not discoverable, and (D) any claim for patent, trademark or copyright
infringement or (iv) any breach of or failure to perform or observe, or any
other breach of or failure to perform or observe, or any other non-compliance
with, any
49
<PAGE>
covenant, condition or agreement or other obligation to be performed by the
Charterer or the Guarantor under any Operative Document, or the falsity of any
representation or warranty of the Charterer or the Guarantor in any of the
Operative Documents, the Pass Through Trust Agreement or in any Officer's
Certificate delivered by the Charterer or the Guarantor; provided, however, that
-------- -------
the Charterer shall not be required to indemnify any Indemnitee under this
Section 13.1 for (1) any Claim in respect of the Vessel to the extent
attributable to acts, events, circumstances or conditions which arise, occur or
exist after the earlier of: (I) the return of possession of the Vessel Interest
to the Owner Trust or its designee pursuant to the terms of the Charter (other
than as a result of a Charter Event of Default) or (II) the payment by the
Charterer of all amounts required to be paid under the Charter following an
Event of Loss with respect to the Vessel, (2) any Claim to the extent resulting
from the willful misconduct or gross negligence of such Indemnitee (other than
willful misconduct or gross negligence imputed to such Indemnitee as a matter of
law without regard to any action or inaction of such Indemnitee and solely by
reason of its interest in the Vessel Interest), (3) any Transaction Expense or
any other expense or Claim expressly provided under any of the Operative
Documents to be paid or borne by such Indemnitee at its own expense (or without
reimbursement or indemnification), (4) any Claim to the extent resulting from
the offer, sale, disposition or transfer by such Indemnitee of all or part of
its interest in the Vessel Interest, the Secured Note, the Pass Through
Certificates or the Trust Estate, other than any such transfer or disposition
(i) resulting from a continuing Charter Event of Default, (ii) in connection
with an Event of Loss, or (iii) to a successor Owner Trustee, and, in each case,
without duplication of any amounts recovered pursuant to the Charter, (5) any
Claim to the extent resulting from a breach by such Indemnitee of any of its
representations, warranties or covenants in the Pass Through Trust Agreement or
in any of the Operative Documents or in any Officer's Certificate delivered
pursuant thereto, or to the extent resulting from a knowing violation of law by
such Indemnitee, unless such violation of law is the result of the failure of
any other party to comply with its obligations under any Operative Document to
which it is a party (other than, in the case of the Owner Participant, such a
failure by the Owner Trustee as a result of the direction or instruction of the
Owner Participant and, in the case of the Loan Participant, such failure by the
Indenture Trustee as a result of the direction or instruction of (or a vote or
consent in favor of such direction or instruction by) the Loan Participant), (6)
any Claims in respect of Taxes (other than Taxes required to be paid to
indemnify such Indemnitee under this Section 13.1 on an After-Tax Basis) whether
or not the Charterer is obligated to indemnify for such Taxes under Section
13.2, (7) any Claim principally resulting from any
50
<PAGE>
business, transaction or other activity in which such Indemnitee is engaged,
other than the transactions contemplated hereby, by the Pass Through Trust
Agreement or by any of the other Operative Documents, except to the extent
resulting from a Charter Event of Default, (8) any Claim to the extent
attributable to the authorization or giving or withholding by such Indemnitee of
any future amendments, supplements, waivers or consents with respect to any
Operative Document or the Pass Through Trust Agreement, other than such as have
been requested by the Charterer or Guarantor, or such that occur as a result of
a Charter Event of Default that shall have occurred and is continuing, or such
as are expressly required by any Operative Document or the Pass Through Trust
Agreement, (9) any Claim resulting from any Lien resulting from any Claim
against such Indemnitee for which such Indemnitee is not indemnified hereunder
as a result of any other exclusion under this Section 13.1, (10) any Claim
resulting from the Indenture Event of Default which is not occasioned by a
Charter Event of Default or Charter Default, (11) with respect to the Owner
Trust, the Trust Company, the Resident Trustee and the Owner Participant, any
Claim resulting from the indemnity given by the Owner Participant pursuant to
Section 6.3 of the Trust Agreement or any indemnification pursuant thereto,
except to the extent that the indemnitee under such Section 6.3 would be
otherwise entitled to indemnification from the Charterer under this Section
13.1, (12) any Claim of the Pass Through Trustee to the extent that it is
indemnified by the Charterer pursuant to the Pass Through Trust Agreement, (13)
Claims against such Indemnitee resulting from a violation of ERISA or Section
4975 of the Code, other than, in the case of an Owner Participant, the making
and holding of its investment pursuant to this Participation Agreement or the
taking of any action at the request or direction of the Charterer, (14) any
claim which is an ordinary and usual operating or overhead expense of such
Indemnitee, (15) failure on the part of the Indenture Trustee, the Owner Trust
or the Pass Through Trustee, as the case may be, to distribute in accordance
with the Indenture, or the Trust Agreement, or the Pass Through Trust Agreement,
as the case may be, any amounts received and distributable by it thereunder,
(16) any Claim that constitutes or arises from such Indemnitee's exercise of its
contest rights with respect to a Permitted Lien attributable to such Indemnitee,
(17) any Claim of such Indemnitee relating to or arising from the inaccuracy,
incompleteness or misleading nature of any statement or representation included
in any registration statement issued in connection with any of an offer, sale or
disposition of any Secured Note, Pass Through Certificates or similar interest,
which statement or representation is based on written information supplied or
made available by such Indemnitee specifically for inclusion in such
registration statement, (18) any Claim of such Indemnitee (x) arising out of its
inability to invest in another transaction or for any
51
<PAGE>
other purpose as a result of such Indemnitee's participation or investment of
funds in connection with the transactions contemplated by this Agreement, or (y)
for which a payment of Termination Value paid by a Charterer in accordance with
the terms of the Operative Documents is intended to compensate such Indemnitee,
(19) any Claim to the extent that such Claim would not have arisen but for the
appointment of a successor or an additional Owner Trustee without the consent of
the Charterer, (20) any Claim to the extent that such Claim relates to amounts
payable by an Owner Participant to the Indenture Trustee in respect of the
Secured Note with respect to any Premium thereon as a result of a Indenture
Event of Default which is not occasioned by a Charter Event of Default or any
Premium payable by the Charterer or the Owner Participant pursuant to Section
3.06 of the Indenture and (21) any Claim arising from the negligence or strict
liability of such Indemnitee to the extent indemnity therefor would be in
violation of applicable law.
(b) Notices. If the Charterer shall obtain knowledge of any action,
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suit, proceeding or written notice of any Claim indemnified against under this
Section 13.1, the Charterer shall give prompt notice thereof to the appropriate
Indemnitee or Indemnitees, as the case may be, and if any Indemnitee shall
obtain any such knowledge, such Indemnitee shall give prompt notice thereof to
the Charterer; provided that the failure of such Indemnitee to so notify the
--------
Charterer shall not affect the Charterer's indemnification obligations under
this Section 13.1 to such Indemnitee except to the extent of any damage to
Charterer resulting from such failure. With respect to any amount that the
Charterer is requested by an Indemnitee to pay by reason of this Section 13.1,
such Indemnitee shall, if so requested by the Charterer and prior to any
payment, submit such additional information in such Indemnitee's possession to
the Charterer as the Charterer may reasonably request properly to substantiate
the requested payment.
(c) Contests. Subject to the rights of insurers under policies of
--------
insurance maintained pursuant to Section 16 of the Charter, the Charterer shall
have the right, at its sole cost and expense, to investigate, and the right in
its sole discretion to defend or compromise, any Claim for which indemnification
is sought under this Section 13.1, and the Indemnitee shall cooperate, at the
Charterer's expense, with all reasonable requests of the Charterer in connection
therewith. The Charterer will provide the Indemnitee with such information not
within the control of such Indemnitee, as is in the Charterer's control or is
reasonably available to the Charterer, which such Indemnitee may reasonably
request and shall otherwise cooperate with such Indemnitee so as to enable such
Indemnitee to fulfill its obligations under this Section 13.1. Where the
Charterer or the insurers under a
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policy of insurance maintained by the Charterer undertake the defense of an
Indemnitee with respect to a Claim, no additional legal fees or expenses of such
Indemnitee in connection with the defense of such claim shall be indemnified
hereunder unless such fees or expenses were incurred at the request of the
Charterer or such insurers; provided, however, that if (i) in the written
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opinion of counsel to such Indemnitee an actual or potential material conflict
of interest exists where it is advisable for such Indemnitee to be represented
by separate counsel or (ii) such Indemnitee has been indicted or otherwise
charged in a criminal complaint in connection with a Claim not excluded by
Section 13.1(a) and such Indemnitee informs the Charterer that such Indemnitee
desires to be represented by separate counsel, the reasonable fees and expenses
of such separate counsel shall be borne by the Charterer. Subject to the
requirements of any policy of insurance, an Indemnitee may participate at its
own expense in any judicial proceeding controlled by the Charterer pursuant to
the preceding provisions; provided that such party's participation does not, in
--------
the reasonable opinion of the independent counsel appointed by the Charterer or
its insurers to conduct such proceedings, significantly interfere with such
control; and such participation shall not constitute a waiver of the right to
receive the indemnification provided in this Section 13.1. Notwithstanding
anything to the contrary contained herein, (x) the Charterer shall not under any
circumstances be liable for the fees and expenses of more than one counsel for
each of (i) the Owner Participant and the Owner Trust (and their respective
successors and permitted assigns, agents and servants) and (ii) the Loan
Participants and the Indenture Trustee (and their respective successors and
permitted assigns, agents and servants), and (y) during the continuance of a
Charter Event of Default, the Charterer shall not compromise any Claim without
the consent of the applicable Indemnitee, such consent not to be unreasonably
withheld.
(d) Subrogation. Upon payment in full of any Claim by the Charterer
-----------
pursuant to this Section 13.1 to or on behalf of an Indemnitee, the Charterer,
without any further action, shall be subrogated to any and all claims that such
Indemnitee may have in respect of the matters against which such indemnity was
given (other than claims under any insurance policies maintained by such
Indemnitee). Such Indemnitee agrees to cooperate with the Charterer and to
execute such further instruments to permit the Charterer, at the Charterer's
expense, to pursue such claims, to the extent reasonably requested by the
Charterer.
(e) Refunds. Upon receipt by any Indemnitee of a repayment or
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reimbursement of all or any part of any Claim for which the Charterer shall have
paid for any Indemnitee or for which the Charterer shall have reimbursed any
Indemnitee pursuant to this Section 13.1, such Indemnitee shall pay to
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the Charterer, as promptly as practicable after the receipt thereof, the amount
of such repayment or reimbursement plus any interest received by such Indemnitee
on such amount plus the amount of any tax savings realized by such Indemnitee as
a result of such payment made to the Charterer.
(f) Payments; Verification. Any amount payable to any Indemnitee
----------------------
pursuant to this Section 13.1 shall be paid to such Indemnitee promptly upon
receipt of a written demand therefor from such Indemnitee, accompanied by a
written statement describing the basis for such indemnity and the computation of
the amount so payable and, if requested by the Charterer, such determination
shall be verified by a nationally recognized independent accounting firm
mutually acceptable to the Charterer and the Indemnitee at the Charterer's
expense, unless such accounting firm determines that the amount payable by the
Charterer is less than 95 percent (95%) of the amount shown on such written
statement, in which case such verification shall be at such Indemnitee's
expense.
(g) Trustee's Fees. The Charterer shall pay the reasonable ongoing
--------------
fees and expenses of the Managing Trustee, Delaware Trustee, the Pass Through
Trustee and the Indenture Trustee for acting as such to the extent not included
in the Transaction Expenses. The Charterer shall have the right to receive and
review any substantiation relating to any such ongoing expense as it may
reasonably request.
13.2 General Tax Indemnification.
---------------------------
(a) Payment of Taxes. The Charterer agrees that each payment of Base
----------------
Hire and Termination Value pursuant to the Charter shall be free of all
withholding with respect to Taxes of any nature whatsoever, and in the event
that the Charterer shall be required by applicable law to make any such
withholding for any such payment, (x) Base Hire and Termination Value payable
shall be increased so that after making all required withholdings the Tax
Indemnitee receives an amount equal to the Hire it would have received had such
withholdings not been made, (y) the Charterer shall make such withholdings and
(z) the Charterer shall pay the full amount withheld to the relevant taxing
authority in accordance with applicable law. If for any reason, the Charterer
is required to make any payment to a taxing authority or to any Tax Indemnitee
as a result of the application of the preceding sentence or otherwise that
relates to or is a result of any Tax imposed on or with respect to any Tax
Indemnitee which Tax (in whole or in part) is not the responsibility of the
Charterer under the terms of this Section 13.2, then the Tax Indemnitee in
respect of whom such Tax is an excluded Tax hereunder shall, within 30 days
after receipt of notice of payment of the Tax and appropriate payment
documentation with
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respect thereto, pay to the Charterer an amount which equals the amount paid by
the Charterer with respect to or as a result of such Tax that is not the
responsibility of the Charterer (including any expenses or other charges borne
by the Charterer) increased by (but subject to the proviso in Section 13.2(f))
the amount of tax savings to such Tax Indemnitee attributable to the making of
such payment to the Charterer. Each Tax Indemnitee also agrees (subject to the
proviso in Section 13.2(f)) to reimburse the Charterer for any amounts withheld
for which such Tax Indemnitee obtains a credit or refund, within 30 days after
receipt of such credit or refund.
Except as provided in Section 13.2(b), the Charterer agrees to pay,
and to indemnify, protect, defend, save and keep harmless each Tax Indemnitee,
on an After-Tax Basis, whether or not any or all of the transactions
contemplated hereby are consummated in whole or in part, from and against any
and all taxes, impositions, fees, levies, assessments, duties, withholdings,
governmental claims or other charges of any nature whatsoever (together with any
related interest, fines, penalties or additions to tax), including, without
limitation, rental, income, withholding, sales, use, transfer, leasing, personal
property, excise, receipts, franchise, value-added, stamp, filing, recording,
documentation or license taxes, however imposed or asserted, by any United
States federal, state or local government or taxing authority (including any
possession or territory thereof) or any foreign government or taxing authority
or subdivision thereof, or any international taxing authority or any subdivision
or taxing authority of any thereof (all the foregoing being herein collectively
called "Taxes" or, separately, a "Tax"), upon or with respect to (i) the Vessel
----- ---
Interest or any portion thereof or interest therein, (ii) the acquisition,
purchase, sale, financing, chartering, subchartering, sub-subchartering and sub-
sub-subchartering, ownership, maintenance, repair, modification, replacement,
removal, substitution, redelivery, alteration, insuring, control, use,
operation, manufacture, assembly, delivery, possession, repossession, location,
storage, importation, exportation, refinancing, refunding, transfer of title,
registration, reregistration, transfer of registration, return or other
disposition thereof of all or any part of the Vessel Interest or any portion
thereof or interest therein, (iii) the rental payments (including, without
limitation, all Base Hire and Supplemental Hire), receipts or earnings arising
from the Vessel Interest or any portion thereof or interest therein, or payable
pursuant to the Charter, or any other payment or right to receive payment
pursuant to the Operative Documents or the Pass Through Trust Agreement or Pass
Through Certificate (including, without limitation, any payment of principal,
interest, discount or premium on or with respect to the Secured Note), (iv) the
Operative Documents and any other documents contemplated
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hereby or thereby and amendments and supplements thereto, or the issuance,
refunding, refinancing or resetting of the Secured Note or the Pass Through
Certificate or any other document executed and delivered in connection with the
consummation of the transactions contemplated by the Operative Documents or Pass
Through Trust Agreement or the interest of any Tax Indemnitee in any of the
foregoing, or the execution, amendment, issuance or delivery of any of the
foregoing, (v) the Indenture Estate or Trust Estate or Pass Through Trust or the
property, or the income or other proceeds received with respect to the property,
held by the Indenture Trustee under the Indenture or the Owner Trustee under the
Trust Agreement, or (vi) otherwise arising out of, with respect to, or in
connection with the transactions contemplated by the Operative Documents, the
Pass Through Certificate, or the Pass Through Trust Agreement.
(b) Exclusions from General Tax Indemnity. The provisions of Section
-------------------------------------
13.2(a) shall not apply to, and the Charterer shall have no liability to a Tax
Indemnitee under Section 13.2(a) with respect to:
(1) Taxes (other than such Taxes that are sales, use, rental,
property or ad valorem Taxes) imposed on, based on or measured by, net
-- -------
income, receipts, capital, net worth, excess profits or conduct of business
which are imposed by the United States federal, or any state or local
government therein, or any foreign or international taxing authority,
including any franchise or privilege Taxes, minimum Taxes, value added
Taxes imposed in lieu of net income Taxes, withholding Taxes (other than
withholding Taxes resulting from either the Owner Trust or Owner
Participant not being a United States person for United States federal
income tax purposes), and any Taxes on or measured by any items of tax
preference;
(2) Taxes, including, without limitation, sales and transfer
Taxes, that result from any voluntary or involuntary transfer by such Tax
Indemnitee of any interest in the Owner Participant, the Vessel Interest,
the Trust Estate or any portion of any of the foregoing, or any interest
arising out of the Operative Documents or Pass Through Trust Agreement or
the Secured Note or Pass Through Certificate; provided, however, that this
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Section 13.2(b)(2) shall not apply to any transfer that (A) relates to the
exercise of remedies in connection with a Charter Event of Default; (B)
results from a Event of Default or from an Event of Loss; or (C) results
from the
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<PAGE>
replacement, removal or substitution of all or any part of the Vessel
Interest;
(3) Taxes imposed by any jurisdiction that would not have been
imposed on a Tax Indemnitee but for its activities in such jurisdiction
unrelated to the transactions contemplated by the Operative Documents or
Pass Through Trust Agreement;
(4) Taxes that result from (A) the willful misconduct or gross
negligence of such Tax Indemnitee, (B) the breach or inaccuracy by such Tax
Indemnitee of any of its representations, covenants and obligations under
the Operative Documents, (C) the failure of a Tax Indemnitee to file tax
returns properly and on a timely basis or to claim a deduction or credit to
which it is entitled (provided that such Tax Indemnitee shall not be
obligated to claim a deduction or credit if it requests but fails to
receive an opinion of Dewey Ballantine or other independent counsel
selected by such Tax Indemnitee and reasonably acceptable to the Charterer
that it is entitled to claim such deduction or credit), or (D) the failure
of a Tax Indemnitee to comply with certification, reporting or other
similar requirements of the jurisdiction imposing such Tax; provided,
--------
however, that the exclusions set forth in subclauses (C) and (D) shall not
-------
apply if any such failure is the result of the failure of the Charterer to
(I) perform its obligations under Section 13.2(c), or to perform its duties
and responsibilities pursuant to any of the Operative Documents, (II)
timely and properly notify such Tax Indemnitee of the applicable filing,
certification, reporting or other similar requirements, or (III) provide
reasonable assistance in complying with any such requirement;
(5) Taxes which are attributable to any period or circumstance
occurring after the expiration or earlier termination of the Charter,
except to the extent attributable to (A) a failure of the Charterer to
fully discharge its obligations under the Charter, (B) Taxes imposed on or
with respect to any payments that are due after the expiration or earlier
termination of the Charter and which are attributable to a period or
circumstance occurring prior to such expiration or earlier termination or
(C) Taxes that relate to events, matters or circumstances occurring prior
to such expiration or earlier termination;
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(6) Taxes which are based on or measured by fees or compensation
received by the Owner Trustee for acting as Owner Trustee under the Trust
Agreement, the Indenture Trustee for acting as Indenture Trustee under the
Indenture or Pass Through Trustee for acting as Pass Through Trustee under
the Pass Through Trust Agreement;
(7) other than with respect to Owner Participants and the
Shareholders therein, Taxes to the extent such Taxes would not have been
imposed on a Tax Indemnitee if such Tax Indemnitee were a United States
person for United States federal income tax purposes;
(8) any Tax that is being contested in accordance with the
provisions of Section 13.2(e) during the pendency of such contest, but only
for so long as such contest is continuing in accordance with such Section
and payment is not otherwise required pursuant to such Section;
(9) Taxes as to which any Tax Indemnitee fails to comply with its
contest obligations under Section 13.2(e) in any material respect, but only
to the extent such failure materially impairs the Charterer's contest
rights with respect to the Taxes that are the subject of the contest and is
not due to any act or failure to act by the Charterer; provided, however,
-------- -------
that this Section 13.2(b)(9) shall not constitute a waiver by the Charterer
of its rights, if any, to assert and sue upon any claims it may have
against the Tax Indemnitee by reason of its failure to comply with its
obligations under Section 13.2(e) of this Agreement;
(10) Taxes imposed as a result of the trust described in the Trust
Agreement or the Pass Through Trust not being treated as a grantor trust or
other conduit entity for federal, state or local tax purposes;
(11) any Taxes with respect to a transferee or subsequent
transferee to the extent of the excess of such Taxes over the amount of the
Taxes that would have been imposed had there not been a transfer by the
initial Tax Indemnitee after the Closing Date of (i) an interest in the
Owner Participant, the Vessel Interest, or of a beneficial interest in the
Trust Estate or any portion of any of the foregoing, or (ii) any interest
arising under any Operative Document or
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Pass Through Trust Agreement or any Secured Note or Pass Through
Certificate;
(12) Taxes which have been included in Owner's Cost;
(13) any Taxes imposed as a result of, or in connection with, any
"prohibited transaction," within the meaning of Section 4975 of the Code,
Section 406 or ERISA or any comparable laws of any governmental authority,
engaged in by any Tax Indemnitee other than, in the case of the Owner
Participant, the making and holding of its investment in the Interest or
the taking of any action at the request or direction of the Charterer;
(14) Taxes imposed on the Owner Trust resulting from a Lessor's
Lien;
(15) Taxes resulting from an amendment to an Operative Document
which is not consented to by the Charterer in writing; or
(16) any Tax in the nature of an intangible tax or similar tax upon
or with respect to the value of the interest of the Indenture Estate or a
Certificateholder, as the case may be, in any of the Secured Note or
Certificate imposed by any government or taxing authority.
Notwithstanding anything contained herein or any other Operative
Document to the contrary, the Charterer acknowledges and agrees to indemnify and
hold harmless the Owner Participant and Owner Trust against any and all
withholding Taxes (inclusive of any interest and penalties imposed for any
failure to timely withhold such Taxes) imposed on or with respect to any amounts
paid to Loan Participant as an indemnified Tax for purposes of this Section
13.2, unless such withholding is due to (i) the Owner Trust not being a United
States person for United States federal income tax purposes, (ii) a failure of
the Owner Participant or the Owner Trustee to comply with any provision of the
Operative Documents (including Section 13.2(b)(4)) except if such failure is the
result of the failure of the Charterer to perform its obligations under Section
13.2(c) or (iii) the breach or inaccuracy of any representations, covenants or
obligations by the Owner Participant or Owner Trust under the Operative
Documents. If a Tax (including any related interest, fines, penalties or
addition to Tax) results from a failure of any Tax Indemnitee to comply with its
obligations under the Operative Documents or the Pass Through Trust Agreement
and the Charterer is required to indemnify another
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Tax Indemnitee against the imposition of such Tax, then the Tax Indemnitee whose
failure resulted in the imposition of such Tax shall, within 30 days after
receipt of notice of payment of the Tax and appropriate payment documentation
with respect thereto, pay to the Charterer an amount which equals the amount
paid by the Charterer with respect to or as a result of such Tax (including any
expenses or other charges borne by the Charterer) increased by (but subject to
the proviso in Section 13.2(f)) the amount of tax savings to such Tax Indemnitee
attributable to the making of such payment to the Charterer.
The provisions of this Section 13.2(b) shall not apply to any Taxes
imposed in respect of the receipt or accrual of any indemnity payment made by
the Charterer pursuant to this Section 13.2 hereof.
(c) Reports. If any report, return, certification or statement is
-------
required to be filed with respect to any Tax that is subject to indemnification
under this Section 13.2, the Charterer shall timely prepare and file the same
(except for (i) any report, return or statement relating to any Taxes described
in Section 13.2(b)(1) or any Taxes in lieu of or enacted in substitution for any
of the foregoing or (ii) any other report, return, certification or statement
which the Tax Indemnitee has notified the Charterer that the Tax Indemnitee
intends to prepare and file); provided that such Tax Indemnitee shall have
--------
furnished the Charterer, at the Charterer's expense, with such information
reasonably necessary to prepare and file such returns as is within such Tax
Indemnitee's control. The Charterer shall either file such report, return,
certification or statement (so as to show the ownership of the Vessel Interest
in the Owner Trust) and send a copy of such report, return, certification or
statement to the Owner Participant and the Owner Trust, or, where not so
permitted to file, shall notify the Owner Participant and the Owner Trust of
such requirement within a reasonable period of time prior to the due date for
filing (without regard to any applicable extensions) and prepare and deliver
such report, return, certification or statement to the Owner Participant and the
Owner Trust. In addition, within a reasonable time prior to the time such
report, return, certification or statement is to be filed the Charterer shall,
to the extent permitted by law, cause all billings of such Taxes to be made to
each Tax Indemnitee in care of the Charterer, make payment thereof and furnish
written evidence of such payment. The Charterer shall furnish promptly upon
written request such data, records and documents as any Tax Indemnitee may
reasonably require of the Charterer to enable such Tax Indemnitee to comply with
requirements of any taxing jurisdiction arising out of such Tax Indemnitee's
participation in the transactions contemplated by this
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Agreement, including, without limitation, requirements relating to Taxes
described in Section 13.2(b)(1).
(d) Payments. Any Tax indemnified hereunder shall be paid directly
--------
when due to the applicable taxing authority if direct payment is permitted, or
shall be reimbursed to a Tax Indemnitee on demand if paid by such Tax Indemnitee
in accordance herewith. Except as otherwise provided in this Section 13.2, all
amounts payable to a Tax Indemnitee hereunder shall be paid promptly in
immediately available funds, but in no event later than the later of (i) 10 days
after the date of such demand or (ii) 10 days before the date the Tax to which
such amount payable hereunder relates is due or is to be paid (ignoring
extension of time) and shall be accompanied by a written statement (which
written statement shall, at the Charterer's request, be verified by a nationally
recognized independent accounting firm mutually acceptable to the Charterer and
the Tax Indemnitee, such verification to be at the Charterer's expense unless
such accountants determine that the amount payable by the Charterer is less than
ninety-five percent (95%) of the amount shown on such written statement, in
which event it will be paid by the Tax Indemnitee) describing in reasonable
detail the Tax and the computation of the amount payable. In the case of a Tax
subject to indemnification under this Section 13.2 which is properly subject to
a contest in accordance with Section 13.2(e), the Charterer (i) shall be
obligated to make any advances with respect to such Tax whenever required under
Section 13.2(e) and (ii) shall pay such Tax (in the amount finally determined to
be owing in such contest) prior to the latest time permitted by the relevant
taxing authority for timely payment after a Final Determination.
(e) Contests; Refunds. (i) In the event a taxing jurisdiction makes
-----------------
a claim with respect to any Tax for which a Charterer may be liable under this
Section 13.2 (a "Tax Claim"), the Charterer may cause the applicable Tax
--- -----
Indemnitee to contest such Tax Claim as set forth herein. In the event any Tax
Indemnitee receives notice of a Tax Claim or potential Tax Claim which may be
indemnified under this Section 13.2, such Tax Indemnitee shall promptly notify
the Charterer thereof. If requested by the Charterer in writing within 30 days
of receipt of such notice (or, if sooner, on or before the last date upon which
the contest of such Tax can be initiated, provided that the Tax Indemnitee's
notice to the Charterer discloses such date), such Tax Indemnitee shall, upon
receipt of an indemnity satisfactory to it for all reasonable costs, expenses,
losses, legal and accountants' fees and disbursements, and for all penalties,
fines, additions to tax and interest, and at the expense of the Charterer,
contest the imposition of any Tax Claim by (1) resisting payment thereof, if
such Tax Indemnitee in its reasonable discretion shall determine such course of
action to
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be appropriate, (2) not paying the same except under protest, if protest is
necessary and proper, or (3) if payment shall be made, using reasonable efforts
to obtain a refund thereof in appropriate administrative and judicial
proceedings, or both; provided, however, that in no event will such Tax
-------- -------
Indemnitee be required to contest or continue to contest any Tax Claim unless
such Tax Indemnitee and the Owner Participant shall have reasonably determined
that the action to be taken will not result in any material risk of sale,
forfeiture or loss of, or the creation of any lien (except if the Charterer
shall have adequately bonded such lien, or otherwise made provision to protect
the interests of such Tax Indemnitee and the Owner Participant in a manner
reasonably satisfactory to such Tax Indemnitee and the Owner Participant) on,
the Vessel Interest, any part thereof or interest therein. If such contest
shall involve payment of the Tax Claim, the Charterer shall have advanced to
such Tax Indemnitee the amount of such payment plus interest, penalties and
additions to tax with respect thereto on an interest-free basis, and shall have
agreed to indemnify the Tax Indemnitee, on an After-Tax Basis, for any adverse
tax consequences resulting from such advance. If permitted by applicable law,
the Charterer may contest, at its own expense, the imposition of any Tax Claim
if the proviso in the second preceding sentence is satisfied. In any contest
controlled by the Tax Indemnitee, such Tax Indemnitee will consult with the
Charterer and permit the Charterer to participate in a reasonable manner in the
conduct of the contest.
A Tax Indemnitee shall not make, accept or enter into a settlement or
other compromise with respect to any Taxes indemnified pursuant to this Section
13.2 (which proceeding the Tax Indemnitee is required to continue), or forego or
terminate any such proceeding with respect to Taxes indemnified pursuant to this
Section 13.2, without the prior written consent of the Charterer.
Notwithstanding the foregoing, if a Tax Indemnitee refuses to contest any Tax
Claim or effects a settlement or compromise of any such Tax that the Tax
Indemnitee is required to contest or otherwise terminates any such contest
without such prior written consent of the Charterer, such Tax Indemnitee shall
be deemed to have waived its right to any indemnity payment by the Charterer
that would otherwise be payable by the Charterer pursuant to this Section 13.2
in respect of such Tax Claim.
(ii) Upon receipt by any Tax Indemnitee of a repayment or refund of
all or any part of any Tax which such Charterer shall have paid for, or
advanced to, such Tax Indemnitee or for which the Charterer shall have
reimbursed such Tax Indemnitee pursuant to this Section 13.2, such Tax
Indemnitee shall pay to the Charterer, as promptly as practicable after the
receipt thereof, the amount of such repayment or refund plus any interest
received by, or credited
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to, such Tax Indemnitee on such amounts net of Taxes thereon plus the amount of
any net tax savings actually realized by such Tax Indemnitee as a result of the
payment made to the Charterer; provided, however, that: (A) such Tax Indemnitee
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shall not be obligated to make such payment with respect to any net tax savings
to the extent that the amount of such payment would exceed (x) all prior
indemnity payments (excluding costs and expenses incurred with respect to
contests) made by the Charterer with respect to such Tax pursuant to this
Section 13.2 and less (y) the amount of all prior payments by such Tax
Indemnitee to the Charterer hereunder with respect to such Tax (but any such
excess shall be applied against, and reduce pro tanto, any future payment due
--- -----
such Tax indemnitee pursuant to this Section 13.2); and (B) if there is (1) a
subsequent loss of any such tax savings or refund realized by the Tax Indemnitee
or (2) a reduction of an amount otherwise payable to a Tax Indemnitee hereunder
as a result of any such tax savings or refund, such loss or reduction shall be
treated as a Tax for which the Charterer must indemnify such Tax Indemnitee
pursuant to this Section 13.2.
(f) Tax Savings. If, by reason of any payment made to or for the
-----------
account of a Tax Indemnitee by the Charterer pursuant to this Section 13.2, such
Tax Indemnitee at any time realizes a reduction in any Taxes for which the
Charterer is not required to indemnify such Tax Indemnitee pursuant to this
Section 13.2 and which was not taken into account previously in computing such
payment by the Charterer to or for the account of such Tax Indemnitee, then such
Tax Indemnitee shall promptly pay to the Charterer an amount equal to such
actual reduction in Taxes, plus the amount of any additional reduction in Taxes
of such Tax Indemnitee attributable to the payment made by such Tax Indemnitee
to the Charterer pursuant to this sentence; provided, however, that: (A) such
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Tax Indemnitee shall not be obligated to make such payment with respect to any
net tax savings to the extent that the amount of such payment would exceed (x)
all prior indemnity payments (excluding costs and expenses incurred with respect
to contests) made by the Charterer with respect to such Tax pursuant to this
Section 13.2 and less (y) the amount of all prior payments by such Tax
Indemnitee to the Charterer hereunder with respect to such Tax (but any such
excess shall be applied against, and reduce pro tanto, any future payment due
--- -----
such Tax indemnitee pursuant to this Section 13.2); and (B) if there is a (i)
subsequent loss of any such tax savings or refund realized by the Tax Indemnitee
or (ii) a reduction of an amount otherwise payable to a Tax Indemnitee hereunder
as a result of any such tax savings or refund, such loss or reduction shall be
treated as a Tax for which the Charterer must indemnify such Tax Indemnitee
pursuant to this Section 13.2.
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<PAGE>
13.3 Special Indemnity Relating to U.K. Documents. The Charterer
--------------------------------------------
agrees to indemnify, protect, save and keep harmless the Indenture Trustee, the
Pass Through Trustee and each holder of a Secured Note (the "Special
Indemnitees") from any losses, liabilities or expenses (collectively, "Losses")
suffered or incurred by any Special Indemnitee resulting from the obligations
(the "U.K. Obligations") of the Owner Trust under the U.K. Documents including,
without limitation of the generality of the foregoing, Losses incurred as a
result of an insolvency proceeding of the Owner Trust resulting from the U.K.
Obligations or Losses resulting from the failure of the Indenture Trustee to
receive Assigned Hire when due as a result of the actions of any holder of a
U.K. Obligation.
13.4 No Guarantee. Nothing in Sections 13.1, 13.2 or 13.3 shall be
------------
construed as a guaranty by the Charterer of any residual value in the Vessel
Interest or as a guaranty of the Secured Note.
SECTION 14. TRANSFER OF AN OWNER PARTICIPANT'S
INTEREST.
----------------------------------
14.1 Restrictions on Transfer. Without the prior written consent of,
------------------------
so long as the Charter shall be in effect, the Charterer, and, so long as the
Lien of the Indenture shall be in effect, the Indenture Trustee, the Owner
Participant shall not, directly or indirectly, assign, convey or otherwise
transfer (whether by consolidation, merger, sale of assets or otherwise) any of
its right, title or interest in and to the Trust Estate, this Agreement, the
Trust Agreement or any other Operative Document except in accordance with the
terms and conditions of this Section 15.
14.2 Permitted Transfers. The Owner Participant may transfer all or
-------------------
part of its right, title and interest in and to the Trust Estate (whether or not
the same shall then have been pledged or mortgaged under the Indenture, but
subject to the Lien of the Indenture if then in effect) and in and to this
Agreement and the other Operative Documents to any Person (a "Transferee") only
----------
in compliance with and upon satisfaction of the following conditions:
(a) the Transferee shall be (i) a financial institution, leasing
company or other investor whose net worth at the time is at least
$25,000,000 (or the obligations of which are guaranteed by an entity whose
net worth at the time is at least $25,000,000 pursuant to a guarantee in
form and substance reasonably satisfactory to the Charterer and the
Indenture Trustee), (ii) an Affiliate of the Owner Participant, or (iii) a
solvent entity formed under the laws of the Cayman Islands or any of the
states of the United States at least 50% of the
64
<PAGE>
equity interest in which is owned by one or more Affiliates of the
Guarantor; provided that in the case of Transferees under clauses (ii) or
--------
(iii) either (x) the Owner Participant shall guarantee the obligations of
such Transferee as Owner Participant under the Operative Documents pursuant
to a guarantee in form and substance reasonably satisfactory to the
Charterer and the Indenture Trustee, or (y) such Transferee shall have a
net worth at the time of such transfer of at least $25,000,000;
(b) no such transfer shall violate any provision of, or create a
relationship which would be in violation of, any applicable Governmental
Rules, including, without limitation, applicable securities laws, any
agreement to which the Owner Participant or the Transferee is a party or by
which it or any of its property is bound or any Governmental Actions;
(c) the Transferee shall enter into an agreement or agreements, in
form and substance reasonably satisfactory to the Charterer, the Owner
Trust and (if the Lien of the Indenture shall then be in effect) the
Indenture Trustee, whereby the Transferee shall confirm that it has the
requisite power and authority to enter into and to carry out the
transactions contemplated hereby and in each Operative Document to which
the Owner Participant is or will be a party, and that it shall be deemed a
party to each of such Operative Documents and shall agree to be bound by
all the terms of, and to undertake all the obligations of the transferor to
be performed on or after the date of such transfer contained in, each of
such Operative Documents, and whereby such Transferee shall make
representations and warranties reasonably requested by the Charterer, the
Owner Trust and the Indenture Trustee not exceeding the scope of the
representations and warranties contained in Section 7; provided that such
--------
Transferee delivers to the Charterer and the Indenture Trustee a written
representation and warranty (or an opinion of counsel reasonably
satisfactory to the Charterer and the Indenture Trustee) that such transfer
to and ownership by such Transferee (1) will not result in a "prohibited
transaction" as defined in Section 406 of ERISA or Section 4975 of the Code
or (2) are covered by an exemption contained in ERISA or an administrative
exemption thereunder;
(d) the transferring Owner Participant shall have provided 30 days
prior written notice of such transfer to the Indenture Trustee and the
Charterer, which notice shall specify (i) such information and be
accompanied by evidence as shall be reasonably necessary to establish
compliance with this Section 15 and Section 12.7 of the
65
<PAGE>
Trust Agreement (ii) the name and address (for the purpose of giving notice
as contemplated by the Operative Documents) of the Transferee;
(e) the transferring Owner Participant shall pay or cause to be paid
all reasonable fees, expenses, disbursements and costs (including, without
limitation, legal and other professional fees and expenses) incurred by the
Owner Trust, the Loan Participant, the Indenture Trustee or the Charterer
in connection with any transfer pursuant to this Section 14;
(f) the transferring Owner Participant or the Transferee shall have
delivered to the Charterer and, if the Lien of the Indenture shall then be
in effect, the Indenture Trustee, an opinion of counsel in form and
substance reasonably satisfactory to each of them, as to the due
authorization, execution, delivery and enforceability of the agreement or
agreements referred to in clauses (c) and (g) of this Section 14.2, and as
to the matters referred to in clause (b) of this Section 14.2; and
(g) the transferring Owner Participant or the Transferee shall agree
by an instrument in writing in form and substance reasonably satisfactory
to the Charterer to indemnify the Charterer against any increased tax
indemnity obligations the Charterer may have as a result of such
conveyance.
14.3 Effect of Transfer. From and after any transfer effected in
------------------
accordance with this Section 14, the Owner Participant making such transfer
shall be released, to the extent of the obligations assumed by the Transferee,
from its liability hereunder and under the other Operative Documents to which it
is or will be a party in respect of obligations to be performed on or after the
date of such transfer. Upon any transfer by the Owner Participant in accordance
with this Section 14, the Transferee shall be deemed an "Owner Participant" for
all purposes of the Operative Documents and each reference herein to the Owner
Participant making such transfer shall thereafter be deemed a reference to such
Transferee for all purposes, except as provided in the preceding sentence.
SECTION 15. MISCELLANEOUS.
-------------
15.1 Survival. All agreements, representations, warranties and
--------
indemnities contained in this Agreement and the other Operative Documents and in
any agreement, document or certificate delivered pursuant hereto or thereto or
in connection herewith or therewith shall survive and continue in effect
following the execution and delivery of this Agreement
66
<PAGE>
and the other Operative Documents and the participation by the Owner Participant
and the Loan Participant in the payment of Owner's Cost as contemplated hereby
and by the other Operative Documents.
15.2 Binding Effect. All agreements, representations, warranties and
--------------
indemnities in this Agreement and the other Operative Documents and in any
agreement, document or certificate delivered pursuant hereto or thereto or in
connection herewith or therewith shall bind the Person making the same and its
successors and assigns, and shall inure to the benefit of each Person for whom
made and its successors and permitted assigns.
15.3 Notices. All communications, notices and consents provided for
-------
in this Agreement shall be in writing and shall be given in person or by courier
or by means of telecopy or other wire transmission (with request for assurance
of receipt in a manner typical with respect to communications of that type), or
mailed by registered or certified first class mail, return receipt requested,
addressed as set forth in Schedule 1 or at such other address as any such Person
may from time to time designate by notice duly given in accordance with the
provisions of this Section 15.3 to the other parties hereto. All such
communications, notices and consents given in such manner shall be deemed given
when received in accordance with this Section 15.3 (or when proffered to a
Person if receipt is refused).
15.4 Counterpart Execution. This Agreement may be executed in any
---------------------
number of counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
15.5 GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED
-------------
BY, AND BE CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BUT
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS THEREOF BUT APPLYING
WHERE MANDATORILY APPLICABLE THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA.
15.6 Amendments, Supplements, Etc. (a) Neither this Agreement nor
----------------------------
any of the terms hereof may be amended, supplemented, waived or modified orally,
but only by an instrument in writing signed by the party against which
enforcement of such change is sought.
(b) Prior to the Charter Termination Date, neither the Trust
Agreement nor the Indenture may be amended, waived, supplemented or modified to
permit any action contrary to, or
67
<PAGE>
disturb the Charterer's rights under, the Charter, or otherwise adversely affect
the Charterer's rights, or increase the Charterer's obligations or liabilities,
under any Operative Document without the consent of the Charterer.
15.7 Headings; Table of Contents. The division of this Agreement
---------------------------
into Sections, subsections and paragraphs, the provision of a table of contents
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation hereof.
15.8 Severability of Provisions. Any provision of this Agreement
--------------------------
which may be determined by competent authority to be invalid or unenforceable in
such jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without invalidating or rendering
unenforceable any remaining terms and provisions hereof, and any such invalidity
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. The parties shall
negotiate in good faith to replace such provision with an appropriate, legal
provision. To the extent permitted by applicable law, the parties hereto hereby
waive any provision thereof that renders any term or provision hereof invalid or
unenforceable in any respect.
15.9 Entire Agreement. This Agreement (including the schedules and
----------------
exhibits hereto), the Pass Through Trust Agreement, the Pass Through Trust
Supplement and the other Operative Documents, and all certificates, instruments
and other documents relating thereto delivered and to be delivered from time to
time pursuant to the Operative Documents and the Pass Through Trust Agreement,
supersede all agreements (other than any Operative Document) prior to the date
of this Agreement, written or oral, between or among any of the parties hereto
relating to the transactions contemplated hereby and thereby, not including the
Amended and Restated Joint Venture Agreement relating to the Vessel between
MOSAT, Saudi Maritime Holding Company and SAMCAY dated as of December 3, 1996.
15.10 Limitation of Liability of Managing Trustee, Indenture Trustee
--------------------------------------------------------------
and Pass Through Trustee. (a) It is expressly understood and agreed by and
- ------------------------
among all of the parties hereto that, except as otherwise expressly provided
herein or in any other Operative Document (other than the Trust Agreement), (i)
this Agreement is executed and delivered by the Managing Trustee not in its
individual capacity, except to the extent expressly set forth herein, but solely
as Managing Trustee for the Owner Trust under the Trust Agreement in the
exercise of the power and authority conferred and vested in it as the Managing
Trustee, (ii) certain of the representations, undertakings and agreements made
herein by
68
<PAGE>
the Managing Trustee are not personal representations, undertakings and
agreements, but are binding only on the Trust Estate and the Managing Trustee,
as trustee, (iii) except as set forth in the proviso to this sentence, nothing
herein contained shall be construed as creating any liability of the Trust
Company or any incorporator or any past, present or future subscriber to the
capital stock of, or stockholder, officer or director of, the Trust Company to
perform any covenant, whether express or implied, contained herein, all such
liability, if any, being expressly waived by each of the other parties hereto
and by any Person claiming by, through or under any such party, and (iv) so far
as the Managing Trustee is concerned, each of the other parties hereto and any
Person claiming by, through or under any such party shall (other than with
respect to Claims arising from the willful misconduct or gross negligence of the
Managing Trustee or its failure to distribute funds in accordance with the terms
of the Operative Documents) look solely to the Trust Estate and the Indenture
Estate for the performance of any obligation under any of the instruments
referred to herein; provided, however, that notwithstanding anything in this
-------- -------
Section 15.10 to the contrary, the Trust Company shall be liable (A) in its
individual capacity and as Managing Trustee to the Owner Participant as
expressly set forth in the Trust Agreement, (B) in its individual capacity, in
respect of the representations, warranties and agreements of the Trust Company
made in its individual capacity as expressly set forth herein (including,
without limitation, Sections 9) or in any other Operative Document to which it
is a party or in any Officer's Certificate of the Trust Company delivered
pursuant hereto, and (C) in its individual capacity for the consequences of its
own gross negligence or willful misconduct or its failure to distribute funds in
accordance with the terms of the Operative Documents to which it is or will be a
party (including, without limitation, willful breach of contract).
(b) It is expressly understood and agreed by and among all of the
parties hereto that, except as otherwise expressly provided herein or in any
other Operative Document, (i) this Agreement is executed and delivered by State
Street Bank and Trust Company not in its individual capacity but solely as
trustee under the Indenture in the exercise of the power and authority conferred
and vested in it as such Indenture Trustee, (ii) certain of the representations,
undertakings and agreements made herein by the Indenture Trustee are not
personal representations, undertakings and agreements, but are binding only on
the Indenture Trustee, as trustee, (iii) except as set forth in the proviso to
this sentence, nothing herein contained shall be construed as creating any
liability of State Street Bank and Trust Company or any incorporator or any
past, present or future subscriber to the capital stock of, or stockholder,
officer or director of, State Street Bank and Trust Company to perform any
69
<PAGE>
covenant, whether express or implied, contained herein, all such liability, if
any, being expressly waived by each of the other parties hereto and by any
Person claiming by, through or under any such party, and (iv) so far as the
Indenture Trustee is concerned, each of the other parties hereto and any Person
claiming by, through or under any such party shall (other than with respect to
Claims arising from the willful misconduct or gross negligence of the Indenture
Trustee and for its failure to distribute funds in accordance with the terms of
the Operative Documents) look solely to the Indenture Trustee, as trustee for
the performance of any obligation under any of the instruments referred to
herein; provided, however, that notwithstanding anything in this Section 15.10
-------- -------
to the contrary, State Street Bank and Trust Company shall be liable (A) in its
individual capacity, in respect of the representations, warranties and
agreements of the Indenture Trustee made in its individual capacity as expressly
set forth herein (including, without limitation, in Section 10) or in any other
Operative Document to which it is a party or in any Officer's Certificate made
in its individual capacity delivered pursuant hereto, and (B) in its individual
capacity for the consequences of its own gross negligence or willful misconduct
and for its failure to use ordinary care to disburse funds in accordance with
any Operative Document to which it is or will be a party.
(c) It is expressly understood and agreed by and among all of the
parties hereto that, except as otherwise expressly provided herein or in the
Pass Through Trust Agreement, (i) this Agreement is executed and delivered by
State Street Bank and Trust Company not in its individual capacity but solely as
trustee under the Pass Through Trust Agreement in the exercise of the power and
authority conferred and vested in it as such Pass Through Trustee, (ii) certain
of the representations, undertakings and agreements made herein by the Pass
Through Trustee are not personal representations, undertakings and agreements,
but are binding only on the Pass Through Trustee, as trustee, (iii) except as
set forth in the proviso to this sentence, nothing herein contained shall be
construed as creating any liability of State Street Bank and Trust Company or
any incorporator or any past, present or future subscriber to the capital stock
of, or stockholder, officer or director of, State Street Bank and Trust Company
to perform any covenant, whether express or implied, contained herein, all such
liability, if any, being expressly waived by each of the other parties hereto
and by any Person claiming by, through or under any such party, and (iv) so far
as the Pass Through Trustee is concerned, each of the other parties hereto and
any Person claiming by, through or under any such party shall (other than with
respect to Claims arising from the willful misconduct or negligence of the Pass
Through Trustee and for its failure to distribute funds in accordance with the
terms of the Pass Through Trust Agreement) look
70
<PAGE>
solely to the Pass Through Trustee, as trustee for the performance of any
obligation under any of the instruments referred to herein; provided, however,
-------- -------
that notwithstanding anything in this Section 15.10 to the contrary, State
Street Bank and Trust Company shall be liable (A) in its individual capacity, in
respect of the representations, warranties and agreements of the Pass Through
Trustee made in its individual capacity as expressly set forth herein
(including, without limitation, in Sections 8 and 11) or in the Pass Through
Trust Agreement or in any Officer's Certificate made in its individual capacity
delivered pursuant hereto, and (B) in its individual capacity for the
consequences of its own negligence or willful misconduct and for its failure to
use ordinary care to disburse funds in accordance with the Pass Through Trust
Agreement.
15.11 Jurisdiction; Service of Process. Any legal action or
--------------------------------
proceeding with respect to this Agreement or any other Operative Document to
which any party hereto is a signatory or against any such party or against the
Indenture Estate or Trust Estate may be brought, at the option of any such
party, in any of the courts in the State of New York or the Federal courts of
the United States of America located in the City of New York, and each party
hereto hereby unconditionally accepts the nonexclusive jurisdiction of the
aforesaid courts, expressly waiving any other jurisdiction to which any such
party may be entitled by reason of its present and future domicile. Each party
hereto irrevocably waives any objection it may now or hereafter have to the
laying of venue of any such action or proceeding in any of the aforesaid courts
and any claim it may now or hereafter have that any such action or proceeding
has been brought in an inconvenient forum. Each party hereto further
irrevocably consents to the service of process out of any of the aforesaid
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail to such party's address for notices specified
herein. Nothing herein shall affect the right to serve process in any other
manner permitted by law.
15.12 Instructions. By their respective execution and delivery of
------------
this Agreement, the Owner Participant and the Pass Through Trustee hereby
instruct the Owner Trust, the Managing Trustee and the Indenture Trustee to
execute and deliver this Agreement.
71
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be duly executed as of the date first above written.
CHARTERER: MOBIL MARINE FINANCE COMPANY I INC.
By: /s/ R.E. Sliwinski
------------------------------------
Name: R.E. Sliwinski
Title: Authorized Signatory
OWNER PARTICIPANT: SAMOCO L.L.C.
By: /s/ Bengt Hermelin
------------------------------------
Name: Bengt Hermelin
Title: Director
MANAGING TRUSTEE: DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED, not in its
individual capacity except to the extent expressly
provided herein, but solely as Managing Trustee
By: /s/ J.H. Gullimare
------------------------------------
Name: J.H. Gullimare
Title: Authorized Signatory
OWNER TRUST: SAMOCO 1233 TRUST
By: DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED, not in
its individual capacity, except to the extent
expressly set forth herein, but solely as Managing
Trustee
By: /s/ J.H. Gullimare
------------------------------------
Name: J.H. Gullimare
Title: Authorized Signatory
[PARTICIPATION AGREEMENT - 1233]
<PAGE>
INDENTURE TRUSTEE: STATE STREET BANK AND TRUST COMPANY, not in its
individual capacity, except to the extent expressly set
forth herein, but solely as Indenture Trustee
By: /s/ Ruth A. Smith
------------------------------------
Name: Ruth A. Smith
Title: Vice President
PASS THROUGH TRUSTEE: STATE STREET BANK AND TRUST COMPANY, not in its
individual capacity, except to the extent expressly set
forth herein, but solely as Pass Through Trustee and
Loan Participant
By: /s/ Ruth A. Smith
------------------------------------
Name: Ruth A. Smith
Title: Vice President
[PARTICIPATION AGREEMENT - 1233]
<PAGE>
APPENDIX A
DEFINITIONS
1-1
<PAGE>
SCHEDULE 1
to
Participation Agreement
-----------------------
ADDRESSES FOR NOTICES AND PAYMENTS
----------------------------------
CHARTERER:
---------
Mobil Marine Finance Company I Inc.
3225 Gallows Road
Fairfax, Virginia 22037-0001
Attention:Treasurer
Telecopier: 703-846-1469
OWNER PARTICIPANT:
-----------------
SAMOCO L.L.C.
c/o Maples and Calder
Ugland House
George Town
Grand Cayman
Cayman Islands
British West Indies
Attention: Julian Reddyhough
Telecopier: 809-949-8080
Method of Payment
-----------------
All payments to be made to [Owner Participant] shall be made to:
]
]
Notices
-------
All communications with respect to payments and all other communications
to be made to the address first set forth above.
MANAGING TRUSTEE OR THE TRUST COMPANY:
-------------------------------------
Deutsche Morgan Grenfell (Cayman) Limited
Elizabethan Square
P.O.Box 1984
George Town
Grand Cayman
Cayman Islands
1-2
<PAGE>
British West Indies
Attention: Managing Director
Telecopier: 809-949-8178
Method of Payment
-----------------
Deutsche Morgan Grenfell (Cayman) Limited
[ ]
[ ]
OWNER TRUST:
-----------
c/o Deutsche Morgan Grenfell (Cayman) Limited
Elizabethan Square
P.O.Box 1984
George Town
Grand Cayman
Cayman Islands
British West Indies
Attention: Managing Director
Telecopier: 809-949-8178
Method of Payment
-----------------
SAMOCO 1233 Trust
[ ]
[ ]
INDENTURE TRUSTEE OR PASS THROUGH TRUSTEE:
-----------------------------------------
State Street Bank and Trust Company
Two International Place
Boston, MA 02110
Attention: Corporate Trust Department
Telecopier: 617-664-5371
Method of Payment
-----------------
State Street Bank and Trust Company
[ ]
[ ]
1-3
<PAGE>
SCHEDULE 2
to
Participation Agreement
-----------------------
INVESTMENT
----------
Seller: Owner Participant
Equity Investment:
Loan Participant Secured Note: $62,800,000 [ ]%
2-1
<PAGE>
SCHEDULE 3
to
Participation Agreement
-----------------------
CERTAIN FILINGS AND RECORDINGS
------------------------------
A. Precautionary UCC-1 Financing Statements with regard to the Charter
filed with each of the following:
1. State Corporation Commission of Virginia
2. County Clerk's Office of Fairfax County, Virginia
B. UCC-1 Financing Statements with regard to the Indenture Estate filed
with the Secretary of State of Delaware.
C. Delivery of Notification Letter of the Assignment of Charterer's
Obligations Addressed to and Acknowledged by the Charterer.
D. Recordation of the Ship Mortgage with the Registry of the Republic
of the Marshall Islands.
E. Delivery of prescribed particulars of the charge created by the
Owner Trust under the Indenture together with an original of the
Indenture to the Registrar of Companies in England.
3-1
<PAGE>
SCHEDULE 4
to
Participation Agreement
-----------------------
CERTAIN EXCEPTIONS
------------------
The assignment of the Construction Contract from the Owner Participant to
the Owner Trust is subject to obtaining the consents of the Japanese
authorities, if any, required in accordance with the Construction
Contract.
3-2
<PAGE>
EXHIBIT 99.8
================================================================================
PARTICIPATION AGREEMENT
among
MOBIL MARINE FINANCE COMPANY I INC.,
Charterer
SAMOCO L.L.C.,
Owner Participant
SAMOCO 1234 TRUST,
Owner Trust
DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED,
Managing Trustee
STATE STREET BANK AND TRUST COMPANY,
Pass Through Trustee and Loan Participant
and
STATE STREET BANK AND TRUST COMPANY,
Indenture Trustee
Dated as of December 19, 1996
Lease Financing of One Very Large Crude Carrier
Hull No. 1234
<PAGE>
TABLE OF CONTENTS
Page
RECITALS................................................. 1
SECTION 1. DEFINITIONS; INTERPRETATION.................. 2
SECTION 2. COMMITMENTS OF PARTICIPANTS; CLOSING;
FUNDING; TRANSACTION EXPENSES.............. 3
2.1 Commitment of Owner Participant.............. 3
2.2 Commitments of Pass Through Trustee;
Secured Note............................... 3
2.3 Expiration of Commitments.................... 3
2.4 Notice of Closing Dates...................... 3
2.5 Time and Place of Closing.................... 4
2.6 Delivery of Funds............................ 4
2.7 Application of Funds by Owner Trust.......... 4
2.8 Conclusion of U.K. Arrangements.............. 5
2.9 Actions on Closing Date...................... 5
2.10 Transaction Expenses........................ 5
2.11 Authorization to Owner Trust................ 6
SECTION 3. CONDITIONS TO CLOSING BY THE
CHARTERER. 6
3.1 Operative Documents.......................... 6
3.2 Legality, Etc................................ 7
3.3 Event of Loss................................ 7
3.4 Consents and Approvals....................... 7
3.5 Representations and Warranties;
Certificates............................... 8
3.6 Opinions..................................... 8
3.7 Litigation................................... 8
3.8 Sale of Pass Through Certificates............ 8
SECTION 4. CONDITIONS TO CLOSING BY THE PASS
THROUGH TRUSTEE............................ 9
4.1 Notice of Closing............................ 9
4.2 Operative Documents.......................... 9
4.3 Legality, Etc................................ 9
4.4 Event of Loss................................ 10
4.5 Insurance.................................... 10
4.6 Opinions..................................... 10
4.7 Taxes........................................ 11
4.8 Officer's Certificates....................... 11
4.9 Resolutions, Etc............................. 13
4.10 Litigation.................................. 14
4.11 Consents and Approvals...................... 14
4.12 Title; Filings and Recordings............... 15
4.13 Sale of Pass Through Certificates........... 16
4.14 No Default Under Charter.................... 16
4.15 U.K. Closing................................ 16
i
<PAGE>
Page
----
4.16 Investment.................................. 16
SECTION 5. CONDITIONS TO CLOSING BY OWNER
PARTICIPANT................ 16
5.1 Notice of Closing............................ 17
5.2 Operative Documents.......................... 17
5.3 Legality, Etc................................ 17
5.4 Event of Loss................................ 17
5.5 Insurance.................................... 17
5.6 Opinions..................................... 18
5.7 Taxes........................................ 19
5.8 Officer's Certificates....................... 19
5.9 Resolutions, Etc............................. 20
5.10 Litigation.................................. 22
5.11 Consents and Approvals...................... 22
5.12 Title; Filings and Recordings............... 23
5.13 Sale of Pass Through Certificates........... 23
5.14 No Default Under Charters................... 23
5.15 Loans....................................... 23
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE
CHARTERER.................................. 23
6.1 Due Organization............................. 23
6.2 Authorization................................ 24
6.3 Execution; Enforceability.................... 24
6.4 No Violation................................. 24
6.5 Consents and Approvals....................... 25
6.6 Securities Act............................... 25
6.7 Title; Filings and Recordings................ 26
6.8 Chief Place of Business...................... 26
6.9 Litigation................................... 26
6.10 No Default.................................. 26
6.11 Event of Loss............................... 26
6.12 Investment Company Act...................... 26
6.13 No Brokers' Fees............................ 27
6.14 No Other Business or Liabilities.......... 27
6.15 Payment of Taxes, etc....................... 27
SECTION 7. REPRESENTATIONS AND WARRANTIES
OF THE OWNER PARTICIPANT................... 27
7.1 Due Organization............................. 27
7.2 Authorization; Execution; Enforceability..... 28
7.3 No Violation................................. 28
7.4 Owner Participant's Liens.................... 28
7.5 Acquisition for Investment................... 28
7.6 Securities Act............................... 29
7.7 ERISA........................................ 29
7.8 Investment Company Act....................... 29
7.9 Litigation................................... 29
7.10 No Default.................................. 30
7.11 Federal Reserve Regulations................. 30
ii
<PAGE>
Page
----
7.12 No Brokers' Fees............................ 30
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE
PASS THROUGH TRUSTEE....................... 30
8.1 Due Organization............................. 30
8.2 Authorization; Execution; Enforceability..... 30
8.3 No Violation................................. 31
8.4 Litigation................................... 31
8.5 Pass Through Trustee's Liens................. 32
8.6 Securities Act............................... 32
SECTION 9. REPRESENTATIONS AND WARRANTIES OF THE
TRUST COMPANY AND OWNER TRUST.............. 32
9.1 Due Organization............................. 32
9.2 Authorization; Execution; Enforceability..... 33
9.3 No Violation................................. 33
9.4 No Default................................... 34
9.5 Litigation................................... 34
9.6 Owner's Liens................................ 34
9.7 Securities Act............................... 35
9.8 Chief Place of Business...................... 35
9.9 No Taxes Payable............................. 35
9.10 Title....................................... 36
9.11 Federal Reserve Regulations................. 36
SECTION 10. REPRESENTATIONS AND WARRANTIES OF
INDENTURE TRUSTEE.......................... 36
10.1 Due Organization............................ 36
10.2 Authorization; Execution;
Enforceability............................. 36
10.3 No Violation................................ 37
10.4 Litigation.................................. 37
10.5 Indenture Trustee's Liens................... 38
SECTION 11. CHARTERER COVENANTS......................... 38
11.1 Officer's Certificate....................... 38
11.2 Maintenance of Corporate Existence,
Etc........................................ 38
11.3 Merger, Consolidation, Sale, Etc............ 38
11.4 Change in Name or Chief Place of
Business................................... 40
11.5 Further Assurances.......................... 40
11.6 Inspection.................................. 41
11.7 Documentation of Vessels.................... 41
11.8 No Petition................................. 42
SECTION 12. OTHER COVENANTS AND AGREEMENTS.............. 42
12.1 Agreements of Owner Participant............. 42
12.2 Agreements of Trust Company and Owner
Trust...................................... 44
12.3 Agreements of Pass Through Trustee.......... 46
iii
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Page
----
12.4 Agreements of Indenture Trustee............. 47
12.5 Confidentiality............................. 48
12.6 Further Assurances.......................... 49
SECTION 13. INDEMNIFICATION...................... 49
13.1 General Indemnification..................... 49
13.2 General Tax Indemnification................. 54
13.3 Special Indemnity Relating to U.K.
Documents.................................. 64
13.4 No Guarantee................................ 64
SECTION 14. TRANSFER OF AN OWNER PARTICIPANT'S
INTEREST................... 64
14.1 Restrictions on Transfer.................... 64
14.2 Permitted Transfers......................... 64
14.3 Effect of Transfer.......................... 66
SECTION 15. MISCELLANEOUS............................... 66
15.1 Survival.................................... 66
15.2 Binding Effect.............................. 67
15.3 Notices..................................... 67
15.4 Counterpart Execution....................... 67
15.5 GOVERNING LAW............................... 67
15.6 Amendments, Supplements, Etc................ 67
15.7 Headings; Table of Contents................. 68
15.8 Severability of Provisions.................. 68
15.9 Entire Agreement............................ 68
15.10 Limitation of Liability of Managing
Trustee, Indenture Trustee and Pass
Through Trustee............................ 68
15.11 Jurisdiction; Service of Process........... 71
15.12 Instructions............................... 71
Appendix A Definitions
Schedules
Schedule 1 Addresses for Notices and Payments
Schedule 2 Equity Investment
Schedule 3 Certain Filings and Recordings
Schedule 4 Certain Exceptions
Exhibit A-1 Ralph N. Johanson, Jr., Esq., Managing
Counsel, Corporate Finance and Securities
of the Guarantor
Exhibit A-2 Dewey Ballantine, special counsel to the
Charterer and the Guarantor
iv
<PAGE>
Exhibit A-3 Haight, Gardner, Poor & Havens, special
Marshall Islands counsel
Exhibit A-4 Maples & Calder, special counsel to the
Owner Participant
Exhibit A-5 Morris, James, Hitchins & Williams, special
Delaware counsel to the Resident Trustee
and the Owner Trust
Exhibit A-6 Maples & Calder, special Cayman Islands
counsel to the Trust Company and the Owner
Trust
Exhibit A-7 Bingham, Dana & Gould, counsel to the
Indenture Trustee
Exhibit A-8 Bingham, Dana & Gould, counsel to the Pass
Through Trustee
Exhibit A-9 Dewey Ballantine, special New York counsel
to the Owner Participant
Exhibit A-10 Slaughter and May, special English counsel
to the Owner Participant
v
<PAGE>
PARTICIPATION AGREEMENT
-----------------------
THIS PARTICIPATION AGREEMENT, dated as of December 19, 1996, is among
MOBIL MARINE FINANCE COMPANY I INC., a Delaware corporation, SAMOCO L.L.C., a
Cayman Islands limited life company, STATE STREET BANK AND TRUST COMPANY, a
Massachusetts chartered trust company, not in its individual capacity except to
the extent expressly set forth herein but solely as Pass Through Trustee under
the Pass Through Trust Agreement, SAMOCO 1234 TRUST, a trust created pursuant to
the Delaware Business Trust Act under the Trust Agreement, DEUTSCHE MORGAN
GRENFELL (CAYMAN) LIMITED, a Cayman Islands company, not in its individual
capacity except to the extent expressly set forth herein but solely as Managing
Trustee under the Trust Agreement, and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts chartered trust company, not in its individual capacity except to
the extent expressly set forth herein but solely as Indenture Trustee under the
Indenture.
RECITALS:
A. The Owner Trust desires to finance its acquisition of the Vessel
in part through the transactions contemplated by this Agreement.
B. Subject to the terms and conditions set forth herein, the Owner
Trust desires to charter the Vessel Interest to the Charterer pursuant to the
Charter and the Charterer desires to charter the Vessel Interest from the Owner
Trust pursuant to the Charter and to sub-charter the Vessel Interest to MSCL
pursuant to the Initial Subcharter.
C. Prior to the execution and delivery of this Agreement, the Owner
Participant, the Trust Company and the Resident Trustee have entered into the
Trust Agreement, pursuant to which the Trust Company has agreed, among other
things, to act as the Managing Trustee, and to hold the Trust Estate as Managing
Trustee for the benefit of the Owner Participant on the terms specified therein,
subject, however, to the Lien created under the Indenture.
D. Prior to the execution and delivery of this Agreement, the Owner
Trust and the U.K. Lessor have entered into the Conditional Sale Agreement,
pursuant to which the Owner Trust agreed, among other things, to sell to the
U.K. Lessor the Vessel and the U.K. Lessor has agreed to purchase the Vessel
from the Owner Trust on the terms specified therein;
E. Prior to the execution and delivery of this Agreement, the Owner
Trust and the U.K. Lessor have entered
<PAGE>
into a Head Lease with respect to the Vessel pursuant to which the U.K. Lessor
agreed, among other things, to lease the Vessel to the Owner Trust and the Owner
Trust has agreed to lease the Vessel from the U.K. Lessor on the terms specified
therein;
F. Concurrently with the execution and delivery of this Agreement,
the Owner Trust and the Charterer have entered into the Charter, pursuant to
which the Owner Trust agreed, among other things, to charter the Vessel Interest
to the Charterer and the Charterer has agreed to charter the Vessel Interest
from the Owner Trust on the terms specified therein.
G. Concurrently with the execution and delivery of this Agreement,
the Owner Trust and the Indenture Trustee have entered into the Indenture,
pursuant to which the Owner Trust, for the benefit of the Loan Participant, has
agreed, among other things, to mortgage and pledge unto the Indenture Trustee,
all of the Owner Trust's right, title and interest in and to the Indenture
Estate.
H. Concurrently with the execution and delivery of this Agreement,
the Pass Through Trustee, the Charterer and certain other Persons have entered
into the Pass Through Trust Agreement and the Pass Through Trust Supplement
pursuant to which, among other things, the Pass Through Certificates will be
issued.
I. Concurrently with the execution and delivery of this Agreement,
the Guarantor has entered into the Guarantee whereby the Guarantor will guaranty
the Charterer's obligations hereunder and under the other Operative Documents to
which the Charterer is a party.
J. The Owner Participant desires to participate in the payment of
Owner's Cost by providing its Investment to the Owner Trust. The Pass Through
Trustee, as a Loan Participant, desires to participate in the payment of Owner's
Cost by purchasing the Secured Note from the Owner Trust.
Accordingly, in consideration of the premises and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION.
---------------------------
For the purposes hereof, terms used herein and not otherwise defined
shall have the meanings assigned to them in Appendix A. References in this
Agreement to Sections, subsections, paragraphs, Schedules, Appendices and
Exhibits are to Sections, subsections and paragraphs in, and Schedules,
2
<PAGE>
Appendices and Exhibits to, this Agreement unless otherwise indicated.
SECTION 2. COMMITMENTS OF PARTICIPANTS; CLOSING; FUNDING;
TRANSACTION EXPENSES.
----------------------------------------------
2.1 Commitment of Owner Participant. Subject to the terms and
-------------------------------
conditions of this Agreement, the Owner Participant agrees to participate in the
payment of Owner's Cost by making an equity investment (the "Investment") in the
----------
beneficial ownership of the Vessel Interest on or before the Closing Date in the
amount shown on Schedule 2, and shall take and cause the Owner Trust to take, on
the Closing Date, the respective actions specified in Sections 2.8 and 2.9 to be
taken by the Owner Participant and the Owner Trust.
2.2 Commitments of Pass Through Trustee; Secured Note. Subject to
-------------------------------------------------
the terms and conditions of this Agreement, the Pass Through Trustee, as a Loan
Participant, agrees to participate on the Closing Date in the payment of the
Owner's Cost for the Vessel Interest by purchasing the Secured Note from the
Owner Trust at a purchase price equal to a percentage of the aggregate principal
amount payable at maturity of the Secured Note set forth in Schedule 2 and shall
take and cause the Indenture Trustee to take, on the Closing Date, the
respective actions specified in Section 2.9 to be taken by the Pass Through
Trustee, as a Loan Participant, and the Indenture Trustee. The Secured Note
shall be issued to the Pass Through Trustee, as a Loan Participant, under and in
accordance with the terms of the Indenture.
2.3 Expiration of Commitments. Unless the Owner Participant shall
-------------------------
agree to a later date, the Owner Participant's commitment to make the Investment
on the Closing Date pursuant to Section 2.1 shall expire if the Closing Date
shall not have occurred before midnight on the Cut-off Date. Unless the Pass
Through Trustee, as Loan Participant, shall agree to a later date, the Pass
Through Trustee's commitment, as a Loan Participant, to purchase the Secured
Note pursuant to Section 2.2 shall expire if the Closing Date or purchase shall
not have occurred before midnight on the Cut-off Date.
2.4 Notice of Closing Dates. On or before the second Business Day
-----------------------
prior to the Closing Date, the Charterer shall deliver to each Participant
written notice of the Closing Date, which notice shall contain (a) the date of
the Closing Date, (b) the amount of Owner's Cost with respect to the Vessel
Interest, (c) the amount of the Investment with respect to the Vessel Interest
and (d) the principal amount and purchase price of the Secured Note to be
purchased by the Pass Through Trustee, as a Loan Participant, on the Closing
3
<PAGE>
Date; provided, however, that the funding of the Owner Participant's Investment
-------- -------
or the funding of the purchase price for the Secured Note to be purchased by the
Pass Through Trustee, as a Loan Participant, on the Closing Date, as the case
may be, and the taking of the other actions contemplated to be taken hereby in
each case on the Closing Date shall be deemed a waiver of the requirement of
notice of the Closing Date set forth in this Section 2.4.
2.5 Time and Place of Closing. The closing on the Closing Date shall
-------------------------
commence at 9:15 a.m., New York City time, at the offices of Dewey Ballantine,
New York, New York, or at such other location in New York City as the Charterer
may specify in the notice of closing for the Closing Date delivered pursuant to
Section 2.4.
2.6 Delivery of Funds. Subject to the terms and conditions of this
-----------------
Agreement, on or before 9:15 a.m., New York City time, on the Closing Date, the
Owner Participant shall deliver to the Owner Trust by wire transfer of
immediately available funds an amount equal to any remaining Investment to be
made by the Owner Participant on the Closing Date and the Pass Through Trustee,
as a Loan Participant, shall deliver to the Owner Trust by wire transfer of
immediately available funds an amount equal to the purchase price of the Secured
Note to be purchased by the Pass Through Trustee, as a Loan Participant, on the
Closing Date, in each case to the account of the Owner Trust specified in
Schedule 1 or to such other account as shall be specified in writing by the
Owner Trust to the Owner Participant and the Pass Through Trustee, as a Loan
Participant, at least one Business Day prior to the Closing Date, which amounts
shall be held by the Owner Trust in trust, solely on behalf of the Participant
delivering or transferring such amount (and not as part of the Trust Estate),
until such Participant shall have instructed the Owner Trust that such amount is
available to be applied by the Owner Trust pursuant to Section 2.7. No
Participant shall be obligated to deliver such instruction if the conditions to
its participation set forth in Section 4 have not been met to its satisfaction
or waived by it.
2.7 Application of Funds by Owner Trust. On the Closing Date, upon
-----------------------------------
receipt by the Owner Trust of (a) the amount of the Investment to be made by the
Owner Participant on the Closing Date, (b) the purchase price of the Secured
Note to be paid by the Pass Through Trustee, as a Loan Participant, on the
Closing Date, and (c) the instruction pursuant to Section 2.6 that each of such
amounts is available to be applied by the Owner Trust pursuant to this Section
2.7, the Owner Trust shall cause such funds to be deposited in such amounts and
in such accounts as may be specified by the Owner Participant by written
instructions.
4
<PAGE>
2.8 Conclusion of U.K. Arrangements. (a) The parties recognize that
-------------------------------
it is the intention of the Owner Participant that, immediately following the
Closing Date, the U.K. Financing will be concluded by the satisfaction of the
conditions to the obligation of the U.K. Lessor to lease the Vessel to the Owner
Trust under the Head Lease. The Owner Participant agrees that the U.K.
Financing, if concluded, will be concluded on documents substantially in the
form of the documents delivered to the parties hereto with such changes as shall
not be materially adverse to any party hereto.
(b) The conclusion of the U.K. Financing is not a condition to the
issuance and sale of the Secured Note and the other transactions contemplated by
this Agreement and if for any reason the U.K. Financing is not concluded, the
parties agree, at the request and expense of the Owner Participant, to execute
such documents and take such actions as may be necessary or desirable to reflect
the abandonment of the U.K. Financing while maintaining in effect the
transactions contemplated by this Agreement; provided, however that the
-------- -------
execution of such documents and the taking of such actions shall not be adverse
to the interests of any such party in any material respect or increase its
liability under the Operative Documents.
2.9 Actions on Closing Date. Subject to satisfaction of the
-----------------------
applicable conditions precedent set forth in Sections 3, 4 and 5, on the Closing
Date:
(a) the Owner Participant shall make the Investment required to be
made by it on the Closing Date;
(b) the Pass Through Trustee, as a Loan Participant, shall pay to the
Owner Trust the purchase price for the Secured Note required to be
purchased by it on the Closing Date, the Owner Trust shall execute and
deliver to the Indenture Trustee the Secured Note, and the Indenture
Trustee shall authenticate and register the Secured Note and shall deliver
the Secured Note to the Pass Through Trustee, as a Loan Participant; and
(c) simultaneously therewith, the Owner Trust shall enter into the
Charter with the Owner Trust; and
(d) if the Delivery Date shall have occurred, the Charterer shall
sub-charter the Vessel Interest to MSCL pursuant to the Initial Subcharter.
2.10 Transaction Expenses. (a) If the transactions contemplated by
--------------------
this Agreement are consummated, the Owner Trust shall as soon as practicable
after the Closing Date pay, or reimburse the Charterer for, all related
Transaction Expenses accrued to the Closing Date and not
5
<PAGE>
theretofore paid by the Owner Trust, and the Owner Participant will provide to
the Owner Trust funds therefor and instructions with respect to the payment
thereof; provided that the underwriting commissions of Morgan Stanley & Co.
--------
Incorporated as underwriter of the Pass Through Certificates shall be paid by
the Owner Trust in immediately available funds on the Closing Date. If the
transactions contemplated by this Agreement to be consummated on the Closing
Date are not consummated for any reason whatsoever, the Charterer shall be
obligated to pay or reimburse the Owner Participant for all Transaction
Expenses.
(b) Each of the Transaction Expenses shall be evidenced by
appropriate bills or invoices. The Charterer shall have the right to receive
and review any substantiation relating to any Transaction Expenses or such
ongoing expenses as it may reasonably request.
2.11 Authorization to Owner Trust. The Owner Participant agrees that
----------------------------
on the Closing Date the receipt by the Owner Trust of an instruction from each
Participant pursuant to Section 2.6 making available the amount delivered by
such Participant to the Owner Trust shall constitute, without further act,
authorization and direction by such Participant to the Owner Trust to take the
actions contemplated to be taken by the Owner Trust on the Closing Date in the
Operative Documents, including, without limitation, the execution and delivery
of all other documents and instruments contemplated to be executed and delivered
by the Owner Trust on or prior to the Closing Date in the Operative Documents.
SECTION 3. CONDITIONS TO CLOSING BY THE CHARTERER.
---------------------------------------
The obligation of the Charterer pursuant to Section 2 to charter the
Vessel Interest from the Owner Trust and take the other actions contemplated by
Section 2 to be taken by it on the Closing Date are subject only to the
fulfillment on the Closing Date to the satisfaction of or waiver by the
Charterer of each of the following conditions precedent:
3.1 Operative Documents. Each of the following documents shall have
-------------------
been duly authorized, executed and delivered by the respective parties thereto
(other than the Charterer or the Guarantor):
(a) this Agreement;
(b) the Charter;
(c) the Assignment of Construction Contract;
(d) the Indenture;
6
<PAGE>
(e) the Secured Note;
(f) the Trust Agreement;
(g) the Pass Through Trust Agreement;
(h) the Pass Through Trust Supplement; and
(i) the Underwriting Agreement
and each such document shall be in full force and effect on the Closing
Date, and an executed counterpart of each of the same shall have been
delivered to the Charterer (except that the original Secured Note shall be
delivered only to the Pass Through Trustee).
3.2 Legality, Etc. No change shall have occurred after December 14,
-------------
1996 in Governmental Rules that, in the reasonable opinion of the Charterer,
would make it illegal or unduly burdensome for the Charterer, the Guarantor, the
Owner Trustee, the Indenture Trustee, the Pass Through Trustee or any
Participant to participate in any of the transactions contemplated by the
Operative Documents to be consummated on the Closing Date.
3.3 Event of Loss. No Event of Loss shall have occurred and no
-------------
action or proceeding shall have been commenced that could result in an Event of
Loss.
3.4 Consents and Approvals. On the Closing Date, all Governmental
----------------------
Actions required to be taken, given or obtained, as the case may be, by or from
any Governmental Authority which are required in connection with the
transactions contemplated by the Operative Documents and the Pass Through Trust
Agreement, or to authorize the execution, delivery and performance by the
Charterer and/or the Guarantor, as the case may be, of the Pass Through Trust
Agreement, the Underwriting Agreement, and the Operative Documents to which it
is a party, other than those constituting filings, recordings or other actions
of the types referred to in Section 4.12, shall have been duly taken, given or
obtained, as the case may be, shall be in full force and effect on the Closing
Date, shall not be subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and shall be adequate to authorize the
consummation of the transactions contemplated by the Pass Through Trust
Agreement, the Underwriting Agreement and the Operative Documents and the
performance by each of the Charterer and the Guarantor of its obligations under
such thereof to which it is a party, except such as may be required to be taken,
obtained, given, accomplished or renewed from time to time in connection with
the delivery, maintenance or operation of the Vessel or which are otherwise
required in connection with the
7
<PAGE>
transactions contemplated by the Pass Through Trust Agreement, the Underwriting
Agreement and the Operative Documents which have been applied for but which
cannot be obtained, or which are not normally applied for or taken, given or
obtained, prior to the Closing Date, and which in the normal course would be
granted; provided that the failure to obtain such Governmental Actions, consents
--------
or approvals by the Closing Date would not materially adversely affect the
ability of (x) the Charterer to perform its obligations under this Agreement,
the Pass Through Trust Agreement or any other Operative Document to which it is
or will be a party or (y) the ability of the Guarantor to perform its
obligations under the Guarantee.
3.5 Representations and Warranties; Certificates. The
--------------------------------------------
representations and warranties of the Owner Participant, the Pass Through
Trustee, the Trust Company, the Owner Trust, and the Indenture Trustee contained
in Sections 7, 8, 9 and 10, respectively, shall be true and accurate on and as
of the Closing Date as though made on and as of such date, except to the extent
that such representations and warranties relate solely to an earlier date (in
which case the same shall be true and accurate as of such earlier date), and the
Charterer shall have received executed copies of each of the certificates
referred to in Section 4.8 and Section 4.9 (other than Sections 4.8(a) and (f)
and Sections 4.9(a) and (f)) required to be delivered on the Closing Date, which
certificates shall be dated the Closing Date.
3.6 Opinions. A signed original of each opinion referred to in
--------
Section 4.6 (other than Sections 4.6(a), 4.6(b) and 4.6(i)) shall have been
addressed to and delivered to the Charterer.
3.7 Litigation. There shall be no actions, suits, investigations or
----------
proceedings pending or, to the knowledge of the Charterer, threatened against
the Charterer, the Guarantor, the Owner Participant, the Pass Through Trustee,
the Owner Trust or the Indenture Trustee or the properties of any of such
Persons before any Governmental Authority to set aside, restrain, enjoin or
prevent the consummation of this Agreement or the transactions contemplated
hereby or by any of the other Operative Documents, the Pass Through Trust
Agreement or the Underwriting Agreement.
3.8 Sale of Pass Through Certificates. The Pass Through Certificates
---------------------------------
shall have been issued pursuant to the Pass Through Trust Agreement and sold
pursuant to the Underwriting Agreement and the Underwriters shall have
transferred to the Pass Through Trustee in immediately available funds an amount
equal to the purchase price for the Pass Through Certificates sold pursuant to
the Pass Through Trust Agreement.
8
<PAGE>
SECTION 4. CONDITIONS TO CLOSING BY THE PASS THROUGH
TRUSTEE
-----------------------------------------
The obligations of the Pass Through Trustee pursuant to Section 2 to
purchase the Secured Notes and to take the other actions contemplated by Section
2 to be taken by it on the Closing Date are subject only to the fulfillment on
the Closing Date to the satisfaction of (including, with respect to writings,
such writings being in form and substance reasonably satisfactory to the
addressee or the beneficiary thereof) or waiver by the Pass Through Trustee of
each of the following conditions precedent (other than in the case of the Pass
Through Trustee, Sections 4.8(e) and 4.9(e)), except that the obligations of
such Pass Through Trustee shall not be subject to such Pass Through Trustee's
own performance or, if the Pass Through Trustee shall have the power to cause
another Person to perform, the Pass Through Trustee's failure to cause such
performance:
4.1 Notice of Closing. The Participants shall have received the
-----------------
notice of closing for such Closing Date required to be delivered pursuant to
Section 2.4.
4.2 Operative Documents. Each of the following documents shall have
-------------------
been duly authorized, executed and delivered by the respective parties thereto:
(a) this Agreement;
(b) the Charter;
(c) the Assignment of Construction Contract;
(d) the Indenture;
(e) the Secured Note;
(f) the Trust Agreement; and
(g) the Parent Guarantee;
and each such document, the Lessor's Security Assignment, the Pass Through Trust
Agreement and the Pass Through Trust Supplement shall be in full force and
effect on the Closing Date, and no event or condition shall have occurred that,
with or without the lapse of time or the giving of notice, shall give any other
party thereto the right to terminate such document and an executed counterpart
(or a true, correct and complete copy) of each of the same shall have been
delivered to the Pass Through Trustee.
4.3 Legality, Etc. No change shall have occurred after December 12,
-------------
1996 in Governmental Rules that, in the
9
<PAGE>
reasonable opinion of the Pass Through Trustee, would make it illegal or unduly
burdensome for the Trust Company, the Resident Trustee, the Owner Trust, the
Charterer, the Guarantor, the Indenture Trustee, the Pass Through Trustee in its
individual capacity or any Participant to participate in any of the transactions
contemplated by the Operative Documents to be consummated on the Closing Date.
4.4 Event of Loss. No Event of Loss shall have occurred and no
-------------
action or proceeding shall have been commenced that could result in an Event of
Loss.
4.5 Insurance. If the Delivery Date has occurred, insurance
---------
complying in all respects with the provisions of Section 13.1 of the Charter
shall be in full force and effect and the Owner Participant, the Pass Through
Trustee and the Indenture Trustee shall have received a certificate of an
independent insurance broker or consultant, which broker or consultant may be
the Charterer's independent insurance broker or consultant, dated the Closing
Date, setting forth the insurance obtained by or on behalf of the Charterer in
accordance with Section 13.1(a) of the Charter and as then in effect, stating
that such insurance is in full force and effect and that all premiums then due
thereon have been paid and an Officer's Certificate of the Charterer, dated the
Closing Date, stating that such insurance complies in all respects with the
provisions of such Section 13.1(a).
4.6 Opinions. Opinions dated the Closing Date of the following
--------
counsel, each such opinion substantially in the form of the indicated Exhibit
hereto (with such changes to such form as contemplated by such Exhibit) and
addressed as provided in such Exhibit (or, in lieu of including the Underwriter
as an addressee, such counsel may deliver a reliance letter to the Underwriter),
shall have been executed and delivered by such counsel:
(a) Ralph N. Johanson, Jr., Esq., Managing Counsel, Corporate Finance
and Securities of the Guarantor, substantially in the form of Exhibit A-1;
(b) Dewey Ballantine, special counsel to the Charterer and the
Guarantor, substantially in the form of Exhibit A-2;
(c) Haight, Gardner, Poor & Havens, special Marshall Islands counsel,
substantially in the form of Exhibit A-3;
(d) Maples & Calder, special counsel to the Owner Participant,
substantially in the form of Exhibit A-4;
10
<PAGE>
(e) Morris, James, Hitchins & Williams, special Delaware counsel to
the Resident Trustee and the Owner Trust, substantially in the form of
Exhibit A-5;
(f) Maples & Calder, special Cayman Islands counsel to the Trust
Company and the Owner Trust, substantially in the form of Exhibit A-6;
(g) Bingham, Dana & Gould, counsel to the Indenture Trustee,
substantially in the form of Exhibit A-7;
(h) Bingham, Dana & Gould, counsel to the Pass Through Trustee,
substantially in the form of Exhibit A-8;
(i) Dewey Ballantine, special New York counsel to the Owner
Participant, substantially in the form of Exhibit A-9; and
(j) Slaughter and May, special English counsel to the Owner
Participant, substantially in the form of Exhibit A-10.
4.7 Taxes. All Taxes, fees and other charges, if any, payable on or
-----
prior to the Closing Date in connection with the execution, delivery,
recordation and filing of all documents and instruments referred to in Section
4.12 below, this Agreement or any other Operative Document, or in connection
with the acquisition by the Owner Trustee on the Closing Date of the Vessel
Interest, the issuance and sale of the Secured Note and the Pass Through
Certificates and the subjecting of the Vessel Interest to the Lien of the
Indenture, shall have been duly paid in full by the Charterer.
4.8 Officer's Certificates. On the Closing Date, the following
----------------------
statements shall be true and the Pass Through Trustee and the Indenture Trustee
shall have received:
(a) an Officer's Certificate of the Charterer, dated the Closing
Date, stating that (A) the representations and warranties of the Charterer
contained in Section 6 are true and accurate on and as of the Closing Date
as though made on and as of such date except to the extent that such
representations and warranties specifically relate solely to an earlier
date (in which case such representations and warranties shall have been
true and accurate on and as of such earlier date) and (B) each Operative
Document to which it is a party and the Pass Through Trust Agreement remain
in full force and effect with respect to it;
(b) an Officer's Certificate of the Owner Participant, dated the
Closing Date, stating that (i) the
11
<PAGE>
representations and warranties of the Owner Participant contained in
Section 7 are true and accurate on and as of the Closing Date as though
made on and as of such date except to the extent that such representations
and warranties specifically relate solely to an earlier date (in which case
such representations and warranties shall have been true and accurate on
and as of such earlier date); and (ii) each Operative Document to which it
is a party remains in full force and effect with respect to it;
(c) an Officer's Certificate of each of the Trust Company and the
Managing Trustee, dated the Closing Date, stating that (i) the
representations and warranties of the Trust Company and the Managing
Trustee contained in Section 9 are true and accurate on and as of the
Closing Date as though made on and as of such date except to the extent
that such representations and warranties specifically relate solely to an
earlier date (in which case such representations and warranties shall have
been true and accurate on and as of such earlier date); and (ii) each
Operative Document to which it is a party remains in full force and effect
with respect to it;
(d) an Officer's Certificate of the Indenture Trustee, dated the
Closing Date, stating that (i) the representations and warranties of the
Indenture Trustee contained in Section 10 are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which case such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) each
Operative Document to which it is a party remains in full force and effect
with respect to it;
(e) an Officer's Certificate of the Pass Through Trustee, dated the
Closing Date, stating that (i) the representations and warranties of the
Pass Through Trustee contained in Section 8 are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which case such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) each
of the Participation Agreement and the Pass Through Trust Agreement remain
in full force and effect with respect to it; and
(f) an Officer's Certificate of the Guarantor, dated the Closing Date,
stating that (i) the representations and warranties of the Guarantor
contained
12
<PAGE>
in Section 1.1 of the Guarantee are true and accurate on and as of the
Closing Date as though made on and as of such date except to the extent
that such representations and warranties specifically relate solely to an
earlier date (in which are such representations and warranties shall have
been true and accurate on and as of such earlier date); and (ii) each of
the Guarantee and the Pass Through Trust Agreement remains in full force
and effect with respect to it.
4.9 Resolutions, Etc. The Loan Participant and the Indenture Trustee
-----------------
shall have received the following, in each case in form and substance reasonably
satisfactory to such Person:
(a) a Secretary's or an Assistant Secretary's certificate of the
Charterer, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Charterer of each Operative Document to
which it is a party, and the Pass Through Trust Agreement and the
transactions contemplated thereby, certified to be in full force and effect
without modification as of the Closing Date, (ii) its charter documents,
(iii) its by-laws, and (iv) the incumbency and signature of persons
authorized to execute and deliver such documents on behalf of the
Charterer;
(b) a Secretary's or an Assistant Secretary's certificate of the Owner
Participant, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Owner Participant of each Operative
Document to which it is a party, and the transactions contemplated thereby,
certified to be in full force and effect without modification as of the
Closing Date, (ii) its charter documents, (iii) its by-laws, and (iv) the
incumbency and signature of persons authorized to execute and deliver such
documents on behalf of the Owner Participant;
(c) a Secretary's or an Assistant Secretary's certificate of the Trust
Company, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Trust Company of each Operative Document to
which it is a party, and the transactions contemplated thereby, certified
to be in full force and effect without modification as of the Closing Date,
(ii) its charter documents, (iii) its by-laws, and (iv) the incumbency and
signature of persons authorized to execute and deliver such documents on
behalf of the Trust Company;
13
<PAGE>
(d) a Secretary's or an Assistant Secretary's certificate of the Indenture
Trustee, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Indenture Trustee of each Operative
Document to which it is a party, and the transactions contemplated thereby,
certified to be in full force and effect without modification as of the
Closing Date, (ii) its charter documents, (iii) its by-laws, and (iv) the
incumbency and signature of persons authorized to execute and deliver such
documents on behalf of the Indenture Trustee;
(e) a Secretary's or an Assistant Secretary's certificate of the Pass
Through Trustee, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors or an appropriate committee thereof
duly authorizing the execution, delivery and performance by the Pass
Through Trustee of the Pass Through Trust Agreement, the Pass Through Trust
Supplement and the Participation Agreement, and the transactions
contemplated thereby, certified to be in full force and effect without
modification as of the Closing Date, (ii) its charter documents, (iii) its
by-laws, and (iv) the incumbency and signature of persons authorized to
execute and deliver such documents on behalf of the Pass Through Trustee;
and
(f) a Secretary's or an Assistant Secretary's certificate of the
Guarantor, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Guarantor of the Guarantee and its
obligations thereunder, certified to be in full force and effect without
modification as of the Closing Date, (ii) its charter documents, (iii) its
by-laws and (iv) the incumbency and signature of persons authorized to
execute and deliver the Guarantee on behalf of the Guarantor.
4.10 Litigation. There shall be no actions, suits, investigations or
----------
proceedings pending or, to the knowledge of the Owner Participant, the Owner
Trust, the Indenture Trustee, the Charterer, or the Guarantor threatened against
any of such Persons or the properties of any of such Persons before any
Governmental Authority to set aside, restrain, enjoin or prevent the
consummation of this Agreement or the transactions contemplated hereby or by any
of the other Operative Documents, the Pass Through Trust Agreement, the Pass
Through Trust Supplement or the Underwriting Agreement.
4.11 Consents and Approvals. On the Closing Date, all Governmental
----------------------
Actions which are required to have been
14
<PAGE>
taken, given, obtained, filed or recorded, as the case may be, on or prior to
the Closing Date by, from or with any Governmental Authority, and all other
consents, filings or approvals which are required to have been taken, given,
obtained, filed or recorded, as the case may be, on or prior to the Closing Date
by, from or with any other Person, in connection with the transactions
contemplated by the Operative Documents and the Pass Through Trust Agreement, or
to authorize the execution, delivery and performance by the Charterer, the
Guarantor, the Owner Participant, the Owner Trustee, the Indenture Trustee or
the Pass Through Trustee of the Pass Through Trust Agreement and each of the
Operative Documents to which it is a party, or the legality, validity, binding
effect or enforceability thereof as against the Charterer or the Guarantor,
other than those constituting filings, recordings or other actions of the type
referred to in Section 4.12, shall have been duly taken, given or obtained, as
the case may be, shall be in full force and effect on the Closing Date, shall
not be subject to any pending proceedings or appeals (administrative, judicial
or otherwise) and shall be adequate to authorize the consummation of the
transactions contemplated by the Pass Through Trust Agreement, the Underwriting
Agreement and the Operative Documents and the performance by the Charterer and
the Guarantor of its obligations under such thereof to which it is a party,
except such as may be required to be taken, obtained, given, accomplished or
renewed from time to time in connection with the maintenance or operation of the
Vessel or which is otherwise required in connection with the transactions
contemplated by the Pass Through Trust Agreement, the Underwriting Agreement and
the Operative Documents which have been applied for but which cannot be
obtained, or which are not normally applied for or taken, given or obtained,
prior to the Closing Date, and which in the normal course would be granted;
provided that the failure to obtain such Governmental Actions, consents or
- --------
approvals by the Closing Date would not materially adversely affect the ability
of (x) the Charterer to perform its obligations under this Agreement, the Pass
Through Trust Agreement or any other Operative Document to which it is or will
be a party or (y) the Guarantor to perform its obligations under the Guarantee.
4.12 Title; Filings and Recordings. On the Closing Date, (a) all of
-----------------------------
the Owner Participant's right, title and interest in and to the Construction
Contract and the Payment Guarantee Letter shall have been duly and effectively
transferred to the Owner Trust pursuant to the Assignment of Construction
Contract, free and clear of all Liens other than Permitted Liens, and, except as
set forth in Schedule 4, all filings and recordings and other action necessary
or advisable to establish the Owner Trust's right, title and interest in and to
the Construction Contract and the Payment Guarantee Letter, and to perfect the
security interest in the
15
<PAGE>
Construction Contract and the Indenture Estate created by the Indenture, shall
have been duly made, subject to requirements for filing continuation statements
at appropriate intervals and subject to Permitted Liens, and (b) no other action
shall be required to perfect such mortgage Lien and security interest.
4.13 Sale of Pass Through Certificates. The Charterer, the Other
---------------------------------
Charterer and the Guarantor shall have entered into the Underwriting Agreement,
the Pass Through Trust Agreement and the Pass Through Trust Supplement, and the
Pass Through Certificates shall have been issued pursuant to the Pass Through
Trust Agreement and sold pursuant to the Underwriting Agreement and the
Underwriters shall have transferred to the Pass Through Trustee in immediately
available funds an amount equal to the purchase price for the Pass Through
Certificates.
4.14 No Default Under Charter. The Vessel shall have been duly
------------------------
accepted by the Charterer under the Charter and in evidence thereof the Pass
Through Trustee and the Indenture Trustee shall have received a protocol of
delivery and acceptance executed by Charterer and no Charter Default or Charter
Event of Default shall have occurred and be continuing.
4.15 U.K. Closing. The Pass Through Trustee and Indenture Trustee
------------
shall have received copies of the executed Head Lease, Conditional Sale
Agreement, Lessee Support Agreement, Lessor's Security Assignment and the U.K.
Lessor's Mortgage and each such document shall have terms reasonably
satisfactory to it.
4.16 Investment. The Owner Participant shall have made available to
----------
the Owner Trust the full amount of its Investment on the Closing Date pursuant
to Section 2.
SECTION 5. CONDITIONS TO CLOSING BY OWNER
PARTICIPANT.
------------------------------
The obligations of the Owner Participant pursuant to Section 2 to
participate in the payment of Owner's Cost and to take the other actions
contemplated by Section 2 to be taken by it on the Closing Date are subject only
to the fulfillment on the Closing Date to the satisfaction of (including, with
respect to writings, such writings being in form and substance reasonably
satisfactory to the addressee or the beneficiary thereof) or waiver by the Owner
Participant of each of the following conditions precedent (other than (i) in the
case of the Owner Participant, Sections 5.6 (d) and (i) except that the
obligations of the Owner Participant shall not be subject to the Owner
Participant's own performance or, if the Owner Participant shall have the power
to cause another Person to
16
<PAGE>
perform, the Owner Participant's failure to cause such performance:
5.1 Notice of Closing. The Owner Participant shall have received the
-----------------
notice of closing for such Closing Date required to be delivered pursuant to
Section 2.4.
5.2 Operative Documents. Each of the following documents shall have
-------------------
been duly authorized, executed and delivered by the respective parties thereto:
(a) this Agreement;
(b) the Charter;
(c) the Assignment of Construction Contract;
(d) the Indenture;
(e) the Secured Note;
(f) the Trust Agreement;
(g) the Guarantee;
(h) the Ship Mortgage; and
(i) the U.K. Lessor's Mortgage;
and each such document, the Pass Through Trust Agreement and the Pass Through
Trust Supplement shall be in full force and effect on the Closing Date, and no
event or condition shall have occurred that, with or without the lapse of time
or the giving of notice, shall give any other party thereto the right to
terminate such document and an executed counterpart (or a true, correct and
complete copy) of each of the same shall have been delivered to the Owner
Participant.
5.3 Legality, Etc. No change shall have occurred after December 14,
-------------
1996 in Governmental Rules that, in the reasonable opinion of the Owner
Participant, would make it illegal or unduly burdensome for the Trust Company,
the Owner Trust, the Charterer, the Guarantor, the Indenture Trustee or any
Participant to participate in any of the transactions contemplated by the
Operative Documents to be consummated on the Closing Date.
5.4 Event of Loss. No Event of Loss shall have occurred and no
-------------
action or proceeding shall have been commenced that could result in an Event of
Loss.
5.5 Insurance. If the Delivery Date has occurred, insurance
---------
complying in all respects with the provisions of
17
<PAGE>
Section 13.1 of the Charter shall be in full force and effect and the Owner
Participant and the Indenture Trustee shall have received a certificate of an
independent insurance broker or consultant, which broker or consultant may be
the Charterer's independent insurance broker or consultant, dated the Closing
Date, setting forth the insurance obtained by or on behalf of the Charterer in
accordance with Section 13.1(a) of the Charter and as then in effect, stating
that such insurance is in full force and effect and that all premiums then due
thereon have been paid and an Officer's Certificate of the Charterer, dated the
Closing Date, stating that such insurance complies in all respects with the
provisions of such Section 13.1(a).
5.6 Opinions. Opinions dated the Closing Date of the following
--------
counsel, each such opinion substantially in the form of the indicated Exhibit
hereto (with such changes to such form as contemplated by such Exhibit) and
addressed as provided in such Exhibit (or, in lieu of including the Underwriter
as an addressee, such counsel may deliver a reliance letter to the Underwriter),
shall have been executed and delivered by such counsel:
(a) Ralph N. Johanson, Jr., Esq., Managing Counsel, Corporate Finance
and Securities of the Guarantor, substantially in the form of Exhibit A-1;
(b) Dewey Ballantine, special counsel to the Charterer and the
Guarantor, substantially in the form of Exhibit A-2;
(c) Haight, Gardner, Poor & Havens, special Marshall Islands counsel,
substantially in the form of Exhibit A-3;
(d) Maples & Calder, special counsel to the Owner Participant,
substantially in the form of Exhibit A-4;
(e) Morris, James, Hitchins & Williams, special Delaware counsel to
the Resident Trustee and the Owner Trustee, substantially in the form of
Exhibit A-5;
(f) Maples & Calder, special Cayman Islands counsel to the Trust
Company and the Owner Trustee, substantially in the form of Exhibit A-6;
(g) Bingham, Dana & Gould, counsel to the Indenture Trustee,
substantially in the form of Exhibit A-7;
(h) Bingham, Dana & Gould, counsel to the Pass Through Trustee,
substantially in the form of Exhibit A-8;
18
<PAGE>
(i) Dewey Ballantine, special New York counsel to the Owner
Participant, substantially in the form of Exhibit A-9; and
(j) Slaughter and May, special English counsel to the Owner
Participant, substantially in the form of Exhibit A-10.
5.7 Taxes. All Taxes, fees and other charges, if any, payable on or
-----
prior to the Closing Date in connection with the execution, delivery,
recordation and filing of all documents and instruments referred to in Section
5.12 below, this Agreement or any other Operative Document, or in connection
with the acquisition by the Owner Trustee on the Closing Date of the Vessel
Interest, the issuance and sale of the Secured Note and the Pass Through
Certificates and the subjecting of the Vessel Interest to the Lien of the
Indenture, shall have been duly paid in full by the Charterer.
5.8 Officer's Certificates. On the Closing Date, the following
----------------------
statements shall be true and the Owner Participant and the Owner Trust shall
have received:
(a) an Officer's Certificate of the Charterer, dated the Closing
Date, stating that (A) the representations and warranties of the Charterer
contained in Section 6 are true and accurate on and as of the Closing Date
as though made on and as of such date except to the extent that such
representations and warranties specifically relate solely to an earlier
date (in which case such representations and warranties shall have been
true and accurate on and as of such earlier date) and (B) each Operative
Document to which it is a party and the Pass Through Trust Agreement remain
in full force and effect with respect to it;
(b) an Officer's Certificate of each of the Trust Company and the
Managing Trustee, dated the Closing Date, stating that (i) the
representations and warranties of the Trust Company and the Owner Trust
contained in Section 9, as the case may be, are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which case such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) each
Operative Document to which it is a party remains in full force and effect
with respect to it;
(c) an Officer's Certificate of the Indenture Trustee, dated the
Closing Date, stating that (i) the representations and warranties of the
Indenture Trustee
19
<PAGE>
contained in Section 10 are true and accurate on and as of the Closing Date
as though made on and as of such date except to the extent that such
representations and warranties specifically relate solely to an earlier
date (in which case such representations and warranties shall have been
true and accurate on and as of such earlier date); and (ii) each Operative
Document to which it is a party remains in full force and effect with
respect to it;
(d) an Officer's Certificate of the Pass Through Trustee, dated the
Closing Date, stating that (i) the representations and warranties of the
Pass Through Trustee contained in Section 8 are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which case such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) each
of the Participation Agreement, the Pass Through Trust Agreement and the
Pass Through Trust Supplement remain in full force and effect with respect
to it; and
(e) an Officer's Certificate of the Guarantor, dated the Closing Date,
stating that (i) the representations and warranties of the Guarantor
contained in Section 1.1 of the Guarantee are true and accurate on and as
of the Closing Date as though made on and as of such date except to the
extent that such representations and warranties specifically relate solely
to an earlier date (in which are such representations and warranties shall
have been true and accurate on and as of such earlier date); and (ii) the
Guarantee remains in full force and effect.
5.9 Resolutions, Etc. The Owner Participant and the Owner Trust
-----------------
shall have received the following, in each case in form and substance reasonably
satisfactory to the Owner Participant:
(a) a Secretary's or an Assistant Secretary's certificate of the
Charterer, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Charterer of each Operative Document to
which it is a party, and the Pass Through Trust Agreement and the
transactions contemplated thereby, certified to be in full force and effect
without modification as of the Closing Date, (ii) its charter documents,
(iii) its by-laws, and (iv) the incumbency and signature of persons
authorized to execute and deliver such documents on behalf of the
Charterer;
20
<PAGE>
(b) a Secretary's or an Assistant Secretary's certificate of the Trust
Company, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Trust Company of each Operative Document to
which it is a party, and the transactions contemplated thereby, certified
to be in full force and effect without modification as of the Closing Date,
(ii) its charter documents, (iii) its by-laws, and (iv) the incumbency and
signature of persons authorized to execute and deliver such documents on
its behalf;
(c) a Secretary's or an Assistant Secretary's certificate of the
Indenture Trustee, dated the Closing Date, attaching and certifying as to
(i) resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Indenture Trustee of each Operative
Document to which it is a party, and the transactions contemplated thereby,
certified to be in full force and effect without modification as of the
Closing Date, (ii) its charter documents, (iii) its by-laws, and (iv) the
incumbency and signature of persons authorized to execute and deliver such
documents on behalf of the Indenture Trustee;
(d) a Secretary's or an Assistant Secretary's certificate of the Pass
Through Trustee, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors or an appropriate committee thereof
duly authorizing the execution, delivery and performance by the Pass
Through Trustee of the Pass Through Trust Agreement, the Pass Through Trust
Supplement, and the Participation Agreement, and the transactions
contemplated thereby, certified to be in full force and effect without
modification as of the Closing Date, (ii) its charter documents, (iii) its
by-laws, and (iv) the incumbency and signature of persons authorized to
execute and deliver such documents on behalf of the Pass Through Trustee;
and
(e) a Secretary's or an Assistant Secretary's certificate of the
Guarantor, dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the execution,
delivery and performance by the Guarantor of the Guarantee and its
obligations thereunder, certified to be in full force and effect without
modification as of the Closing Date, (ii) its charter documents, (iii) its
by-laws and (iv) the incumbency and signature of persons authorized to
execute and deliver the Guarantee on behalf of the Guarantor.
21
<PAGE>
5.10 Litigation. There shall be no actions, suits, investigations or
----------
proceedings pending or, to the knowledge of the Owner Participant, the
Charterer, the Guarantor, the Owner Trust or the Indenture Trustee, threatened
against any of such Persons or the properties of any of such Persons before any
Governmental Authority to set aside, restrain, enjoin or prevent the
consummation of this Agreement or the transactions contemplated hereby or by any
of the other Operative Documents, the Pass Through Trust Agreement, the Pass
Through Trust Supplement or the Underwriting Agreement.
5.11 Consents and Approvals. On the Closing Date, all Governmental
----------------------
Actions which are required to have been taken, given, obtained, filed or
recorded, as the case may be, on or prior to the Closing Date by, from or with
any Governmental Authority, and all other consents, filings or approvals which
are required to have been taken, given, obtained, filed or recorded, as the case
may be, on or prior to the Closing Date by, from or with any other Person, in
connection with the transactions contemplated by the Operative Documents and the
Pass Through Trust Agreement, or to authorize the execution, delivery and
performance by the Charterer, the Guarantor, the Owner Participant, the Owner
Trust, the Indenture Trustee or the Pass Through Trustee of the Pass Through
Trust Agreement and each of the Operative Documents to which it is a party, or
the legality, validity, binding effect or enforceability thereof as against the
Charterer or the Guarantor, other than those constituting filings, recordings or
other actions of the type referred to in Section 5.12, shall have been duly
taken, given or obtained, as the case may be, shall be in full force and effect
on the Closing Date, shall not be subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and shall be adequate to authorize the
consummation of the transactions contemplated by the Pass Through Trust
Agreement, the Underwriting Agreement and the Operative Documents and the
performance by the Charterer and the Guarantor of its obligations under such
thereof to which it is a party, except such as may be required to be taken,
obtained, given, accomplished or renewed from time to time in connection with
the maintenance or operation of the Vessel or which is otherwise required in
connection with the transactions contemplated by the Pass Through Trust
Agreement, the Underwriting Agreement and the Operative Documents which have
been applied for but which cannot be obtained, or which are not normally applied
for or taken, given or obtained, prior to the Closing Date, and which in the
normal course would be granted; provided that the failure to obtain such
--------
Governmental Actions, consents or approvals by the Closing Date would not
materially adversely affect the ability of (x) the Charterer to perform its
obligations under this Agreement, the Pass Through Trust Agreement or any other
Operative Document to
22
<PAGE>
which it is or will be a party or (y) the Guarantor to perform its obligations
under the Guarantee.
5.12 Title; Filings and Recordings. On or prior to the Closing Date,
-----------------------------
(a) all of the Owner Participant's right, title and interest in and to the
Construction Contract and the Payment Guarantee Letter shall have been duly and
effectively transferred to the Owner Trust pursuant to the Assignment of
Construction Contract, free and clear of all Liens other than Permitted Liens,
and, except as set forth in Schedule 4, all filings and recordings or other
actions necessary or advisable to establish the Owner Trust's right, title and
interest in and to the Construction Contract and the Payment Guarantee Letter,
and to perfect the security interest in the Construction Contract and the
Indenture Estate created by the Indenture and the Ship Mortgage (including,
without limitation, all filings and recordings necessary to register the Owner
Trust's title to the Vessel in the Marshall Islands and the filing of the Ship
Mortgage in the Office of the Maritime Administrator of the Marshall Islands
registry), shall have been duly made, subject to requirements for filing
continuation statements at appropriate intervals and subject to Permitted Liens,
and (b) no other action shall be required to perfect such mortgage Lien and
security interest.
5.13 Sale of Pass Through Certificates. The Charterer, the Other
---------------------------------
Charterer and the Guarantor shall have entered into the Underwriting Agreement,
the Pass Through Trust Agreement and the Pass Through Trust Supplement, and the
Pass Through Certificates shall have been issued pursuant to the Pass Through
Trust Agreement and sold pursuant to the Underwriting Agreement and the
Underwriters shall have transferred to the Pass Through Trustee in immediately
available funds an amount equal to the purchase price for the Pass Through
Certificates.
5.14 No Default Under Charters. No Charter Default or Charter Event
-------------------------
of Default shall have occurred and be continuing.
5.15 Loans. The Pass Through Trustee shall have purchased the
-----
Secured Note required to be purchased by it on the Closing Date pursuant to
Section 2.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE CHARTERER.
------------------------------------------------
The Charterer represents and warrants to each of the other parties
hereto that:
6.1 Due Organization. The Charterer is a corporation duly organized,
----------------
validly existing and in good standing under the laws of the State of Delaware
and has the
23
<PAGE>
corporate power and authority to carry on its business as presently conducted
and as it is contemplated it will be conducted in connection with the Vessel
Interest, to own or hold under lease or charter its properties, and to enter
into and perform its obligations under this Agreement, the Pass Through Trust
Agreement and each other Operative Document to which it is a party. The
Charterer has not failed to qualify to do business in any jurisdiction where
failure so to qualify could reasonably be expected to materially adversely
affect its ability to perform any of its obligations under this Agreement, the
Pass Through Trust Agreement, the Pass Through Trust Supplement or any other
Operative Document to which it is a party.
6.2 Authorization. The execution, delivery and performance by the
-------------
Charterer of this Agreement, the Pass Through Trust Agreement, the Pass Through
Trust Supplement and each other Operative Document to which it is a party and of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of the Charterer and do not and will
not require the consent or approval of any shareholder of the Charterer or any
trustee or holder of any indebtedness or other obligation of the Charterer.
6.3 Execution; Enforceability. This Agreement, the Pass Through
-------------------------
Trust Agreement, the Pass Through Trust Supplement and each other Operative
Document to which the Charterer is a party have been duly executed and delivered
by the Charterer and, assuming the due authorization, execution and delivery
hereof and thereof by the other parties hereto and thereto are legal, valid and
binding obligations of the Charterer, enforceable against the Charterer in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, liquidation,
moratorium or similar laws affecting creditors' or lessors' rights generally and
by the application of general equitable principles which may limit the
availability of certain remedies.
6.4 No Violation. The execution and delivery by the Charterer of
------------
this Agreement, the Pass Through Trust Agreement, the Pass Through Trust
Supplement and each other Operative Document to which it is a party do not and
will not, and the performance by the Charterer of its obligations under each
thereof do not and will not, (i) violate or be inconsistent with its charter
documents or by-laws, (ii) contravene any Governmental Rule or Governmental
Action applicable to it, which, in the case of such performance, noncompliance
with which would materially adversely affect the Vessel Interest or the ability
of the Charterer to perform its obligations under the Operative Documents;
provided that no representation or warranty is made with respect to ERISA,
- --------
24
<PAGE>
(iii) contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other agreement or instrument to which the Charterer is a
party or by which it or any of its properties are bound or (iv) result in or,
require the creation or imposition of any Lien (other than Permitted Liens) upon
any of its properties or assets.
6.5 Consents and Approvals. On the Closing Date, all Governmental
----------------------
Actions which are required to have been taken, given, obtained, filed or
recorded, as the case may be, on or prior to the Closing Date by, from or with
any Governmental Authority and all other consents, filings or approvals which
are required to have been taken, given, obtained, filed or recorded, as the case
may be, on or prior to the Closing Date by, from or with any other Person, in
connection with the transactions contemplated by the Pass Through Trust
Agreement and the Operative Documents, or to authorize the execution, delivery
and performance by the Charterer and/or the Guarantor of the Guarantee, the Pass
Through Trust Agreement, the Pass Through Trust Supplement and the Operative
Documents to which either of them is a party, or the legality, validity, binding
effect or enforceability thereof as against the Charterer or the Guarantor,
other than those constituting filings, recordings or other actions of the types
referred to in Section 6.7, have been duly taken, given or obtained, as the case
may be, are in full force and effect on the Closing Date, are not subject to any
pending proceedings or appeals (administrative, judicial or otherwise) and are
adequate to authorize the consummation by the Charterer or the Guarantor of the
transactions contemplated by the Pass Through Trust Agreement, the Underwriting
Agreement and the Operative Documents and the performance by each of the
Charterer and the Guarantor of its obligations under such thereof to which it is
a party, except such as may be required to be taken, obtained, given,
accomplished or renewed from time to time in connection with the maintenance or
operation of the Vessel Interest or which are otherwise required in connection
with the transactions contemplated by the Operative Documents, which have been
applied for but which cannot be obtained, or which are not normally applied for
or taken, given or obtained, prior to the Closing Date, and which in the normal
course would be granted, provided that the failure to obtain such Governmental
--------
Actions, consents and approvals by the Closing Date would not materially
adversely affect the ability of the Charterer to perform its obligations under
this Agreement, the Pass Through Trust Agreement or any other Operative Document
to which it is or will be a party.
6.6 Securities Act. Neither the Charterer nor any Person authorized
--------------
on its behalf has directly or indirectly offered or sold the Pass Through
Certificates, or solicited any offer to acquire the same from, any Person other
than in a manner required by the Securities Act. Neither the
25
<PAGE>
Charterer nor any Person authorized to act on its behalf will take any action
which would subject the issuance or sale of any interest in the Trust Estate or
the Secured Note to the provisions of Section 5 of the Securities Act or require
the qualification of the Indenture under the Trust Indenture Act.
6.7 Title; Filings and Recordings. On the Closing Date, (a) all of
-----------------------------
the Owner Participant's right, title and interest in and to the Construction
Contract and Payment Guarantee Letter shall have been duly and effectively
transferred to the Owner Trust pursuant to the Assignment of Construction
Contract, free and clear of all Liens other than Permitted Liens, and, except as
set forth in Schedule 4, all filings and recordings and other action necessary
or advisable to establish the Owner Trust's right, title and interest in and to
the Construction Contract and Payment Guarantee Letter, and to perfect the
mortgage Lien on security interest in the Construction Contract and the
Indenture Estate created by the Indenture, shall have been duly made, subject to
requirements for filing continuation statements at appropriate intervals and
subject to Permitted Liens, and (b) no other action shall be required to perfect
such mortgage Lien and security interest.
6.8 Chief Place of Business. The chief place of business and chief
-----------------------
executive office of the Charterer is in Fairfax, Virginia and the offices where
it keeps its records concerning the Vessel and its accounts and contract rights
are in Fairfax, Virginia.
6.9 Litigation. There is no action, suit, investigation or
----------
proceeding pending or, to the Actual Knowledge of the Charterer, threatened
against the Charterer or affecting it or its properties before any Governmental
Authority which, individually or in the aggregate (so far as the Charterer now
can reasonably foresee), is reasonably likely materially and adversely to affect
the consummation of the transactions under this Agreement, the Pass Through
Trust Agreement, the Pass Through Trust Supplement or any other Operative
Document to which it is or will be a party or the ability of the Charterer to
perform its obligations hereunder or thereunder.
6.10 No Default. No Charter Default or Charter Event of Default has
----------
occurred and is continuing.
6.11 Event of Loss. No Event of Loss has occurred.
-------------
6.12 Investment Company Act. The Charterer is not an "investment
----------------------
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
26
<PAGE>
6.13 No Brokers' Fees. Neither the Charterer nor any Person acting
----------------
on its behalf has taken any actions the effect of which would be to cause the
Owner Trust, the Indenture Trustee or any Participant to be liable for any
brokers', finders' or agents' fees or commissions or costs of any nature or kind
claimed by or on behalf of brokers, finders or agents in respect of the
transactions contemplated by this Agreement other than fees payable to Morgan
Stanley & Co. Incorporated, all of which fees, commissions or costs are included
in Transaction Expenses or will be paid or indemnified against by the Charterer.
6.14 No Other Business or Liabilities. Except for activities and
--------------------------------
liabilities contemplated by Operative Documents and the U.K. Documents and
comparable documents relating to two Other Vessels and activities incidental
thereto, the Charterer has not engaged in any other business or activities or
incurred any liabilities.
6.15 Payment of Taxes, etc. All Taxes, fees and other charges
---------------------
payable on or prior to the Closing Date in connection with the execution,
delivery, recordation and filing of all documents and instruments, including the
Operative Documents, and the performance of the transactions contemplated by the
Operative Documents occurring on or prior to the Closing Date, have been paid in
full.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN OR IN ANY OTHER OPERATIVE DOCUMENT,
THE CHARTERER MAKES NOR SHALL THE CHARTERER BE DEEMED TO HAVE MADE, AND THE
CHARTERER HEREBY DISCLAIMS, ANY REPRESENTATION OR WARRANTY OTHER THAN THOSE
REFERRED TO IN THIS SECTION, IN ANY OFFICER'S CERTIFICATE OF THE CHARTERER OR
EXPRESSLY MADE IN ANY OTHER OPERATIVE DOCUMENT, EITHER EXPRESS OR IMPLIED, AS TO
THE DESIGN OR CONDITION OF THE VESSEL OR ANY PART THEREOF, THE MERCHANTABILITY
THEREOF OR THE FITNESS THEREOF FOR ANY PARTICULAR PURPOSE, THE ABILITY OF THE
VESSEL TO PERFORM ANY FUNCTION, THE QUALITY OF THE MATERIALS OR WORKMANSHIP
THEREOF OR CONFORMITY THEREOF TO SPECIFICATIONS, OR THE PRESENCE OR ABSENCE OF
ANY LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE; PROVIDED THAT THE
FOREGOING SHALL NOT EXCUSE THE PERFORMANCE BY THE CHARTERER OF ITS OBLIGATIONS
UNDER THIS AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT OR THE BILL OF SALE.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF THE OWNER
PARTICIPANT.
-------------------------------------------
The Owner Participant represents and warrants to each of the other
parties hereto that:
7.1 Due Organization. The Owner Participant is a Cayman Islands
----------------
limited life company, duly organized, validly
27
<PAGE>
existing and in good standing under the laws of the Cayman Islands and has the
corporate power and authority to enter into and perform its obligations under
this Agreement and each other Operative Document to which it is a party.
7.2 Authorization; Execution; Enforceability. The execution,
----------------------------------------
delivery and performance by the Owner Participant of this Agreement and each
other Operative Document to which it is a party and of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of the Owner Participant and do not and will not
require the consent or approval of any shareholder of the Owner Participant
which has not been obtained. This Agreement and each other Operative Document
to which the Owner Participant is a party have been duly authorized, executed
and delivered by the Owner Participant and, assuming the due authorization,
execution and delivery hereof and thereof by the other parties hereto and
thereto, are legal, valid and binding obligations of the Owner Participant,
enforceable against the Owner Participant in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, liquidation, moratorium or similar laws affecting
creditors' rights generally and by the application of general equitable
principles which may limit the availability of certain remedies. Any direction
given by the Owner Participant to the Owner Trust pursuant to the Trust
Agreement will have been duly authorized.
7.3 No Violation. The execution and delivery by the Owner
------------
Participant of this Agreement and each other Operative Document to which it is a
party do not and will not, and the performance by the Owner Participant of its
obligations under each thereof do not and will not, (i) violate or be
inconsistent with or in violation of its charter documents or by-laws, (ii)
contravene any Governmental Rule or Governmental Action applicable to it or,
except as set forth in Schedule 4, require any Governmental Action and (iii)
contravene any provision of, or constitute a default or require any consent
under, any indenture, mortgage, contract or other instrument to which the Owner
Participant is a party or by which it or any of its property is bound.
7.4 Owner Participant's Liens. There are no Owner Participant's
-------------------------
Liens on the Trust Estate or the Indenture Estate, or on any part of either
thereof and the execution, delivery and performance by the Owner Participant of
the Operative Documents to which it is a party will not subject the Trust Estate
or the Indenture Estate to the Owner Participant's Liens.
7.5 Acquisition for Investment. The Owner Participant is acquiring
--------------------------
its interest in the Trust Estate for
28
<PAGE>
its own account for investment and not with a view to, or for sale in connection
with, any distribution of any such interest (it being understood that at all
times the disposition of its property shall remain within its control), except
that the Owner Participant reserves the right to transfer or assign any of or
all such interest to the extent permitted by the terms of this Agreement and the
Trust Agreement.
7.6 Securities Act. Neither the Owner Participant nor any Person
--------------
authorized by the Owner Participant has directly or indirectly offered or sold
any interest in the Trust Estate, the Trust Agreement or the Secured Note, or in
any similar security relating to the Vessel Interest, or in any security the
offering of which for the purposes of the Securities Act would be deemed to be
part of the same offering as the offering of the aforementioned securities to,
or solicited any offer to acquire any of the same from, any Person other than,
in the case of the Secured Note, the Loan Participant, and neither the Owner
Participant nor any Person authorized to act on its behalf will take any action
which would subject the issuance or sale of any interest in the Trust Estate or
the Secured Note to the provisions of Section 5 of the Securities Act or require
the qualification of the Indenture under the Trust Indenture Act except to the
extent required under Section 15 hereof.
7.7 ERISA. The Owner Participant is not acquiring any part of its
-----
interest in the Trust Estate with the "plan assets" of any "employee benefit
plan" within the meaning of ERISA (or of any "plan" within the meaning of
Section 4975 of the Code), as interpreted by the Internal Revenue Service and
the U.S. Department of Labor in rules, regulations, releases, bulletins or as
interpreted under applicable case law.
7.8 Investment Company Act. Neither the Owner Participant nor any of
----------------------
its Affiliates is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
7.9 Litigation. There is no action, suit, investigation or
----------
proceeding pending or, to the Actual Knowledge of the Owner Participant,
threatened against the Owner Participant or its properties before any
Governmental Authority which, individually or in the aggregate (so far as the
Owner Participant now can reasonably foresee), is reasonably likely materially
and adversely to affect the ability of the Owner Participant to perform its
obligations under this Agreement or any other Operative Document to which it is
or will be a party.
29
<PAGE>
7.10 No Default. No Indenture Default or Indenture Event of Default
----------
attributable to the Owner Participant has occurred and is continuing.
7.11 Federal Reserve Regulations. The Owner Participant is not
---------------------------
engaged principally in, and does not have as one of its important activities,
the business of extending credit for the purpose of purchasing or carrying any
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System of the United States), and no part of the proceeds of
the Secured Note will be used by it to purchase or carry any such margin stock
or, assuming the accuracy of the representation set forth in Section 5.15, to
extend credit to others for the purpose of purchasing or carrying any such
margin stock or for any purpose that violates, or is inconsistent with, the
provisions of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System of the United States.
7.12 No Brokers' Fees. Neither the Owner Participant nor any Person
----------------
acting on its behalf has taken any actions the effect of which would be to cause
the Charterer or the Loan Participant to be liable for any brokers', finders' or
agents' fees or commissions or costs of any nature or kind claimed by or on
behalf of brokers, finders or agents in respect of the transactions contemplated
by this Agreement not included in Transaction Expenses.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE PASS THROUGH
TRUSTEE.
--------------------------------------------------
State Street Bank and Trust Company represents and warrants in its
individual capacity with respect to Sections 8.1, 8.2(a), 8.3, 8.4, 8.5(a), 8.6
and 8.7 and not in its individual capacity, but solely in its capacity as Pass
Through Trustee under the Pass Through Trust Agreement, with respect to Sections
8.2(b) and 8.5(b), to each of the other parties hereto that:
8.1 Due Organization. State Street Bank and Trust Company is a state
----------------
chartered trust company, duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts and has the corporate power
and authority to enter into and perform its obligations under this Agreement,
the Pass Through Trust Agreement and the Pass Through Trust Supplement.
8.2 Authorization; Execution; Enforceability. (a) This Agreement,
----------------------------------------
the Pass Through Trust Agreement and the Pass Through Trust Supplement have been
duly authorized, executed and delivered by State Street Bank and Trust Company,
in its individual capacity and, assuming the due
30
<PAGE>
authorization, execution and delivery hereof and thereof by the other parties
hereto and thereto, are legal, valid and binding obligations of State Street
Bank and Trust Company in its individual capacity (to the extent it is a party
hereto or thereto in such capacity), enforceable against it in accordance with
their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, liquidation, receivership,
moratorium or similar laws affecting creditors' rights generally and by the
application of general equitable principles which may limit the availability of
certain remedies.
(b) This Agreement, the Pass Through Trust Agreement, the Pass Through
Trust Supplement and the Pass Through Certificates have been duly authorized,
executed and delivered by the Pass Through Trustee and, assuming the due
authorization, execution and delivery hereof and thereof by the other parties
hereto or thereto, are legal, valid and binding obligations of the Pass Through
Trustee, enforceable against it in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, liquidation, receivership, moratorium or similar
laws affecting creditors' rights generally and the application of general
equitable principles may limit the availability of certain remedies.
8.3 No Violation. The execution, delivery and performance by State
------------
Street Bank and Trust Company of this Agreement, the Pass Through Trust
Agreement and the Pass Through Trust Supplement the purchase by the Pass Through
Trustee of the Secured Note pursuant to this Agreement and the issuance of the
Pass Through Certificates pursuant to the Pass Through Trust Agreement and Pass
Through Trust Supplement are not and will not be inconsistent with its
constitutional documents or do not and will not contravene any Governmental Rule
of the United States of America or the Commonwealth of Massachusetts governing
with respect to its banking or trust powers, and will not contravene any
provision of, or constitute a default under, any indenture, mortgage, contract
or other instrument to which State Street Bank and Trust Company, in its
individual capacity, is a party, or by which it or any of its properties are
bound, or require any Governmental Action of the United States of America or the
Commonwealth of Massachusetts governing its banking or trust powers.
8.4 Litigation. There is no action, suit, investigation or
----------
proceeding pending or, to the Actual Knowledge of State Street Bank and Trust
Company, threatened against it, whether in its individual capacity or as Pass
Through Trustee, before any Governmental Authority governing its banking or
trust powers which, individually or in the
31
<PAGE>
aggregate (so far as State Street Bank and Trust Company now can reasonably
foresee), is reasonably likely materially and adversely to affect the ability of
the Pass Through Trustee (in either such capacity) to perform its obligations
under this Agreement or the Pass Through Trust Agreement (in either such
capacity).
8.5 Pass Through Trustee's Liens. (a) There are no Pass Through
----------------------------
Trustee's Liens attributable to State Street Bank and Trust Company in its
individual capacity on the Pass Through Trust Property or on any part thereof.
(b) There are no Pass Through Trustee's Liens on the Pass Through
Trust Property or any part thereof.
8.6 Securities Act. State Street Bank and Trust Company has not
--------------
offered any interest in the Pass Through Certificates or any Secured Note or any
similar securities for sale to, or solicited any offer to acquire the same from,
anyone other than the Underwriter, and no responsible officer or responsible
employee of State Street Bank and Trust Company has knowledge of any such offer
or solicitation, except as set forth in the Operative Documents, the Pass
Through Trust Agreement and Underwriting Agreement.
SECTION 9. REPRESENTATIONS AND WARRANTIES OF THE TRUST COMPANY AND
OWNER TRUST.
-------------------------------------------------------
The Trust Company, in its individual capacity, represents and warrants
with respect to Sections 9.1, 9.2 (other than clause (b)(ii) thereof), 9.3, 9.4
(other than clause (b) thereto), 9.5, 9.6 (other than clause (b) thereto), 9.7
(as specified therein), 9.8 and 9.10, and in its capacity as Managing Trustee
represents and warrants with respect to Sections 9.2(b), 9.4(b), 9.6 (b), 9.7
(as specified therein), 9.9, 9.10, 9.11 and 9.12 to each of the other parties
hereto that:
9.1 Due Organization. The Trust Company is a Cayman Islands company
----------------
duly organized, validly existing and in good standing under the laws of the
Cayman Islands and has the corporate power and authority to enter into and
perform its obligations under the Trust Agreement, this Agreement and each other
Operative Document to which it is a party and assuming due authorization,
execution and delivery by the Owner Participant of the Trust Agreement and upon
due direction by the Owner Participant pursuant thereto, will have the power and
authority to enter into and perform its obligations as Managing Trustee under
the Trust Agreement, this Agreement and each other Operative Document to which
the Owner Trust is a party.
32
<PAGE>
9.2 Authorization; Execution; Enforceability. (a) This Agreement,
----------------------------------------
the Trust Agreement and each other Operative Document to which the Trust Company
is a party have been duly authorized, executed and delivered by the Trust
Company and, assuming due authorization, execution and delivery by the other
parties hereto and thereto, are legal, valid and binding obligations of the
Trust Company enforceable against it in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, liquidation, moratorium or similar laws affecting
creditors' rights generally and by the application of general equitable
principles which may limit the availability of certain remedies.
(b) This Agreement and each other Operative Document to which the
Owner Trust is a party (i) have been (assuming due authorization, execution and
delivery by the Owner Participant of the Trust Agreement and upon due direction
by the Owner Participant pursuant thereto) duly authorized, executed and
delivered by one of its officers who is duly authorized to execute and deliver
such Operative Document on behalf of the Managing Trustee, and (ii) assuming due
authorization, execution and delivery by the other parties hereto and thereto,
are legal, valid and binding obligations of the Owner Trust enforceable against
it in accordance with their respective terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, liquidation,
moratorium or similar laws affecting creditors' rights generally and the
application of general equitable principles may limit the availability of
certain remedies and upon execution of the Secured Note by the Managing Trustee,
authentication thereof by the Indenture Trustee and delivery thereof against
payment or the giving of consideration therefor in accordance with the Indenture
and this Agreement, the Secured Note will be legal, valid and binding
obligations of the Owner Trust enforceable against it in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, liquidation, moratorium or similar laws
affecting creditors' rights generally and the application of general equitable
principles may limit the availability of certain remedies.
9.3 No Violation. (a) The execution and delivery by the Trust
------------
Company of the Trust Agreement and, to the extent it is a party hereto or
thereto in its individual capacity, this Agreement and each other Operative
Document, are not or will not be, and the performance by the Trust Company of
its obligations under each will not be, inconsistent with the charter documents
or by-laws of the Trust Company, do not and will not contravene any Cayman
Islands Governmental Rule governing its banking or trust powers relating to or
affecting its capacity to act as contemplated by the Trust Agreement or
33
<PAGE>
the other Operative Documents to which it is a party and do not and will not
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which the Trust Company is a party or
by which it or any of its property is bound, or require any Cayman Islands
Governmental Action relating to or affecting its capacity to act as contemplated
by the Trust Agreement or the other Operative Documents to which it is or will
be a party.
(b) The execution and delivery by the Owner Trust of each Operative
Document to which the Owner Trust is a party are not, and the performance by the
Owner Trust of its obligations under each will not be, inconsistent with the
charter documents or by-laws of the Trust Company, do not and will not
contravene any Cayman Islands Governmental Rule regulating its banking or trust
powers relating to or affecting its capacity to act as contemplated by the Trust
Agreement or the Owner Trust Documents and do not and will not contravene any
provision of, or constitute a default under, any indenture, mortgage, contract
or other instrument to which the Owner Trust is a party or by which it or its
property is bound or require any Cayman Islands Government Action relating to or
affecting its capacity to act as contemplated by the Trust Agreement or the
Owner Trust Documents.
9.4 No Default. (a) No Indenture Default or Indenture Event of
----------
Default attributable to the Trust Company has occurred and is continuing.
(b) No Indenture Default or Indenture Event of Default attributable
to the Owner Trustee has occurred and is continuing.
9.5 Litigation. (a) There is no action, suit, investigation or
----------
proceeding pending or, to the Actual Knowledge of the Trust Company, threatened
against the Trust Company before any Governmental Authority which, individually
or in the aggregate (so far as the Trust Company now can reasonably foresee), is
reasonably likely materially and adversely to affect the ability of the Trust
Company to perform its obligations under this Agreement or any other Operative
Document to which it is a party.
(b) There is no action, suit, investigation or proceeding pending or,
to the Actual Knowledge of the Trust Company, threatened against the Owner Trust
before any Governmental Authority.
9.6 Owner's Liens. (a) There are no Owner's Liens attributable to
-------------
the Trust Company on the Trust Estate or the Indenture Estate, or on any part of
either thereof and the execution, delivery and performance by the Trust Company
of the Operative Documents to which the Trust Company is a party
34
<PAGE>
will not subject the Trust Estate or the Indenture Estate to any the Owner's
Liens.
(b) There are no Owner's Liens attributable to the Owner Trust on the
Trust Estate or the Indenture Estate, or on any part of either thereof and the
execution, delivery and performance by the Owner Trust of the Operative
Documents to which the Owner Trust is a party will not subject the Trust Estate
or the Indenture Estate to any the Owner's Liens.
9.7 Securities Act. None of the Trust Company, the Owner Trust or
--------------
any Person authorized by either of the Trust Company or the Owner Trust to act
on its behalf, has directly or indirectly offered or sold any interest in the
Trust Estate or the Secured Note, or in any similar security relating to the
Vessel Interest, or in any security the offering of which for the purposes of
the Securities Act would be deemed to be part of the same offering as the
offering of the aforementioned securities (collectively, any "Security") to, or
solicited any offer to acquire any of the same from, any Person, other than, in
the case of the Secured Note, the Loan Participant, and none of the Trust
Company, the Owner Trust or any Person authorized by either of the Trust Company
or Owner Trust to act on its behalf will take any action other than the sale of
the Secured Note to the Loan Participant that would subject the issuance or sale
of any interest in the Trust Estate or the Secured Note to the provisions of
Section 5 of the Securities Act or require the qualification of the Indenture
under the Trust Indenture Act it being understood that no Person has been
authorized to act on behalf of the Owner Trust or the Trust Company in
connection with the issuance and sale of any Security.
9.8 Chief Place of Business. The Trust Company's chief place of
-----------------------
business, chief executive office and office where the documents, accounts and
records relating to the transactions contemplated by this Agreement and each
other Operative Document are kept are located in Grand Cayman, Cayman Islands.
9.9 No Taxes Payable. Except for Taxes based upon the income of any
----------------
Person, there are no Taxes payable in the jurisdiction in which the principal
place of business of the Trust Company is located in connection with the
execution, delivery, consummation or recordation of this Agreement and the other
Operative Documents or upon or with respect to the Trust Estate or the Indenture
Estate and, solely because the Trust Company is a Cayman Islands company with
its principal place of business in the Cayman Islands and to the extent that it
performs any of its duties as Managing Trustee in the Cayman Islands, the
consummation of the transactions contemplated hereby and by the other Operative
Documents (including, without limitation, the filing of financing
35
<PAGE>
statements with respect thereto or the sale or transfer of the Vessel Interest).
9.10 Title. On the Closing Date, the Owner Trust shall have received
-----
whatever interest in and to the Construction Contract and the Payment Guarantee
Letter as was conveyed to it by the Owner Participant.
9.11 Federal Reserve Regulations. The Owner Trust is not engaged
---------------------------
principally in, and does not have as one of its important activities, the
business of extending credit for the purpose of purchasing or carrying any
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System of the United States), and no part of the proceeds of
the Secured Note will be used by it to purchase or carry any such margin stock
or, assuming the accuracy of the representation set forth in Section 5.15, to
extend credit to others for the purpose of purchasing or carrying any such
margin stock or for any purpose that violates, or is inconsistent with, the
provisions of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System of the United States.
9.12 No Other Activities. The Owner Trust has not engaged in any
-------------------
business or activities other than those contemplated by the Operative Documents
and the U.K. Documents and activities incidental thereto.
SECTION 10. REPRESENTATIONS AND WARRANTIES OF INDENTURE TRUSTEE.
----------------------------------------------------
State Street Bank and Trust Company represents and warrants in its
individual capacity with respect to Sections 10.1, 10.2(a), 10.3, 10.4 and
10.5(a), and not in its individual capacity, but solely in its capacity as
Indenture Trustee with respect to Sections 10.2(b) and 10.5(b), to each of the
other parties hereto that:
10.1 Due Organization. State Street Bank and Trust Company is a
----------------
state chartered trust company duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts and has the
corporate power and authority to enter into and perform its obligations under
this Agreement and each other Operative Document to which it is or will be a
party.
10.2 Authorization; Execution; Enforceability. (a) This Agreement
----------------------------------------
and each other Operative Document to which State Street Bank and Trust Company,
in its individual capacity is a party have been, duly authorized, executed and
delivered by State Street Bank and Trust Company, in its individual capacity
and, assuming the due authorization, execution and delivery hereof and thereof
by the other parties
36
<PAGE>
hereto and thereto, are legal, valid and binding obligations of the Indenture
Trustee in its individual capacity (to the extent it is a party hereto or
thereto in such capacity), enforceable against it in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, liquidation, receivership, moratorium or
similar laws affecting creditors' rights generally and the application of
general equitable principles may limit the availability of certain remedies.
Assuming due authorization, execution and delivery thereof by the Owner Trust,
the Secured Note issued on the Closing Date pursuant to the terms of this
Agreement and the Indenture on the Closing Date will have been duly
authenticated.
(b) This Agreement and each other Operative Document to which the
Indenture Trustee is a party have been duly authorized, executed and delivered
by the Indenture Trustee and, assuming the due authorization, execution and
delivery hereof and thereof by the other parties hereto or thereto, are legal,
valid and binding obligations of the Indenture Trustee, enforceable against it
in accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, liquidation,
receivership, moratorium or similar laws affecting creditors' rights generally
and the application of general equitable principles may limit the availability
of certain remedies.
10.3 No Violation. The execution and delivery by State Street Bank
------------
and Trust Company of this Agreement and each other Operative Document to which
it is a party are not and will not be, and the performance by it of its
obligations under each will not be, inconsistent with its charter documents or
do not and will not contravene any Governmental Rule of the United States of
America or the Commonwealth of Massachusetts governing with respect to its
banking or trust powers, and will not contravene any provision of, or constitute
a default under, any indenture, mortgage, contract or other instrument to which
State Street Bank and Trust Company, in its individual capacity, is a party, or
by which it or any of its properties are bound, or require any Governmental
Action of the United States of America or the Commonwealth of Massachusetts
governing its banking or trust powers.
10.4 Litigation. There is no action, suit, investigation or
----------
proceeding pending or, to the Actual Knowledge of the Indenture Trustee,
threatened against the Indenture Trustee, whether in its individual capacity or
as Indenture Trustee, before any Governmental Authority governing its banking or
trust powers which, individually or in the aggregate (so far as the Indenture
Trustee now can reasonably
37
<PAGE>
foresee), is reasonably likely materially and adversely to affect the ability of
the Indenture Trustee (in either such capacity) to perform its obligations under
this Agreement or any other Operative Document to which it is a party (in either
such capacity).
10.5 Indenture Trustee's Liens. (a) There are no Indenture
-------------------------
Trustee's Liens attributable to State Street Bank and Trust Company in its
individual capacity on the Indenture Estate or on any part thereof.
(b) There are no Indenture Trustee's Liens on the Indenture Estate or
any part thereof.
SECTION 11. CHARTERER COVENANTS.
-------------------
The Charterer covenants and agrees that:
11.1 Officer's Certificate. The Charterer will deliver to the Owner
---------------------
Participant, the Owner Trust and the Indenture Trustee on or before November 1
of each year during the Charter Period, an Officer's Certificate of the
Charterer to the effect that the signer is familiar with or has reviewed the
relevant terms of the Charter and the signer does not have knowledge of the
existence, as of the date of such certificate, of any condition or event which
constitutes a Charter Event of Default.
11.2 Maintenance of Corporate Existence, Etc. Subject to the
---------------------------------------
provisions of Section 11.3, the Charterer shall at all times maintain its
corporate existence and preserve and keep in full force and effect its rights
and franchises, the loss of which would have a material adverse effect on the
financial condition of the Charterer or its ability to comply with its
obligations under the Operative Documents.
11.3 Merger, Consolidation, Sale, Etc. So long as the Secured Note
--------------------------------
remains Outstanding or any amounts due and owing by the Charterer with respect
thereto to the Holders thereof under the Pass Through Trust Agreement or any
other Operative Document remain unpaid and so long as the Charter Period shall
not have expired or been terminated, the Charterer shall not consolidate with or
merge into any other corporation or convey, transfer or lease substantially all
of its assets as an entirety to any Person, unless:
(i) the corporation formed by such consolidation or into which the
Charterer is merged or the Person which acquires by conveyance, transfer or
lease substantially all of the assets of the Charterer as an entirety shall
be a corporation organized and existing under the laws of the United States
of America or any State or the District of Columbia, and shall execute and
deliver to the Owner
38
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Trust, the Owner Participant, the Indenture Trustee and the Pass Through
Trustee an agreement (in form and substance reasonably satisfactory to each
thereof) containing the assumption by such successor corporation of the due
and punctual performance and observance of each covenant and condition of
this Agreement, the Charter, the Pass Through Trust Agreement, the Pass
Through Trust Supplement and each other Operative Document to which the
Charterer is a party to be performed or observed by the Charterer;
(ii) immediately after giving effect to such transaction, no Charter
Event of Default shall have occurred and be continuing;
(iii) the Charterer shall have delivered to the Owner Trust, the Owner
Participant and the Indenture Trustee an Officer's Certificate of the
Charterer, and an opinion of counsel to the Charterer (which may be the
Charterer's internal counsel), each stating that such consolidation,
merger, conveyance, transfer or lease and the assumption agreement
mentioned in clause (i) comply with this Section 11.3 and that all
conditions precedent herein provided for relating to such transaction have
been complied with (except that such opinion need not cover the matters
referred to in clause (ii) above and may rely, as to factual matters, on an
Officer's Certificate of the Charterer) and, in the case of such opinion,
that such assumption agreement has been duly authorized, executed and
delivered by such successor corporation and is enforceable against such
successor corporation in accordance with its terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally and by general
principles of equity; and
(iv) after giving effect to any consolidation, merger, conveyance,
transfer or lease of substantially all of the assets of the Charterer as an
entirety in accordance with this Section 11.3, the Guarantee shall remain
in full force and effect and shall constitute a full and unconditional
guaranty of the successor corporation's obligations under the Operative
Documents to which it is a party and the Pass Through Trust Agreement to
the same extent as the Charterer's obligations under such documents prior
to giving effect to any such consolidation, merger, conveyance, transfer or
lease of substantially all of the assets of the Charterer.
Upon any consolidation or merger, or any conveyance, transfer or lease of
substantially all of the assets of the Charterer
39
<PAGE>
as an entirety in accordance with this Section 11.3, the successor corporation
formed by such consolidation or into which the Charterer is merged or to which
such conveyance, transfer or lease is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Charterer under this
Agreement and the other Operative Documents with the same effect as if such
successor corporation had been named as the Charterer herein. No such
conveyance, transfer or lease of substantially all of the assets of the
Charterer as an entirety shall have the effect of releasing the Charterer or any
successor corporation which shall theretofore have become such in the manner
prescribed in this Section 11.3 from its liability hereunder.
11.4 Change in Name or Chief Place of Business. The Charterer shall
-----------------------------------------
give notice to the Owner Trust, the Owner Participant and the Indenture Trustee
promptly after any change in its name or chief place of business or chief
executive office.
11.5 Further Assurances. The Charterer, at its own cost and expense,
------------------
will cause to be promptly and duly taken, executed, acknowledged and delivered
all such further acts, documents and assurances as the Owner Trust, the Owner
Participant, the Loan Participant or the Indenture Trustee reasonably may
request from time to time in order to carry out more effectively the intent and
purposes of this Agreement, the Pass Through Trust Agreement, the Pass Through
Trust Supplement and the other Operative Documents and the transactions
contemplated hereby and thereby. The Charterer, at its own cost and expense,
will cause the Indenture, the Ship Mortgage and the Charter, any supplements or
amendments thereto and restatements thereof and all financing statements,
fixture filings and other documents, to be recorded or filed at such places and
times and in such manner, as may be necessary, advisable or as may be reasonably
requested (x) by the Owner Trust, the Owner Participant, the Pass Through
Trustee or the Indenture Trustee in order to establish, preserve and protect the
interest of the Owner Trust in and to the Vessel Interest and the Owner Trust's
rights under this Agreement and the other Operative Documents and (y) so long as
any Secured Note is Outstanding, by the Indenture Trustee, the Loan Participant
or (unless the Indenture Trustee objects thereto) the Owner Trust in order to
establish, preserve, protect and perfect the mortgage and security interest of
the Indenture Trustee in the Indenture Estate granted or intended to be created
under the Indenture and the Ship Mortgage and the Indenture Trustee's rights
under this Agreement and the other Operative Documents, subject only to
Permitted Liens. During the ninety (90) day period prior to the fifth, tenth,
fifteenth and twentieth anniversary of the Closing Date the Charterer will cause
to be prepared and delivered to the Managing Trustee and the Indenture Trustee
an opinion of one
40
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or more legal counsel to the effect set forth in clauses (x) and (y) above
subject to exceptions and qualifications similar to those taken in the opinions
delivered as at the Closing Date and such other exceptions and qualifications as
are customary at the time of giving such opinion.
11.6 Inspection. (a) The Charterer shall permit the Indenture
----------
Trustee, (and any authorized representatives of any thereof), at such Person's
risk (including, without limitation, as to personal injury and death) and
expense, including, without limitation, the cost and expense for such Person's
transportation to and from the Vessel, and under conditions reasonably
acceptable to the Charterer and subject to Section 12.5 hereof, to visit and
inspect the Vessel, and have access to officers of the Charterer and MSCL, all
upon reasonable notice and at such reasonable times during normal business hours
and as may be reasonably requested; provided, however, that (A) unless there is
-------- -------
an existing Charter Event of Default, the Indenture Trustee may not make more
than one (1) such inspection in any calendar year without the Charterer's prior
written consent and (B) prior to any such inspection the Charterer shall have
been provided reasonable assurances than any Person conducting such inspection
is fully insured with respect thereto.
(b) No Person entitled to make any inspection or inquiry referred to
in this Section 11.6 shall have any duty to make such inspection or inquiry, or
shall incur any liability or obligation by reason of not making any such
inspection or inquiry.
11.7 Documentation of Vessels. The Charterer agrees that, at or
------------------------
before the time of delivery of the Vessel to the Owner Trust on the Delivery
Date, the Charterer shall cause the Vessel to be documented, on a provisional
basis, in the name of the Owner Trust at the Charterer's expense under the laws
and the flag of the Marshall Islands and shall cause the Vessel to be documented
on a permanent basis in the name of the Owner Trust promptly after the Delivery
Date. The Charterer shall throughout the Charter Period maintain the
documentation of the Vessel in the Marshall Islands (or in any other
jurisdiction selected by the Charterer provided such other jurisdiction provides
substantially equivalent (or better) protection for the rights of owner
participants, lessors, lenders and mortgagees for similar transactions as the
law of the Marshall Islands), and shall not do or suffer or permit to be done
anything which would prevent the maintenance of the documentation of the Vessel
under the laws and the flag of the Marshall Islands (or such other jurisdiction)
or which would constitute or result in a violation of any applicable law or
regulation of the Marshall Islands (or such other jurisdiction) non-compliance
with which could create any material risk of or danger of the sale, for-
41
<PAGE>
feiture or loss of any material part of or interest in the Vessel, provided,
--------
however, that in the event the Vessel is documented in a jurisdiction other than
- -------
the Marshall Islands, the Charterer shall make or cause to be made all filings
and recordings or other actions necessary or advisable to establish the
Indenture Trustee's and the Owner Trust's right, title and interest in and to
the Vessel Interest, including the execution, delivery and filing of a ship
mortgage in form and substance substantially similar to the Ship Mortgage with
the appropriate governmental agency of such jurisdiction, provided further,
-------- -------
however that such ship mortgage shall not be adverse to the interests of the
- -------
Owner Trust or the Indenture Trustee in any material respect or increase either
parties liability under the Operative Documents.
11.8 No Petition. Unless otherwise agreed in writing by both the
-----------
Indenture Trustee and Owner Participant, the Charterer hereby agrees to the
fullest extent permitted by law that so long as the lien of the Indenture shall
not have been discharged, it will not at any time institute against the Owner
Trust, or join in the institution against the Owner Trust of any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law.
SECTION 12. OTHER COVENANTS AND AGREEMENTS.
------------------------------
12.1 Agreements of Owner Participant. The Owner Participant
-------------------------------
covenants and agrees that:
(a) Discharge of Liens. The Owner Participant will not create or
------------------
permit to exist at any time, and will, at its own cost and expense,
promptly take such action as may be necessary duly to discharge, or to
cause to be discharged, (i) all Owner Participant's Liens and (ii) all
Owner's Liens resulting from any act or failure to act by the Owner Trust
at the express direction of, or with express authorization from, the Owner
Participant on all or any part of the Vessel Interest, the Trust Estate,
the Indenture Estate, or title thereto or any interest therein. The Owner
Participant shall indemnify, protect, defend, save and keep harmless the
Charterer, the Loan Participant, and the Indenture Trustee from and against
any and all Claims that may be imposed on, incurred by or asserted against
such Person or the Vessel Interest arising out of or secured by the Owner
Participant's Liens or the Owner's Liens described in clause (ii) of the
preceding sentence.
(b) Cooperation with Charterer. The Owner Participant shall, to the
--------------------------
extent reasonably so requested by the Charterer, cooperate with the
Charterer, at the Charterer's expense, to enable the Charterer to make the
42
<PAGE>
filings and recordings listed in Schedule 3, including, without limitation,
at any time and from time to time, upon the request of the Charterer
promptly and duly executing and delivering, any and all such further
instruments and documents as the Charterer may reasonably request in order
to perform such covenants and to make such filings and recordings.
(c) Successor Owner Trustee. The Owner Participant shall not appoint
-----------------------
or cause or allow to be appointed a successor to either Owner Trustee or an
additional or separate trustee under the Trust Agreement without the prior
written consent of the Charterer. The Owner Participant shall cause any
such successor, additional or separate trustee, simultaneously with its
assumption of duties in such capacity, to take all actions as may be
reasonably requested by the Indenture Trustee, the Pass Through Trustee or
the Charterer (including, without limitation, the filing of financing
statements), at the Charterer's expense, in order to establish, preserve,
protect and perfect its interest in and to the Vessel Interest and its
rights under this Agreement and the other Operative Documents and, so long
as any Secured Note is Outstanding, the mortgage and security interest of
the Indenture Trustee in the Indenture Estate granted or intended to be
created under the Indenture and the Ship Mortgage and the Indenture
Trustee's rights under this Agreement and the other Operative Documents,
subject only to Permitted Liens.
(d) Performance of Obligations. The Owner Participant will perform
--------------------------
and comply with all obligations imposed on the Owner Participant pursuant
to the provisions of the Charter or the Indenture in accordance with the
terms and conditions of each thereof.
(e) Instructions to the Owner Trust. The Owner Participant will not
-------------------------------
instruct or otherwise direct the Owner Trust to take, or omit to take, any
action in violation of the express covenants and agreements of the Owner
Trust in any Operative Document. Subject to Section 5 hereof, the Owner
Participant will direct and instruct the Owner Trust to execute and deliver
the Operative Documents to which it is to be a party and to comply with its
obligations set forth therein. The Owner Participant will not unreasonably
withhold its consent to or authorization of any consent requested of the
Owner Trust under the terms of any Operative Document which by its terms is
not to be unreasonably withheld by the Owner Trust.
(f) Termination of Trust Agreement. Prior to the expiration or
------------------------------
earlier termination of the Charter pursuant
43
<PAGE>
to its terms, the Owner Participant will not terminate or revoke, or
consent to the termination or revocation of, the Trust Agreement, or, prior
to the release of the Lien of the Indenture on the Indenture Estate, amend
or modify such Trust Agreement in any manner that would materially
adversely affect the Indenture Estate or limit in any material manner the
rights of the Indenture Trustee set forth therein.
(g) Election to Retain Title. If the Owner Trust shall elect to
------------------------
retain title to the Vessel Interest pursuant to Section 18(e) of the
Charter, the Owner Participant will cause the Owner Trust to perform its
obligations under Section 18(e) in accordance with the terms thereof.
(h) Additional Financings and Refundings. The Owner Participant
------------------------------------
shall, to the extent reasonably so requested by the Charterer, cooperate
with the Charterer, (i) to facilitate the issuance of Additional Notes
permitted by the provisions of Section 2.08(a) of the Indenture and (ii) to
refund or refinance the Secured Note then Outstanding in accordance with
the terms of the Indenture.
12.2 Agreements of Trust Company and Owner Trust. The Trust Company,
-------------------------------------------
in its individual capacity, covenants and agrees with respect to Sections
12.2(a)(i) and 12.2(b) and the Owner Trust covenants and agrees with respect to
Sections 12.2(a)(ii), 12.2(c), 12.2(d), 12.2(e), 12.2(f), 12.2(g), 12.2(h),
12.2(i) and 12.2(j) that:
(a) Discharge of Liens. (i) The Trust Company will not create or
------------------
permit to exist at any time, and will, at its own cost and expense,
promptly take such action as may be necessary duly to discharge all Owner's
Liens on all or any part of the Vessel Interest, the Trust Estate, the
Indenture Estate, or title thereto or any interest therein attributable to
it. Except for the Owner Participant's obligation pursuant to Section
13.1(a)(ii), the Trust Company shall indemnify, protect, defend, save and
keep harmless the Charterer, the Owner Participant, the Loan Participant
and the Indenture Trustee from and against any and all Claims that may be
imposed on, incurred by or asserted against such Person or the Vessel
Interest arising out of or secured by any such Lien.
(ii) The Owner Trust will not create or permit to exist at any
time, and will, at its own cost and expense, promptly take such action as
may be necessary duly to discharge all Owner's Liens on all or any part of
the Vessel Interest, the Trust Estate, the Indenture
44
<PAGE>
Estate, or title thereto or any interest therein attributable to it.
(b) Change of Chief Place of Business. The Trust Company shall give
---------------------------------
notice to the Charterer, the Owner Participant and the Indenture Trustee
prior to any change in its chief place of business or chief executive
office, or the office where the records concerning the accounts, contract
rights or general intangibles relating to the transactions contemplated
hereby are kept.
(c) Cooperation with the Charterer. The Owner Trust shall, to the
------------------------------
extent reasonably so requested by the Charterer, cooperate with the
Charterer, at the Charterer's expense, to enable the Charterer to make the
filings and recordings listed in Schedule 3, including, without limitation,
at any time and from time to time, upon the request of the Charterer
promptly and duly executing and delivering any and all such further
instruments, documents and financing statements (and continuation
statements related thereto) as the Charterer may request in order to
perform such covenants and to make such filings and recordings.
(d) Notice of Transfer of Assets. The Owner Trust shall not transfer
----------------------------
any of the estates, properties, rights, powers, duties or trusts of the
Owner Trust to any successor trustee or to any additional or separate
trustee under the Trust Agreement without giving prior written notice of
such transfer to the Owner Participant, the Charterer, the Pass Through
Trustee and the Indenture Trustee in accordance with Section 11 of the
Trust Agreement.
(e) Certain Transfers; Termination. Except as expressly permitted
------------------------------
hereby or by the terms of any other Operative Document or required by the
terms of the Head Lease, the Owner Trust will not transfer the Vessel
Interest to any Person prior to the expiration or earlier termination of
the Charter pursuant to its terms, other than a successor Owner Trust
appointed in accordance with the provisions of Section 11 of the Trust
Agreement, or terminate the Trust Agreement or distribute all or any part
of the Trust Estate to any Person.
(f) Owner Trust's Activities. The Owner Trust will not incur any
------------------------
indebtedness for money borrowed, or enter into any other activity, except
as contemplated by the Operative Documents or as may be necessary or
advisable to carry out its obligations or enforce its rights thereunder.
45
<PAGE>
(g) Notice of Indenture Event of Default. Promptly after the Owner
------------------------------------
Trust has Actual Knowledge that the Indenture Event of Default attributable
to the Owner Trust has occurred and is continuing, the Owner Trust shall
deliver to the Charterer a notice of such Indenture Event of Default which
is not also a Charter Event of Default describing the same in reasonable
detail and, together with such notice or as soon thereafter as possible, a
description of the action that the Owner Trust has taken, is taking and
proposes to take with respect thereto.
(h) ERISA. The Owner Trust agrees that (i) it shall not permit any
-----
ERISA plan sponsored or maintained by it, any ERISA Affiliate or any PTE
90-24 Affiliate thereof to purchase or hold the Pass Through Certificate
and (ii) neither it nor any PTE 90-24 Affiliate thereof shall act in a
fiduciary capacity with respect to the purchase or holding by any ERISA
plan of the Pass Through Certificates, in the case of (i) or (ii) which
would constitute a non-exempt "prohibited transaction" within the meaning
of Section 406 of ERISA or Section 4975 of the Code.
(i) Ownership for Tax Purposes. The Owner Trust will not take any
--------------------------
position inconsistent with its ownership of the Vessel Interest for U.S.
federal, state, or local income tax purposes.
(j) U.K. Documents. Owner Trust will not consent to any amendment or
--------------
modification to the U.K. Documents which would adversely affect the
Indenture Trustee, the holder of the Secured Note or the Pass Through
Trustee without the prior written consent of the Indenture Trustee.
12.3 Agreements of Pass Through Trustee. The Pass Through Trustee
----------------------------------
covenants and agrees that:
(a) Transfer of Secured Note. Any sale, transfer or assignment
------------------------
(including, without limitation, a transfer pursuant to the exercise of
remedies with respect to any Secured Note) by the Pass Through Trustee of
any Secured Note or of all or any part of its interest hereunder or under
the Indenture shall be on the express condition that the purchaser,
transferee or assignee, as the case may be, shall agree to be bound by the
terms and provisions applicable to the Pass Through Trustee contained in
this Agreement, the Secured Note and the Indenture. The acceptance by any
person of the Secured Note shall constitute such Person's agreement to be
bound by the terms and provisions of this Agreement and the Indenture. The
Pass Through Trustee will not make any
46
<PAGE>
such sale, transfer or assignment to any Person unless such Person delivers
to the Charterer, the Owner Trust, the Indenture Trustee and the Owner
Participant (i) a written representation and warranty by such Person (or an
opinion of counsel reasonably satisfactory to the Charterer, the Owner
Trust and the Owner Participant) that such sale, transfer or assignment to
and the holding of any such interest by, such Person (1) will not result in
a "prohibited transaction" as defined in Section 406 of ERISA or Section
4975 of the Code, or (2) are covered by an exemption contained in ERISA or
an administrative exemption adopted thereunder and (ii) a written
undertaking by such Person that is substantially identical to the covenant
made by the Pass Through Trustee in this Section 13.3(a) (including this
clause (ii)).
(b) Instructions to Indenture Trustee. The Pass Through Trustee will
---------------------------------
not instruct or otherwise direct the Indenture Trustee to take, or omit to
take, any action in violation of the express covenants and agreements of
the Indenture Trustee in any Operative Document.
(c) ERISA. The Pass Through Trustee agrees that (i) it shall not
-----
permit any ERISA Plan sponsored or maintained by it, any ERISA Affiliate or
any PTE 90-24 Affiliate thereof to purchase or hold any Pass Through
Certificate and (ii) neither it nor any PTE 90-24 Affiliate thereof shall
act in a fiduciary capacity with respect to the purchase or holding by any
ERISA Plan of the Pass Through Certificates, in the case of (i) or (ii)
which would constitute a non-exempt "prohibited transaction" within the
meaning of Section 406 of ERISA or Section 4975 of the Code.
12.4 Agreements of Indenture Trustee. State Street Bank and Trust
-------------------------------
Company, in its individual capacity, to the extent set forth herein, and as
Indenture Trustee, covenant and agree, as follows:
(a) Discharge of Liens. State Street Bank and Trust Company
------------------
covenants and agrees in its individual capacity that it will not create or
permit to exist at any time, and will, at its own cost and expense,
promptly take such action as may be necessary to discharge, all of
Indenture Trustee's Liens on all or any part of any Vessel Interest, the
Trust Estate or Indenture Estate, or title thereto or any interest therein.
The Indenture Trustee shall indemnify, protect, defend, save and keep
harmless the Charterer, the Owner Participant, the Loan Participant and the
Owner Trust from and against any and all Claims imposed on, incurred by or
asserted against such Person arising out of the Indenture Trustee's Lien.
47
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(b) Cooperation With the Charterer. The Indenture Trustee shall, to the
------------------------------
extent reasonably requested by the Charterer, cooperate with the Charterer,
at the Charterer's expense, to enable the Charterer to perform the
Indenture Trustee's covenants contained in Section 11.5 and to make the
filings and recordings listed in Schedule 3, including, without limitation,
at any time and from time to time, upon request of the Charterer promptly
and duly executing and delivering any and all such further instruments,
documents and financing statements (and continuation statements related
thereto) as the Charterer may request in order to perform such covenants
and to make such filings and recordings.
(c) Original Charter. Except to the extent otherwise required by the
----------------
Indenture and so long as it remains as Indenture Trustee, State Street Bank
and Trust Company agrees in its individual capacity that it will maintain
possession of the version of the Charter identified in a receipt therefor
executed by the Indenture Trustee as the original executed counterpart of
the Charter.
(d) Performance of Obligations. The Indenture Trustee will perform
--------------------------
and comply with the provisions of the Indenture which, upon satisfaction of
any applicable conditions set forth therein, require payment or the
tendering of performance to the Charterer.
12.5 Confidentiality. Each of the parties hereto agrees that all
---------------
matters relating to this Agreement, the other Operative Documents and the
transactions contemplated hereby shall be kept strictly confidential,
including, without limitation, the substance of its commercial terms, and
any disclosure of such matters shall be made only with the prior written
consent of the other parties hereto. The obligations set forth in this
Section shall survive any termination or rescission of this Agreement, the
Operative Documents, and the Pass Through Trust Agreement, as the case may
be. Nothing in this Section shall prevent, or require the consent of any
party to, any disclosure:
(a) required by the order of any court of competent jurisdiction;
(b) as may be required by any Governmental Rule or Governmental
Authority;
(c) by either party to its legal and other professional advisers, or
in the course of or for the purpose of any arbitration or court
proceedings;
48
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(d) of information which has otherwise become public information
through no breach of this Section 13.5 by the disclosing party or through
filings made with the SEC; or
(e) in the case of the Pass Through Trustee and Indenture Trustee as
may be reasonably necessary or desirable to perform its duties on behalf of
the holders of the Secured Notes and Pass Through Certificates.
12.6 Further Assurances. In the event of the sale of the Vessel pursuant
------------------
to Clause 23 of the Head Lease, the Owner Participant, the Charterer and the
Indenture Trustee shall take such steps and sign such documents as may
reasonably be required by the Owner Trust to effect such sale.
SECTION 13. INDEMNIFICATION.
---------------
13.1 General Indemnification.
-----------------------
(a) Indemnification. The Charterer agrees, whether or not any of the
---------------
transactions contemplated hereby shall be consummated, to assume liability for,
and to indemnify, protect, save and keep harmless each Indemnitee, on an After-
Tax Basis, from and against any and all Claims that may be imposed on, incurred
by or asserted against any Indemnitee, whether or not such Indemnitee shall also
be indemnified as to any such Claim by any other Person, in any way relating to
or arising out of (i) the Vessel or the Vessel Interest or any part thereof,
(ii) the Operative Documents, the U.K. Documents, the Pass Through Trust
Agreement, the Pass Through Trust Supplement, or the transactions contemplated
thereby or the issuance of the Secured Note or the Pass Through Certificates,
(iii) the manufacture, financing, refinancing, design, construction, inspection,
purchase, ownership, acquisition, acceptance, rejection, delivery, nondelivery,
possession, transportation, charter, sub-charter, sub-sub-subcharter,
mortgaging, granting of a security interest in, preparation, installation,
condition, transfer of title, rental, use, operation, storage, maintenance,
modification, alteration, repair, assembly, sale, return, abandonment or other
application or disposition of all or any part of the Vessel or the Vessel
Interest or any interest therein, including, without limitation, (A) Claims or
penalties arising from any violation of law or liability in tort (strict or
otherwise), (B) loss of or damage to any property or the environment (including,
without limitation, clean-up costs, response costs and costs of corrective
action) or death or injury to any Person, (C) latent or other defects, whether
or not discoverable, and (D) any claim for patent, trademark or copyright
infringement or (iv) any breach of or failure to perform or observe, or any
other breach of or failure to perform or observe, or any other non-compliance
with, any
49
<PAGE>
covenant, condition or agreement or other obligation to be performed by the
Charterer or the Guarantor under any Operative Document, or the falsity of any
representation or warranty of the Charterer or the Guarantor in any of the
Operative Documents, the Pass Through Trust Agreement or in any Officer's
Certificate delivered by the Charterer or the Guarantor; provided, however, that
-------- -------
the Charterer shall not be required to indemnify any Indemnitee under this
Section 13.1 for (1) any Claim in respect of the Vessel to the extent
attributable to acts, events, circumstances or conditions which arise, occur or
exist after the earlier of: (I) the return of possession of the Vessel Interest
to the Owner Trust or its designee pursuant to the terms of the Charter (other
than as a result of a Charter Event of Default) or (II) the payment by the
Charterer of all amounts required to be paid under the Charter following an
Event of Loss with respect to the Vessel, (2) any Claim to the extent resulting
from the willful misconduct or gross negligence of such Indemnitee (other than
willful misconduct or gross negligence imputed to such Indemnitee as a matter of
law without regard to any action or inaction of such Indemnitee and solely by
reason of its interest in the Vessel Interest), (3) any Transaction Expense or
any other expense or Claim expressly provided under any of the Operative
Documents to be paid or borne by such Indemnitee at its own expense (or without
reimbursement or indemnification), (4) any Claim to the extent resulting from
the offer, sale, disposition or transfer by such Indemnitee of all or part of
its interest in the Vessel Interest, the Secured Note, the Pass Through
Certificates or the Trust Estate, other than any such transfer or disposition
(i) resulting from a continuing Charter Event of Default, (ii) in connection
with an Event of Loss, or (iii) to a successor Owner Trustee, and, in each case,
without duplication of any amounts recovered pursuant to the Charter, (5) any
Claim to the extent resulting from a breach by such Indemnitee of any of its
representations, warranties or covenants in the Pass Through Trust Agreement or
in any of the Operative Documents or in any Officer's Certificate delivered
pursuant thereto, or to the extent resulting from a knowing violation of law by
such Indemnitee, unless such violation of law is the result of the failure of
any other party to comply with its obligations under any Operative Document to
which it is a party (other than, in the case of the Owner Participant, such a
failure by the Owner Trustee as a result of the direction or instruction of the
Owner Participant and, in the case of the Loan Participant, such failure by the
Indenture Trustee as a result of the direction or instruction of (or a vote or
consent in favor of such direction or instruction by) the Loan Participant), (6)
any Claims in respect of Taxes (other than Taxes required to be paid to
indemnify such Indemnitee under this Section 13.1 on an After-Tax Basis) whether
or not the Charterer is obligated to indemnify for such Taxes under Section
13.2, (7) any Claim principally resulting from any
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business, transaction or other activity in which such Indemnitee is engaged,
other than the transactions contemplated hereby, by the Pass Through Trust
Agreement or by any of the other Operative Documents, except to the extent
resulting from a Charter Event of Default, (8) any Claim to the extent
attributable to the authorization or giving or withholding by such Indemnitee of
any future amendments, supplements, waivers or consents with respect to any
Operative Document or the Pass Through Trust Agreement, other than such as have
been requested by the Charterer or Guarantor, or such that occur as a result of
a Charter Event of Default that shall have occurred and is continuing, or such
as are expressly required by any Operative Document or the Pass Through Trust
Agreement, (9) any Claim resulting from any Lien resulting from any Claim
against such Indemnitee for which such Indemnitee is not indemnified hereunder
as a result of any other exclusion under this Section 13.1, (10) any Claim
resulting from the Indenture Event of Default which is not occasioned by a
Charter Event of Default or Charter Default, (11) with respect to the Owner
Trust, the Trust Company, the Resident Trustee and the Owner Participant, any
Claim resulting from the indemnity given by the Owner Participant pursuant to
Section 6.3 of the Trust Agreement or any indemnification pursuant thereto,
except to the extent that the indemnitee under such Section 6.3 would be
otherwise entitled to indemnification from the Charterer under this Section
13.1, (12) any Claim of the Pass Through Trustee to the extent that it is
indemnified by the Charterer pursuant to the Pass Through Trust Agreement, (13)
Claims against such Indemnitee resulting from a violation of ERISA or Section
4975 of the Code, other than, in the case of an Owner Participant, the making
and holding of its investment pursuant to this Participation Agreement or the
taking of any action at the request or direction of the Charterer, (14) any
claim which is an ordinary and usual operating or overhead expense of such
Indemnitee, (15) failure on the part of the Indenture Trustee, the Owner Trust
or the Pass Through Trustee, as the case may be, to distribute in accordance
with the Indenture, or the Trust Agreement, or the Pass Through Trust Agreement,
as the case may be, any amounts received and distributable by it thereunder,
(16) any Claim that constitutes or arises from such Indemnitee's exercise of its
contest rights with respect to a Permitted Lien attributable to such Indemnitee,
(17) any Claim of such Indemnitee relating to or arising from the inaccuracy,
incompleteness or misleading nature of any statement or representation included
in any registration statement issued in connection with any of an offer, sale or
disposition of any Secured Note, Pass Through Certificates or similar interest,
which statement or representation is based on written information supplied or
made available by such Indemnitee specifically for inclusion in such
registration statement, (18) any Claim of such Indemnitee (x) arising out of its
inability to invest in another transaction or for any
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other purpose as a result of such Indemnitee's participation or investment of
funds in connection with the transactions contemplated by this Agreement, or (y)
for which a payment of Termination Value paid by a Charterer in accordance with
the terms of the Operative Documents is intended to compensate such Indemnitee,
(19) any Claim to the extent that such Claim would not have arisen but for the
appointment of a successor or an additional Owner Trustee without the consent of
the Charterer, (20) any Claim to the extent that such Claim relates to amounts
payable by an Owner Participant to the Indenture Trustee in respect of the
Secured Note with respect to any Premium thereon as a result of a Indenture
Event of Default which is not occasioned by a Charter Event of Default or any
Premium payable by the Charterer or the Owner Participant pursuant to Section
3.06 of the Indenture and (21) any Claim arising from the negligence or strict
liability of such Indemnitee to the extent indemnity therefor would be in
violation of applicable law.
(b) Notices. If the Charterer shall obtain knowledge of any action,
-------
suit, proceeding or written notice of any Claim indemnified against under this
Section 13.1, the Charterer shall give prompt notice thereof to the appropriate
Indemnitee or Indemnitees, as the case may be, and if any Indemnitee shall
obtain any such knowledge, such Indemnitee shall give prompt notice thereof to
the Charterer; provided that the failure of such Indemnitee to so notify the
--------
Charterer shall not affect the Charterer's indemnification obligations under
this Section 13.1 to such Indemnitee except to the extent of any damage to
Charterer resulting from such failure. With respect to any amount that the
Charterer is requested by an Indemnitee to pay by reason of this Section 13.1,
such Indemnitee shall, if so requested by the Charterer and prior to any
payment, submit such additional information in such Indemnitee's possession to
the Charterer as the Charterer may reasonably request properly to substantiate
the requested payment.
(c) Contests. Subject to the rights of insurers under policies of
--------
insurance maintained pursuant to Section 16 of the Charter, the Charterer shall
have the right, at its sole cost and expense, to investigate, and the right in
its sole discretion to defend or compromise, any Claim for which indemnification
is sought under this Section 13.1, and the Indemnitee shall cooperate, at the
Charterer's expense, with all reasonable requests of the Charterer in connection
therewith. The Charterer will provide the Indemnitee with such information not
within the control of such Indemnitee, as is in the Charterer's control or is
reasonably available to the Charterer, which such Indemnitee may reasonably
request and shall otherwise cooperate with such Indemnitee so as to enable such
Indemnitee to fulfill its obligations under this Section 13.1. Where the
Charterer or the insurers under a
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policy of insurance maintained by the Charterer undertake the defense of an
Indemnitee with respect to a Claim, no additional legal fees or expenses of such
Indemnitee in connection with the defense of such claim shall be indemnified
hereunder unless such fees or expenses were incurred at the request of the
Charterer or such insurers; provided, however, that if (i) in the written
-------- -------
opinion of counsel to such Indemnitee an actual or potential material conflict
of interest exists where it is advisable for such Indemnitee to be represented
by separate counsel or (ii) such Indemnitee has been indicted or otherwise
charged in a criminal complaint in connection with a Claim not excluded by
Section 13.1(a) and such Indemnitee informs the Charterer that such Indemnitee
desires to be represented by separate counsel, the reasonable fees and expenses
of such separate counsel shall be borne by the Charterer. Subject to the
requirements of any policy of insurance, an Indemnitee may participate at its
own expense in any judicial proceeding controlled by the Charterer pursuant to
the preceding provisions; provided that such party's participation does not, in
--------
the reasonable opinion of the independent counsel appointed by the Charterer or
its insurers to conduct such proceedings, significantly interfere with such
control; and such participation shall not constitute a waiver of the right to
receive the indemnification provided in this Section 13.1. Notwithstanding
anything to the contrary contained herein, (x) the Charterer shall not under any
circumstances be liable for the fees and expenses of more than one counsel for
each of (i) the Owner Participant and the Owner Trust (and their respective
successors and permitted assigns, agents and servants) and (ii) the Loan
Participants and the Indenture Trustee (and their respective successors and
permitted assigns, agents and servants), and (y) during the continuance of a
Charter Event of Default, the Charterer shall not compromise any Claim without
the consent of the applicable Indemnitee, such consent not to be unreasonably
withheld.
(d) Subrogation. Upon payment in full of any Claim by the Charterer
-----------
pursuant to this Section 13.1 to or on behalf of an Indemnitee, the Charterer,
without any further action, shall be subrogated to any and all claims that such
Indemnitee may have in respect of the matters against which such indemnity was
given (other than claims under any insurance policies maintained by such
Indemnitee). Such Indemnitee agrees to cooperate with the Charterer and to
execute such further instruments to permit the Charterer, at the Charterer's
expense, to pursue such claims, to the extent reasonably requested by the
Charterer.
(e) Refunds. Upon receipt by any Indemnitee of a repayment or
-------
reimbursement of all or any part of any Claim for which the Charterer shall have
paid for any Indemnitee or for which the Charterer shall have reimbursed any
Indemnitee pursuant to this Section 13.1, such Indemnitee shall pay to
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the Charterer, as promptly as practicable after the receipt thereof, the amount
of such repayment or reimbursement plus any interest received by such Indemnitee
on such amount plus the amount of any tax savings realized by such Indemnitee as
a result of such payment made to the Charterer.
(f) Payments; Verification. Any amount payable to any Indemnitee
----------------------
pursuant to this Section 13.1 shall be paid to such Indemnitee promptly upon
receipt of a written demand therefor from such Indemnitee, accompanied by a
written statement describing the basis for such indemnity and the computation of
the amount so payable and, if requested by the Charterer, such determination
shall be verified by a nationally recognized independent accounting firm
mutually acceptable to the Charterer and the Indemnitee at the Charterer's
expense, unless such accounting firm determines that the amount payable by the
Charterer is less than 95 percent (95%) of the amount shown on such written
statement, in which case such verification shall be at such Indemnitee's
expense.
(g) Trustee's Fees. The Charterer shall pay the reasonable ongoing
--------------
fees and expenses of the Managing Trustee, Delaware Trustee, the Pass Through
Trustee and the Indenture Trustee for acting as such to the extent not included
in the Transaction Expenses. The Charterer shall have the right to receive and
review any substantiation relating to any such ongoing expense as it may
reasonably request.
13.2 General Tax Indemnification.
---------------------------
(a) Payment of Taxes. The Charterer agrees that each payment of Base
----------------
Hire and Termination Value pursuant to the Charter shall be free of all
withholding with respect to Taxes of any nature whatsoever, and in the event
that the Charterer shall be required by applicable law to make any such
withholding for any such payment, (x) Base Hire and Termination Value payable
shall be increased so that after making all required withholdings the Tax
Indemnitee receives an amount equal to the Hire it would have received had such
withholdings not been made, (y) the Charterer shall make such withholdings and
(z) the Charterer shall pay the full amount withheld to the relevant taxing
authority in accordance with applicable law. If for any reason, the Charterer
is required to make any payment to a taxing authority or to any Tax Indemnitee
as a result of the application of the preceding sentence or otherwise that
relates to or is a result of any Tax imposed on or with respect to any Tax
Indemnitee which Tax (in whole or in part) is not the responsibility of the
Charterer under the terms of this Section 13.2, then the Tax Indemnitee in
respect of whom such Tax is an excluded Tax hereunder shall, within 30 days
after receipt of notice of payment of the Tax and appropriate payment
documentation with
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respect thereto, pay to the Charterer an amount which equals the amount paid by
the Charterer with respect to or as a result of such Tax that is not the
responsibility of the Charterer (including any expenses or other charges borne
by the Charterer) increased by (but subject to the proviso in Section 13.2(f))
the amount of tax savings to such Tax Indemnitee attributable to the making of
such payment to the Charterer. Each Tax Indemnitee also agrees (subject to the
proviso in Section 13.2(f)) to reimburse the Charterer for any amounts withheld
for which such Tax Indemnitee obtains a credit or refund, within 30 days after
receipt of such credit or refund.
Except as provided in Section 13.2(b), the Charterer agrees to pay,
and to indemnify, protect, defend, save and keep harmless each Tax Indemnitee,
on an After-Tax Basis, whether or not any or all of the transactions
contemplated hereby are consummated in whole or in part, from and against any
and all taxes, impositions, fees, levies, assessments, duties, withholdings,
governmental claims or other charges of any nature whatsoever (together with any
related interest, fines, penalties or additions to tax), including, without
limitation, rental, income, withholding, sales, use, transfer, leasing, personal
property, excise, receipts, franchise, value-added, stamp, filing, recording,
documentation or license taxes, however imposed or asserted, by any United
States federal, state or local government or taxing authority (including any
possession or territory thereof) or any foreign government or taxing authority
or subdivision thereof, or any international taxing authority or any subdivision
or taxing authority of any thereof (all the foregoing being herein collectively
called "Taxes" or, separately, a "Tax"), upon or with respect to (i) the Vessel
----- ---
Interest or any portion thereof or interest therein, (ii) the acquisition,
purchase, sale, financing, chartering, subchartering, sub-subchartering and sub-
sub-subchartering, ownership, maintenance, repair, modification, replacement,
removal, substitution, redelivery, alteration, insuring, control, use,
operation, manufacture, assembly, delivery, possession, repossession, location,
storage, importation, exportation, refinancing, refunding, transfer of title,
registration, reregistration, transfer of registration, return or other
disposition thereof of all or any part of the Vessel Interest or any portion
thereof or interest therein, (iii) the rental payments (including, without
limitation, all Base Hire and Supplemental Hire), receipts or earnings arising
from the Vessel Interest or any portion thereof or interest therein, or payable
pursuant to the Charter, or any other payment or right to receive payment
pursuant to the Operative Documents or the Pass Through Trust Agreement or Pass
Through Certificate (including, without limitation, any payment of principal,
interest, discount or premium on or with respect to the Secured Note), (iv) the
Operative Documents and any other documents contemplated
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hereby or thereby and amendments and supplements thereto, or the issuance,
refunding, refinancing or resetting of the Secured Note or the Pass Through
Certificate or any other document executed and delivered in connection with the
consummation of the transactions contemplated by the Operative Documents or Pass
Through Trust Agreement or the interest of any Tax Indemnitee in any of the
foregoing, or the execution, amendment, issuance or delivery of any of the
foregoing, (v) the Indenture Estate or Trust Estate or Pass Through Trust or the
property, or the income or other proceeds received with respect to the property,
held by the Indenture Trustee under the Indenture or the Owner Trustee under the
Trust Agreement, or (vi) otherwise arising out of, with respect to, or in
connection with the transactions contemplated by the Operative Documents, the
Pass Through Certificate, or the Pass Through Trust Agreement.
(b) Exclusions from General Tax Indemnity. The provisions of Section
-------------------------------------
13.2(a) shall not apply to, and the Charterer shall have no liability to a Tax
Indemnitee under Section 13.2(a) with respect to:
(1) Taxes (other than such Taxes that are sales, use, rental,
property or ad valorem Taxes) imposed on, based on or measured by, net
-- -------
income, receipts, capital, net worth, excess profits or conduct of business
which are imposed by the United States federal, or any state or local
government therein, or any foreign or international taxing authority,
including any franchise or privilege Taxes, minimum Taxes, value added
Taxes imposed in lieu of net income Taxes, withholding Taxes (other than
withholding Taxes resulting from either the Owner Trust or Owner
Participant not being a United States person for United States federal
income tax purposes), and any Taxes on or measured by any items of tax
preference;
(2) Taxes, including, without limitation, sales and transfer
Taxes, that result from any voluntary or involuntary transfer by such Tax
Indemnitee of any interest in the Owner Participant, the Vessel Interest,
the Trust Estate or any portion of any of the foregoing, or any interest
arising out of the Operative Documents or Pass Through Trust Agreement or
the Secured Note or Pass Through Certificate; provided, however, that this
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Section 13.2(b)(2) shall not apply to any transfer that (A) relates to the
exercise of remedies in connection with a Charter Event of Default; (B)
results from a Event of Default or from an Event of Loss; or (C) results
from the
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replacement, removal or substitution of all or any part of the Vessel
Interest;
(3) Taxes imposed by any jurisdiction that would not have been
imposed on a Tax Indemnitee but for its activities in such jurisdiction
unrelated to the transactions contemplated by the Operative Documents or
Pass Through Trust Agreement;
(4) Taxes that result from (A) the willful misconduct or gross
negligence of such Tax Indemnitee, (B) the breach or inaccuracy by such Tax
Indemnitee of any of its representations, covenants and obligations under
the Operative Documents, (C) the failure of a Tax Indemnitee to file tax
returns properly and on a timely basis or to claim a deduction or credit to
which it is entitled (provided that such Tax Indemnitee shall not be
obligated to claim a deduction or credit if it requests but fails to
receive an opinion of Dewey Ballantine or other independent counsel
selected by such Tax Indemnitee and reasonably acceptable to the Charterer
that it is entitled to claim such deduction or credit), or (D) the failure
of a Tax Indemnitee to comply with certification, reporting or other
similar requirements of the jurisdiction imposing such Tax; provided,
--------
however, that the exclusions set forth in subclauses (C) and (D) shall not
-------
apply if any such failure is the result of the failure of the Charterer to
(I) perform its obligations under Section 13.2(c), or to perform its duties
and responsibilities pursuant to any of the Operative Documents, (II)
timely and properly notify such Tax Indemnitee of the applicable filing,
certification, reporting or other similar requirements, or (III) provide
reasonable assistance in complying with any such requirement;
(5) Taxes which are attributable to any period or circumstance
occurring after the expiration or earlier termination of the Charter,
except to the extent attributable to (A) a failure of the Charterer to
fully discharge its obligations under the Charter, (B) Taxes imposed on or
with respect to any payments that are due after the expiration or earlier
termination of the Charter and which are attributable to a period or
circumstance occurring prior to such expiration or earlier termination or
(C) Taxes that relate to events, matters or circumstances occurring prior
to such expiration or earlier termination;
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(6) Taxes which are based on or measured by fees or compensation
received by the Owner Trustee for acting as Owner Trustee under the Trust
Agreement, the Indenture Trustee for acting as Indenture Trustee under the
Indenture or Pass Through Trustee for acting as Pass Through Trustee under
the Pass Through Trust Agreement;
(7) other than with respect to Owner Participants and the
Shareholders therein, Taxes to the extent such Taxes would not have been
imposed on a Tax Indemnitee if such Tax Indemnitee were a United States
person for United States federal income tax purposes;
(8) any Tax that is being contested in accordance with the
provisions of Section 13.2(e) during the pendency of such contest, but only
for so long as such contest is continuing in accordance with such Section
and payment is not otherwise required pursuant to such Section;
(9) Taxes as to which any Tax Indemnitee fails to comply with its
contest obligations under Section 13.2(e) in any material respect, but only
to the extent such failure materially impairs the Charterer's contest
rights with respect to the Taxes that are the subject of the contest and is
not due to any act or failure to act by the Charterer; provided, however,
-------- -------
that this Section 13.2(b)(9) shall not constitute a waiver by the Charterer
of its rights, if any, to assert and sue upon any claims it may have
against the Tax Indemnitee by reason of its failure to comply with its
obligations under Section 13.2(e) of this Agreement;
(10) Taxes imposed as a result of the trust described in the Trust
Agreement or the Pass Through Trust not being treated as a grantor trust or
other conduit entity for federal, state or local tax purposes;
(11) any Taxes with respect to a transferee or subsequent
transferee to the extent of the excess of such Taxes over the amount of the
Taxes that would have been imposed had there not been a transfer by the
initial Tax Indemnitee after the Closing Date of (i) an interest in the
Owner Participant, the Vessel Interest, or of a beneficial interest in the
Trust Estate or any portion of any of the foregoing, or (ii) any interest
arising under any Operative Document or
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Pass Through Trust Agreement or any Secured Note or Pass Through
Certificate;
(12) Taxes which have been included in Owner's Cost;
(13) any Taxes imposed as a result of, or in connection with, any
"prohibited transaction," within the meaning of Section 4975 of the Code,
Section 406 or ERISA or any comparable laws of any governmental authority,
engaged in by any Tax Indemnitee other than, in the case of the Owner
Participant, the making and holding of its investment in the Interest or
the taking of any action at the request or direction of the Charterer;
(14) Taxes imposed on the Owner Trust resulting from a Lessor's
Lien;
(15) Taxes resulting from an amendment to an Operative Document
which is not consented to by the Charterer in writing; or
(16) any Tax in the nature of an intangible tax or similar tax upon
or with respect to the value of the interest of the Indenture Estate or a
Certificateholder, as the case may be, in any of the Secured Note or
Certificate imposed by any government or taxing authority.
Notwithstanding anything contained herein or any other Operative
Document to the contrary, the Charterer acknowledges and agrees to indemnify and
hold harmless the Owner Participant and Owner Trust against any and all
withholding Taxes (inclusive of any interest and penalties imposed for any
failure to timely withhold such Taxes) imposed on or with respect to any amounts
paid to Loan Participant as an indemnified Tax for purposes of this Section
13.2, unless such withholding is due to (i) the Owner Trust not being a United
States person for United States federal income tax purposes, (ii) a failure of
the Owner Participant or the Owner Trustee to comply with any provision of the
Operative Documents (including Section 13.2(b)(4)) except if such failure is the
result of the failure of the Charterer to perform its obligations under Section
13.2(c) or (iii) the breach or inaccuracy of any representations, covenants or
obligations by the Owner Participant or Owner Trust under the Operative
Documents. If a Tax (including any related interest, fines, penalties or
addition to Tax) results from a failure of any Tax Indemnitee to comply with its
obligations under the Operative Documents or the Pass Through Trust Agreement
and the Charterer is required to indemnify another
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Tax Indemnitee against the imposition of such Tax, then the Tax Indemnitee whose
failure resulted in the imposition of such Tax shall, within 30 days after
receipt of notice of payment of the Tax and appropriate payment documentation
with respect thereto, pay to the Charterer an amount which equals the amount
paid by the Charterer with respect to or as a result of such Tax (including any
expenses or other charges borne by the Charterer) increased by (but subject to
the proviso in Section 13.2(f)) the amount of tax savings to such Tax Indemnitee
attributable to the making of such payment to the Charterer.
The provisions of this Section 13.2(b) shall not apply to any Taxes
imposed in respect of the receipt or accrual of any indemnity payment made by
the Charterer pursuant to this Section 13.2 hereof.
(c) Reports. If any report, return, certification or statement is
-------
required to be filed with respect to any Tax that is subject to indemnification
under this Section 13.2, the Charterer shall timely prepare and file the same
(except for (i) any report, return or statement relating to any Taxes described
in Section 13.2(b)(1) or any Taxes in lieu of or enacted in substitution for any
of the foregoing or (ii) any other report, return, certification or statement
which the Tax Indemnitee has notified the Charterer that the Tax Indemnitee
intends to prepare and file); provided that such Tax Indemnitee shall have
--------
furnished the Charterer, at the Charterer's expense, with such information
reasonably necessary to prepare and file such returns as is within such Tax
Indemnitee's control. The Charterer shall either file such report, return,
certification or statement (so as to show the ownership of the Vessel Interest
in the Owner Trust) and send a copy of such report, return, certification or
statement to the Owner Participant and the Owner Trust, or, where not so
permitted to file, shall notify the Owner Participant and the Owner Trust of
such requirement within a reasonable period of time prior to the due date for
filing (without regard to any applicable extensions) and prepare and deliver
such report, return, certification or statement to the Owner Participant and the
Owner Trust. In addition, within a reasonable time prior to the time such
report, return, certification or statement is to be filed the Charterer shall,
to the extent permitted by law, cause all billings of such Taxes to be made to
each Tax Indemnitee in care of the Charterer, make payment thereof and furnish
written evidence of such payment. The Charterer shall furnish promptly upon
written request such data, records and documents as any Tax Indemnitee may
reasonably require of the Charterer to enable such Tax Indemnitee to comply with
requirements of any taxing jurisdiction arising out of such Tax Indemnitee's
participation in the transactions contemplated by this
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Agreement, including, without limitation, requirements relating to Taxes
described in Section 13.2(b)(1).
(d) Payments. Any Tax indemnified hereunder shall be paid directly
--------
when due to the applicable taxing authority if direct payment is permitted, or
shall be reimbursed to a Tax Indemnitee on demand if paid by such Tax Indemnitee
in accordance herewith. Except as otherwise provided in this Section 13.2, all
amounts payable to a Tax Indemnitee hereunder shall be paid promptly in
immediately available funds, but in no event later than the later of (i) 10 days
after the date of such demand or (ii) 10 days before the date the Tax to which
such amount payable hereunder relates is due or is to be paid (ignoring
extension of time) and shall be accompanied by a written statement (which
written statement shall, at the Charterer's request, be verified by a nationally
recognized independent accounting firm mutually acceptable to the Charterer and
the Tax Indemnitee, such verification to be at the Charterer's expense unless
such accountants determine that the amount payable by the Charterer is less than
ninety-five percent (95%) of the amount shown on such written statement, in
which event it will be paid by the Tax Indemnitee) describing in reasonable
detail the Tax and the computation of the amount payable. In the case of a Tax
subject to indemnification under this Section 13.2 which is properly subject to
a contest in accordance with Section 13.2(e), the Charterer (i) shall be
obligated to make any advances with respect to such Tax whenever required under
Section 13.2(e) and (ii) shall pay such Tax (in the amount finally determined to
be owing in such contest) prior to the latest time permitted by the relevant
taxing authority for timely payment after a Final Determination.
(e) Contests; Refunds. (i) In the event a taxing jurisdiction makes
-----------------
a claim with respect to any Tax for which a Charterer may be liable under this
Section 13.2 (a "Tax Claim"), the Charterer may cause the applicable Tax
--- -----
Indemnitee to contest such Tax Claim as set forth herein. In the event any Tax
Indemnitee receives notice of a Tax Claim or potential Tax Claim which may be
indemnified under this Section 13.2, such Tax Indemnitee shall promptly notify
the Charterer thereof. If requested by the Charterer in writing within 30 days
of receipt of such notice (or, if sooner, on or before the last date upon which
the contest of such Tax can be initiated, provided that the Tax Indemnitee's
notice to the Charterer discloses such date), such Tax Indemnitee shall, upon
receipt of an indemnity satisfactory to it for all reasonable costs, expenses,
losses, legal and accountants' fees and disbursements, and for all penalties,
fines, additions to tax and interest, and at the expense of the Charterer,
contest the imposition of any Tax Claim by (1) resisting payment thereof, if
such Tax Indemnitee in its reasonable discretion shall determine such course of
action to
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be appropriate, (2) not paying the same except under protest, if protest is
necessary and proper, or (3) if payment shall be made, using reasonable efforts
to obtain a refund thereof in appropriate administrative and judicial
proceedings, or both; provided, however, that in no event will such Tax
-------- -------
Indemnitee be required to contest or continue to contest any Tax Claim unless
such Tax Indemnitee and the Owner Participant shall have reasonably determined
that the action to be taken will not result in any material risk of sale,
forfeiture or loss of, or the creation of any lien (except if the Charterer
shall have adequately bonded such lien, or otherwise made provision to protect
the interests of such Tax Indemnitee and the Owner Participant in a manner
reasonably satisfactory to such Tax Indemnitee and the Owner Participant) on,
the Vessel Interest, any part thereof or interest therein. If such contest
shall involve payment of the Tax Claim, the Charterer shall have advanced to
such Tax Indemnitee the amount of such payment plus interest, penalties and
additions to tax with respect thereto on an interest-free basis, and shall have
agreed to indemnify the Tax Indemnitee, on an After-Tax Basis, for any adverse
tax consequences resulting from such advance. If permitted by applicable law,
the Charterer may contest, at its own expense, the imposition of any Tax Claim
if the proviso in the second preceding sentence is satisfied. In any contest
controlled by the Tax Indemnitee, such Tax Indemnitee will consult with the
Charterer and permit the Charterer to participate in a reasonable manner in the
conduct of the contest.
A Tax Indemnitee shall not make, accept or enter into a settlement or
other compromise with respect to any Taxes indemnified pursuant to this Section
13.2 (which proceeding the Tax Indemnitee is required to continue), or forego or
terminate any such proceeding with respect to Taxes indemnified pursuant to this
Section 13.2, without the prior written consent of the Charterer.
Notwithstanding the foregoing, if a Tax Indemnitee refuses to contest any Tax
Claim or effects a settlement or compromise of any such Tax that the Tax
Indemnitee is required to contest or otherwise terminates any such contest
without such prior written consent of the Charterer, such Tax Indemnitee shall
be deemed to have waived its right to any indemnity payment by the Charterer
that would otherwise be payable by the Charterer pursuant to this Section 13.2
in respect of such Tax Claim.
(ii) Upon receipt by any Tax Indemnitee of a repayment or refund of
all or any part of any Tax which such Charterer shall have paid for, or
advanced to, such Tax Indemnitee or for which the Charterer shall have
reimbursed such Tax Indemnitee pursuant to this Section 13.2, such Tax
Indemnitee shall pay to the Charterer, as promptly as practicable after the
receipt thereof, the amount of such repayment or refund plus any interest
received by, or credited
62
<PAGE>
to, such Tax Indemnitee on such amounts net of Taxes thereon plus the amount of
any net tax savings actually realized by such Tax Indemnitee as a result of the
payment made to the Charterer; provided, however, that: (A) such Tax Indemnitee
-------- -------
shall not be obligated to make such payment with respect to any net tax savings
to the extent that the amount of such payment would exceed (x) all prior
indemnity payments (excluding costs and expenses incurred with respect to
contests) made by the Charterer with respect to such Tax pursuant to this
Section 13.2 and less (y) the amount of all prior payments by such Tax
Indemnitee to the Charterer hereunder with respect to such Tax (but any such
excess shall be applied against, and reduce pro tanto, any future payment due
--- -----
such Tax indemnitee pursuant to this Section 13.2); and (B) if there is (1) a
subsequent loss of any such tax savings or refund realized by the Tax Indemnitee
or (2) a reduction of an amount otherwise payable to a Tax Indemnitee hereunder
as a result of any such tax savings or refund, such loss or reduction shall be
treated as a Tax for which the Charterer must indemnify such Tax Indemnitee
pursuant to this Section 13.2.
(f) Tax Savings. If, by reason of any payment made to or for the
-----------
account of a Tax Indemnitee by the Charterer pursuant to this Section 13.2, such
Tax Indemnitee at any time realizes a reduction in any Taxes for which the
Charterer is not required to indemnify such Tax Indemnitee pursuant to this
Section 13.2 and which was not taken into account previously in computing such
payment by the Charterer to or for the account of such Tax Indemnitee, then such
Tax Indemnitee shall promptly pay to the Charterer an amount equal to such
actual reduction in Taxes, plus the amount of any additional reduction in Taxes
of such Tax Indemnitee attributable to the payment made by such Tax Indemnitee
to the Charterer pursuant to this sentence; provided, however, that: (A) such
-------- -------
Tax Indemnitee shall not be obligated to make such payment with respect to any
net tax savings to the extent that the amount of such payment would exceed (x)
all prior indemnity payments (excluding costs and expenses incurred with respect
to contests) made by the Charterer with respect to such Tax pursuant to this
Section 13.2 and less (y) the amount of all prior payments by such Tax
Indemnitee to the Charterer hereunder with respect to such Tax (but any such
excess shall be applied against, and reduce pro tanto, any future payment due
--- -----
such Tax indemnitee pursuant to this Section 13.2); and (B) if there is a (i)
subsequent loss of any such tax savings or refund realized by the Tax Indemnitee
or (ii) a reduction of an amount otherwise payable to a Tax Indemnitee hereunder
as a result of any such tax savings or refund, such loss or reduction shall be
treated as a Tax for which the Charterer must indemnify such Tax Indemnitee
pursuant to this Section 13.2.
63
<PAGE>
13.3 Special Indemnity Relating to U.K. Documents. The Charterer
--------------------------------------------
agrees to indemnify, protect, save and keep harmless the Indenture Trustee, the
Pass Through Trustee and each holder of a Secured Note (the "Special
Indemnitees") from any losses, liabilities or expenses (collectively, "Losses")
suffered or incurred by any Special Indemnitee resulting from the obligations
(the "U.K. Obligations") of the Owner Trust under the U.K. Documents including,
without limitation of the generality of the foregoing, Losses incurred as a
result of an insolvency proceeding of the Owner Trust resulting from the U.K.
Obligations or Losses resulting from the failure of the Indenture Trustee to
receive Assigned Hire when due as a result of the actions of any holder of a
U.K. Obligation.
13.4 No Guarantee. Nothing in Sections 13.1, 13.2 or 13.3 shall be
------------
construed as a guaranty by the Charterer of any residual value in the Vessel
Interest or as a guaranty of the Secured Note.
SECTION 14. TRANSFER OF AN OWNER PARTICIPANT'S
INTEREST.
----------------------------------
14.1 Restrictions on Transfer. Without the prior written consent of,
------------------------
so long as the Charter shall be in effect, the Charterer, and, so long as the
Lien of the Indenture shall be in effect, the Indenture Trustee, the Owner
Participant shall not, directly or indirectly, assign, convey or otherwise
transfer (whether by consolidation, merger, sale of assets or otherwise) any of
its right, title or interest in and to the Trust Estate, this Agreement, the
Trust Agreement or any other Operative Document except in accordance with the
terms and conditions of this Section 15.
14.2 Permitted Transfers. The Owner Participant may transfer all or
-------------------
part of its right, title and interest in and to the Trust Estate (whether or not
the same shall then have been pledged or mortgaged under the Indenture, but
subject to the Lien of the Indenture if then in effect) and in and to this
Agreement and the other Operative Documents to any Person (a "Transferee") only
----------
in compliance with and upon satisfaction of the following conditions:
(a) the Transferee shall be (i) a financial institution, leasing
company or other investor whose net worth at the time is at least
$25,000,000 (or the obligations of which are guaranteed by an entity whose
net worth at the time is at least $25,000,000 pursuant to a guarantee in
form and substance reasonably satisfactory to the Charterer and the
Indenture Trustee), (ii) an Affiliate of the Owner Participant, or (iii) a
solvent entity formed under the laws of the Cayman Islands or any of the
states of the United States at least 50% of the
64
<PAGE>
equity interest in which is owned by one or more Affiliates of the
Guarantor; provided that in the case of Transferees under clauses (ii) or
--------
(iii) either (x) the Owner Participant shall guarantee the obligations of
such Transferee as Owner Participant under the Operative Documents pursuant
to a guarantee in form and substance reasonably satisfactory to the
Charterer and the Indenture Trustee, or (y) such Transferee shall have a
net worth at the time of such transfer of at least $25,000,000;
(b) no such transfer shall violate any provision of, or create a
relationship which would be in violation of, any applicable Governmental
Rules, including, without limitation, applicable securities laws, any
agreement to which the Owner Participant or the Transferee is a party or by
which it or any of its property is bound or any Governmental Actions;
(c) the Transferee shall enter into an agreement or agreements, in
form and substance reasonably satisfactory to the Charterer, the Owner
Trust and (if the Lien of the Indenture shall then be in effect) the
Indenture Trustee, whereby the Transferee shall confirm that it has the
requisite power and authority to enter into and to carry out the
transactions contemplated hereby and in each Operative Document to which
the Owner Participant is or will be a party, and that it shall be deemed a
party to each of such Operative Documents and shall agree to be bound by
all the terms of, and to undertake all the obligations of the transferor to
be performed on or after the date of such transfer contained in, each of
such Operative Documents, and whereby such Transferee shall make
representations and warranties reasonably requested by the Charterer, the
Owner Trust and the Indenture Trustee not exceeding the scope of the
representations and warranties contained in Section 7; provided that such
--------
Transferee delivers to the Charterer and the Indenture Trustee a written
representation and warranty (or an opinion of counsel reasonably
satisfactory to the Charterer and the Indenture Trustee) that such transfer
to and ownership by such Transferee (1) will not result in a "prohibited
transaction" as defined in Section 406 of ERISA or Section 4975 of the Code
or (2) are covered by an exemption contained in ERISA or an administrative
exemption thereunder;
(d) the transferring Owner Participant shall have provided 30 days
prior written notice of such transfer to the Indenture Trustee and the
Charterer, which notice shall specify (i) such information and be
accompanied by evidence as shall be reasonably necessary to establish
compliance with this Section 15 and Section 12.7 of the
65
<PAGE>
Trust Agreement (ii) the name and address (for the purpose of giving notice
as contemplated by the Operative Documents) of the Transferee;
(e) the transferring Owner Participant shall pay or cause to be paid
all reasonable fees, expenses, disbursements and costs (including, without
limitation, legal and other professional fees and expenses) incurred by the
Owner Trust, the Loan Participant, the Indenture Trustee or the Charterer
in connection with any transfer pursuant to this Section 14;
(f) the transferring Owner Participant or the Transferee shall have
delivered to the Charterer and, if the Lien of the Indenture shall then be
in effect, the Indenture Trustee, an opinion of counsel in form and
substance reasonably satisfactory to each of them, as to the due
authorization, execution, delivery and enforceability of the agreement or
agreements referred to in clauses (c) and (g) of this Section 14.2, and as
to the matters referred to in clause (b) of this Section 14.2; and
(g) the transferring Owner Participant or the Transferee shall agree
by an instrument in writing in form and substance reasonably satisfactory
to the Charterer to indemnify the Charterer against any increased tax
indemnity obligations the Charterer may have as a result of such
conveyance.
14.3 Effect of Transfer. From and after any transfer effected in
------------------
accordance with this Section 14, the Owner Participant making such transfer
shall be released, to the extent of the obligations assumed by the Transferee,
from its liability hereunder and under the other Operative Documents to which it
is or will be a party in respect of obligations to be performed on or after the
date of such transfer. Upon any transfer by the Owner Participant in accordance
with this Section 14, the Transferee shall be deemed an "Owner Participant" for
all purposes of the Operative Documents and each reference herein to the Owner
Participant making such transfer shall thereafter be deemed a reference to such
Transferee for all purposes, except as provided in the preceding sentence.
SECTION 15. MISCELLANEOUS.
-------------
15.1 Survival. All agreements, representations, warranties and
--------
indemnities contained in this Agreement and the other Operative Documents and in
any agreement, document or certificate delivered pursuant hereto or thereto or
in connection herewith or therewith shall survive and continue in effect
following the execution and delivery of this Agreement
66
<PAGE>
and the other Operative Documents and the participation by the Owner Participant
and the Loan Participant in the payment of Owner's Cost as contemplated hereby
and by the other Operative Documents.
15.2 Binding Effect. All agreements, representations, warranties and
--------------
indemnities in this Agreement and the other Operative Documents and in any
agreement, document or certificate delivered pursuant hereto or thereto or in
connection herewith or therewith shall bind the Person making the same and its
successors and assigns, and shall inure to the benefit of each Person for whom
made and its successors and permitted assigns.
15.3 Notices. All communications, notices and consents provided for
-------
in this Agreement shall be in writing and shall be given in person or by courier
or by means of telecopy or other wire transmission (with request for assurance
of receipt in a manner typical with respect to communications of that type), or
mailed by registered or certified first class mail, return receipt requested,
addressed as set forth in Schedule 1 or at such other address as any such Person
may from time to time designate by notice duly given in accordance with the
provisions of this Section 15.3 to the other parties hereto. All such
communications, notices and consents given in such manner shall be deemed given
when received in accordance with this Section 15.3 (or when proffered to a
Person if receipt is refused).
15.4 Counterpart Execution. This Agreement may be executed in any
---------------------
number of counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
15.5 GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED
-------------
BY, AND BE CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BUT
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS THEREOF BUT APPLYING
WHERE MANDATORILY APPLICABLE THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA.
15.6 Amendments, Supplements, Etc. (a) Neither this Agreement nor
----------------------------
any of the terms hereof may be amended, supplemented, waived or modified orally,
but only by an instrument in writing signed by the party against which
enforcement of such change is sought.
(b) Prior to the Charter Termination Date, neither the Trust
Agreement nor the Indenture may be amended, waived, supplemented or modified to
permit any action contrary to, or
67
<PAGE>
disturb the Charterer's rights under, the Charter, or otherwise adversely affect
the Charterer's rights, or increase the Charterer's obligations or liabilities,
under any Operative Document without the consent of the Charterer.
15.7 Headings; Table of Contents. The division of this Agreement
---------------------------
into Sections, subsections and paragraphs, the provision of a table of contents
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation hereof.
15.8 Severability of Provisions. Any provision of this Agreement
--------------------------
which may be determined by competent authority to be invalid or unenforceable in
such jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without invalidating or rendering
unenforceable any remaining terms and provisions hereof, and any such invalidity
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. The parties shall
negotiate in good faith to replace such provision with an appropriate, legal
provision. To the extent permitted by applicable law, the parties hereto hereby
waive any provision thereof that renders any term or provision hereof invalid or
unenforceable in any respect.
15.9 Entire Agreement. This Agreement (including the schedules and
----------------
exhibits hereto), the Pass Through Trust Agreement, the Pass Through Trust
Supplement and the other Operative Documents, and all certificates, instruments
and other documents relating thereto delivered and to be delivered from time to
time pursuant to the Operative Documents and the Pass Through Trust Agreement,
supersede all agreements (other than any Operative Document) prior to the date
of this Agreement, written or oral, between or among any of the parties hereto
relating to the transactions contemplated hereby and thereby, not including the
Amended and Restated Joint Venture Agreement relating to the Vessel between
MOSAT, Saudi Maritime Holding Company and SAMCAY dated as of December 3, 1996.
15.10 Limitation of Liability of Managing Trustee, Indenture Trustee
--------------------------------------------------------------
and Pass Through Trustee. (a) It is expressly understood and agreed by and
- ------------------------
among all of the parties hereto that, except as otherwise expressly provided
herein or in any other Operative Document (other than the Trust Agreement), (i)
this Agreement is executed and delivered by the Managing Trustee not in its
individual capacity, except to the extent expressly set forth herein, but solely
as Managing Trustee for the Owner Trust under the Trust Agreement in the
exercise of the power and authority conferred and vested in it as the Managing
Trustee, (ii) certain of the representations, undertakings and agreements made
herein by
68
<PAGE>
the Managing Trustee are not personal representations, undertakings and
agreements, but are binding only on the Trust Estate and the Managing Trustee,
as trustee, (iii) except as set forth in the proviso to this sentence, nothing
herein contained shall be construed as creating any liability of the Trust
Company or any incorporator or any past, present or future subscriber to the
capital stock of, or stockholder, officer or director of, the Trust Company to
perform any covenant, whether express or implied, contained herein, all such
liability, if any, being expressly waived by each of the other parties hereto
and by any Person claiming by, through or under any such party, and (iv) so far
as the Managing Trustee is concerned, each of the other parties hereto and any
Person claiming by, through or under any such party shall (other than with
respect to Claims arising from the willful misconduct or gross negligence of the
Managing Trustee or its failure to distribute funds in accordance with the terms
of the Operative Documents) look solely to the Trust Estate and the Indenture
Estate for the performance of any obligation under any of the instruments
referred to herein; provided, however, that notwithstanding anything in this
-------- -------
Section 15.10 to the contrary, the Trust Company shall be liable (A) in its
individual capacity and as Managing Trustee to the Owner Participant as
expressly set forth in the Trust Agreement, (B) in its individual capacity, in
respect of the representations, warranties and agreements of the Trust Company
made in its individual capacity as expressly set forth herein (including,
without limitation, Sections 9) or in any other Operative Document to which it
is a party or in any Officer's Certificate of the Trust Company delivered
pursuant hereto, and (C) in its individual capacity for the consequences of its
own gross negligence or willful misconduct or its failure to distribute funds in
accordance with the terms of the Operative Documents to which it is or will be a
party (including, without limitation, willful breach of contract).
(b) It is expressly understood and agreed by and among all of the
parties hereto that, except as otherwise expressly provided herein or in any
other Operative Document, (i) this Agreement is executed and delivered by State
Street Bank and Trust Company not in its individual capacity but solely as
trustee under the Indenture in the exercise of the power and authority conferred
and vested in it as such Indenture Trustee, (ii) certain of the representations,
undertakings and agreements made herein by the Indenture Trustee are not
personal representations, undertakings and agreements, but are binding only on
the Indenture Trustee, as trustee, (iii) except as set forth in the proviso to
this sentence, nothing herein contained shall be construed as creating any
liability of State Street Bank and Trust Company or any incorporator or any
past, present or future subscriber to the capital stock of, or stockholder,
officer or director of, State Street Bank and Trust Company to perform any
69
<PAGE>
covenant, whether express or implied, contained herein, all such liability, if
any, being expressly waived by each of the other parties hereto and by any
Person claiming by, through or under any such party, and (iv) so far as the
Indenture Trustee is concerned, each of the other parties hereto and any Person
claiming by, through or under any such party shall (other than with respect to
Claims arising from the willful misconduct or gross negligence of the Indenture
Trustee and for its failure to distribute funds in accordance with the terms of
the Operative Documents) look solely to the Indenture Trustee, as trustee for
the performance of any obligation under any of the instruments referred to
herein; provided, however, that notwithstanding anything in this Section 15.10
-------- -------
to the contrary, State Street Bank and Trust Company shall be liable (A) in its
individual capacity, in respect of the representations, warranties and
agreements of the Indenture Trustee made in its individual capacity as expressly
set forth herein (including, without limitation, in Section 10) or in any other
Operative Document to which it is a party or in any Officer's Certificate made
in its individual capacity delivered pursuant hereto, and (B) in its individual
capacity for the consequences of its own gross negligence or willful misconduct
and for its failure to use ordinary care to disburse funds in accordance with
any Operative Document to which it is or will be a party.
(c) It is expressly understood and agreed by and among all of the
parties hereto that, except as otherwise expressly provided herein or in the
Pass Through Trust Agreement, (i) this Agreement is executed and delivered by
State Street Bank and Trust Company not in its individual capacity but solely as
trustee under the Pass Through Trust Agreement in the exercise of the power and
authority conferred and vested in it as such Pass Through Trustee, (ii) certain
of the representations, undertakings and agreements made herein by the Pass
Through Trustee are not personal representations, undertakings and agreements,
but are binding only on the Pass Through Trustee, as trustee, (iii) except as
set forth in the proviso to this sentence, nothing herein contained shall be
construed as creating any liability of State Street Bank and Trust Company or
any incorporator or any past, present or future subscriber to the capital stock
of, or stockholder, officer or director of, State Street Bank and Trust Company
to perform any covenant, whether express or implied, contained herein, all such
liability, if any, being expressly waived by each of the other parties hereto
and by any Person claiming by, through or under any such party, and (iv) so far
as the Pass Through Trustee is concerned, each of the other parties hereto and
any Person claiming by, through or under any such party shall (other than with
respect to Claims arising from the willful misconduct or negligence of the Pass
Through Trustee and for its failure to distribute funds in accordance with the
terms of the Pass Through Trust Agreement) look
70
<PAGE>
solely to the Pass Through Trustee, as trustee for the performance of any
obligation under any of the instruments referred to herein; provided, however,
-------- -------
that notwithstanding anything in this Section 15.10 to the contrary, State
Street Bank and Trust Company shall be liable (A) in its individual capacity, in
respect of the representations, warranties and agreements of the Pass Through
Trustee made in its individual capacity as expressly set forth herein
(including, without limitation, in Sections 8 and 11) or in the Pass Through
Trust Agreement or in any Officer's Certificate made in its individual capacity
delivered pursuant hereto, and (B) in its individual capacity for the
consequences of its own negligence or willful misconduct and for its failure to
use ordinary care to disburse funds in accordance with the Pass Through Trust
Agreement.
15.11 Jurisdiction; Service of Process. Any legal action or
--------------------------------
proceeding with respect to this Agreement or any other Operative Document to
which any party hereto is a signatory or against any such party or against the
Indenture Estate or Trust Estate may be brought, at the option of any such
party, in any of the courts in the State of New York or the Federal courts of
the United States of America located in the City of New York, and each party
hereto hereby unconditionally accepts the nonexclusive jurisdiction of the
aforesaid courts, expressly waiving any other jurisdiction to which any such
party may be entitled by reason of its present and future domicile. Each party
hereto irrevocably waives any objection it may now or hereafter have to the
laying of venue of any such action or proceeding in any of the aforesaid courts
and any claim it may now or hereafter have that any such action or proceeding
has been brought in an inconvenient forum. Each party hereto further
irrevocably consents to the service of process out of any of the aforesaid
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail to such party's address for notices specified
herein. Nothing herein shall affect the right to serve process in any other
manner permitted by law.
15.12 Instructions. By their respective execution and delivery of
------------
this Agreement, the Owner Participant and the Pass Through Trustee hereby
instruct the Owner Trust, the Managing Trustee and the Indenture Trustee to
execute and deliver this Agreement.
71
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be duly executed as of the date first above written.
CHARTERER: MOBIL MARINE FINANCE COMPANY I INC.
By: /s/ R.E. Sliwinski
-----------------------------------
Name: R.E. Sliwinski
Title: Authorized Signatory
OWNER PARTICIPANT: SAMOCO L.L.C.
By: /s/ Bengt Hermelin
-----------------------------------
Name: Bengt Hermelin
Title: Director
MANAGING TRUSTEE: DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED, not in its
individual capacity except to the extent expressly
provided herein, but solely as Managing Trustee
By: /s/ J.H. Gullimare
-----------------------------------
Name: J.H. Gullimare
Title: Authorized Signatory
OWNER TRUST: SAMOCO 1234 TRUST
By: DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED, not in
its individual capacity, except to the extent
expressly set forth herein, but solely as Managing
Trustee
By: /s/ J.H. Gullimare
-----------------------------------
Name: J.H. Gullimare
Title: Authorized Signatory
[PARTICIPATION AGREEMENT - 1234]
<PAGE>
INDENTURE TRUSTEE: STATE STREET BANK AND TRUST COMPANY, not in its
individual capacity, except to the extent expressly set
forth herein, but solely as Indenture Trustee
By: /s/ Ruth A. Smith
-------------------------------
Name: Ruth A. Smith
Title: Vice President
PASS THROUGH TRUSTEE: STATE STREET BANK AND TRUST COMPANY, not in its
individual capacity, except to the extent expressly set
forth herein, but solely as Pass Through Trustee and
Loan Participant
By: /s/ Ruth A. Smith
-------------------------------
Name: Ruth A. Smith
Title: Vice President
[PARTICIPATION AGREEMENT - 1234]
<PAGE>
APPENDIX A
DEFINITIONS
1-1
<PAGE>
SCHEDULE 1
to
Participation Agreement
-----------------------
ADDRESSES FOR NOTICES AND PAYMENTS
----------------------------------
CHARTERER:
---------
Mobil Marine Finance Company I Inc.
3225 Gallows Road
Fairfax, Virginia 22037-0001
Attention: Treasurer
Telecopier: 703-846-1469
OWNER PARTICIPANT:
-----------------
SAMOCO L.L.C.
c/o Maples and Calder
Ugland House
George Town
Grand Cayman
Cayman Islands
British West Indies
Attention: Julian Reddyhough
Telecopier: 809-949-8080
Method of Payment
-----------------
All payments to be made to [Owner Participant] shall be made to:
[ ]
[ ]
Notices
-------
All communications with respect to payments and all other communications
to be made to the address first set forth above.
MANAGING TRUSTEE OR THE TRUST COMPANY:
-------------------------------------
Deutsche Morgan Grenfell (Cayman) Limited
Elizabethan Square
P.O.Box 1984
George Town
Grand Cayman
Cayman Islands
1-2
<PAGE>
British West Indies
Attention: Managing Director
Telecopier: 809-949-8178
Method of Payment
-----------------
Deutsche Morgan Grenfell (Cayman) Limited
[ ]
[ ]
OWNER TRUST:
-----------
c/o Deutsche Morgan Grenfell (Cayman) Limited
Elizabethan Square
P.O.Box 1984
George Town
Grand Cayman
Cayman Islands
British West Indies
Attention: Managing Director
Telecopier: 809-949-8178
Method of Payment
-----------------
SAMOCO 1234 Trust
[ ]
[ ]
INDENTURE TRUSTEE OR PASS THROUGH TRUSTEE:
-----------------------------------------
State Street Bank and Trust Company
Two International Place
Boston, MA 02110
Attention: Corporate Trust Department
Telecopier: 617-664-5371
Method of Payment
-----------------
State Street Bank and Trust Company
[ ]
[ ]
1-3
<PAGE>
SCHEDULE 2
to
Participation Agreement
-----------------------
INVESTMENT
----------
Seller: Owner Participant
Equity Investment:
Loan Participant Secured Note: $62,800,000 [ ]%
2-1
<PAGE>
SCHEDULE 3
to
Participation Agreement
-----------------------
CERTAIN FILINGS AND RECORDINGS
------------------------------
A. Precautionary UCC-1 Financing Statements with regard to the Charter
filed with each of the following:
1. State Corporation Commission of Virginia
2. County Clerk's Office of Fairfax County, Virginia
B. UCC-1 Financing Statements with regard to the Indenture Estate filed
with the Secretary of State of Delaware.
C. Delivery of Notification Letter of the Assignment of Charterer's
Obligations Addressed to and Acknowledged by the Charterer.
D. Recordation of the Ship Mortgage with the Registry of the Republic
of the Marshall Islands.
E. Delivery of prescribed particulars of the charge created by the
Owner Trust under the Indenture together with an original of the
Indenture to the Registrar of Companies in England.
3-1
<PAGE>
SCHEDULE 4
to
Participation Agreement
-----------------------
CERTAIN EXCEPTIONS
------------------
The assignment of the Construction Contract from the Owner
Participant to the Owner Trust is subject to obtaining the consents of
the Japanese authorities, if any, required in accordance with the
Construction Contract.
3-2
<PAGE>
EXHIBIT 99.9
MOBIL RAVEN GUARANTY
THIS Guaranty, dated as of December 19, 1996 (together with any
amendments or supplements hereto, this "Guaranty"), by and among MOBIL
--------
CORPORATION, a Delaware corporation (together with any successor permitted by
Section 4.1 hereof, the "Guarantor"), and the Managing Trustee, in both its
---------
individual capacity and as Managing Trustee, the Delaware Trustee, in both its
individual capacity and as Delaware Trustee, the Indenture Trustee, in both its
individual capacity and as Indenture Trustee, the Pass Through Trustee, in both
its individual capacity and as Pass Through Trustee and as Loan Participant, and
the Owner Participant (defined below) referred to in the Participation Agreement
described below (collectively, together with each other Indemnitee and their
successors and permitted assigns, the "Beneficiaries" and, individually, a
-------------
"Beneficiary").
- ------------
W I T N E S S E T H:
-------------------
WHEREAS, Mobil Marine Finance Company I Inc., a Delaware corporation,
and wholly-owned subsidiary of the Guarantor (together with its successors and
permitted assigns, the "Charterer"), is entering into that certain Participation
---------
Agreement dated as of December 19, 1996 (the "Participation Agreement"), among
-----------------------
the Charterer, the Owner Participant, the Owner Trust, Deutsche Morgan Grenfell
(Cayman) Limited, acting not in its individual capacity except as expressly set
forth therein, but solely as Managing Trustee, State Street Bank and Trust
Company, acting not in its individual capacity except as expressly provided
therein, but solely as Indenture Trustee, and State Street Bank and Trust
Company, acting not in its individual capacity except as expressly provided
therein, but solely as Pass Through Trustee and Loan Participant; and
WHEREAS, it is a condition precedent to the obligations of the
Beneficiaries to consummate the transactions contemplated by the Participation
Agreement that the Guarantor execute and deliver this Guaranty,
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, the Guarantor does hereby covenant and agree with the
Beneficiaries from and after the execution and delivery of the Participation
Agreement as follows (capitalized terms used herein (including those used in the
foregoing preamble and recitals) and not otherwise defined herein having the
meanings ascribed to them in Appendix A to the Participation Agreement):
<PAGE>
ARTICLE I.
REPRESENTATIONS AND WARRANTIES OF GUARANTOR
Section 1.1. Representations and Warranties of Guarantor. The
-------------------------------------------
Guarantor hereby represents and warrants that:
(1) The Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, has the
corporate power and authority to carry on its business as presently
conducted, to own or hold under lease its properties, and to enter into and
perform its obligations under this Guaranty, and is duly qualified to do
business in each jurisdiction in which it has operations or a principal
office and where failure so to qualify could reasonably be expected to
materially adversely affect its financial condition, business, operations,
or its ability to perform any of its obligations under this Guaranty.
(2) The execution, delivery and performance by the Guarantor of this
Guaranty and the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Guarantor.
(3) This Guaranty has been duly executed and delivered by the
Guarantor and constitutes the legal, valid and binding obligation of the
Guarantor enforceable against the Guarantor in accordance with the terms
hereof, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, liquidation, moratorium or similar
laws affecting creditors' or lessors' rights generally and by the
application of general equitable principles which may limit the
availability of certain remedies.
(4) The execution and delivery by the Guarantor of this Guaranty do
not and will not, and the performance by the Guarantor of its obligations
hereunder do not and will not, (i) violate or be inconsistent with its
charter documents or by-laws, (ii) contravene any Governmental Rule or
Governmental Action applicable to it, (iii) contravene any provision of, or
constitute a default under, any indenture, mortgage, contract or other
instrument to which the Guarantor is a party or by which it or any of its
properties are bound or (iv) result in or, require the creation or
imposition of any Lien (other than Permitted Liens) upon any of its
properties or assets.
(5) No Governmental Action and no consent of any other Person
(including, without limitation, any stockholder or creditor of the
Guarantor) is required in
2
<PAGE>
connection with the execution, delivery or performance of this Guaranty.
(6) Each of the consolidated financial statements of the Guarantor set
forth in its Annual Report on Form 10-K for the year ended December 31,
1995 and the consolidated financial statements of the Guarantor set forth
in its Quarterly Report on Form 10-Q for the quarter ended September 30,
1996 fairly presents the consolidated financial position of the Guarantor
and its Subsidiaries as at the respective dates thereof and the
consolidated results of operations and changes in financial position of the
Guarantor and its Subsidiaries for each of the periods covered thereby
(subject, in the case of any unaudited interim financial statements, to
changes resulting from normal year-end adjustments) in conformity with GAAP
applied on a consistent basis (except as disclosed in the notes thereto).
Since September 30, 1996, there has been no material adverse change in such
consolidated financial position of the Guarantor and its Subsidiaries,
taken as a whole.
(7) Except as disclosed in the Guarantor's Annual Report on Form 10-K
for the year ended December 31, 1995 or the Guarantor's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1996, there is no action,
suit, investigation or proceeding pending or, to the Actual Knowledge of
the Guarantor threatened in writing against the Guarantor or affecting it
or its properties before any Governmental Authority which, individually or
in the aggregate (so far as the Guarantor now can reasonably foresee), is
reasonably likely materially and adversely to affect the consummation of
the transactions under this Guaranty or the ability of the Guarantor to
perform its obligations hereunder or its business or financial condition.
(8) The Guarantor owns, directly or indirectly, 100% of the equity
interest in the Charterer.
3
<PAGE>
ARTICLE II.
Guaranty OF OBLIGATIONS
Section 2.1. Guaranty of Obligations. (a) The Guarantor hereby
-----------------------
guarantees to each of the Beneficiaries, as primary obligor and not as surety,
the full and prompt payment by the Charterer, as the case may be, when due,
whether at the stated payment date thereof, by acceleration or otherwise, of,
and the faithful performance of and compliance with, all payment obligations of
the Charterer under the Participation Agreement, the Charter and the other
Operative Documents owed to the Beneficiaries strictly in accordance with the
terms thereof, however created, arising or evidenced, whether direct or
indirect, primary or secondary, absolute or contingent, joint or several, and
whether now or hereafter existing or due or to become due and the full, faithful
and timely performance of, and compliance with, all other obligations of the
Charterer owed to the Beneficiaries thereunder strictly in accordance with the
terms thereof, however created, arising or evidenced, whether direct or
indirect, primary or secondary, absolute or contingent, joint or several, and
whether now or hereafter existing or due or to become due (such payment and
other obligations, the "Obligations"). Such guarantee is an absolute,
-----------
unconditional, irrevocable, present and continuing guarantee of payment and
performance and not of collectability.
(b) If for any reason any Obligation to be performed or observed by
the Charterer whether affirmative or negative in character) shall not be
observed or performed strictly in accordance with the terms thereof, the
Guarantor shall, no later than 15 Business Days following receipt of written
notice by the relevant Beneficiary of such non-observance, non-performance or
nonpayment, and not less than 5 Business Days following receipt of notice in the
case of non-payment of Base Hire, perform or observe or cause to be performed or
observed each such Obligation and shall pay such amount at the place and to the
Person or entity entitled thereto pursuant to the relevant Operative Documents,
as the case may be, regardless of whether or not any Beneficiary or anyone on
behalf of any of them shall have instituted any suit, action or proceeding or
exhausted its remedies or taken any steps to enforce any rights against the
Charterer or any other Person or entity to compel any such performance or to
collect all or any part of such amount pursuant to the provisions of the
relevant Operative Document or at law or in equity, or otherwise, and regardless
of any other condition or contingency. Nothing in this Guaranty shall be
construed to be a guaranty of payment of the Secured Note.
Section 2.2. Nature of Guaranty. The obligations, covenants,
------------------
agreements and duties of the Guarantor shall remain in full force and effect
until the Obligations are finally,
4
<PAGE>
indefeasibly and unconditionally paid and performed in full in accordance with
the terms of the Operative Documents and, to the maximum extent permitted by
law, shall in no way be affected or impaired by reason of the happening from
time to time of any other event, including, without limitation, the following,
whether or not any such event shall have occurred without notice to or the
consent of the Guarantor:
(a) the waiver, compromise, settlement, termination or other
release of the performance or observance by the Guarantor or the
Charterer of any or all of their respective agreements, covenants,
terms or conditions contained in this Guaranty (other than Section 2.1
hereof), the Participation Agreement, the Charter and the other
Operative Documents;
(b) any failure, omission, delay or lack on the part of the
Beneficiaries to enforce, assert or exercise any right, power or
remedy conferred on the Beneficiaries in the Participation Agreement,
the Charter, the other Operative Documents or this Guaranty, or the
inability of the Beneficiaries to enforce any provision of the
Participation Agreement, the Charter, the other Operative Documents or
this Guaranty for any reason, or any other act or omission on the part
of the Beneficiaries;
(c) the transfer, assignment or mortgaging, or the purported
transfer, assignment or mortgaging, of all or any part of the interest
of the Charterer in the Vessel Interest or the Vessel or the
invalidity, unenforceability or termination of the Participation
Agreement, the Charter or any other Operative Document or any defect
in the title of the Vessel or any part thereof or any loss of
possession, use or operational control of the Vessel or any part
thereof by the Charterer or any Permitted Subcharterer;
(d) the modification or amendment (whether material or otherwise)
of any obligation, covenant or agreement set forth in the
Participation Agreement, the Charter, or any other Operative Document;
(e) the voluntary or involuntary liquidation, dissolution, sale
of all or substantially all of the assets, marshalling of assets and
liabilities, receivership, conservatorship, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of, or other similar proceedings
5
<PAGE>
affecting the Charterer or any of its assets or any allegation or
contest of the validity of this Guaranty, the Participation Agreement,
the Charter or any other Operative Document in any such proceeding;
(f) the surrender or impairment of any security for the
performance or observance of any of the Obligations;
(g) any failure of the Guarantor or the Charterer to perform and
observe any agreement or covenant, or to discharge any duty or
obligation, arising out of or connected with this Guaranty, the
Participation Agreement, the Charter or any other Operative Document
or the occurrence or pendency of any Charter Default or Charter Event
of Default or any proceedings or actions as a result of, or attendant
upon, such Charter Default or Charter Event of Default;
(h) the inability of the Guarantor, the Beneficiaries or the
Charterer to enforce any provision of this Guaranty, the Participation
Agreement, the Charter or any other Operative Document for any reason;
(i) the failure to give notice to the Guarantor or the Charterer
of the occurrence of an event of default under the terms and
provisions of the Participation Agreement, the Charter or the other
Operative Documents;
(j) the disposition by the Guarantor of any or all of its
interest in any capital stock of the Charterer or any change,
restructuring or termination of the corporate structure, ownership or
existence of the Charterer;
(k) any set-off, counterclaim, reduction, or diminution of any
Obligation, or any defense of any kind or nature whatsoever (other
than performance) which the Guarantor or the Charterer may have or
assert against the Beneficiaries; or
(l) any other circumstance (other than performance) that might
otherwise constitute a legal or equitable defense or discharge of a
guarantor or surety with respect to any Obligation.
Section 2.3. Waivers by Guarantor. The Guarantor waives notice of the
--------------------
acceptance of and reliance on this
6
<PAGE>
Guaranty by the Beneficiaries, and the Guarantor also waives presentment, demand
for payment, protest and notice of nonpayment or dishonor and all other notices
and demands whatsoever, except that the Guarantor does not waive the notices
provided for in Section 2.1(b) hereof. The Guarantor further waives any right
it may have to (a) require the Beneficiaries to proceed against the Charterer,
(b) require the Beneficiaries to proceed against or exhaust any security granted
by the Charterer or the Owner Trust or (c) require the Beneficiaries to pursue
any other remedy within the power of the Beneficiaries, and the Guarantor agrees
that all of its obligations under this Guaranty are independent of the
Obligations and that a separate action may be brought against the Guarantor
whether or not an action is commenced against the Charterer under the Operative
Documents.
Section 2.4. Subrogation of Guarantor; Subordination. Notwithstanding
---------------------------------------
any payment or payments made by the Guarantor, the Guarantor shall not be
subrogated to any rights of the Beneficiaries against the Charterer until all of
the Obligations then due shall have been finally, indefeasibly and
unconditionally paid and performed in full. Any claim of the Guarantor against
the Charterer arising from payments made by the Guarantor by reason of this
Guaranty shall be in all respects subordinated to the final, indefeasible,
unconditional, full and complete payment or discharge of all of the Obligations
guaranteed hereby, and no payment by the Guarantor shall give rise to any claim
of the Guarantor against the Beneficiaries. The Guarantor further agrees that
any right of subrogation it may have against the Owner Trust by reason of any
guaranty by it of obligations of the Owner Trust under the U.K. Documents shall
in all respects be subject and subordinate to the Owner Trust's obligations
under the Indenture and the Secured Notes, and the Guarantor agrees that it will
not exercise such subrogation right or any similar right until all of the
Obligations then due shall have been finally, indefeasibly and unconditionally
paid and performed in full.
Section 2.5. Reinstatement. This Guaranty shall continue to be
--------------------------
effective, or be automatically reinstated, as the case may be, if at any time
payment, or any part thereof, made by or on behalf of the Charterer of any of
the Obligations is rescinded or must otherwise be restored or returned by any
Beneficiary for any reason whatsoever, whether upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Charterer, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, either of the Charterer or any substantial part
of its property, or otherwise, all as though such payments had not been made.
Section 2.6. Place and Manner of Payments. All payments to be made by
----------------------------
the Guarantor under this Guaranty to a
7
<PAGE>
Beneficiary shall be paid to such Beneficiary at the address provided for in
Schedule 1 of the Participation Agreement or, if no address, at the address and
to the account specified in the notice demanding payment by the Guarantor;
provided, however, that the Guarantor consents to the assignment by the Owner
- -------- -------
Trust to the Indenture Trustee of the Owner Trust's right, title and interest
in, to and under this Guaranty to the extent set forth in the Indenture, and
agrees to make all payments (other than Excepted Payments) hereunder directly to
the Indenture Trustee until such time as the Indenture Trustee shall give notice
to the Guarantor that the Lien of the Indenture has been fully discharged, and
thereafter to the Owner Trust. The Guarantor agrees that it will make all
payments due hereunder by wire transfer at or before 12 Noon, New York time, on
the date due in immediately available funds to the party to which such payment
is to be made.
ARTICLE III.
DEFAULT AND REMEDIES
Section 3.1. Enforcement Provisions. The Beneficiaries shall have the
----------------------
right, power and authority to do all things, including instituting or appearing
in any suit or proceeding, not inconsistent with the express provisions of the
Operative Documents, or this Guaranty, which they may deem necessary or
advisable to enforce the provisions of this Guaranty and protect the interests
of the Beneficiaries. Each and every default in the payment or performance of
the Obligations shall give rise to a separate cause of action hereunder, and
separate suits may be brought hereunder as each cause of action arises.
Section 3.2. No Remedy Exclusive. No remedy conferred upon or
-------------------
reserved to the Beneficiaries herein or in the Operative Documents is intended
to be exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given under this Guaranty or now or hereafter existing at law or in equity.
Section 3.3. Right to Proceed Against Guarantor. In the event of a
----------------------------------
default in any payment or performance of any Obligation when and as the same
shall become due, whether at the stated maturity thereof, by acceleration or
otherwise, the Beneficiaries may proceed to enforce their respective rights
hereunder and the Beneficiaries shall have the right to proceed first and
directly against the Guarantor under this Guaranty without proceeding against
any other Person or exhausting any other remedies which they may have and
without resorting to any collateral security relating thereto.
Section 3.4. Guarantor to Pay Costs of Enforcement. The Guarantor
-------------------------------------
agrees to pay all costs, expenses
8
<PAGE>
and fees, including, without limitation, all reasonable attorneys' fees, which
may be incurred by the Beneficiaries in enforcing or attempting to enforce this
Guaranty or protecting the rights of the Beneficiaries hereunder following any
default on the part of the Guarantor hereunder, whether the same shall be
enforced by suit or otherwise.
Section 3.5. No Waiver of Rights. No delay in exercising or omission
-------------------
to exercise any right or power accruing upon any default, omission or failure of
performance hereunder shall impair any such right or power or shall be construed
to be a waiver thereof, but any such right and power may be exercised from time
to time and as often as may be deemed expedient.
ARTICLE IV.
COVENANTS OF GUARANTOR
Section 4.1. Maintenance of Corporate Existence. So long as any of
----------------------------------
the Obligations remain outstanding or any amounts due and owing by the Charterer
with respect thereto remain unpaid, the Guarantor will maintain its corporate
existence and will not merge or consolidate with any other corporation nor
dissolve or otherwise sell or dispose of all or substantially all of its assets
as an entirety, unless the successor or transferee corporation (if other than
the Guarantor) (a) shall expressly and unconditionally assume, in a written
instrument delivered to the Owner Participant, the Owner Trust, the Indenture
Trustee and the Pass Through Trustee, the punctual performance and observance of
all covenants, conditions and obligations of this Guaranty to be performed by
the Guarantor, and (b) shall not, immediately after such merger, consolidation,
sale or disposition, be in default in the performance of any covenant, condition
or obligation of the Guarantor pursuant to this Guaranty.
Section 4.2. Financial Statements. The Guarantor shall provide to the
--------------------
Owner Participant and the Indenture Trustee, within 30 days after the Guarantor
is required to file the same with the Securities and Exchange Commission (the
"SEC") or any successor agency, a copy of each annual report and any amendment
to an annual report, filed by the Guarantor with the SEC pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 (currently Form 10-K), as the
same may be amended from time to time, and all financial statement reports,
notices, proxy statements or other documents that are sent or made generally
available by the Guarantor to holders of its registered securities and all
regular and periodic reports filed by the Guarantor with the SEC except for
reports on SEC Forms 3, 4 or 5.
9
<PAGE>
Section 4.3. No Petition. Unless otherwise agreed in writing by both
-----------
the Indenture Trustee and the Owner Participant, the Guarantor hereby agrees to
the fullest extent permitted by law that it will not at any time institute
against the Owner Trust, or join in the institution against the Owner Trust of
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under any United States Federal or state bankruptcy or similar law.
ARTICLE V.
GENERAL
Section 5.1. Benefitted Parties. This Guaranty is entered into by the
------------------
Guarantor for the benefit of the Beneficiaries in accordance with the provisions
of this Guaranty and the Operative Documents. This Guaranty shall not be deemed
to create any right in, or to be in whole or in part for the benefit of, any
person other than the Beneficiaries and the Guarantor and their respective
permitted successors and assigns. The Guarantor may not assign any of its
rights or obligations hereunder except in accordance with Section 4.1 hereof.
Section 5.2. Interpretations. The article and section headings of
---------------
this Guaranty are for reference purposes only and shall not affect its
interpretation in any respect.
Section 5.3. Entire Agreement; Counterparts; Amendments; Governing
-----------------------------------------------------
Law; Etc. This Guaranty (a) constitutes the entire agreement, and supersedes
- --------
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof; (b) may be executed in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument; (c) may be modified
only by an instrument in writing signed by the duly authorized representatives
of the parties hereto; and (d) shall be governed in all respects, including
validity, interpretation and effect by, and shall be enforceable in accordance
with, the laws of the State of New York. This Guaranty shall terminate when the
Obligations have been fully, indefeasibly and unconditionally paid and performed
in full.
If any provision of this Guaranty shall be held to be invalid by any
court of competent jurisdiction, the invalidity of such provisions shall not
affect any of the remaining provisions, and any such invalidity in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the parties
hereto hereby waive any provision thereof that renders any term or provision
hereof invalid or unenforceable in any respect.
10
<PAGE>
Section 5.4. Further Assurances. The Guarantor will execute and
------------------
deliver all such instruments and take all such actions as the Beneficiaries may
from time to time reasonably request in order fully to effectuate the purposes
of this Guaranty.
Section 5.5. Notices. All notices and other communications in respect
-------
of this Guaranty to the Guarantor or the Beneficiaries shall be given as
provided in the applicable provisions of the Participation Agreement.
Section 5.6. Consent to Jurisdiction. Any legal suit, action or
-----------------------
proceeding arising out of or relating to this Guaranty or any transaction
contemplated hereby may be instituted in any state or Federal court in the
County of New York and State of New York, and the Guarantor to the extent
permitted by applicable law waives any objection which it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding, and
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding.
11
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed in its name and behalf and its corporate seal to be affixed hereto and
attested by its duly authorized officers, and the Beneficiaries have accepted
the same, as of the date first above written.
MOBIL CORPORATION
/s/ R.E. Sliwinski
By:______________________
Name: R.E. Sliwinski
Title: Attorney in Fact
ACCEPTED:
DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED, in its
individual capacity and as Managing Trustee
/s/ James Baird
By: ____________________
Name: James Baird
Title: Attorney in Fact
STATE STREET BANK AND TRUST COMPANY, in its individual
capacity and as Indenture Trustee
/s/ Ruth A. Smith
By:______________________
Name: Ruth A. Smith
Title: Vice President
STATE STREET BANK AND TRUST COMPANY, in its individual
capacity and as Pass Through Trustee under the Pass
Through Trust Agreement and as the Loan Participant
/s/ Ruth A. Smith
By: _____________________
Name: Ruth A. Smith
Title: Vice President
<PAGE>
SAMOCO L.L.C.
/s/ Bengt Hermelin
By: _____________________
Name: Bengt Hermelin
Title: Director
SAMOCO RAVEN TRUST
By: Deutsche Morgan Grenfell
(Cayman) Limited, as
Managing Trustee
/s/ James Baird
By: _____________________
Name: James Baird
Title: Authorized Signatory
<PAGE>
EXHIBIT 99.10
MOBIL EAGLE GUARANTY
THIS Guaranty, dated as of December 19, 1996 (together with any
amendments or supplements hereto, this "Guaranty"), by and among MOBIL
--------
CORPORATION, a Delaware corporation (together with any successor permitted by
Section 4.1 hereof, the "Guarantor"), and the Managing Trustee, in both its
---------
individual capacity and as Managing Trustee, the Delaware Trustee, in both its
individual capacity and as Delaware Trustee, the Indenture Trustee, in both its
individual capacity and as Indenture Trustee, the Pass Through Trustee, in both
its individual capacity and as Pass Through Trustee and as Loan Participant, and
the Owner Participant (defined below) referred to in the Participation Agreement
described below (collectively, together with each other Indemnitee and their
successors and permitted assigns, the "Beneficiaries" and, individually, a
-------------
"Beneficiary").
- ------------
W I T N E S S E T H:
-------------------
WHEREAS, Mobil Marine Finance Company II Inc., a Delaware corporation,
and wholly-owned subsidiary of the Guarantor (together with its successors and
permitted assigns, the "Charterer"), is entering into that certain Participation
---------
Agreement dated as of December 19, 1996 (the "Participation Agreement"), among
-----------------------
the Charterer, the Owner Participant, the Owner Trust, Deutsche Morgan Grenfell
(Cayman) Limited, acting not in its individual capacity except as expressly set
forth therein, but solely as Managing Trustee, State Street Bank and Trust
Company, acting not in its individual capacity except as expressly provided
therein, but solely as Indenture Trustee, and State Street Bank and Trust
Company, acting not in its individual capacity except as expressly provided
therein, but solely as Pass Through Trustee and Loan Participant; and
WHEREAS, it is a condition precedent to the obligations of the
Beneficiaries to consummate the transactions contemplated by the Participation
Agreement that the Guarantor execute and deliver this Guaranty,
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, the Guarantor does hereby covenant and agree with the
Beneficiaries from and after the execution and delivery of the Participation
Agreement as follows (capitalized terms used herein (including those used in the
foregoing preamble and recitals) and not otherwise defined herein having the
meanings ascribed to them in Appendix A to the Participation Agreement):
<PAGE>
ARTICLE I.
REPRESENTATIONS AND WARRANTIES OF GUARANTOR
Section 1.1. Representations and Warranties of Guarantor. The
-------------------------------------------
Guarantor hereby represents and warrants that:
(1) The Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, has the
corporate power and authority to carry on its business as presently
conducted, to own or hold under lease its properties, and to enter into and
perform its obligations under this Guaranty, and is duly qualified to do
business in each jurisdiction in which it has operations or a principal
office and where failure so to qualify could reasonably be expected to
materially adversely affect its financial condition, business, operations,
or its ability to perform any of its obligations under this Guaranty.
(2) The execution, delivery and performance by the Guarantor of this
Guaranty and the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Guarantor.
(3) This Guaranty has been duly executed and delivered by the
Guarantor and constitutes the legal, valid and binding obligation of the
Guarantor enforceable against the Guarantor in accordance with the terms
hereof, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, liquidation, moratorium or similar
laws affecting creditors' or lessors' rights generally and by the
application of general equitable principles which may limit the
availability of certain remedies.
(4) The execution and delivery by the Guarantor of this Guaranty do
not and will not, and the performance by the Guarantor of its obligations
hereunder do not and will not, (i) violate or be inconsistent with its
charter documents or by-laws, (ii) contravene any Governmental Rule or
Governmental Action applicable to it, (iii) contravene any provision of, or
constitute a default under, any indenture, mortgage, contract or other
instrument to which the Guarantor is a party or by which it or any of its
properties are bound or (iv) result in or, require the creation or
imposition of any Lien (other than Permitted Liens) upon any of its
properties or assets.
(5) No Governmental Action and no consent of any other Person
(including, without limitation, any stockholder or creditor of the
Guarantor) is required in
2
<PAGE>
connection with the execution, delivery or performance of this Guaranty.
(6) Each of the consolidated financial statements of the Guarantor set
forth in its Annual Report on Form 10-K for the year ended December 31,
1995 and the consolidated financial statements of the Guarantor set forth
in its Quarterly Report on Form 10-Q for the quarter ended September 30,
1996 fairly presents the consolidated financial position of the Guarantor
and its Subsidiaries as at the respective dates thereof and the
consolidated results of operations and changes in financial position of the
Guarantor and its Subsidiaries for each of the periods covered thereby
(subject, in the case of any unaudited interim financial statements, to
changes resulting from normal year-end adjustments) in conformity with GAAP
applied on a consistent basis (except as disclosed in the notes thereto).
Since September 30, 1996, there has been no material adverse change in such
consolidated financial position of the Guarantor and its Subsidiaries,
taken as a whole.
(7) Except as disclosed in the Guarantor's Annual Report on Form 10-K
for the year ended December 31, 1995 or the Guarantor's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1996, there is no action,
suit, investigation or proceeding pending or, to the Actual Knowledge of
the Guarantor threatened in writing against the Guarantor or affecting it
or its properties before any Governmental Authority which, individually or
in the aggregate (so far as the Guarantor now can reasonably foresee), is
reasonably likely materially and adversely to affect the consummation of
the transactions under this Guaranty or the ability of the Guarantor to
perform its obligations hereunder or its business or financial condition.
(8) The Guarantor owns, directly or indirectly, 100% of the equity
interest in the Charterer.
3
<PAGE>
ARTICLE II.
Guaranty OF OBLIGATIONS
Section 2.1. Guaranty of Obligations. (a) The Guarantor hereby
-----------------------
guarantees to each of the Beneficiaries, as primary obligor and not as surety,
the full and prompt payment by the Charterer, as the case may be, when due,
whether at the stated payment date thereof, by acceleration or otherwise, of,
and the faithful performance of and compliance with, all payment obligations of
the Charterer under the Participation Agreement, the Charter and the other
Operative Documents owed to the Beneficiaries strictly in accordance with the
terms thereof, however created, arising or evidenced, whether direct or
indirect, primary or secondary, absolute or contingent, joint or several, and
whether now or hereafter existing or due or to become due and the full, faithful
and timely performance of, and compliance with, all other obligations of the
Charterer owed to the Beneficiaries thereunder strictly in accordance with the
terms thereof, however created, arising or evidenced, whether direct or
indirect, primary or secondary, absolute or contingent, joint or several, and
whether now or hereafter existing or due or to become due (such payment and
other obligations, the "Obligations"). Such guarantee is an absolute,
-----------
unconditional, irrevocable, present and continuing guarantee of payment and
performance and not of collectability.
(b) If for any reason any Obligation to be performed or observed by
the Charterer whether affirmative or negative in character) shall not be
observed or performed strictly in accordance with the terms thereof, the
Guarantor shall, no later than 15 Business Days following receipt of written
notice by the relevant Beneficiary of such non-observance, non-performance or
nonpayment, and not less than 5 Business Days following receipt of notice in the
case of non-payment of Base Hire, perform or observe or cause to be performed or
observed each such Obligation and shall pay such amount at the place and to the
Person or entity entitled thereto pursuant to the relevant Operative Documents,
as the case may be, regardless of whether or not any Beneficiary or anyone on
behalf of any of them shall have instituted any suit, action or proceeding or
exhausted its remedies or taken any steps to enforce any rights against the
Charterer or any other Person or entity to compel any such performance or to
collect all or any part of such amount pursuant to the provisions of the
relevant Operative Document or at law or in equity, or otherwise, and regardless
of any other condition or contingency. Nothing in this Guaranty shall be
construed to be a guaranty of payment of the Secured Note.
Section 2.2. Nature of Guaranty. The obligations, covenants,
------------------
agreements and duties of the Guarantor shall remain in full force and effect
until the Obligations are finally,
4
<PAGE>
indefeasibly and unconditionally paid and performed in full in accordance with
the terms of the Operative Documents and, to the maximum extent permitted by
law, shall in no way be affected or impaired by reason of the happening from
time to time of any other event, including, without limitation, the following,
whether or not any such event shall have occurred without notice to or the
consent of the Guarantor:
(a) the waiver, compromise, settlement, termination or other
release of the performance or observance by the Guarantor or the
Charterer of any or all of their respective agreements, covenants,
terms or conditions contained in this Guaranty (other than Section 2.1
hereof), the Participation Agreement, the Charter and the other
Operative Documents;
(b) any failure, omission, delay or lack on the part of the
Beneficiaries to enforce, assert or exercise any right, power or
remedy conferred on the Beneficiaries in the Participation Agreement,
the Charter, the other Operative Documents or this Guaranty, or the
inability of the Beneficiaries to enforce any provision of the
Participation Agreement, the Charter, the other Operative Documents or
this Guaranty for any reason, or any other act or omission on the part
of the Beneficiaries;
(c) the transfer, assignment or mortgaging, or the purported
transfer, assignment or mortgaging, of all or any part of the interest
of the Charterer in the Vessel Interest or the Vessel or the
invalidity, unenforceability or termination of the Participation
Agreement, the Charter or any other Operative Document or any defect
in the title of the Vessel or any part thereof or any loss of
possession, use or operational control of the Vessel or any part
thereof by the Charterer or any Permitted Subcharterer;
(d) the modification or amendment (whether material or otherwise)
of any obligation, covenant or agreement set forth in the
Participation Agreement, the Charter, or any other Operative Document;
(e) the voluntary or involuntary liquidation, dissolution, sale
of all or substantially all of the assets, marshalling of assets and
liabilities, receivership, conservatorship, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of, or other similar proceedings
5
<PAGE>
affecting the Charterer or any of its assets or any allegation or
contest of the validity of this Guaranty, the Participation Agreement,
the Charter or any other Operative Document in any such proceeding;
(f) the surrender or impairment of any security for the
performance or observance of any of the Obligations;
(g) any failure of the Guarantor or the Charterer to perform and
observe any agreement or covenant, or to discharge any duty or
obligation, arising out of or connected with this Guaranty, the
Participation Agreement, the Charter or any other Operative Document
or the occurrence or pendency of any Charter Default or Charter Event
of Default or any proceedings or actions as a result of, or attendant
upon, such Charter Default or Charter Event of Default;
(h) the inability of the Guarantor, the Beneficiaries or the
Charterer to enforce any provision of this Guaranty, the Participation
Agreement, the Charter or any other Operative Document for any reason;
(i) the failure to give notice to the Guarantor or the Charterer
of the occurrence of an event of default under the terms and
provisions of the Participation Agreement, the Charter or the other
Operative Documents;
(j) the disposition by the Guarantor of any or all of its
interest in any capital stock of the Charterer or any change,
restructuring or termination of the corporate structure, ownership or
existence of the Charterer;
(k) any set-off, counterclaim, reduction, or diminution of any
Obligation, or any defense of any kind or nature whatsoever (other
than performance) which the Guarantor or the Charterer may have or
assert against the Beneficiaries; or
(l) any other circumstance (other than performance) that might
otherwise constitute a legal or equitable defense or discharge of a
guarantor or surety with respect to any Obligation.
Section 2.3. Waivers by Guarantor. The Guarantor waives notice of the
--------------------
acceptance of and reliance on this
6
<PAGE>
Guaranty by the Beneficiaries, and the Guarantor also waives presentment, demand
for payment, protest and notice of nonpayment or dishonor and all other notices
and demands whatsoever, except that the Guarantor does not waive the notices
provided for in Section 2.1(b) hereof. The Guarantor further waives any right
it may have to (a) require the Beneficiaries to proceed against the Charterer,
(b) require the Beneficiaries to proceed against or exhaust any security granted
by the Charterer or the Owner Trust or (c) require the Beneficiaries to pursue
any other remedy within the power of the Beneficiaries, and the Guarantor agrees
that all of its obligations under this Guaranty are independent of the
Obligations and that a separate action may be brought against the Guarantor
whether or not an action is commenced against the Charterer under the Operative
Documents.
Section 2.4. Subrogation of Guarantor; Subordination. Notwithstanding
---------------------------------------
any payment or payments made by the Guarantor, the Guarantor shall not be
subrogated to any rights of the Beneficiaries against the Charterer until all of
the Obligations then due shall have been finally, indefeasibly and
unconditionally paid and performed in full. Any claim of the Guarantor against
the Charterer arising from payments made by the Guarantor by reason of this
Guaranty shall be in all respects subordinated to the final, indefeasible,
unconditional, full and complete payment or discharge of all of the Obligations
guaranteed hereby, and no payment by the Guarantor shall give rise to any claim
of the Guarantor against the Beneficiaries. The Guarantor further agrees that
any right of subrogation it may have against the Owner Trust by reason of any
guaranty by it of obligations of the Owner Trust under the U.K. Documents shall
in all respects be subject and subordinate to the Owner Trust's obligations
under the Indenture and the Secured Notes, and the Guarantor agrees that it will
not exercise such subrogation right or any similar right until all of the
Obligations then due shall have been finally, indefeasibly and unconditionally
paid and performed in full.
Section 2.5. Reinstatement. This Guaranty shall continue to be
--------------------------
effective, or be automatically reinstated, as the case may be, if at any time
payment, or any part thereof, made by or on behalf of the Charterer of any of
the Obligations is rescinded or must otherwise be restored or returned by any
Beneficiary for any reason whatsoever, whether upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Charterer, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, either of the Charterer or any substantial part
of its property, or otherwise, all as though such payments had not been made.
Section 2.6. Place and Manner of Payments. All payments to be made by
----------------------------
the Guarantor under this Guaranty to a
7
<PAGE>
Beneficiary shall be paid to such Beneficiary at the address provided for in
Schedule 1 of the Participation Agreement or, if no address, at the address and
to the account specified in the notice demanding payment by the Guarantor;
provided, however, that the Guarantor consents to the assignment by the Owner
- -------- -------
Trust to the Indenture Trustee of the Owner Trust's right, title and interest
in, to and under this Guaranty to the extent set forth in the Indenture, and
agrees to make all payments (other than Excepted Payments) hereunder directly to
the Indenture Trustee until such time as the Indenture Trustee shall give notice
to the Guarantor that the Lien of the Indenture has been fully discharged, and
thereafter to the Owner Trust. The Guarantor agrees that it will make all
payments due hereunder by wire transfer at or before 12 Noon, New York time, on
the date due in immediately available funds to the party to which such payment
is to be made.
ARTICLE III.
DEFAULT AND REMEDIES
Section 3.1. Enforcement Provisions. The Beneficiaries shall have the
----------------------
right, power and authority to do all things, including instituting or appearing
in any suit or proceeding, not inconsistent with the express provisions of the
Operative Documents, or this Guaranty, which they may deem necessary or
advisable to enforce the provisions of this Guaranty and protect the interests
of the Beneficiaries. Each and every default in the payment or performance of
the Obligations shall give rise to a separate cause of action hereunder, and
separate suits may be brought hereunder as each cause of action arises.
Section 3.2. No Remedy Exclusive. No remedy conferred upon or
-------------------
reserved to the Beneficiaries herein or in the Operative Documents is intended
to be exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given under this Guaranty or now or hereafter existing at law or in equity.
Section 3.3. Right to Proceed Against Guarantor. In the event of a
----------------------------------
default in any payment or performance of any Obligation when and as the same
shall become due, whether at the stated maturity thereof, by acceleration or
otherwise, the Beneficiaries may proceed to enforce their respective rights
hereunder and the Beneficiaries shall have the right to proceed first and
directly against the Guarantor under this Guaranty without proceeding against
any other Person or exhausting any other remedies which they may have and
without resorting to any collateral security relating thereto.
Section 3.4. Guarantor to Pay Costs of Enforcement. The Guarantor
-------------------------------------
agrees to pay all costs, expenses
8
<PAGE>
and fees, including, without limitation, all reasonable attorneys' fees, which
may be incurred by the Beneficiaries in enforcing or attempting to enforce this
Guaranty or protecting the rights of the Beneficiaries hereunder following any
default on the part of the Guarantor hereunder, whether the same shall be
enforced by suit or otherwise.
Section 3.5. No Waiver of Rights. No delay in exercising or omission
-------------------
to exercise any right or power accruing upon any default, omission or failure of
performance hereunder shall impair any such right or power or shall be construed
to be a waiver thereof, but any such right and power may be exercised from time
to time and as often as may be deemed expedient.
ARTICLE IV.
COVENANTS OF GUARANTOR
Section 4.1. Maintenance of Corporate Existence. So long as any of
----------------------------------
the Obligations remain outstanding or any amounts due and owing by the Charterer
with respect thereto remain unpaid, the Guarantor will maintain its corporate
existence and will not merge or consolidate with any other corporation nor
dissolve or otherwise sell or dispose of all or substantially all of its assets
as an entirety, unless the successor or transferee corporation (if other than
the Guarantor) (a) shall expressly and unconditionally assume, in a written
instrument delivered to the Owner Participant, the Owner Trust, the Indenture
Trustee and the Pass Through Trustee, the punctual performance and observance of
all covenants, conditions and obligations of this Guaranty to be performed by
the Guarantor, and (b) shall not, immediately after such merger, consolidation,
sale or disposition, be in default in the performance of any covenant, condition
or obligation of the Guarantor pursuant to this Guaranty.
Section 4.2. Financial Statements. The Guarantor shall provide to the
--------------------
Owner Participant and the Indenture Trustee, within 30 days after the Guarantor
is required to file the same with the Securities and Exchange Commission (the
"SEC") or any successor agency, a copy of each annual report and any amendment
to an annual report, filed by the Guarantor with the SEC pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 (currently Form 10-K), as the
same may be amended from time to time, and all financial statement reports,
notices, proxy statements or other documents that are sent or made generally
available by the Guarantor to holders of its registered securities and all
regular and periodic reports filed by the Guarantor with the SEC except for
reports on SEC Forms 3, 4 or 5.
9
<PAGE>
Section 4.3. No Petition. Unless otherwise agreed in writing by both
-----------
the Indenture Trustee and the Owner Participant, the Guarantor hereby agrees to
the fullest extent permitted by law that it will not at any time institute
against the Owner Trust, or join in the institution against the Owner Trust of
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under any United States Federal or state bankruptcy or similar law.
ARTICLE V.
GENERAL
Section 5.1. Benefitted Parties. This Guaranty is entered into by the
------------------
Guarantor for the benefit of the Beneficiaries in accordance with the provisions
of this Guaranty and the Operative Documents. This Guaranty shall not be deemed
to create any right in, or to be in whole or in part for the benefit of, any
person other than the Beneficiaries and the Guarantor and their respective
permitted successors and assigns. The Guarantor may not assign any of its
rights or obligations hereunder except in accordance with Section 4.1 hereof.
Section 5.2. Interpretations. The article and section headings of
---------------
this Guaranty are for reference purposes only and shall not affect its
interpretation in any respect.
Section 5.3. Entire Agreement; Counterparts; Amendments; Governing
-----------------------------------------------------
Law; Etc. This Guaranty (a) constitutes the entire agreement, and supersedes
- --------
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof; (b) may be executed in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument; (c) may be modified
only by an instrument in writing signed by the duly authorized representatives
of the parties hereto; and (d) shall be governed in all respects, including
validity, interpretation and effect by, and shall be enforceable in accordance
with, the laws of the State of New York. This Guaranty shall terminate when the
Obligations have been fully, indefeasibly and unconditionally paid and performed
in full.
If any provision of this Guaranty shall be held to be invalid by any
court of competent jurisdiction, the invalidity of such provisions shall not
affect any of the remaining provisions, and any such invalidity in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the parties
hereto hereby waive any provision thereof that renders any term or provision
hereof invalid or unenforceable in any respect.
10
<PAGE>
Section 5.4. Further Assurances. The Guarantor will execute and
------------------
deliver all such instruments and take all such actions as the Beneficiaries may
from time to time reasonably request in order fully to effectuate the purposes
of this Guaranty.
Section 5.5. Notices. All notices and other communications in respect
-------
of this Guaranty to the Guarantor or the Beneficiaries shall be given as
provided in the applicable provisions of the Participation Agreement.
Section 5.6. Consent to Jurisdiction. Any legal suit, action or
-----------------------
proceeding arising out of or relating to this Guaranty or any transaction
contemplated hereby may be instituted in any state or Federal court in the
County of New York and State of New York, and the Guarantor to the extent
permitted by applicable law waives any objection which it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding, and
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding.
11
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed in its name and behalf and its corporate seal to be affixed hereto and
attested by its duly authorized officers, and the Beneficiaries have accepted
the same, as of the date first above written.
MOBIL CORPORATION
/s/ R.E. Sliwinski
By:______________________
Name: R.E. Sliwinski
Title: Attorney in Fact
ACCEPTED:
DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED, in its
individual capacity and as Managing Trustee
/s/ James Baird
By: ____________________
Name: James Baird
Title: Attorney in Fact
STATE STREET BANK AND TRUST COMPANY, in its individual
capacity and as Indenture Trustee
/s/ Ruth A. Smith
By:______________________
Name: Ruth A. Smith
Title: Vice President
STATE STREET BANK AND TRUST COMPANY, in its individual
capacity and as Pass Through Trustee under the Pass
Through Trust Agreement and as the Loan Participant
/s/ Ruth A. Smith
By: _____________________
Name: Ruth A. Smith
Title: Vice President
<PAGE>
DUMOCO L.L.C.
/s/ R.E. Sliwinski
By: _____________________
Name: R.E. Sliwinski
Title: Authorized Signatory
DUMOCO EAGLE TRUST
By: Deutsche Morgan Grenfell
(Cayman) Limited, as
Managing Trustee
/s/ James Baird
By: _____________________
Name: James Baird
Title: Attorney-in-Fact
<PAGE>
EXHIBIT 99.11
MOBIL 1233 GUARANTY
THIS Guaranty, dated as of December 19, 1996 (together with any
amendments or supplements hereto, this "Guaranty"), by and among MOBIL
--------
CORPORATION, a Delaware corporation (together with any successor permitted by
Section 4.1 hereof, the "Guarantor"), and the Managing Trustee, in both its
---------
individual capacity and as Managing Trustee, the Delaware Trustee, in both its
individual capacity and as Delaware Trustee, the Indenture Trustee, in both its
individual capacity and as Indenture Trustee, the Pass Through Trustee, in both
its individual capacity and as Pass Through Trustee and as Loan Participant, and
the Owner Participant (defined below) referred to in the Participation Agreement
described below (collectively, together with each other Indemnitee and their
successors and permitted assigns, the "Beneficiaries" and, individually, a
-------------
"Beneficiary").
- ------------
W I T N E S S E T H:
-------------------
WHEREAS, Mobil Marine Finance Company I Inc., a Delaware corporation,
and wholly-owned subsidiary of the Guarantor (together with its successors and
permitted assigns, the "Charterer"), is entering into that certain Participation
---------
Agreement dated as of December 19, 1996 (the "Participation Agreement"), among
-----------------------
the Charterer, the Owner Participant, the Owner Trust, Deutsche Morgan Grenfell
(Cayman) Limited, acting not in its individual capacity except as expressly set
forth therein, but solely as Managing Trustee, State Street Bank and Trust
Company, acting not in its individual capacity except as expressly provided
therein, but solely as Indenture Trustee, and State Street Bank and Trust
Company, acting not in its individual capacity except as expressly provided
therein, but solely as Pass Through Trustee and Loan Participant; and
WHEREAS, it is a condition precedent to the obligations of the
Beneficiaries to consummate the transactions contemplated by the Participation
Agreement that the Guarantor execute and deliver this Guaranty,
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, the Guarantor does hereby covenant and agree with the
Beneficiaries from and after the execution and delivery of the Participation
Agreement as follows (capitalized terms used herein (including those used in the
foregoing preamble and recitals) and not otherwise defined herein having the
meanings ascribed to them in Appendix A to the Participation Agreement):
<PAGE>
ARTICLE I.
REPRESENTATIONS AND WARRANTIES OF GUARANTOR
Section 1.1. Representations and Warranties of Guarantor. The
-------------------------------------------
Guarantor hereby represents and warrants that:
(1) The Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, has the
corporate power and authority to carry on its business as presently
conducted, to own or hold under lease its properties, and to enter into and
perform its obligations under this Guaranty, and is duly qualified to do
business in each jurisdiction in which it has operations or a principal
office and where failure so to qualify could reasonably be expected to
materially adversely affect its financial condition, business, operations,
or its ability to perform any of its obligations under this Guaranty.
(2) The execution, delivery and performance by the Guarantor of this
Guaranty and the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Guarantor.
(3) This Guaranty has been duly executed and delivered by the
Guarantor and constitutes the legal, valid and binding obligation of the
Guarantor enforceable against the Guarantor in accordance with the terms
hereof, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, liquidation, moratorium or similar
laws affecting creditors' or lessors' rights generally and by the
application of general equitable principles which may limit the
availability of certain remedies.
(4) The execution and delivery by the Guarantor of this Guaranty do
not and will not, and the performance by the Guarantor of its obligations
hereunder do not and will not, (i) violate or be inconsistent with its
charter documents or by-laws, (ii) contravene any Governmental Rule or
Governmental Action applicable to it, (iii) contravene any provision of, or
constitute a default under, any indenture, mortgage, contract or other
instrument to which the Guarantor is a party or by which it or any of its
properties are bound or (iv) result in or, require the creation or
imposition of any Lien (other than Permitted Liens) upon any of its
properties or assets.
(5) No Governmental Action and no consent of any other Person
(including, without limitation, any stockholder or creditor of the
Guarantor) is required in
2
<PAGE>
connection with the execution, delivery or performance of this Guaranty.
(6) Each of the consolidated financial statements of the Guarantor set
forth in its Annual Report on Form 10-K for the year ended December 31,
1995 and the consolidated financial statements of the Guarantor set forth
in its Quarterly Report on Form 10-Q for the quarter ended September 30,
1996 fairly presents the consolidated financial position of the Guarantor
and its Subsidiaries as at the respective dates thereof and the
consolidated results of operations and changes in financial position of the
Guarantor and its Subsidiaries for each of the periods covered thereby
(subject, in the case of any unaudited interim financial statements, to
changes resulting from normal year-end adjustments) in conformity with GAAP
applied on a consistent basis (except as disclosed in the notes thereto).
Since September 30, 1996, there has been no material adverse change in such
consolidated financial position of the Guarantor and its Subsidiaries,
taken as a whole.
(7) Except as disclosed in the Guarantor's Annual Report on Form 10-K
for the year ended December 31, 1995 or the Guarantor's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1996, there is no action,
suit, investigation or proceeding pending or, to the Actual Knowledge of
the Guarantor threatened in writing against the Guarantor or affecting it
or its properties before any Governmental Authority which, individually or
in the aggregate (so far as the Guarantor now can reasonably foresee), is
reasonably likely materially and adversely to affect the consummation of
the transactions under this Guaranty or the ability of the Guarantor to
perform its obligations hereunder or its business or financial condition.
(8) The Guarantor owns, directly or indirectly, 100% of the equity
interest in the Charterer.
3
<PAGE>
ARTICLE II.
Guaranty OF OBLIGATIONS
Section 2.1. Guaranty of Obligations. (a) The Guarantor hereby
-----------------------
guarantees to each of the Beneficiaries, as primary obligor and not as surety,
the full and prompt payment by the Charterer, as the case may be, when due,
whether at the stated payment date thereof, by acceleration or otherwise, of,
and the faithful performance of and compliance with, all payment obligations of
the Charterer under the Participation Agreement, the Charter and the other
Operative Documents owed to the Beneficiaries strictly in accordance with the
terms thereof, however created, arising or evidenced, whether direct or
indirect, primary or secondary, absolute or contingent, joint or several, and
whether now or hereafter existing or due or to become due and the full, faithful
and timely performance of, and compliance with, all other obligations of the
Charterer owed to the Beneficiaries thereunder strictly in accordance with the
terms thereof, however created, arising or evidenced, whether direct or
indirect, primary or secondary, absolute or contingent, joint or several, and
whether now or hereafter existing or due or to become due (such payment and
other obligations, the "Obligations"). Such guarantee is an absolute,
-----------
unconditional, irrevocable, present and continuing guarantee of payment and
performance and not of collectability.
(b) If for any reason any Obligation to be performed or observed by
the Charterer whether affirmative or negative in character) shall not be
observed or performed strictly in accordance with the terms thereof, the
Guarantor shall, no later than 15 Business Days following receipt of written
notice by the relevant Beneficiary of such non-observance, non-performance or
nonpayment, and not less than 5 Business Days following receipt of notice in the
case of non-payment of Base Hire, perform or observe or cause to be performed or
observed each such Obligation and shall pay such amount at the place and to the
Person or entity entitled thereto pursuant to the relevant Operative Documents,
as the case may be, regardless of whether or not any Beneficiary or anyone on
behalf of any of them shall have instituted any suit, action or proceeding or
exhausted its remedies or taken any steps to enforce any rights against the
Charterer or any other Person or entity to compel any such performance or to
collect all or any part of such amount pursuant to the provisions of the
relevant Operative Document or at law or in equity, or otherwise, and regardless
of any other condition or contingency. Nothing in this Guaranty shall be
construed to be a guaranty of payment of the Secured Note.
Section 2.2. Nature of Guaranty. The obligations, covenants,
------------------
agreements and duties of the Guarantor shall remain in full force and effect
until the Obligations are finally,
4
<PAGE>
indefeasibly and unconditionally paid and performed in full in accordance with
the terms of the Operative Documents and, to the maximum extent permitted by
law, shall in no way be affected or impaired by reason of the happening from
time to time of any other event, including, without limitation, the following,
whether or not any such event shall have occurred without notice to or the
consent of the Guarantor:
(a) the waiver, compromise, settlement, termination or other
release of the performance or observance by the Guarantor or the
Charterer of any or all of their respective agreements, covenants,
terms or conditions contained in this Guaranty (other than Section 2.1
hereof), the Participation Agreement, the Charter and the other
Operative Documents;
(b) any failure, omission, delay or lack on the part of the
Beneficiaries to enforce, assert or exercise any right, power or
remedy conferred on the Beneficiaries in the Participation Agreement,
the Charter, the other Operative Documents or this Guaranty, or the
inability of the Beneficiaries to enforce any provision of the
Participation Agreement, the Charter, the other Operative Documents or
this Guaranty for any reason, or any other act or omission on the part
of the Beneficiaries;
(c) the transfer, assignment or mortgaging, or the purported
transfer, assignment or mortgaging, of all or any part of the interest
of the Charterer in the Vessel Interest or the Vessel or the
invalidity, unenforceability or termination of the Participation
Agreement, the Charter or any other Operative Document or any defect
in the title of the Vessel or any part thereof or any loss of
possession, use or operational control of the Vessel or any part
thereof by the Charterer or any Permitted Subcharterer;
(d) the modification or amendment (whether material or otherwise)
of any obligation, covenant or agreement set forth in the
Participation Agreement, the Charter, or any other Operative Document;
(e) the voluntary or involuntary liquidation, dissolution, sale
of all or substantially all of the assets, marshalling of assets and
liabilities, receivership, conservatorship, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of, or other similar proceedings
5
<PAGE>
affecting the Charterer or any of its assets or any allegation or
contest of the validity of this Guaranty, the Participation Agreement,
the Charter or any other Operative Document in any such proceeding;
(f) the surrender or impairment of any security for the
performance or observance of any of the Obligations;
(g) any failure of the Guarantor or the Charterer to perform and
observe any agreement or covenant, or to discharge any duty or
obligation, arising out of or connected with this Guaranty, the
Participation Agreement, the Charter or any other Operative Document
or the occurrence or pendency of any Charter Default or Charter Event
of Default or any proceedings or actions as a result of, or attendant
upon, such Charter Default or Charter Event of Default;
(h) the inability of the Guarantor, the Beneficiaries or the
Charterer to enforce any provision of this Guaranty, the Participation
Agreement, the Charter or any other Operative Document for any reason;
(i) the failure to give notice to the Guarantor or the Charterer
of the occurrence of an event of default under the terms and
provisions of the Participation Agreement, the Charter or the other
Operative Documents;
(j) the disposition by the Guarantor of any or all of its
interest in any capital stock of the Charterer or any change,
restructuring or termination of the corporate structure, ownership or
existence of the Charterer;
(k) any set-off, counterclaim, reduction, or diminution of any
Obligation, or any defense of any kind or nature whatsoever (other
than performance) which the Guarantor or the Charterer may have or
assert against the Beneficiaries; or
(l) any other circumstance (other than performance) that might
otherwise constitute a legal or equitable defense or discharge of a
guarantor or surety with respect to any Obligation.
Section 2.3. Waivers by Guarantor. The Guarantor waives notice of the
--------------------
acceptance of and reliance on this
6
<PAGE>
Guaranty by the Beneficiaries, and the Guarantor also waives presentment, demand
for payment, protest and notice of nonpayment or dishonor and all other notices
and demands whatsoever, except that the Guarantor does not waive the notices
provided for in Section 2.1(b) hereof. The Guarantor further waives any right
it may have to (a) require the Beneficiaries to proceed against the Charterer,
(b) require the Beneficiaries to proceed against or exhaust any security granted
by the Charterer or the Owner Trust or (c) require the Beneficiaries to pursue
any other remedy within the power of the Beneficiaries, and the Guarantor agrees
that all of its obligations under this Guaranty are independent of the
Obligations and that a separate action may be brought against the Guarantor
whether or not an action is commenced against the Charterer under the Operative
Documents.
Section 2.4. Subrogation of Guarantor; Subordination. Notwithstanding
---------------------------------------
any payment or payments made by the Guarantor, the Guarantor shall not be
subrogated to any rights of the Beneficiaries against the Charterer until all of
the Obligations then due shall have been finally, indefeasibly and
unconditionally paid and performed in full. Any claim of the Guarantor against
the Charterer arising from payments made by the Guarantor by reason of this
Guaranty shall be in all respects subordinated to the final, indefeasible,
unconditional, full and complete payment or discharge of all of the Obligations
guaranteed hereby, and no payment by the Guarantor shall give rise to any claim
of the Guarantor against the Beneficiaries. The Guarantor further agrees that
any right of subrogation it may have against the Owner Trust by reason of any
guaranty by it of obligations of the Owner Trust under the U.K. Documents shall
in all respects be subject and subordinate to the Owner Trust's obligations
under the Indenture and the Secured Notes, and the Guarantor agrees that it will
not exercise such subrogation right or any similar right until all of the
Obligations then due shall have been finally, indefeasibly and unconditionally
paid and performed in full.
Section 2.5. Reinstatement. This Guaranty shall continue to be
--------------------------
effective, or be automatically reinstated, as the case may be, if at any time
payment, or any part thereof, made by or on behalf of the Charterer of any of
the Obligations is rescinded or must otherwise be restored or returned by any
Beneficiary for any reason whatsoever, whether upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Charterer, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, either of the Charterer or any substantial part
of its property, or otherwise, all as though such payments had not been made.
Section 2.6. Place and Manner of Payments. All payments to be made by
----------------------------
the Guarantor under this Guaranty to a
7
<PAGE>
Beneficiary shall be paid to such Beneficiary at the address provided for in
Schedule 1 of the Participation Agreement or, if no address, at the address and
to the account specified in the notice demanding payment by the Guarantor;
provided, however, that the Guarantor consents to the assignment by the Owner
- -------- -------
Trust to the Indenture Trustee of the Owner Trust's right, title and interest
in, to and under this Guaranty to the extent set forth in the Indenture, and
agrees to make all payments (other than Excepted Payments) hereunder directly to
the Indenture Trustee until such time as the Indenture Trustee shall give notice
to the Guarantor that the Lien of the Indenture has been fully discharged, and
thereafter to the Owner Trust. The Guarantor agrees that it will make all
payments due hereunder by wire transfer at or before 12 Noon, New York time, on
the date due in immediately available funds to the party to which such payment
is to be made.
ARTICLE III.
DEFAULT AND REMEDIES
Section 3.1. Enforcement Provisions. The Beneficiaries shall have the
----------------------
right, power and authority to do all things, including instituting or appearing
in any suit or proceeding, not inconsistent with the express provisions of the
Operative Documents, or this Guaranty, which they may deem necessary or
advisable to enforce the provisions of this Guaranty and protect the interests
of the Beneficiaries. Each and every default in the payment or performance of
the Obligations shall give rise to a separate cause of action hereunder, and
separate suits may be brought hereunder as each cause of action arises.
Section 3.2. No Remedy Exclusive. No remedy conferred upon or
-------------------
reserved to the Beneficiaries herein or in the Operative Documents is intended
to be exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given under this Guaranty or now or hereafter existing at law or in equity.
Section 3.3. Right to Proceed Against Guarantor. In the event of a
----------------------------------
default in any payment or performance of any Obligation when and as the same
shall become due, whether at the stated maturity thereof, by acceleration or
otherwise, the Beneficiaries may proceed to enforce their respective rights
hereunder and the Beneficiaries shall have the right to proceed first and
directly against the Guarantor under this Guaranty without proceeding against
any other Person or exhausting any other remedies which they may have and
without resorting to any collateral security relating thereto.
Section 3.4. Guarantor to Pay Costs of Enforcement. The Guarantor
-------------------------------------
agrees to pay all costs, expenses
8
<PAGE>
and fees, including, without limitation, all reasonable attorneys' fees, which
may be incurred by the Beneficiaries in enforcing or attempting to enforce this
Guaranty or protecting the rights of the Beneficiaries hereunder following any
default on the part of the Guarantor hereunder, whether the same shall be
enforced by suit or otherwise.
Section 3.5. No Waiver of Rights. No delay in exercising or omission
-------------------
to exercise any right or power accruing upon any default, omission or failure of
performance hereunder shall impair any such right or power or shall be construed
to be a waiver thereof, but any such right and power may be exercised from time
to time and as often as may be deemed expedient.
ARTICLE IV.
COVENANTS OF GUARANTOR
Section 4.1. Maintenance of Corporate Existence. So long as any of
----------------------------------
the Obligations remain outstanding or any amounts due and owing by the Charterer
with respect thereto remain unpaid, the Guarantor will maintain its corporate
existence and will not merge or consolidate with any other corporation nor
dissolve or otherwise sell or dispose of all or substantially all of its assets
as an entirety, unless the successor or transferee corporation (if other than
the Guarantor) (a) shall expressly and unconditionally assume, in a written
instrument delivered to the Owner Participant, the Owner Trust, the Indenture
Trustee and the Pass Through Trustee, the punctual performance and observance of
all covenants, conditions and obligations of this Guaranty to be performed by
the Guarantor, and (b) shall not, immediately after such merger, consolidation,
sale or disposition, be in default in the performance of any covenant, condition
or obligation of the Guarantor pursuant to this Guaranty.
Section 4.2. Financial Statements. The Guarantor shall provide to the
--------------------
Owner Participant and the Indenture Trustee, within 30 days after the Guarantor
is required to file the same with the Securities and Exchange Commission (the
"SEC") or any successor agency, a copy of each annual report and any amendment
to an annual report, filed by the Guarantor with the SEC pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 (currently Form 10-K), as the
same may be amended from time to time, and all financial statement reports,
notices, proxy statements or other documents that are sent or made generally
available by the Guarantor to holders of its registered securities and all
regular and periodic reports filed by the Guarantor with the SEC except for
reports on SEC Forms 3, 4 or 5.
9
<PAGE>
Section 4.3. No Petition. Unless otherwise agreed in writing by both
-----------
the Indenture Trustee and the Owner Participant, the Guarantor hereby agrees to
the fullest extent permitted by law that it will not at any time institute
against the Owner Trust, or join in the institution against the Owner Trust of
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under any United States Federal or state bankruptcy or similar law.
ARTICLE V.
GENERAL
Section 5.1. Benefitted Parties. This Guaranty is entered into by the
------------------
Guarantor for the benefit of the Beneficiaries in accordance with the provisions
of this Guaranty and the Operative Documents. This Guaranty shall not be deemed
to create any right in, or to be in whole or in part for the benefit of, any
person other than the Beneficiaries and the Guarantor and their respective
permitted successors and assigns. The Guarantor may not assign any of its
rights or obligations hereunder except in accordance with Section 4.1 hereof.
Section 5.2. Interpretations. The article and section headings of
---------------
this Guaranty are for reference purposes only and shall not affect its
interpretation in any respect.
Section 5.3. Entire Agreement; Counterparts; Amendments; Governing
-----------------------------------------------------
Law; Etc. This Guaranty (a) constitutes the entire agreement, and supersedes
- --------
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof; (b) may be executed in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument; (c) may be modified
only by an instrument in writing signed by the duly authorized representatives
of the parties hereto; and (d) shall be governed in all respects, including
validity, interpretation and effect by, and shall be enforceable in accordance
with, the laws of the State of New York. This Guaranty shall terminate when the
Obligations have been fully, indefeasibly and unconditionally paid and performed
in full.
If any provision of this Guaranty shall be held to be invalid by any
court of competent jurisdiction, the invalidity of such provisions shall not
affect any of the remaining provisions, and any such invalidity in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the parties
hereto hereby waive any provision thereof that renders any term or provision
hereof invalid or unenforceable in any respect.
10
<PAGE>
Section 5.4. Further Assurances. The Guarantor will execute and
------------------
deliver all such instruments and take all such actions as the Beneficiaries may
from time to time reasonably request in order fully to effectuate the purposes
of this Guaranty.
Section 5.5. Notices. All notices and other communications in respect
-------
of this Guaranty to the Guarantor or the Beneficiaries shall be given as
provided in the applicable provisions of the Participation Agreement.
Section 5.6. Consent to Jurisdiction. Any legal suit, action or
-----------------------
proceeding arising out of or relating to this Guaranty or any transaction
contemplated hereby may be instituted in any state or Federal court in the
County of New York and State of New York, and the Guarantor to the extent
permitted by applicable law waives any objection which it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding, and
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding.
11
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed in its name and behalf and its corporate seal to be affixed hereto and
attested by its duly authorized officers, and the Beneficiaries have accepted
the same, as of the date first above written.
MOBIL CORPORATION
/s/ R.E. Sliwinski
By:______________________
Name: R.E. Sliwinski
Title: Attorney in Fact
ACCEPTED:
DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED, in its
individual capacity and as Managing Trustee
/s/ James Baird
By: ____________________
Name: James Baird
Title: Attorney in Fact
STATE STREET BANK AND TRUST COMPANY, in its individual
capacity and as Indenture Trustee
/s/ Ruth A. Smith
By:______________________
Name: Ruth A. Smith
Title: Vice President
STATE STREET BANK AND TRUST COMPANY, in its individual
capacity and as Pass Through Trustee under the Pass
Through Trust Agreement and as the Loan Participant
/s/ Ruth A. Smith
By: _____________________
Name: Ruth A. Smith
Title: Vice President
<PAGE>
SAMOCO L.L.C.
/s/ Bengt Hermelin
By: _____________________
Name: Bengt Hermelin
Title: Director
SAMOCO 1233 TRUST
By: Deutsche Morgan Grenfell
(Cayman) Limited, as Managing
Trustee
/s/ James Baird
By: _____________________
Name: James Baird
Title: Attorney-in-Fact
<PAGE>
EXHIBIT 99.12
MOBIL 1234 GUARANTY
THIS Guaranty, dated as of December 19, 1996 (together with any amendments
or supplements hereto, this "Guaranty"), by and among MOBIL CORPORATION, a
--------
Delaware corporation (together with any successor permitted by Section 4.1
hereof, the "Guarantor"), and the Managing Trustee, in both its individual
---------
capacity and as Managing Trustee, the Delaware Trustee, in both its individual
capacity and as Delaware Trustee, the Indenture Trustee, in both its individual
capacity and as Indenture Trustee, the Pass Through Trustee, in both its
individual capacity and as Pass Through Trustee and as Loan Participant, and the
Owner Participant (defined below) referred to in the Participation Agreement
described below (collectively, together with each other Indemnitee and their
successors and permitted assigns, the "Beneficiaries" and, individually, a
-------------
"Beneficiary").
- ------------
W I T N E S S E T H:
-------------------
WHEREAS, Mobil Marine Finance Company I Inc., a Delaware corporation, and
wholly-owned subsidiary of the Guarantor (together with its successors and
permitted assigns, the "Charterer"), is entering into that certain Participation
---------
Agreement dated as of December 19, 1996 (the "Participation Agreement"), among
-----------------------
the Charterer, the Owner Participant, the Owner Trust, Deutsche Morgan Grenfell
(Cayman) Limited, acting not in its individual capacity except as expressly set
forth therein, but solely as Managing Trustee, State Street Bank and Trust
Company, acting not in its individual capacity except as expressly provided
therein, but solely as Indenture Trustee, and State Street Bank and Trust
Company, acting not in its individual capacity except as expressly provided
therein, but solely as Pass Through Trustee and Loan Participant; and
WHEREAS, it is a condition precedent to the obligations of the
Beneficiaries to consummate the transactions contemplated by the Participation
Agreement that the Guarantor execute and deliver this Guaranty,
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, the Guarantor does hereby covenant and agree with the
Beneficiaries from and after the execution and delivery of the Participation
Agreement as follows (capitalized terms used herein (including those used in the
foregoing preamble and recitals) and not otherwise defined herein having the
meanings ascribed to them in Appendix A to the Participation Agreement):
<PAGE>
ARTICLE I.
REPRESENTATIONS AND WARRANTIES OF GUARANTOR
Section 1.1. Representations and Warranties of Guarantor. The Guarantor
-------------------------------------------
hereby represents and warrants that:
(1) The Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, has the
corporate power and authority to carry on its business as presently
conducted, to own or hold under lease its properties, and to enter into and
perform its obligations under this Guaranty, and is duly qualified to do
business in each jurisdiction in which it has operations or a principal
office and where failure so to qualify could reasonably be expected to
materially adversely affect its financial condition, business, operations,
or its ability to perform any of its obligations under this Guaranty.
(2) The execution, delivery and performance by the Guarantor of this
Guaranty and the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Guarantor.
(3) This Guaranty has been duly executed and delivered by the
Guarantor and constitutes the legal, valid and binding obligation of the
Guarantor enforceable against the Guarantor in accordance with the terms
hereof, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, liquidation, moratorium or similar
laws affecting creditors' or lessors' rights generally and by the
application of general equitable principles which may limit the
availability of certain remedies.
(4) The execution and delivery by the Guarantor of this Guaranty do
not and will not, and the performance by the Guarantor of its obligations
hereunder do not and will not, (i) violate or be inconsistent with its
charter documents or by-laws, (ii) contravene any Governmental Rule or
Governmental Action applicable to it, (iii) contravene any provision of, or
constitute a default under, any indenture, mortgage, contract or other
instrument to which the Guarantor is a party or by which it or any of its
properties are bound or (iv) result in or, require the creation or
imposition of any Lien (other than Permitted Liens) upon any of its
properties or assets.
(5) No Governmental Action and no consent of any other Person
(including, without limitation, any stockholder or creditor of the
Guarantor) is required in
2
<PAGE>
connection with the execution, delivery or performance of this Guaranty.
(6) Each of the consolidated financial statements of the Guarantor set
forth in its Annual Report on Form 10-K for the year ended December 31,
1995 and the consolidated financial statements of the Guarantor set forth
in its Quarterly Report on Form 10-Q for the quarter ended September 30,
1996 fairly presents the consolidated financial position of the Guarantor
and its Subsidiaries as at the respective dates thereof and the
consolidated results of operations and changes in financial position of the
Guarantor and its Subsidiaries for each of the periods covered thereby
(subject, in the case of any unaudited interim financial statements, to
changes resulting from normal year-end adjustments) in conformity with GAAP
applied on a consistent basis (except as disclosed in the notes thereto).
Since September 30, 1996, there has been no material adverse change in such
consolidated financial position of the Guarantor and its Subsidiaries,
taken as a whole.
(7) Except as disclosed in the Guarantor's Annual Report on Form 10-K
for the year ended December 31, 1995 or the Guarantor's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1996, there is no action,
suit, investigation or proceeding pending or, to the Actual Knowledge of
the Guarantor threatened in writing against the Guarantor or affecting it
or its properties before any Governmental Authority which, individually or
in the aggregate (so far as the Guarantor now can reasonably foresee), is
reasonably likely materially and adversely to affect the consummation of
the transactions under this Guaranty or the ability of the Guarantor to
perform its obligations hereunder or its business or financial condition.
(8) The Guarantor owns, directly or indirectly, 100% of the equity
interest in the Charterer.
3
<PAGE>
ARTICLE II.
Guaranty OF OBLIGATIONS
Section 2.1. Guaranty of Obligations. (a) The Guarantor hereby
-----------------------
guarantees to each of the Beneficiaries, as primary obligor and not as surety,
the full and prompt payment by the Charterer, as the case may be, when due,
whether at the stated payment date thereof, by acceleration or otherwise, of,
and the faithful performance of and compliance with, all payment obligations of
the Charterer under the Participation Agreement, the Charter and the other
Operative Documents owed to the Beneficiaries strictly in accordance with the
terms thereof, however created, arising or evidenced, whether direct or
indirect, primary or secondary, absolute or contingent, joint or several, and
whether now or hereafter existing or due or to become due and the full, faithful
and timely performance of, and compliance with, all other obligations of the
Charterer owed to the Beneficiaries thereunder strictly in accordance with the
terms thereof, however created, arising or evidenced, whether direct or
indirect, primary or secondary, absolute or contingent, joint or several, and
whether now or hereafter existing or due or to become due (such payment and
other obligations, the "Obligations"). Such guarantee is an absolute,
-----------
unconditional, irrevocable, present and continuing guarantee of payment and
performance and not of collectability.
(b) If for any reason any Obligation to be performed or observed by
the Charterer whether affirmative or negative in character) shall not be
observed or performed strictly in accordance with the terms thereof, the
Guarantor shall, no later than 15 Business Days following receipt of written
notice by the relevant Beneficiary of such non-observance, non-performance or
nonpayment, and not less than 5 Business Days following receipt of notice in the
case of non-payment of Base Hire, perform or observe or cause to be performed or
observed each such Obligation and shall pay such amount at the place and to the
Person or entity entitled thereto pursuant to the relevant Operative Documents,
as the case may be, regardless of whether or not any Beneficiary or anyone on
behalf of any of them shall have instituted any suit, action or proceeding or
exhausted its remedies or taken any steps to enforce any rights against the
Charterer or any other Person or entity to compel any such performance or to
collect all or any part of such amount pursuant to the provisions of the
relevant Operative Document or at law or in equity, or otherwise, and regardless
of any other condition or contingency. Nothing in this Guaranty shall be
construed to be a guaranty of payment of the Secured Note.
Section 2.2. Nature of Guaranty. The obligations, covenants,
------------------
agreements and duties of the Guarantor shall remain in full force and effect
until the Obligations are finally,
4
<PAGE>
indefeasibly and unconditionally paid and performed in full in accordance with
the terms of the Operative Documents and, to the maximum extent permitted by
law, shall in no way be affected or impaired by reason of the happening from
time to time of any other event, including, without limitation, the following,
whether or not any such event shall have occurred without notice to or the
consent of the Guarantor:
(a) the waiver, compromise, settlement, termination or other
release of the performance or observance by the Guarantor or the
Charterer of any or all of their respective agreements, covenants,
terms or conditions contained in this Guaranty (other than Section 2.1
hereof), the Participation Agreement, the Charter and the other
Operative Documents;
(b) any failure, omission, delay or lack on the part of the
Beneficiaries to enforce, assert or exercise any right, power or
remedy conferred on the Beneficiaries in the Participation Agreement,
the Charter, the other Operative Documents or this Guaranty, or the
inability of the Beneficiaries to enforce any provision of the
Participation Agreement, the Charter, the other Operative Documents or
this Guaranty for any reason, or any other act or omission on the part
of the Beneficiaries;
(c) the transfer, assignment or mortgaging, or the purported
transfer, assignment or mortgaging, of all or any part of the interest
of the Charterer in the Vessel Interest or the Vessel or the
invalidity, unenforceability or termination of the Participation
Agreement, the Charter or any other Operative Document or any defect
in the title of the Vessel or any part thereof or any loss of
possession, use or operational control of the Vessel or any part
thereof by the Charterer or any Permitted Subcharterer;
(d) the modification or amendment (whether material or otherwise)
of any obligation, covenant or agreement set forth in the
Participation Agreement, the Charter, or any other Operative Document;
(e) the voluntary or involuntary liquidation, dissolution, sale
of all or substantially all of the assets, marshalling of assets and
liabilities, receivership, conservatorship, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of, or other similar proceedings
5
<PAGE>
affecting the Charterer or any of its assets or any allegation or
contest of the validity of this Guaranty, the Participation Agreement,
the Charter or any other Operative Document in any such proceeding;
(f) the surrender or impairment of any security for the
performance or observance of any of the Obligations;
(g) any failure of the Guarantor or the Charterer to perform and
observe any agreement or covenant, or to discharge any duty or
obligation, arising out of or connected with this Guaranty, the
Participation Agreement, the Charter or any other Operative Document
or the occurrence or pendency of any Charter Default or Charter Event
of Default or any proceedings or actions as a result of, or attendant
upon, such Charter Default or Charter Event of Default;
(h) the inability of the Guarantor, the Beneficiaries or the
Charterer to enforce any provision of this Guaranty, the Participation
Agreement, the Charter or any other Operative Document for any reason;
(i) the failure to give notice to the Guarantor or the Charterer
of the occurrence of an event of default under the terms and
provisions of the Participation Agreement, the Charter or the other
Operative Documents;
(j) the disposition by the Guarantor of any or all of its
interest in any capital stock of the Charterer or any change,
restructuring or termination of the corporate structure, ownership or
existence of the Charterer;
(k) any set-off, counterclaim, reduction, or diminution of any
Obligation, or any defense of any kind or nature whatsoever (other
than performance) which the Guarantor or the Charterer may have or
assert against the Beneficiaries; or
(l) any other circumstance (other than performance) that might
otherwise constitute a legal or equitable defense or discharge of a
guarantor or surety with respect to any Obligation.
Section 2.3. Waivers by Guarantor. The Guarantor waives notice of the
--------------------
acceptance of and reliance on this
6
<PAGE>
Guaranty by the Beneficiaries, and the Guarantor also waives presentment, demand
for payment, protest and notice of nonpayment or dishonor and all other notices
and demands whatsoever, except that the Guarantor does not waive the notices
provided for in Section 2.1(b) hereof. The Guarantor further waives any right
it may have to (a) require the Beneficiaries to proceed against the Charterer,
(b) require the Beneficiaries to proceed against or exhaust any security granted
by the Charterer or the Owner Trust or (c) require the Beneficiaries to pursue
any other remedy within the power of the Beneficiaries, and the Guarantor agrees
that all of its obligations under this Guaranty are independent of the
Obligations and that a separate action may be brought against the Guarantor
whether or not an action is commenced against the Charterer under the Operative
Documents.
Section 2.4. Subrogation of Guarantor; Subordination. Notwithstanding
---------------------------------------
any payment or payments made by the Guarantor, the Guarantor shall not be
subrogated to any rights of the Beneficiaries against the Charterer until all of
the Obligations then due shall have been finally, indefeasibly and
unconditionally paid and performed in full. Any claim of the Guarantor against
the Charterer arising from payments made by the Guarantor by reason of this
Guaranty shall be in all respects subordinated to the final, indefeasible,
unconditional, full and complete payment or discharge of all of the Obligations
guaranteed hereby, and no payment by the Guarantor shall give rise to any claim
of the Guarantor against the Beneficiaries. The Guarantor further agrees that
any right of subrogation it may have against the Owner Trust by reason of any
guaranty by it of obligations of the Owner Trust under the U.K. Documents shall
in all respects be subject and subordinate to the Owner Trust's obligations
under the Indenture and the Secured Notes, and the Guarantor agrees that it will
not exercise such subrogation right or any similar right until all of the
Obligations then due shall have been finally, indefeasibly and unconditionally
paid and performed in full.
Section 2.5. Reinstatement. This Guaranty shall continue to be
--------------------------
effective, or be automatically reinstated, as the case may be, if at any time
payment, or any part thereof, made by or on behalf of the Charterer of any of
the Obligations is rescinded or must otherwise be restored or returned by any
Beneficiary for any reason whatsoever, whether upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Charterer, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, either of the Charterer or any substantial part
of its property, or otherwise, all as though such payments had not been made.
Section 2.6. Place and Manner of Payments. All payments to be made by
----------------------------
the Guarantor under this Guaranty to a
7
<PAGE>
Beneficiary shall be paid to such Beneficiary at the address provided for in
Schedule 1 of the Participation Agreement or, if no address, at the address and
to the account specified in the notice demanding payment by the Guarantor;
provided, however, that the Guarantor consents to the assignment by the Owner
- -------- -------
Trust to the Indenture Trustee of the Owner Trust's right, title and interest
in, to and under this Guaranty to the extent set forth in the Indenture, and
agrees to make all payments (other than Excepted Payments) hereunder directly to
the Indenture Trustee until such time as the Indenture Trustee shall give notice
to the Guarantor that the Lien of the Indenture has been fully discharged, and
thereafter to the Owner Trust. The Guarantor agrees that it will make all
payments due hereunder by wire transfer at or before 12 Noon, New York time, on
the date due in immediately available funds to the party to which such payment
is to be made.
ARTICLE III.
DEFAULT AND REMEDIES
Section 3.1. Enforcement Provisions. The Beneficiaries shall have the
----------------------
right, power and authority to do all things, including instituting or appearing
in any suit or proceeding, not inconsistent with the express provisions of the
Operative Documents, or this Guaranty, which they may deem necessary or
advisable to enforce the provisions of this Guaranty and protect the interests
of the Beneficiaries. Each and every default in the payment or performance of
the Obligations shall give rise to a separate cause of action hereunder, and
separate suits may be brought hereunder as each cause of action arises.
Section 3.2. No Remedy Exclusive. No remedy conferred upon or
-------------------
reserved to the Beneficiaries herein or in the Operative Documents is intended
to be exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given under this Guaranty or now or hereafter existing at law or in equity.
Section 3.3. Right to Proceed Against Guarantor. In the event of a
----------------------------------
default in any payment or performance of any Obligation when and as the same
shall become due, whether at the stated maturity thereof, by acceleration or
otherwise, the Beneficiaries may proceed to enforce their respective rights
hereunder and the Beneficiaries shall have the right to proceed first and
directly against the Guarantor under this Guaranty without proceeding against
any other Person or exhausting any other remedies which they may have and
without resorting to any collateral security relating thereto.
Section 3.4. Guarantor to Pay Costs of Enforcement. The Guarantor
-------------------------------------
agrees to pay all costs, expenses
8
<PAGE>
and fees, including, without limitation, all reasonable attorneys' fees, which
may be incurred by the Beneficiaries in enforcing or attempting to enforce this
Guaranty or protecting the rights of the Beneficiaries hereunder following any
default on the part of the Guarantor hereunder, whether the same shall be
enforced by suit or otherwise.
Section 3.5. No Waiver of Rights. No delay in exercising or omission
-------------------
to exercise any right or power accruing upon any default, omission or failure of
performance hereunder shall impair any such right or power or shall be construed
to be a waiver thereof, but any such right and power may be exercised from time
to time and as often as may be deemed expedient.
ARTICLE IV.
COVENANTS OF GUARANTOR
Section 4.1. Maintenance of Corporate Existence. So long as any of
----------------------------------
the Obligations remain outstanding or any amounts due and owing by the Charterer
with respect thereto remain unpaid, the Guarantor will maintain its corporate
existence and will not merge or consolidate with any other corporation nor
dissolve or otherwise sell or dispose of all or substantially all of its assets
as an entirety, unless the successor or transferee corporation (if other than
the Guarantor) (a) shall expressly and unconditionally assume, in a written
instrument delivered to the Owner Participant, the Owner Trust, the Indenture
Trustee and the Pass Through Trustee, the punctual performance and observance of
all covenants, conditions and obligations of this Guaranty to be performed by
the Guarantor, and (b) shall not, immediately after such merger, consolidation,
sale or disposition, be in default in the performance of any covenant, condition
or obligation of the Guarantor pursuant to this Guaranty.
Section 4.2. Financial Statements. The Guarantor shall provide to the
--------------------
Owner Participant and the Indenture Trustee, within 30 days after the Guarantor
is required to file the same with the Securities and Exchange Commission (the
"SEC") or any successor agency, a copy of each annual report and any amendment
to an annual report, filed by the Guarantor with the SEC pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 (currently Form 10-K), as the
same may be amended from time to time, and all financial statement reports,
notices, proxy statements or other documents that are sent or made generally
available by the Guarantor to holders of its registered securities and all
regular and periodic reports filed by the Guarantor with the SEC except for
reports on SEC Forms 3, 4 or 5.
9
<PAGE>
Section 4.3. No Petition. Unless otherwise agreed in writing by both
-----------
the Indenture Trustee and the Owner Participant, the Guarantor hereby agrees to
the fullest extent permitted by law that it will not at any time institute
against the Owner Trust, or join in the institution against the Owner Trust of
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under any United States Federal or state bankruptcy or similar law.
ARTICLE V.
GENERAL
Section 5.1. Benefitted Parties. This Guaranty is entered into by the
------------------
Guarantor for the benefit of the Beneficiaries in accordance with the provisions
of this Guaranty and the Operative Documents. This Guaranty shall not be deemed
to create any right in, or to be in whole or in part for the benefit of, any
person other than the Beneficiaries and the Guarantor and their respective
permitted successors and assigns. The Guarantor may not assign any of its
rights or obligations hereunder except in accordance with Section 4.1 hereof.
Section 5.2. Interpretations. The article and section headings of
---------------
this Guaranty are for reference purposes only and shall not affect its
interpretation in any respect.
Section 5.3. Entire Agreement; Counterparts; Amendments; Governing
-----------------------------------------------------
Law; Etc. This Guaranty (a) constitutes the entire agreement, and supersedes
- --------
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof; (b) may be executed in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument; (c) may be modified
only by an instrument in writing signed by the duly authorized representatives
of the parties hereto; and (d) shall be governed in all respects, including
validity, interpretation and effect by, and shall be enforceable in accordance
with, the laws of the State of New York. This Guaranty shall terminate when the
Obligations have been fully, indefeasibly and unconditionally paid and performed
in full.
If any provision of this Guaranty shall be held to be invalid by any
court of competent jurisdiction, the invalidity of such provisions shall not
affect any of the remaining provisions, and any such invalidity in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the parties
hereto hereby waive any provision thereof that renders any term or provision
hereof invalid or unenforceable in any respect.
10
<PAGE>
Section 5.4. Further Assurances. The Guarantor will execute and
------------------
deliver all such instruments and take all such actions as the Beneficiaries may
from time to time reasonably request in order fully to effectuate the purposes
of this Guaranty.
Section 5.5. Notices. All notices and other communications in respect
-------
of this Guaranty to the Guarantor or the Beneficiaries shall be given as
provided in the applicable provisions of the Participation Agreement.
Section 5.6. Consent to Jurisdiction. Any legal suit, action or
-----------------------
proceeding arising out of or relating to this Guaranty or any transaction
contemplated hereby may be instituted in any state or Federal court in the
County of New York and State of New York, and the Guarantor to the extent
permitted by applicable law waives any objection which it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding, and
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding.
11
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed in its name and behalf and its corporate seal to be affixed hereto and
attested by its duly authorized officers, and the Beneficiaries have accepted
the same, as of the date first above written.
MOBIL CORPORATION
/s/ R.E. Sliwinski
By:______________________
Name: R.E. Sliwinski
Title: Attorney in Fact
ACCEPTED:
DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED, in its
individual capacity and as Managing Trustee
/s/ James Baird
By: ____________________
Name: James Baird
Title: Attorney in Fact
STATE STREET BANK AND TRUST COMPANY, in its individual
capacity and as Indenture Trustee
/s/ Ruth A. Smith
By:______________________
Name: Ruth A. Smith
Title: Vice President
STATE STREET BANK AND TRUST COMPANY, in its individual
capacity and as Pass Through Trustee under the Pass
Through Trust Agreement and as the Loan Participant
/s/ Ruth A. Smith
By: _____________________
Name: Ruth A. Smith
Title: Vice President
<PAGE>
SAMOCO L.L.C.
/s/ Bengt Hermelin
By: _____________________
Name: Bengt Hermelin
Title: Director
SAMOCO 1234 TRUST
By: Deutsche Morgan Grenfell
(Cayman) Limited, as Managing
Trustee
/s/ James Baird
By: _____________________
Name: James Baird
Title: Attorney-in-Fact
<PAGE>
EXHIBIT 99.13
APPENDIX A
RAVEN
DEFINITIONS
-----------
The following terms shall have the following meanings for all purposes of
the Operative Documents referred to below, unless otherwise defined in an
Operative Document or the context thereof shall otherwise require and such
meanings are equally applicable both to the singular and plural forms of the
terms defined. Any term defined below by reference to any agreement or
instrument shall have such meaning whether or not such agreement or instrument
is in effect. The terms "hereof", "herein", "hereunder" and comparable terms
------ ------ ---------
refer to the entire agreement with respect to which such terms are used and not
to any particular Section, subsection, paragraph or other subdivision thereof.
Unless the context otherwise requires, references to (i) agreements shall
include sections, schedules, exhibits and appendices thereto and shall be deemed
to mean and include such agreements (and sections, schedules, exhibits and
appendices) as the same may be amended, supplemented and otherwise modified from
time to time, (ii) parties to agreements or government agencies shall be deemed
to include the successors and permitted assigns of such parties and the
successors and assigns of such agencies and (iii) laws or regulations shall be
deemed to mean such laws or regulations as the same may be amended from time to
time and any superseding laws or regulations covering the same subject matter.
Unless otherwise specified herein or in any Operative Document, all
accounting terms used in any Operative Document shall be interpreted, all
accounting determinations made pursuant to the terms of any Operative Documents
shall be made, and all financial statements delivered pursuant to the terms of
any Operative Document shall be prepared in accordance with GAAP.
"Actual Knowledge" shall mean, (i) as it applies to either Owner
----------------
Trustee (or the Owner Trust), the Indenture Trustee or the Pass Through
Trustee, actual knowledge of, including any information contained in any
written notices received by, an officer in its Corporate Trust
Administration department, (ii) as it applies to the Owner Participant,
actual knowledge of, including any information contained in any written
notices received by, any officer of the Owner Participant or any Affiliate
thereof whose responsibilities include administration of
<PAGE>
the transactions contemplated by the Operative Documents, (iii) as it
applies to the Charterer, actual knowledge of, including any information
contained in any written notices received by, the Chief Executive Officer,
the President or any Vice President or any other officer of the Charterer
whose responsibilities include administration of the transactions
contemplated by the Operative Documents and (iv) as it applies to the
Guarantor actual knowledge of, including any information contained in any
written notices received by, the Chief Executive Officer, the President or
any Vice President or any other executive of the Guarantor whose
responsibilities include administration of the transactions contemplated by
the Operative Documents.
"Additional Excess Hire" shall have the meaning specified in clause b
----------------------
of Schedule 2A of the Charter Party.
"Additional Excess Rate Hire" shall have the meaning specified in
---------------------------
clause b of Schedule 2A to the Charter Party.
"Additional Notes" shall mean non-recourse Secured Notes issued by the
----------------
Owner Trust in accordance with Section 2.08 of the Indenture.
"Affiliate" shall mean, with respect to any Person, any other Person,
---------
directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such Person. For purposes of this
definition, the term "control" (including the correlative meanings of the
-------
terms "controlling", "controlled by" and "under common control with"), as
----------- ------------- -------------------------
used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
"After-Tax Basis", in the context of determining the amount of a
---------------
payment to be made on such basis, shall mean the payment of an amount
which, after reduction by the net increase in foreign, federal, state and
local income tax liability of the recipient of such payment (which net
increase shall be calculated by taking into account any reduction in such
taxes resulting from any tax benefits realized or to be realized by the
recipient as a result of the event giving rise to such payment) shall be
equal to the amount required to be paid. In calculating the amount payable
by reason of this provision, all foreign, federal, state and local income
taxes payable and tax benefits realized or to be realized shall be
determined on the assumptions that (i) the recipient has a sufficient tax
base to be taxable on all income at the
2
<PAGE>
highest marginal tax rates then applicable to corporate taxpayers taxed on
the same basis as the recipient that are then in effect in the applicable
jurisdictions and that all tax benefits are utilized at the highest
marginal rates then applicable to corporate taxpayers taxed on the same
basis as the recipient that are then in effect in the applicable
jurisdictions, (ii) state and local income taxes are payable, and state and
local tax benefits are realized, in the jurisdiction in which the recipient
has its principal place of business, and (iii) tax benefits to be realized
in any taxable year other than the year of payment are determined on a
present value basis using the Debt Rate.
"Alteration" shall have the meaning specified in Section 15(a) of the
----------
Construction Contract.
"Amortization Schedule" shall mean, with respect to any Secured Note,
---------------------
the amortization schedule for such Secured Note set forth in Exhibit B to
the Indenture.
"Appraisal Procedure" shall mean a procedure for determining any
-------------------
amount, value or period. Such procedure shall be commenced by the delivery
of written notification as specified in the Operative Documents by the
Charterer to the Owner Trust or the Owner Participant, as the case may be,
or by the Owner Participant or the Owner Trust, as the case may be, to the
Charterer, that it desires to obtain an appraisal with respect to such
amount, value or period. If required by the terms of the applicable
Operative Documents, such parties shall first attempt to agree on such
matter. If such parties are unable to agree on such matter within the time
period specified in the applicable Operative Document, or if such parties
are not required to attempt to agree, such parties shall thereupon consult
for the purpose of selecting a mutually acceptable Independent appraiser.
If within 10 days from the date the parties are required to so consult,
they are unable to agree upon the appointment of a mutually acceptable
Independent appraiser, then each of such parties shall appoint an
Independent appraiser, and such Independent appraisers shall jointly
determine such matter. If one party does not so appoint an Independent
appraiser, then the Independent appraiser appointed by the other shall
determine such matter as the sole appraiser. If such two Independent
appraisers cannot agree on such matter within 20 days, such matters shall
be determined by such two Independent appraisers and a third Independent
appraiser chosen within 10 days after such 20-day period by such two
Independent appraisers or, if such three Independent appraisers fail to
reach an agreement, the determination of the appraiser that differs most
from the second highest determination shall be excluded (unless such
3
<PAGE>
difference is less than ten percent from either of the other
determinations), the remaining two determinations shall be averaged (or all
three shall be averaged, if the third determination is not discarded due to
the preceding parenthetical) and such average shall constitute the
determination of the appraisers. If such two Independent appraisers fail
to agree upon the appointment of a third Independent appraiser within the
allotted time period, such appointment shall be made by the New York City
office of the American Arbitration Association or any organization
successor thereto, upon the request of any such parties from a panel of
arbitrators having familiarity with assets similar to the Vessel. The
determination of the appraisers so chosen shall be given within 20 days of
the appointment of such third appraiser. Fees and expenses of the
appraisers appointed in connection with an Appraisal Procedure shall be
paid by the Charterer.
"Assigned Hire" shall have the meaning set forth in Section 4.01(a) of
-------------
the Indenture.
"Bareboat Hire" shall mean, for any Rate Period, the sum of the Base
-------------
Hire, the Excess Hire and the Additional Excess Hire for such Rate Period.
"Bareboat Market Rate" shall mean, for any Rate Period, the "Bareboat
--------------------
Market Rate" determined pursuant to Schedule 2B to the Charter Party for
such Rate Period.
"Base Hire" shall have the meaning specified in Schedule 2 to the
---------
Charter Party.
"Base Hire Payment Dates" during the Charter Period shall mean and
-----------------------
include each January 2 and July 2 during the Charter Period, commencing on
July 2, 1997.
"Bill of Sale" shall mean the Assignment and Bill of Sale of Vessel
------------
conveying the Vessel to the Owner Trust and delivered pursuant to Sections
3.1, 4.2 and 5.2 of the Participation Agreement.
"Board of Directors" shall mean, with respect to any Person, either
------------------
the board of directors of such Person or a duly authorized committee of
said board having power to act for such board with respect to the matter in
question.
"Builder" shall mean Sumitomo Heavy Industries, Inc., a Japanese
-------
corporation.
"Business Day" shall mean any day other than a Saturday or Sunday or
------------
any other day on which banks located in London, England, New York, New
York, Fairfax,
4
<PAGE>
Virginia, the city in which the Indenture Trustee Office is located, the
city in which the corporate trust department of the Managing Trustee is
located or, so long as any Pass Through Certificate is Outstanding, the
city in which the corporate trust department of the Pass Through Trustee is
located, are required or authorized to remain closed.
"Business Trust Act" shall mean the Delaware Business Trust Act, 12
------------------
Del. C. c.38, as it may be amended from time to time.
"Capital Stock" shall mean, with respect to any Person, any and all
-------------
shares, interests, participations or other equivalents (however designated)
of such Person's capital stock, whether now outstanding or issued after the
date of the Participation Agreement, including, without limitation, all
Common Stock and Preferred Stock of such Person.
"Casualty Redemption Date" shall have the meaning specified in Section
------------------------
3.02 of the Indenture.
"Certificate" shall mean any one of the pass through certificates
-----------
executed and authenticated by the Pass Through Trustee, substantially in
the form of Exhibit A to the Pass Through Trust Agreement.
"Certificateholder" shall have the meaning specified in the Pass
-----------------
Through Trust Agreement.
"Charter" or "Charter Party" shall mean the VLCC Charter Party dated
------- -------------
as of the Closing Date between the Owner Trust and the Charterer.
"Charter Default" shall mean an event which, after giving of notice or
---------------
lapse of time, or both, would become a Charter Event of Default.
"Charter Event of Default" shall have the meaning specified in Article
------------------------
21 of the Charter Party.
"Charter Party Termination Date" shall mean the last day of the
------------------------------
Charter Period, whether occurring by reason of expiration of the Charter
Period or upon earlier termination of the Charter Party pursuant to the
terms thereof (including, without limitation, termination pursuant to
Article 22 of the Charter Party).
"Charter Period" shall mean the period beginning with the Delivery
--------------
Date and ending on the Charter Expiration Date set forth in Schedule 1 to
the Charter, as the same may be extended in accordance with Article 19(c)
of the Charter Party, or such earlier date on which
5
<PAGE>
the Charter Party is terminated in accordance with the provisions thereof.
"Charterer" shall mean Mobil Marine Finance Company I Inc., a Delaware
---------
corporation.
"Claims" shall mean all liabilities (including, without limitation,
------
negligence, warranty, statutory, product, strict or absolute liability,
liability in tort or otherwise), obligations, responsibilities, losses,
damages, penalties, fines, sanctions, claims, Environmental Claims,
actions, causes of action, suits, investigations, judgments, Liens
(including any Lien in favor of any Governmental Authority for
environmental liabilities and costs or violations of any Environmental
Laws), costs, expenses and disbursements, of any kind or nature, including,
without limitation, reasonable legal fees and expenses and costs of
investigation.
"Classification Society" shall mean the American Bureau of Shipping or
----------------------
any other classification society selected by the Charterer.
"Closing Date" shall mean December 19, 1996.
------------
"Code" shall mean the Internal Revenue Code of 1986.
----
"Common Stock" shall mean, with respect to any Person, any and all
------------
shares, interests, participations and other equivalents (however
designated, whether voting or non-voting) of such Person's common stock,
whether now outstanding or issued after the date of the Participation
Agreement, and includes, without limitation, all series and classes of such
common stock.
"Component" shall mean appliances, parts, instruments, appurtenances,
---------
accessories, equipment and other property of whatever nature originally
included in the Vessel on the Delivery Date.
"Conditional Sale Agreement" shall mean the Conditional Sale Agreement
--------------------------
dated November 25, 1996 between the Owner Trust and the U.K. Lessor.
"Construction Contract" shall mean the Shipbuilding Contract dated
---------------------
28th June between the Builder and MOSAT providing for the construction of
the Vessel and the Payment Guarantee Letter.
"Corporate Trust Office", when used with respect to the Pass Through
----------------------
Trustee, shall mean the office of the Pass Through Trustee in the city at
which at any particular time its corporate trust business shall be
principally administered, and when used with respect to
6
<PAGE>
the Indenture Trustee, shall mean the Indenture Trustee Office.
"Cut-off Date" shall mean January 31, 1997.
------------
"Debt Rate" shall mean the weighted average interest rate borne by the
---------
Secured Notes.
"Delaware Trustee" shall have the meaning specified in the preamble to
----------------
the Trust Agreement.
"Delivery Date" shall mean the date on which the Vessel is delivered
-------------
to the Owner, which is scheduled to occur on the date set forth as the
Scheduled Delivery Date in Schedule 1 of the Charter Party.
"Dollar" and "$" shall mean U.S. dollars.
------ -
"Eligible Bank" shall mean any bank or trust company, including the
-------------
Indenture Trustee and the Pass Through Trustee which shall be a member of
the Federal Reserve System and shall have a combined capital, surplus and
undivided profits of not less than $100,000,000.
"Environmental Claims" shall mean any Claim, action, cause of action,
--------------------
investigation or notice (written or oral) by any Person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, Remedial Action, Releases, governmental
response costs, natural resources damages, property damages, personal
injuries, or penalties) arising out of, based on or resulting from (a) the
presence, release into the environment, of any Hazardous Material at any
location, whether or not owned or operated by the Charterer, the
Subcharteree or MOSAT or (b) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
"Environmental Laws" shall mean all federal, state, foreign and local
------------------
laws and regulations, relating to pollution or protection of the
environment (including, without limitation, ambient air, surface, water,
groundwater, land surface or subsurface strata, wetlands, wildlife, aquatic
species, vegetation and natural resources), including, without limitation,
laws and regulations relating to emissions, discharges, Releases or
threatened Releases of Hazardous Materials or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials. Environmental Laws include,
but are not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"); the Federal
------
7
<PAGE>
Insecticide, Fungicide, and Rodenticide Act ("FIFRA"); the Resource
-----
Conservation Recovery Act ("RCRA"); Oil Pollution Act of 1990 ("OPA"); the
---- ---
Superfund Amendments and Reauthorization Act of 1986 ("SARA"); the Toxic
----
Substances Control Act ("TSCA"); the Hazardous Material Transportation Act;
----
the Clean Air Act; the Federal Water Pollution Control Act; the Safe
Drinking Water Act; and their state and local counterparts or equivalents.
"Environmental Permits" shall mean all permits, consents, licenses,
---------------------
certificates and other approvals or authorizations required under
Environmental Laws.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974.
"ERISA Affiliate" shall mean any entity treated as a single employer
---------------
with any Person pursuant to Section 414(b), (c), (m) or (o) of the Code.
"Event of Loss" shall mean any of the following events occurring on or
-------------
after the Delivery Date: (a) the (i) loss, theft, destruction or
disappearance of, or (ii) occurrence of damage (which, in the Charterer's
reasonable, good faith opinion, renders repair or replacement uneconomic)
to, the Vessel (or substantially the entirety of the Vessel); (b) the
permanent condemnation, confiscation or seizure of, or requisition of title
to, the Vessel by any Governmental Authority; (c) the requisition of use of
the Vessel by any Governmental Authority for a period which shall exceed
the remaining portion of the Charter Period; or (d) the receipt of
insurance proceeds based upon an actual or constructive total loss of the
Vessel.
"Excepted Payments" shall mean and include (i) any indemnity or other
-----------------
similar payment (whether or not Supplemental Hire) payable under any
Operative Document (including, without limitation, any amount payable by
the Guarantor under the Guarantee in respect of indemnity amounts payable
by the Charterer under any Operative Document) directly to any Person
(including, without limitation, the Trust Company, the Resident Trustee,
the Pass Through Trustee, each in its individual capacity) other than the
Indenture Trustee, any Holder, the Owner Trust, the Trust Estate or the
Indenture Estate; (ii) (A) insurance proceeds, if any, payable to the Owner
Trust or the Owner Participant under insurance separately maintained by the
Owner Trust or the Owner Participant as permitted by Section 16(b) of the
Charter Party except to the extent that the payment of any such proceeds
diminishes any recovery available under an insurance policy required to be
maintained under Section 16 of the Charter Party, or (B) proceeds of
personal injury or
8
<PAGE>
property damage liability insurance payable to or for the benefit of the
Trust Company, the Resident Trustee or the Owner Participant under any
Operative Document; (iii) any amount payable for the account of the Owner
Participant pursuant to Section 13.1 or 13.2 of the Participation Agreement
(or any amount payable by the Guarantor under the Guarantee in respect of
amounts payable for the account of the Owner Participant pursuant to
Section 13.1 or 13.2 of the Participation Agreement); and (iv) interest at
the Overdue Rate payable by the Charterer (or the Guarantor) to the Trust
Company, the Resident Trustee or the Owner Participant on any of the
amounts described in clauses (i) through (iii) above; together with the
right to demand, collect, sue for, exercise remedies to enforce, or
otherwise obtain amounts referred to in clauses (i) through (iv) of this
definition.
"Excess Hire" shall have the meaning specified in clause b. of
-----------
Schedule 2A of the Charter Party.
"Excess Hire Rate" shall have the meaning specified in clause b. of
----------------
Schedule 2A to the Charter Party.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
"Fair Market Sales Value" of any property or service as of any date
------------------------
shall mean the cash rent or cash price that would be obtained in an arm's-
length lease or sale, respectively, between an informed and willing lessee
or buyer (under no compulsion to lease or purchase) and an informed and
willing lessor or seller (under no compulsion to lease or sell) of the
property or services in question, disregarding the renewal option set forth
in the Charter Party and shall be determined on the basis that (unless
determined pursuant to Article 22 of the Charter Party) the Vessel has been
maintained in accordance with the requirements of the Charter Party (but
otherwise on an "as-is" basis).
"Final Delivery Date" shall mean the date set forth on Schedule 1 to
--------------------
the Bareboat Charter Party as the Final Delivery Date.
"Final Determination" shall mean (i) a decision, judgment, decree or
-------------------
other order by any court of competent jurisdiction that resolves the
matter, which decision, judgment, decree or other order has become final
(i.e., the earliest of when all allowable appeals have been exhausted by
-----
either party to the action or the time for filing such appeal has expired
or the Tax Indemnitee has notified the Charterer in writing that it does
not intend to make such an appeal, (ii) a closing agreement entered into
under Section 7121 of the Code (or any successor
9
<PAGE>
provision) or any other settlement agreement entered into in connection
with the administrative or judicial proceedings, in any case with the
Charterer's consent, (iii) the expiration of the time for instituting an
initial suit with respect to a claimed deficiency or for instituting a
claim for refund, or, if a refund claim was filed, the expiration of the
time for instituting suit with respect thereto or (iv) the point in time
when the Tax Indemnitee is no longer required to contest the imposition of
such Tax pursuant to Section 13.2(e) of the Participation Agreement.
"GAAP" shall mean generally accepted accounting principles in the
----
United States of America.
"Governmental Actions" shall mean all actions, authorizations,
--------------------
consents, approvals, waivers, exceptions, variances, franchises, filings,
orders, permits, licenses, exemptions, publications, notices to and
declarations of or with any Governmental Authority, including, without
limitation, those pertaining to Environmental Laws and Environmental
Permits.
"Governmental Authority" shall mean any nation or government, any
----------------------
state, county, municipality or other political subdivision thereof or any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Governmental Rules" shall mean applicable statutes, laws, rules,
------------------
codes, ordinances, decisions, regulations, permits, certificates and orders
of any Governmental Authority now or hereafter in effect and any
interpretation thereof by competent Governmental Authority, including any
judicial or administrative order, consent decree, settlement agreement or
judgment, including, without limitation, Environmental Laws.
"Guarantee" or "Guaranty" shall mean the Mobil Guarantee dated as of
--------- --------
the Closing Date by Guarantor in favor of the Managing Trustee, the
Delaware Trustee, the Owner Trust, the Owner Participant, the Indenture
Trustee and the Pass Through Trustee.
"Guarantor" shall mean Mobil Corporation, a Delaware corporation.
---------
"Hazardous Materials" shall mean all substances defined as such in the
-------------------
National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R.
(S) 300.5, or defined as such by, or regulated as such under, any law
relating to pollution or protection of the environment.
10
<PAGE>
"Head Lease" shall mean the Lease Agreement dated December 10, 1996
----------
between U.K. Lessor and the Owner Trust.
"Head Lessor" shall mean the U.K. Lessor.
-----------
"Hire" shall mean, collectively, Bareboat Hire and Supplemental Hire.
----
"Holder" shall mean a registered holder of a Secured Note and shall
------
include, so long as the Pass Through Trustee is a registered holder of a
Secured Note, the Pass Through Trustee.
"Indemnitee" shall mean each Owner Trust, the Resident Trustee, the
-----------
Trust Company, the Delaware Trustee, the Managing Trustee, the Owner
Participant, the Indenture Trustee (both in its individual and its trust
capacity), the Pass Through Trustee (both in its individual and trust
capacities), each Loan Participant, and their respective Affiliates,
shareholders, officers, directors, agents, employees and servants.
"Indenture" shall mean the Trust Indenture, Assignment of Charter and
---------
Head Lease and Security Agreement dated as of the Closing Date between the
Owner Trust and the Indenture Trustee.
"Indenture Default" shall mean an event which, after giving of notice
-----------------
or lapse of time, or both, would become an Indenture Event of Default.
"Indenture Estate" shall have the meaning specified in the Granting
----------------
Clause of the Indenture.
"Indenture Event of Default" shall have the meaning specified in
--------------------------
Section 5.02 of the Indenture.
"Indenture Indebtedness" shall have the meaning specified in the
----------------------
Recitals to the Indenture.
"Indenture Supplement" shall mean any indenture supplement that may be
--------------------
executed and delivered by the Owner Trust and the Indenture Trustee from
time to time.
"Indenture Trustee" shall have the meaning specified in the preamble
-----------------
to the Indenture.
"Indenture Trustee Office" shall mean the office of the Indenture
------------------------
Trustee initially located at Two International Place, Boston, MA 02110 or
such other office as may be designated by the Indenture Trustee to the
Owner Trust and the Charterer.
11
<PAGE>
"Indenture Trustee's Liens" shall mean Liens on or against all or any
-------------------------
part of the Vessel, the Vessel Interest, the Charter Party, the Trust
Estate, the Indenture Estate or any payment of Hire, Excess Hire or
Additional Excess Hire (a) which result from any act of, or failure to act
by, or any Claim against, the Indenture Trustee (in its individual capacity
or as trustee) unrelated to the transactions contemplated by the
Participation Agreement or any other Operative Document, or which result
from any violation by the Indenture Trustee (in its individual capacity or
as trustee) of any of the terms of the Operative Documents, or (b) which
result from Liens in favor of any taxing authority by reason of any Tax
owed by the Indenture Trustee (in its individual capacity or as trustee),
except that Indenture Trustee's Liens shall not include any Lien directly
resulting from any Tax for which the Charterer is obligated to indemnify
the Indenture Trustee (in its individual capacity or as trustee) until such
time as the Charterer shall have already paid to, or on behalf of, the
Indenture Trustee, the Tax or an indemnity with respect to the same.
"Independent" shall mean, when used with respect to any specified
-----------
Person, a Person who (1) is in fact independent, (2) does not have any
direct financial interest in the Trust Company, the Owner Trust, the Owner
Participant or the Charterer or any Affiliate of any of them and (3) is not
connected with the Trust Company, the Owner Participant or the Charterer or
any such Affiliate as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions. Whenever it is
provided that any Independent Person's opinion or certificate shall be
furnished to the Indenture Trustee, such Person shall be appointed by the
Charterer and approved by the Indenture Trustee in the exercise of
reasonable care and such opinion or certificate shall state that the signer
has read this definition and that the signer is Independent within the
meaning hereof.
"Independent Investment Banker" shall mean an independent investment
-----------------------------
banking institution of national standing appointed by the Charterer on
behalf of the Owner Trust; provided that if the Indenture Trustee shall not
--------
have received written notice of such an appointment at least 10 days prior
to the relevant Redemption Date or Charter Termination Date or if a Charter
Event of Default shall have occurred and be continuing, "Independent
-----------
Investment Banker" shall mean such an institution appointed by the
-----------------
Indenture Trustee.
"Initial Secured Note(s)" shall mean the Secured Note(s) issued under
-----------------------
the Indenture on the Closing date or
12
<PAGE>
any Secured Notes issued in exchange therefor pursuant to Sections 2.06 and
2.07 of the Indenture.
"Inflation Factor" shall mean the Producer Price Index as published by
----------------
the U.S. Department of Labor.
"Initial Subcharter" shall mean the Vessel Subcharter Agreement dated
------------------
as of the Closing Date between the Charterer and MSCL.
"Interest Payment Date" shall mean each January 2 and July 2.
---------------------
"Investment" shall have the meaning specified in Section 2.1 of the
----------
Participation Agreement.
"Joint Venture Agreement" shall mean the Joint Venture Agreement dated
-----------------------
June 27, 1996 among MOSAT, SAMCO and Samco (Cayman) Ltd., a Cayman Islands
company.
"Lessee Support Agreement" shall mean the agreement dated
-------------------------
December 10, 1996 among the Charterer, the U.K. Lessor and the Owner Trust
with respect to certain obligations of the Owner Trust under the Head
Lease.
"Lessor's Mortgage" shall mean the U.K. Lessor's Mortgage.
-----------------
"Lessor's Security Assignment" shall mean that certain Lessor's
----------------------------
Security Assignment dated December 19, 1996 among the Indenture Trustee,
the Owner Participant, the Owner Trust and the U.K. Lessor.
"Lien" shall mean any mortgage, pledge, security interest,
----
encumbrance, lien, right of others or charge of any kind, including,
without limitation, any Environmental Liens, any right of first refusal,
any title defect, conditional sale or other title retention agreement or
any lease in the nature thereof or any libel or complaint in admiralty or
the filing of, or agreement to give, any financing statement under the
Uniform Commercial Code of any jurisdiction.
"Loan Participant" shall mean and include each Holder (including, so
----------------
long as it holds a Secured Note, the Pass Through Trustee).
"Losses" shall have the meaning set forth in Section 13.3 of the
------
Participation Agreement.
"Majority in Interest of Holders of Notes" shall mean, as of any date
----------------------------------------
of determination, Holders holding in aggregate more than 50% of the total
principal amount of the Secured Notes Outstanding.
13
<PAGE>
"Make-Whole Amount" shall mean: with respect to any Series 1996 A Secured
-----------------
Note to be redeemed, or purchased on any Redemption Date, the amount which
the Independent Investment Banker determines as of the fourth Business Day
prior to such Redemption Date to equal the excess, if any, of (x) the sum
of the present values of all the remaining scheduled payments of principal
and interest from the Redemption Date to maturity of such Secured Note,
discounted semi-annually on each Interest Payment Date at a rate equal to
the Treasury Rate plus .10%, based on a 360-day year of twelve 30-day
months, over (y) the aggregate unpaid principal amount of such Secured Note
plus accrued but unpaid interest on such Secured Note (but not any accrued
interest in default) to such Redemption Date.
"Managing Trustee" shall mean the Trust Company not in its individual
----------------
capacity but solely as Managing Trustee under the Trust Agreement.
"Maturity Date" shall mean, with respect to any Secured Note, the date
-------------
specified as the "Maturity Date" for such Secured Note on Exhibit B to the
Indenture.
"MMFC I" shall mean Mobil Marine Finance Company I Inc., a Delaware
------
corporation.
"MMFC II" shall mean Mobil Marine Finance Company II Inc., a Delaware
-------
corporation.
"Modifications" shall mean alterations, modifications, additions and
-------------
improvements of or to the Vessel.
"Moody's" shall mean Moody's Investor Service, Inc.
-------
"MOSAT" shall mean Mobil Shipping and Transportation Company, a
-----
Liberian corporation.
"MSCL" shall mean Mobil Shipping Company Limited, a corporation formed
----
under the laws of England and Wales.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
-------------------
Section 4001(a)(3) of ERISA which is maintained for employees of the
Charterer or any of its ERISA Affiliates.
"Nonseverable Modification" shall mean any Modification to the Vessel
-------------------------
which is not a Severable Modification.
"Note Register" shall have the meaning specified in Section 2.04 of
-------------
the Indenture.
14
<PAGE>
"Officer's Certificate" and "Officers' Certificate" of any Person
--------------------- ---------------------
shall mean a certificate signed on behalf of such Person by the Chairman,
the President, any Vice President, any Assistant Vice President, Financial
Services Officer, the Controller, Assistant Treasurer or the Treasurer of
such Person or any other individual duly authorized and acting in such
capacity or, in the case of the Owner Trust or the Indenture Trustee, a
Responsible Officer of the Owner Trust or Indenture Trustee.
"Operative Documents" shall mean the Assignment of Construction
-------------------
Contract, Bill of Sale, the Guarantee, the Indenture, each Indenture
Supplement, the Charter Party, the Participation Agreement, the Secured
Notes, the Ship Mortgage and the Trust Agreement.
"Other Charter" or "Other Charter Party" shall mean any of the
------------- -------------------
Bareboat Charter Parties dated as of the Closing Date between either (i)
the Other Owner and the Charterer or (ii) the Other Owner and the Other
Charterer, as charterer, providing for the bareboat charter of one of the
Other Vessels.
"Other Charterer" shall mean MMFC II.
---------------
"Other Owner" shall mean any owner (or owners) from time to time of an
-----------
Other Vessel Interest.
"Other Vessel" shall mean any of the vessels identified as "Other
------------
Vessels" in Schedule 1 to the Charter Party.
"Other Vessel Interest" shall mean the rights of the Other Owner in a
---------------------
related Other Vessel, including its rights under the U.K. Documents.
"Outstanding" shall mean, when used with respect to the Secured
------------
Notes as of any date of determination, all Secured Notes theretofore
authenticated and delivered under the Indenture, except:
(i) Secured Notes theretofore cancelled by the Indenture
Trustee or delivered to the Indenture Trustee for cancellation;
(ii) Secured Notes or portions thereof for whose payment or
redemption money in the necessary amount has been theretofore
deposited with the Indenture Trustee, provided that such Secured Notes
--------
are to be redeemed and notice of such redemption has been duly given
and not revoked or otherwise withdrawn pursuant to the Indenture; and
15
<PAGE>
(iii) Secured Notes paid or in exchange for which or in lieu of
which other Secured Notes have been authenticated and delivered
pursuant to the Indenture;
provided, however, that in determining whether the Holders of the requisite
-------- -------
principal amount of Secured Notes Outstanding have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Secured Notes owned by the Owner Trust, the Charterer, the Owner
Participant, or any Affiliate of the Charterer, the Owner Trust or the
Owner Participant, shall be disregarded and deemed not to be Outstanding,
unless such Person owns 100% of the Secured Notes owned by all Persons,
except that, in determining whether the Indenture Trustee shall be
protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Secured Notes which the
Indenture Trustee knows to be so owned shall be so disregarded. Secured
Notes so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Indenture
Trustee the pledgee's right so to act with respect to such Secured Notes
and that the pledgee is not the Owner Trust, the Charterer, the Owner
Participant or any Affiliate of the Owner Trust, the Charterer or the Owner
Participant.
"Overdue Rate" shall mean a rate per annum equal to (i) with respect
------------
to amounts owing to any Loan Participant constituting payments or
prepayments of any Secured Note, the rate of interest on such Secured Note,
and (ii) with respect to amounts owing to the Owner Participant or the
Charterer, the rate of interest publicly announced from time to time by
Citibank, N.A. in New York City as its "prime" or "base" rate plus 1%
(computed on the basis of a 360-day year of twelve 30-day months).
"Owner" shall mean the Owner Trust.
-----
"Owner's Cost" shall mean the amount set forth as "Owner's Cost" in
------------
Schedule 1 to the Charter Party.
"Owner's Liens" shall mean Liens on or against all or any part of the
-------------
Vessel, the Vessel Interest, the Charter Party, the Trust Estate, the
Indenture Estate or any payment of Hire, Excess Hire or Additional Excess
Hire (a) which result from any act of, or any failure to act by, or any
Claim against, the Trust Company, the Resident Trustee or the Owner Trust
unrelated to its interest in the Vessel Interest, the administration of the
Trust Estate or the transactions contemplated by the Participation
Agreement or any other Operative Document, or which result from any
violation by the Trust Company,
16
<PAGE>
the Resident Trustee or the Owner Trust of any of the terms of the
Operative Documents, or (b) which result from Liens in favor of any taxing
authority by reason of any Tax owed by the Trust Company, the Resident
Trustee or the Owner Trust, except that Owner's Liens shall not include any
Lien resulting from any Tax for which the Charterer is obligated to
indemnify the Trust Company, the Resident Trustee or the Owner Trust until
such time as the Charterer shall have already paid to, or on behalf of, the
Trust Company, the Resident Trustee or the Owner Trust, as the case may be,
the Tax or an indemnity with respect to the same.
"Owner Participant" shall mean the party identified as such in
-----------------
Schedule 1 to the Participation Agreement and each Person to whom a
transfer is effected in accordance with Section 15 of the Participation
Agreement.
"Owner Participant's Liens" shall mean any Lien on or against the
-------------------------
Vessel, the Vessel Interest, the Charter Party, the Trust Estate or the
Indenture Estate or any payment of Hire, Excess Hire or Additional Excess
Hire (a) which results from any act of, or any failure to act by, or any
Claim against, the Owner Participant unrelated to the transactions
contemplated by the Operative Documents, or which result from any violation
by the Owner Participant of any of the terms of the Operative Documents, or
(b) which result from any Lien in favor of any taxing authority by reason
of any Tax owed by the Owner Participant, except that Owner Participant's
Liens shall not include any Lien resulting from any Tax for which the
Charterer is obligated to indemnify the Owner Participant (or any member of
its consolidated group) until such time as the Charterer shall have already
paid to, or on behalf of, the Owner Participant (or such member of its
consolidated group), the Tax or an indemnity with respect to the same.
"Owner Trust" shall have the meaning specified in the preamble to the
-----------
Trust Agreement.
"Owner Trust Documents" shall have the meaning specified in Section
---------------------
2.1 of the Trust Agreement.
"Owner Trust U.K. Documents" shall have the meaning specified in
--------------------------
Section 2.2 of the Trust Agreement.
"Owner Trustee" shall have the meaning specified in the preamble to
-------------
the Trust Agreement.
"Parent Guarantee" or "Parent Guaranty" shall mean the Guarantee.
---------------- ---------------
"Parent Guarantor" shall mean the Guarantor.
----------------
17
<PAGE>
"Participant" shall mean the Loan Participant or the Owner Participant and
-----------
"Participants" shall mean all of them.
------------
"Participation Agreement" shall mean the Participation Agreement dated
-----------------------
as of the Closing Date among the Charterer, the Owner Participant, the Pass
Through Trustee, the Indenture Trustee, the Owner Trust and the Managing
Trustee.
"Pass Through Certificates" shall mean any Certificates from time to
-------------------------
time issued and outstanding under and pursuant to the Pass Through Trust
Agreement.
"Pass Through Trust" shall mean the trust created by the Pass Through
------------------
Trust Agreement.
"Pass Through Trust Agreement" shall mean the Pass Through Trust
----------------------------
Agreement dated as of October 4, 1996 among the Guarantor, the Charterer,
the Other Charterer, six other subsidiaries of the Guarantor and the Pass
Through Trustee, as amended by the Pass Through Trust Supplement.
"Pass Through Trust Property" shall have the meaning specified in the
---------------------------
Pass Through Trust Agreement.
"Pass Through Trust Supplement" shall mean the supplement to the Pass
-----------------------------
Through Trust Agreement dated as of the Closing Date among the Guarantor,
the Charterer, the Other Charterer and the Pass Through Trustee.
"Pass Through Trustee" shall mean State Street Bank and Trust Company,
--------------------
not in its individual capacity except as expressly provided in the Pass
Through Trust Agreement and the Operative Documents, but solely as Pass
Through Trustee under the Pass Through Trust Agreement.
"Payment Guarantee Letter" shall mean the guarantee given by the
------------------------
Sumitomo Marine & Fire Insurance Co., Ltd. pursuant to Article 10 of the
Construction Contract.
"Permitted Investments" shall mean (i) obligations of the United
---------------------
States of America, or obligations fully guaranteed as to interest and
principal by the United States of America; (ii) certificates of deposit
issued by an Eligible Bank or interest-bearing insured accounts in an
Eligible Bank; (iii) commercial paper, rated at least P-1 (or comparable
rating) by Moody's Investors Service, Inc. (or any successor thereto) or at
least A-1 (or comparable rating) by Standard and Poor's Corporation (or any
successor thereto); or (iv) a money market fund registered under the
Investment Company Act of 1940, the portfolio of which is limited to U.S.
government obligations and U.S. agency obligations.
18
<PAGE>
"Permitted Liens" shall mean (a) the respective rights and interests of (x)
---------------
the Charterer, the Owner Participant, the Owner, the Indenture Trustee, and
the Holders, as provided in the Operative Documents and (y) prior to the
Delivery Date, the Builder under the Construction Contract, (b) Owner's
Liens, Owner Participant's Liens and Indenture Trustee's Liens, (c) Liens
for Taxes either not delinquent or being contested in good faith and by
appropriate proceedings, so long as such proceedings do not involve any
material danger of the sale, forfeiture or loss of any part of, the Vessel,
the Trust Estate or the Indenture Estate, or title thereto or any interest
therein or any material danger of the interference with the payment of
Hire, (d) materialmen's, mechanics', workers', repairmen's, employees' or
other like Liens, arising in the ordinary course of business, or arising in
the course of constructing, repairing, equipping or installing, modifying
or expanding the Vessel or any part thereof, for amounts either not more
than 60 days past due or being contested in good faith and by appropriate
proceedings so long as such proceedings do not involve any material danger
of the sale, forfeiture or loss of any part of the Vessel, the Trust Estate
or the Indenture Estate, or title thereto or any interest therein or any
material danger of the interference with the payment of Hire, (e) Liens
arising out of judgments or awards against the Charterer or any Permitted
Subcharterer with respect to which at the time an appeal or proceeding for
review is being prosecuted in good faith so long as such judgment, award or
appeal does not involve any material danger of the sale, forfeiture or loss
of any part of the Vessel, the Trust Estate or the Indenture Estate, or
title thereto or any interest therein or any material danger of the
interference with the payment of Hire, (f) the rights and interests of the
U.K. Lessor provided in the U.K. Documents (g) liens for current crew's
wages, for general average or salvage (including contract salvage) or for
wages of stevedores employed directly by the Charterer, MSCL, or the
operator, agent or master of the Vessel which in each case (A) are
unclaimed or covered by insurance or (B) for amounts either not more than
60 days past due or being contested in good faith and by appropriate
proceedings so long as such proceedings do not involve any material danger
of the sale, forfeiture or loss of any part of the Vessel, the Trust Estate
or the Indenture Estate, or title thereto or any interest therein or any
material danger of the interference with the payment of Hire, and Liens
which, under the laws of the Marshall Islands, take priority over the Ship
Mortgage and which are for amounts either not more than 60 days past due or
being contested in good faith and by appropriate proceedings so long as
such proceedings do not involve any material danger of the sale, forfeiture
19
<PAGE>
or loss of any part of the Vessel, the Vessel Interest, the Trust Estate or
the Indenture Estate, or title thereto or any interest therein and any
material danger of the interference with the payment of Hire, (h) Liens,
assignments and subleases permitted by Article 20(b) of the Charter Party
and the rights of MSCL under the Initial Subcharter and the rights of any
other subcharterer or any sub-subcharterer under any other subcharter (or
sub-subcharter) permitted by Article 20 of the Charter Party.
"Permitted Subcharterer" shall mean any subcharterer of the Vessel
----------------------
Interest under a subcharter in compliance with Article 20 of the Charter.
"Person" shall mean any individual, partnership, corporation, trust,
------
business trust, unincorporated association, joint venture, government or
any department or agency thereof, or any other entity.
"Preferred Stock" shall mean, with respect to any Person, any and all
---------------
shares, interests, participations or other equivalents (however designated)
of such Person's preferred or preference stock, whether now outstanding or
issued after the date of the Participation Agreement, and includes, without
limitation, all classes and series of preferred or preference stock.
"Premium" shall mean the Make-Whole Amount, if any, payable pursuant
-------
to Article III of the Indenture.
"Protocol of Delivery and Acceptance" shall mean a protocol of
-----------------------------------
delivery and acceptance to be executed by Charterer on the Delivery Date.
"PTE 90-24 " shall mean an Affiliate as defined in Prohibited
----------
Transaction Exemption 90-24 et al., Exemption Application No. D-8019 et
al., 55 Fed. Reg. 20,548 1990.
"Rate Excess" shall have the meaning specified in Schedule 2A to the
-----------
Charter Party.
"Rate Period" shall mean each six-month period during the term of the
-----------
Bareboat Charter Party ending on a Base Hire Payment Date, the first such
period commencing and ending on the dates specified in Schedule 1 of the
Charter Party.
"Rating Agency" shall mean each of Moody's and Standard & Poor's, or
-------------
if Moody's or Standard & Poor's shall no longer perform the function of a
securities rating agency, "Rating Agency" shall be deemed to refer to any
other nationally recognized rating agency designated by the Parent
Guarantor.
20
<PAGE>
"Rating Agency Confirmation" shall mean a prior written confirmation from
--------------------------
each Rating Agency that a specified action or event shall not result in the
downgrade or withdrawal of such Rating Agency's then current credit rating
of the Pass Through Certificates.
"Redelivery Date" shall have the meaning specified in Article 12(a) of
---------------
the Charter Party.
"Redemption Date" shall mean the date on which the Secured Notes are
---------------
to be redeemed or purchased pursuant to Section 3.02, 3.03 or 3.06 of the
Indenture.
"Redemption Price" shall have the meaning specified in Section 3.10 of
----------------
the Indenture.
"Release" shall mean the release, spill, emission, leaking, pumping,
-------
injection, deposit, disposal, discharge, dispersal, leaching or migrating
into the environment of any Hazardous Material through or in the air, soil,
surface water or groundwater, provided that the presence of Hydrocarbons
within any portion of the Vessel designed to produce, pump, process, store,
treat, refine or transport Hydrocarbons shall not be considered a Release.
"Remedial Action" shall mean actions required to (i) clean up, remove,
---------------
treat or in any other way address Hazardous Materials in the environment,
(ii) prevent the Release or further Release or minimize the further Release
of Hazardous Materials, or (iii) investigate and determine if a remedial
response is needed, to design such a response and post-remedial
investigation, monitoring, operation, maintenance and care.
"Request" shall have the meaning specified in Section 2.08(b) of the
-------
Indenture.
"Resident Trustee" means Wilmington Trust Company, a Delaware banking
----------------
corporation, acting in its individual capacity, and its successors and
assigns as Delaware Trustee under the Trust Agreement, acting in such
successors' and assigns' respective individual capacities.
"Responsible Officer", when used with respect to either Owner Trustee,
-------------------
the Indenture Trustee or the Pass Through Trustee, shall mean an officer in
its corporate trust administration department (or any successor group of
either Owner Trustee, the Indenture Trustee or the Pass Through Trustee, as
the case may be) or any other officer customarily performing functions
similar to those performed by any of the above designated officers and also
shall mean, with respect to a particular corporate
21
<PAGE>
trust matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"SEC" shall mean the Securities and Exchange Commission.
---
"Secured Notes" shall mean all notes from time to time issued and
-------------
outstanding under and pursuant to the Indenture.
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"Seller" shall meaning the entity identified as such on Schedule 1 to
------
the Charter Party.
Series 1996 A Secured Notes" shall mean the Secured Note issued under
---------------------------
Section 2.01(b) of the Indenture and any Series 1996 A Secured Note issued
in exchange therefor pursuant to Section 2.06 of the Indenture.
"Severable Modification" shall mean any Modification to the Vessel
--------- ------------
permitted under the Charter Party which can be readily removed from the
Vessel without causing material damage to the Vessel.
"Ship Mortgage" shall mean the First Ship Mortgage dated December 19,
-------------
1996 covering the Vessel from the Owner Trust to the Indenture Trustee.
"Special Indemnitee" shall have the meaning specified in Section 13.3
------------------
of the Participation Agreement.
"Special Termination Election" shall mean an election to terminate the
----------------------------
Charter pursuant to Article 18 thereof.
"Special Termination Events" shall mean the events specified as
--------------------------
Special Termination Events in Article 23(a) of the Charter.
"Special Termination Redemption Date" shall have the meaning set forth
-----------------------------------
in Section 3.03(a) of the Indenture.
"Specified Charter Event of Default" shall mean a Charter Party Event
----------------------------------
of Default described in paragraph (1), (7) or (8) of Article 21 of the
Charter Party or a Charter Party Default described in paragraph (1) or (7)
of Article 21 of the Charter Party.
"Standard & Poor's" shall mean Standard & Poor's Rating Group, a
-----------------
division of Dunn & Bradstreet, Inc.
22
<PAGE>
"Subsidiary" of any Person shall mean any corporation, association or
----------
other business entity of which more than fifty percent (50%) of the total
voting power of shares of Capital Stock entitled to vote in the election of
directors, managers or trustees thereof (without regard to the occurrence
of any contingency) is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries (within
the meaning of this definition) of that Person, or a combination thereof.
"Substitute Obligor" shall have the meaning set forth in Section 3.04
------------------
of the Indenture.
"Substitution Date" shall have the meaning set forth in Section 3.04
-----------------
of the Indenture.
"Substitution Date Agreement" shall have the meaning set forth in
---------------------------
Section 3.04 of the Indenture.
"Supplemental Hire" shall mean (i) any and all amounts, liabilities
-----------------
and obligations (other than Bareboat Hire) which the Charterer assumes or
agrees to pay to or on behalf of the Owner Trust, the Owner Participant,
the Trust Company, the Resident Trustee, the Pass Through Trustee, the Loan
Participant or the Indenture Trustee under any Operative Document,
including, without limitation, any payments of indemnification or
Termination Value or Premium and (ii) any amounts which are expressed in
the Indenture to be payable at the Charterer's expense.
"Tax" and "Taxes" shall have the respective meanings specified in
--- -----
Section 14.2 of the Participation Agreement.
"Tax Affiliate" shall mean an Affiliate of any corporation related to
-------------
the Charterer (within the meaning of Section 318 of the Code), or any
shareholder of the Charterer.
"Tax Claim" shall have the meaning specified in Section 13.2(e) of the
---------
Participation Agreement.
"Tax Indemnitee" shall mean each Owner Trustee (both in its individual
--------------
capacity and in its trust capacity), the Owner Participant, the Indenture
Trustee (both in its individual capacity and in its trust capacity), and
the Loan Participant, and their respective Affiliates, officers, directors,
agents, employees and servants but shall not include (i) the Pass Through
Trustee, (ii) any other Holder and (iii) any Certificateholder.
"Termination Date" shall have the meaning specified in Article 18(b)
----------------
of the Charter Party.
23
<PAGE>
"Termination Election" shall mean an election by the Charterer to terminate
--------------------
the Charter pursuant to Article 18(a) thereof.
"Termination Redemption Date" shall have the meaning specified in
---------------------------
Section 3.03(b) of the Indenture.
"Termination Value" shall mean as of any Termination Value
-----------------
Determination Date during the Charter Period, the amount set forth opposite
such date in Schedule 4 to the Charter Party.
"Termination Value Determination Date" shall mean any Business Day.
------------------------------------
"Transaction Expenses" shall mean the following fees, expenses,
--------------------
disbursements and costs incurred in connection with the preparation,
execution and delivery of the Operative Documents and the Pass Through
Trust Agreement and the consummation of the transactions contemplated
thereby on the Closing Date, as applicable, provided that invoices for all
--------
such fees, expenses, disbursements and costs shall have been presented for
payment on or prior to the ninetieth day following the Closing Date: (i)
the reasonable attorneys' fees and expenses of counsel to the Owner
Participant, each Owner Trustee, the Indenture Trustee, the Pass Through
Trustee and special admiralty counsel, (ii) the initial (but not ongoing)
fees and expenses of each Owner Trustee, the Pass Through Trustee and the
Indenture Trustee, (iii) printing, word processing and reproduction costs,
(iv) the fees and commissions of Morgan Stanley & Co. Incorporated as
underwriter in connection with the offering and sale of the Pass Through
Certificates, (v) other costs associated with the issuance of the Secured
Note and the Pass Through Certificates, independent rating agencies and
printer charges, and (vi) to the extent agreed with the Underwriter, the
reasonable fees, expenses and disbursements of special counsel for the
Underwriter in connection with the Operative Documents; provided that,
--------
other than as set forth in clause (iv) of this sentence, "Transaction
-----------
Expenses" shall not include the fees, expenses or disbursements of any law
--------
firm not specifically named in Section 4.6 of the Participation Agreement.
"Transferee" shall have the meaning specified in Section 14.2 of the
----------
Participation Agreement.
"Treasury Rate" shall mean, with respect to each Secured Note to be
-------------
redeemed or purchased, a per annum rate (expressed as a semiannual
equivalent and as a decimal and, in the case of United States Treasury
bills, converted to a bond equivalent yield), determined to be
24
<PAGE>
the per annum rate equal to the semiannual yield to maturity of United
States Treasury securities maturing on the Average Life Date of such
Secured Note, as determined by interpolation between the most recent weekly
average yields to maturity for two series of United States Treasury
securities, (A) one maturing as close as possible to, but earlier than, the
Average Life Date of such Secured Note and (B) the other maturing as close
as possible to, but later than, the Average Life Date of such Secured Note,
in each case as published in the most recent H.15(519) (or, if a weekly
average yield to maturity of United States Treasury securities maturing on
the Average Life Date of such Secured Note is reported in the most recent
H.15(519), as published in H.15(519)). H.15(519) shall mean "Statistical
Release H.15(519), Selected Interest Rates" or any successor publication,
published by the Board of Governors of the Federal Reserve System. The
most recent H.15(519) shall mean the latest H.15(519) which is published
prior to the close of business on the fourth Business Day preceding the
Redemption Date. For purposes hereof, "Average Life Date" shall mean, with
-----------------
respect to each Secured Note to be redeemed, the date which follows the
Redemption Date by a period equal to the Remaining Weighted Average Life of
such Secured Note. For purposes hereof, "Remaining Weighted Average Life"
-------------------------------
shall mean, for any Secured Note, as of any date of determination, the
number of days equal to the quotient obtained by dividing (a) the sum of
the products obtained by multiplying (i) the amount of each then remaining
installment of principal, including the payment due on the maturity of such
Secured Note by (ii) the number of days from and including the Redemption
Date to but excluding the scheduled payment date of such principal payment;
by (b) the then unpaid principal amount of such Secured Note.
"Treasury Regulations" shall mean the income tax regulations issued,
--------------------
published or promulgated under the Code by the United States Department of
the Treasury.
"Trust Agreement" shall mean the Amended and Restated Declaration and
---------------
Agreement of Trust dated as of December 19, 1996 among the Owner
Participant, the Resident Trustee and the Trust Company.
"Trust Company" shall mean Deutsche Morgan Grenfell (Cayman) Limited,
-------------
a Cayman Islands company in its individual capacity.
"Trust Certificate" shall mean an Officer's Certificate of the Owner
-----------------
Trust with regard to those matters set forth in Section 3.04(i) of the
Indenture.
25
<PAGE>
"Trust Estate" shall have the meaning specified in Section 3.2 of the
------------
Trust Agreement.
"Trust Expenses" shall have the meaning specified in Section 8.1 of
--------------
the Trust Agreement.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
-------------------
amended.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
---
of New York or in any other applicable jurisdiction.
"U.K. Documents" shall mean the Conditional Sale Agreement, the Head
--------------
Lease, the U.K. Lessor's Mortgage, the Lessor's Security Assignment and
each other instrument defined as an "Operative Document" in the Head Lease.
"U.K. Financing" shall mean the transactions contemplated by the U.K.
--------------
Documents.
"U.K. Lease Term" shall mean the term of the U.K. Lease set forth in
---------------
Schedule 1 of the Charter Party.
"U.K. Lessor" shall mean the entity identified as such in Schedule 1
------------
of the Charter Party.
"U.K. Lessor's Mortgage" shall mean the Mortgage dated December 10,
----------------------
1996 between U.K. Lessor and Owner Trust.
"U.K. Lessor's Security Assignment" shall mean the Lessor's Security
---------------------------------
Assignment.
"U.K. Obligations" shall have the meaning set forth in Section 13.3 of
----------------
the Participation Agreement.
"Underwriter" shall mean Morgan Stanley & Co. Incorporated, a Delaware
-----------
corporation.
"Underwriting Agreement" shall mean the Underwriting Agreement among
----------------------
the Guarantor, the Charterers and the Underwriter relating to the purchase
and sale of the Pass Through Certificates.
"Vessel" shall mean the very large crude carrier identified in
------
Schedule 1 to the Charter Party under the heading "Vessel", and all other
property installed or located therein and all assets from time to time
included or incorporated therein in which title thereto shall vest in the
Owner pursuant to the Charter Party.
26
<PAGE>
"Vessel Interest" shall mean the Owner's rights in the Vessel,
---------------
including its rights under the U.K. Documents.
27
<PAGE>
EXHIBIT 99.14
APPENDIX A
EAGLE
DEFINITIONS
-----------
The following terms shall have the following meanings for all purposes of
the Operative Documents referred to below, unless otherwise defined in an
Operative Document or the context thereof shall otherwise require and such
meanings are equally applicable both to the singular and plural forms of the
terms defined. Any term defined below by reference to any agreement or
instrument shall have such meaning whether or not such agreement or instrument
is in effect. The terms "hereof", "herein", "hereunder" and comparable terms
------ ------ ---------
refer to the entire agreement with respect to which such terms are used and not
to any particular Section, subsection, paragraph or other subdivision thereof.
Unless the context otherwise requires, references to (i) agreements shall
include sections, schedules, exhibits and appendices thereto and shall be deemed
to mean and include such agreements (and sections, schedules, exhibits and
appendices) as the same may be amended, supplemented and otherwise modified from
time to time, (ii) parties to agreements or government agencies shall be deemed
to include the successors and permitted assigns of such parties and the
successors and assigns of such agencies and (iii) laws or regulations shall be
deemed to mean such laws or regulations as the same may be amended from time to
time and any superseding laws or regulations covering the same subject matter.
Unless otherwise specified herein or in any Operative Document, all
accounting terms used in any Operative Document shall be interpreted, all
accounting determinations made pursuant to the terms of any Operative Documents
shall be made, and all financial statements delivered pursuant to the terms of
any Operative Document shall be prepared in accordance with GAAP.
"Actual Knowledge" shall mean, (i) as it applies to either Owner
----------------
Trustee (or the Owner Trust), the Indenture Trustee or the Pass Through
Trustee, actual knowledge of, including any information contained in any
written notices received by, an officer in its Corporate Trust
Administration department, (ii) as it applies to the Owner Participant,
actual knowledge of, including any information contained in any written
notices received by, any officer of the Owner Participant or any Affiliate
thereof whose responsibilities include administration of
<PAGE>
the transactions contemplated by the Operative Documents, (iii) as it
applies to the Charterer, actual knowledge of, including any information
contained in any written notices received by, the Chief Executive Officer,
the President or any Vice President or any other officer of the Charterer
whose responsibilities include administration of the transactions
contemplated by the Operative Documents and (iv) as it applies to the
Guarantor actual knowledge of, including any information contained in any
written notices received by, the Chief Executive Officer, the President or
any Vice President or any other executive of the Guarantor whose
responsibilities include administration of the transactions contemplated by
the Operative Documents.
"Additional Excess Hire" shall have the meaning specified in clause b
----------------------
of Schedule 2A of the Charter Party.
"Additional Excess Rate Hire" shall have the meaning specified in
---------------------------
clause b of Schedule 2A to the Charter Party.
"Additional Notes" shall mean non-recourse Secured Notes issued by the
----------------
Owner Trust in accordance with Section 2.08 of the Indenture.
"Affiliate" shall mean, with respect to any Person, any other Person,
---------
directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such Person. For purposes of this
definition, the term "control" (including the correlative meanings of the
-------
terms "controlling", "controlled by" and "under common control with"), as
----------- ------------- -------------------------
used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
"After-Tax Basis", in the context of determining the amount of a
---------------
payment to be made on such basis, shall mean the payment of an amount
which, after reduction by the net increase in foreign, federal, state and
local income tax liability of the recipient of such payment (which net
increase shall be calculated by taking into account any reduction in such
taxes resulting from any tax benefits realized or to be realized by the
recipient as a result of the event giving rise to such payment) shall be
equal to the amount required to be paid. In calculating the amount payable
by reason of this provision, all foreign, federal, state and local income
taxes payable and tax benefits realized or to be realized shall be
determined on the assumptions that (i) the recipient has a sufficient tax
base to be taxable on all income at the
2
<PAGE>
highest marginal tax rates then applicable to corporate taxpayers taxed on
the same basis as the recipient that are then in effect in the applicable
jurisdictions and that all tax benefits are utilized at the highest
marginal rates then applicable to corporate taxpayers taxed on the same
basis as the recipient that are then in effect in the applicable
jurisdictions, (ii) state and local income taxes are payable, and state and
local tax benefits are realized, in the jurisdiction in which the recipient
has its principal place of business, and (iii) tax benefits to be realized
in any taxable year other than the year of payment are determined on a
present value basis using the Debt Rate.
"Alteration" shall have the meaning specified in Section 15(a) of the
----------
Construction Contract.
"Amortization Schedule" shall mean, with respect to any Secured Note,
---------------------
the amortization schedule for such Secured Note set forth in Exhibit B to
the Indenture.
"Appraisal Procedure" shall mean a procedure for determining any
-------------------
amount, value or period. Such procedure shall be commenced by the delivery
of written notification as specified in the Operative Documents by the
Charterer to the Owner Trust or the Owner Participant, as the case may be,
or by the Owner Participant or the Owner Trust, as the case may be, to the
Charterer, that it desires to obtain an appraisal with respect to such
amount, value or period. If required by the terms of the applicable
Operative Documents, such parties shall first attempt to agree on such
matter. If such parties are unable to agree on such matter within the time
period specified in the applicable Operative Document, or if such parties
are not required to attempt to agree, such parties shall thereupon consult
for the purpose of selecting a mutually acceptable Independent appraiser.
If within 10 days from the date the parties are required to so consult,
they are unable to agree upon the appointment of a mutually acceptable
Independent appraiser, then each of such parties shall appoint an
Independent appraiser, and such Independent appraisers shall jointly
determine such matter. If one party does not so appoint an Independent
appraiser, then the Independent appraiser appointed by the other shall
determine such matter as the sole appraiser. If such two Independent
appraisers cannot agree on such matter within 20 days, such matters shall
be determined by such two Independent appraisers and a third Independent
appraiser chosen within 10 days after such 20-day period by such two
Independent appraisers or, if such three Independent appraisers fail to
reach an agreement, the determination of the appraiser that differs most
from the second highest determination shall be excluded (unless such
3
<PAGE>
difference is less than ten percent from either of the other
determinations), the remaining two determinations shall be averaged (or all
three shall be averaged, if the third determination is not discarded due to
the preceding parenthetical) and such average shall constitute the
determination of the appraisers. If such two Independent appraisers fail
to agree upon the appointment of a third Independent appraiser within the
allotted time period, such appointment shall be made by the New York City
office of the American Arbitration Association or any organization
successor thereto, upon the request of any such parties from a panel of
arbitrators having familiarity with assets similar to the Vessel. The
determination of the appraisers so chosen shall be given within 20 days of
the appointment of such third appraiser. Fees and expenses of the
appraisers appointed in connection with an Appraisal Procedure shall be
paid by the Charterer.
"Assigned Hire" shall have the meaning set forth in Section 4.01(a) of
-------------
the Indenture.
"Bareboat Hire" shall mean, for any Rate Period, the sum of the Base
-------------
Hire, the Excess Hire and the Additional Excess Hire for such Rate Period.
"Bareboat Market Rate" shall mean, for any Rate Period, the "Bareboat
--------------------
Market Rate" determined pursuant to Schedule 2B to the Charter Party for
such Rate Period.
"Base Hire" shall have the meaning specified in Schedule 2 to the
---------
Charter Party.
"Base Hire Payment Dates" during the Charter Period shall mean and
-----------------------
include each January 2 and July 2 during the Charter Period, commencing on
July 2, 1997.
"Bill of Sale" shall mean the Assignment and Bill of Sale of Vessel
------------
conveying the Vessel to the Owner Trust and delivered pursuant to Sections
3.1, 4.2 and 5.2 of the Participation Agreement.
"Board of Directors" shall mean, with respect to any Person, either
------------------
the board of directors of such Person or a duly authorized committee of
said board having power to act for such board with respect to the matter in
question.
"Builder" shall mean Sumitomo Heavy Industries, Inc., a Japanese
-------
corporation.
"Business Day" shall mean any day other than a Saturday or Sunday or
------------
any other day on which banks located in London, England, New York, New
York, Fairfax,
4
<PAGE>
Virginia, the city in which the Indenture Trustee Office is located, the
city in which the corporate trust department of the Managing Trustee is
located or, so long as any Pass Through Certificate is Outstanding, the
city in which the corporate trust department of the Pass Through Trustee is
located, are required or authorized to remain closed.
"Business Trust Act" shall mean the Delaware Business Trust Act, 12
------------------
Del. C. c.38, as it may be amended from time to time.
"Capital Stock" shall mean, with respect to any Person, any and all
-------------
shares, interests, participations or other equivalents (however designated)
of such Person's capital stock, whether now outstanding or issued after the
date of the Participation Agreement, including, without limitation, all
Common Stock and Preferred Stock of such Person.
"Casualty Redemption Date" shall have the meaning specified in Section
------------------------
3.02 of the Indenture.
"Certificate" shall mean any one of the pass through certificates
-----------
executed and authenticated by the Pass Through Trustee, substantially in
the form of Exhibit A to the Pass Through Trust Agreement.
"Certificateholder" shall have the meaning specified in the Pass
-----------------
Through Trust Agreement.
"Charter" or "Charter Party" shall mean the VLCC Charter Party dated
------- -------------
as of the Closing Date between the Owner Trust and the Charterer.
"Charter Default" shall mean an event which, after giving of notice or
---------------
lapse of time, or both, would become a Charter Event of Default.
"Charter Event of Default" shall have the meaning specified in Article
------------------------
21 of the Charter Party.
"Charter Party Termination Date" shall mean the last day of the
------------------------------
Charter Period, whether occurring by reason of expiration of the Charter
Period or upon earlier termination of the Charter Party pursuant to the
terms thereof (including, without limitation, termination pursuant to
Article 22 of the Charter Party).
"Charter Period" shall mean the period beginning with the Delivery
--------------
Date and ending on the Charter Expiration Date set forth in Schedule 1 to
the Charter, as the same may be extended in accordance with Article 19(c)
of the Charter Party, or such earlier date on which
5
<PAGE>
the Charter Party is terminated in accordance with the provisions thereof.
"Charterer" shall mean Mobil Marine Finance Company II Inc., a
---------
Delaware corporation.
"Claims" shall mean all liabilities (including, without limitation,
------
negligence, warranty, statutory, product, strict or absolute liability,
liability in tort or otherwise), obligations, responsibilities, losses,
damages, penalties, fines, sanctions, claims, Environmental Claims,
actions, causes of action, suits, investigations, judgments, Liens
(including any Lien in favor of any Governmental Authority for
environmental liabilities and costs or violations of any Environmental
Laws), costs, expenses and disbursements, of any kind or nature, including,
without limitation, reasonable legal fees and expenses and costs of
investigation.
"Classification Society" shall mean the American Bureau of Shipping or
----------------------
any other classification society selected by the Charterer.
"Closing Date" shall mean December 19, 1996.
------------
"Code" shall mean the Internal Revenue Code of 1986.
----
"Common Stock" shall mean, with respect to any Person, any and all
------------
shares, interests, participations and other equivalents (however
designated, whether voting or non-voting) of such Person's common stock,
whether now outstanding or issued after the date of the Participation
Agreement, and includes, without limitation, all series and classes of such
common stock.
"Component" shall mean appliances, parts, instruments, appurtenances,
---------
accessories, equipment and other property of whatever nature originally
included in the Vessel on the Delivery Date.
"Conditional Sale Agreement" shall mean the Conditional Sale Agreement
--------------------------
dated November 25, 1996 between the Owner Trust and the U.K. Lessor.
"Construction Contract" shall mean the Shipbuilding Contract dated
---------------------
28th June between the Builder and MOSAT providing for the construction of
the Vessel and the Payment Guarantee Letter.
"Corporate Trust Office", when used with respect to the Pass Through
----------------------
Trustee, shall mean the office of the Pass Through Trustee in the city at
which at any particular time its corporate trust business shall be
principally administered, and when used with respect to
6
<PAGE>
the Indenture Trustee, shall mean the Indenture Trustee Office.
"Cut-off Date" shall mean January 31, 1997.
------------
"Debt Rate" shall mean the weighted average interest rate borne by the
---------
Secured Notes.
"Delaware Trustee" shall have the meaning specified in the preamble to
----------------
the Trust Agreement.
"Delivery Date" shall mean the date on which the Vessel is delivered
-------------
to the Owner, which is scheduled to occur on the date set forth as the
Scheduled Delivery Date in Schedule 1 of the Charter Party.
"Dollar" and "$" shall mean U.S. dollars.
------ -
"Eligible Bank" shall mean any bank or trust company, including the
-------------
Indenture Trustee and the Pass Through Trustee which shall be a member of
the Federal Reserve System and shall have a combined capital, surplus and
undivided profits of not less than $100,000,000.
"Environmental Claims" shall mean any Claim, action, cause of action,
--------------------
investigation or notice (written or oral) by any Person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, Remedial Action, Releases, governmental
response costs, natural resources damages, property damages, personal
injuries, or penalties) arising out of, based on or resulting from (a) the
presence, release into the environment, of any Hazardous Material at any
location, whether or not owned or operated by the Charterer, the
Subcharteree or MOSAT or (b) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
"Environmental Laws" shall mean all federal, state, foreign and local
------------------
laws and regulations, relating to pollution or protection of the
environment (including, without limitation, ambient air, surface, water,
groundwater, land surface or subsurface strata, wetlands, wildlife, aquatic
species, vegetation and natural resources), including, without limitation,
laws and regulations relating to emissions, discharges, Releases or
threatened Releases of Hazardous Materials or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials. Environmental Laws include,
but are not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"); the Federal
------
7
<PAGE>
Insecticide, Fungicide, and Rodenticide Act ("FIFRA"); the Resource
-----
Conservation Recovery Act ("RCRA"); Oil Pollution Act of 1990 ("OPA"); the
---- ---
Superfund Amendments and Reauthorization Act of 1986 ("SARA"); the Toxic
----
Substances Control Act ("TSCA"); the Hazardous Material Transportation Act;
----
the Clean Air Act; the Federal Water Pollution Control Act; the Safe
Drinking Water Act; and their state and local counterparts or equivalents.
"Environmental Permits" shall mean all permits, consents, licenses,
---------------------
certificates and other approvals or authorizations required under
Environmental Laws.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974.
"ERISA Affiliate" shall mean any entity treated as a single employer
---------------
with any Person pursuant to Section 414(b), (c), (m) or (o) of the Code.
"Event of Loss" shall mean any of the following events occurring on or
-------------
after the Delivery Date: (a) the (i) loss, theft, destruction or
disappearance of, or (ii) occurrence of damage (which, in the Charterer's
reasonable, good faith opinion, renders repair or replacement uneconomic)
to, the Vessel (or substantially the entirety of the Vessel); (b) the
permanent condemnation, confiscation or seizure of, or requisition of title
to, the Vessel by any Governmental Authority; (c) the requisition of use of
the Vessel by any Governmental Authority for a period which shall exceed
the remaining portion of the Charter Period; or (d) the receipt of
insurance proceeds based upon an actual or constructive total loss of the
Vessel.
"Excepted Payments" shall mean and include (i) any indemnity or other
-----------------
similar payment (whether or not Supplemental Hire) payable under any
Operative Document (including, without limitation, any amount payable by
the Guarantor under the Guarantee in respect of indemnity amounts payable
by the Charterer under any Operative Document) directly to any Person
(including, without limitation, the Trust Company, the Resident Trustee,
the Pass Through Trustee, each in its individual capacity) other than the
Indenture Trustee, any Holder, the Owner Trust, the Trust Estate or the
Indenture Estate; (ii) (A) insurance proceeds, if any, payable to the Owner
Trust or the Owner Participant under insurance separately maintained by the
Owner Trust or the Owner Participant as permitted by Section 16(b) of the
Charter Party except to the extent that the payment of any such proceeds
diminishes any recovery available under an insurance policy required to be
maintained under Section 16 of the Charter Party, or (B) proceeds of
personal injury or
8
<PAGE>
property damage liability insurance payable to or for the benefit of the
Trust Company, the Resident Trustee or the Owner Participant under any
Operative Document; (iii) any amount payable for the account of the Owner
Participant pursuant to Section 13.1 or 13.2 of the Participation Agreement
(or any amount payable by the Guarantor under the Guarantee in respect of
amounts payable for the account of the Owner Participant pursuant to
Section 13.1 or 13.2 of the Participation Agreement); and (iv) interest at
the Overdue Rate payable by the Charterer (or the Guarantor) to the Trust
Company, the Resident Trustee or the Owner Participant on any of the
amounts described in clauses (i) through (iii) above; together with the
right to demand, collect, sue for, exercise remedies to enforce, or
otherwise obtain amounts referred to in clauses (i) through (iv) of this
definition.
"Excess Hire" shall have the meaning specified in clause b. of
-----------
Schedule 2A of the Charter Party.
"Excess Hire Rate" shall have the meaning specified in clause b. of
----------------
Schedule 2A to the Charter Party.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
"Fair Market Sales Value" of any property or service as of any date
------------------------
shall mean the cash rent or cash price that would be obtained in an arm's-
length lease or sale, respectively, between an informed and willing lessee
or buyer (under no compulsion to lease or purchase) and an informed and
willing lessor or seller (under no compulsion to lease or sell) of the
property or services in question, disregarding the renewal option set forth
in the Charter Party and shall be determined on the basis that (unless
determined pursuant to Article 22 of the Charter Party) the Vessel has been
maintained in accordance with the requirements of the Charter Party (but
otherwise on an "as-is" basis).
"Final Delivery Date" shall mean the date set forth on Schedule 1 to
--------------------
the Bareboat Charter Party as the Final Delivery Date.
"Final Determination" shall mean (i) a decision, judgment, decree or
-------------------
other order by any court of competent jurisdiction that resolves the
matter, which decision, judgment, decree or other order has become final
(i.e., the earliest of when all allowable appeals have been exhausted by
-----
either party to the action or the time for filing such appeal has expired
or the Tax Indemnitee has notified the Charterer in writing that it does
not intend to make such an appeal, (ii) a closing agreement entered into
under Section 7121 of the Code (or any successor
9
<PAGE>
provision) or any other settlement agreement entered into in connection
with the administrative or judicial proceedings, in any case with the
Charterer's consent, (iii) the expiration of the time for instituting an
initial suit with respect to a claimed deficiency or for instituting a
claim for refund, or, if a refund claim was filed, the expiration of the
time for instituting suit with respect thereto or (iv) the point in time
when the Tax Indemnitee is no longer required to contest the imposition of
such Tax pursuant to Section 13.2(e) of the Participation Agreement.
"GAAP" shall mean generally accepted accounting principles in the
----
United States of America.
"Governmental Actions" shall mean all actions, authorizations,
--------------------
consents, approvals, waivers, exceptions, variances, franchises, filings,
orders, permits, licenses, exemptions, publications, notices to and
declarations of or with any Governmental Authority, including, without
limitation, those pertaining to Environmental Laws and Environmental
Permits.
"Governmental Authority" shall mean any nation or government, any
----------------------
state, county, municipality or other political subdivision thereof or any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Governmental Rules" shall mean applicable statutes, laws, rules,
------------------
codes, ordinances, decisions, regulations, permits, certificates and orders
of any Governmental Authority now or hereafter in effect and any
interpretation thereof by competent Governmental Authority, including any
judicial or administrative order, consent decree, settlement agreement or
judgment, including, without limitation, Environmental Laws.
"Guarantee" or "Guaranty" shall mean the Mobil Guarantee dated as of
--------- --------
the Closing Date by Guarantor in favor of the Managing Trustee, the
Delaware Trustee, the Owner Trust, the Owner Participant, the Indenture
Trustee and the Pass Through Trustee.
"Guarantor" shall mean Mobil Corporation, a Delaware corporation.
---------
"Hazardous Materials" shall mean all substances defined as such in the
-------------------
National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R.
(S) 300.5, or defined as such by, or regulated as such under, any law
relating to pollution or protection of the environment.
10
<PAGE>
"Head Lease" shall mean the Lease Agreement dated December 10, 1996
----------
between U.K. Lessor and the Owner Trust.
"Head Lessor" shall mean the U.K. Lessor.
-----------
"Hire" shall mean, collectively, Bareboat Hire and Supplemental Hire.
----
"Holder" shall mean a registered holder of a Secured Note and shall
------
include, so long as the Pass Through Trustee is a registered holder of a
Secured Note, the Pass Through Trustee.
"Indemnitee" shall mean each Owner Trust, the Resident Trustee, the
-----------
Trust Company, the Delaware Trustee, the Managing Trustee, the Owner
Participant, the Indenture Trustee (both in its individual and its trust
capacity), the Pass Through Trustee (both in its individual and trust
capacities), each Loan Participant, and their respective Affiliates,
shareholders, officers, directors, agents, employees and servants.
"Indenture" shall mean the Trust Indenture, Assignment of Charter and
---------
Head Lease and Security Agreement dated as of the Closing Date between the
Owner Trust and the Indenture Trustee.
"Indenture Default" shall mean an event which, after giving of notice
-----------------
or lapse of time, or both, would become an Indenture Event of Default.
"Indenture Estate" shall have the meaning specified in the Granting
----------------
Clause of the Indenture.
"Indenture Event of Default" shall have the meaning specified in
--------------------------
Section 5.02 of the Indenture.
"Indenture Indebtedness" shall have the meaning specified in the
----------------------
Recitals to the Indenture.
"Indenture Supplement" shall mean any indenture supplement that may be
--------------------
executed and delivered by the Owner Trust and the Indenture Trustee from
time to time.
"Indenture Trustee" shall have the meaning specified in the preamble
-----------------
to the Indenture.
"Indenture Trustee Office" shall mean the office of the Indenture
------------------------
Trustee initially located at Two International Place, Boston, MA 02110 or
such other office as may be designated by the Indenture Trustee to the
Owner Trust and the Charterer.
11
<PAGE>
"Indenture Trustee's Liens" shall mean Liens on or against all or any
-------------------------
part of the Vessel, the Vessel Interest, the Charter Party, the Trust
Estate, the Indenture Estate or any payment of Hire, Excess Hire or
Additional Excess Hire (a) which result from any act of, or failure to act
by, or any Claim against, the Indenture Trustee (in its individual capacity
or as trustee) unrelated to the transactions contemplated by the
Participation Agreement or any other Operative Document, or which result
from any violation by the Indenture Trustee (in its individual capacity or
as trustee) of any of the terms of the Operative Documents, or (b) which
result from Liens in favor of any taxing authority by reason of any Tax
owed by the Indenture Trustee (in its individual capacity or as trustee),
except that Indenture Trustee's Liens shall not include any Lien directly
resulting from any Tax for which the Charterer is obligated to indemnify
the Indenture Trustee (in its individual capacity or as trustee) until such
time as the Charterer shall have already paid to, or on behalf of, the
Indenture Trustee, the Tax or an indemnity with respect to the same.
"Independent" shall mean, when used with respect to any specified
-----------
Person, a Person who (1) is in fact independent, (2) does not have any
direct financial interest in the Trust Company, the Owner Trust, the Owner
Participant or the Charterer or any Affiliate of any of them and (3) is not
connected with the Trust Company, the Owner Participant or the Charterer or
any such Affiliate as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions. Whenever it is
provided that any Independent Person's opinion or certificate shall be
furnished to the Indenture Trustee, such Person shall be appointed by the
Charterer and approved by the Indenture Trustee in the exercise of
reasonable care and such opinion or certificate shall state that the signer
has read this definition and that the signer is Independent within the
meaning hereof.
"Independent Investment Banker" shall mean an independent investment
-----------------------------
banking institution of national standing appointed by the Charterer on
behalf of the Owner Trust; provided that if the Indenture Trustee shall not
--------
have received written notice of such an appointment at least 10 days prior
to the relevant Redemption Date or Charter Termination Date or if a Charter
Event of Default shall have occurred and be continuing, "Independent
-----------
Investment Banker" shall mean such an institution appointed by the
-----------------
Indenture Trustee.
"Initial Secured Note(s)" shall mean the Secured Note(s) issued under
-----------------------
the Indenture on the Closing date or
12
<PAGE>
any Secured Notes issued in exchange therefor pursuant to Sections 2.06 and
2.07 of the Indenture.
"Inflation Factor" shall mean the Producer Price Index as published by
----------------
the U.S. Department of Labor.
"Initial Subcharter" shall mean the Vessel Subcharter Agreement dated
------------------
as of the Closing Date between the Charterer and MSCL.
"Interest Payment Date" shall mean each January 2 and July 2.
---------------------
"Investment" shall have the meaning specified in Section 2.1 of the
----------
Participation Agreement.
"Joint Venture Agreement" shall mean the Joint Venture Agreement dated
-----------------------
June 27, 1996 among MOSAT, SAMCO and Samco (Cayman) Ltd., a Cayman Islands
company.
"Lessee Support Agreement" shall mean the agreement dated
-------------------------
December 10, 1996 among the Charterer, the U.K. Lessor and the Owner Trust
with respect to certain obligations of the Owner Trust under the Head
Lease.
"Lessor's Mortgage" shall mean the U.K. Lessor's Mortgage.
-----------------
"Lessor's Security Assignment" shall mean that certain Lessor's
----------------------------
Security Assignment dated December 19, 1996 among the Indenture Trustee,
the Owner Participant, the Owner Trust and the U.K. Lessor.
"Lien" shall mean any mortgage, pledge, security interest,
----
encumbrance, lien, right of others or charge of any kind, including,
without limitation, any Environmental Liens, any right of first refusal,
any title defect, conditional sale or other title retention agreement or
any lease in the nature thereof or any libel or complaint in admiralty or
the filing of, or agreement to give, any financing statement under the
Uniform Commercial Code of any jurisdiction.
"Loan Participant" shall mean and include each Holder (including, so
----------------
long as it holds a Secured Note, the Pass Through Trustee).
"Losses" shall have the meaning set forth in Section 13.3 of the
------
Participation Agreement.
"Majority in Interest of Holders of Notes" shall mean, as of any date
----------------------------------------
of determination, Holders holding in aggregate more than 50% of the total
principal amount of the Secured Notes Outstanding.
13
<PAGE>
"Make-Whole Amount" shall mean: with respect to any Series 1996 A Secured
-----------------
Note to be redeemed, or purchased on any Redemption Date, the amount which
the Independent Investment Banker determines as of the fourth Business Day
prior to such Redemption Date to equal the excess, if any, of (x) the sum
of the present values of all the remaining scheduled payments of principal
and interest from the Redemption Date to maturity of such Secured Note,
discounted semi-annually on each Interest Payment Date at a rate equal to
the Treasury Rate plus .10%, based on a 360-day year of twelve 30-day
months, over (y) the aggregate unpaid principal amount of such Secured Note
plus accrued but unpaid interest on such Secured Note (but not any accrued
interest in default) to such Redemption Date.
"Managing Trustee" shall mean the Trust Company not in its individual
----------------
capacity but solely as Managing Trustee under the Trust Agreement.
"Maturity Date" shall mean, with respect to any Secured Note, the date
-------------
specified as the "Maturity Date" for such Secured Note on Exhibit B to the
Indenture.
"MMFC I" shall mean Mobil Marine Finance Company I Inc., a Delaware
------
corporation.
"MMFC II" shall mean Mobil Marine Finance Company II Inc., a Delaware
-------
corporation.
"Modifications" shall mean alterations, modifications, additions and
-------------
improvements of or to the Vessel.
"Moody's" shall mean Moody's Investor Service, Inc.
-------
"MOSAT" shall mean Mobil Shipping and Transportation Company, a
-----
Liberian corporation.
"MSCL" shall mean Mobil Shipping Company Limited, a corporation formed
----
under the laws of England and Wales.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
-------------------
Section 4001(a)(3) of ERISA which is maintained for employees of the
Charterer or any of its ERISA Affiliates.
"Nonseverable Modification" shall mean any Modification to the Vessel
-------------------------
which is not a Severable Modification.
"Note Register" shall have the meaning specified in Section 2.04 of
-------------
the Indenture.
14
<PAGE>
"Officer's Certificate" and "Officers' Certificate" of any Person
--------------------- ---------------------
shall mean a certificate signed on behalf of such Person by the Chairman,
the President, any Vice President, any Assistant Vice President, Financial
Services Officer, the Controller, Assistant Treasurer or the Treasurer of
such Person or any other individual duly authorized and acting in such
capacity or, in the case of the Owner Trust or the Indenture Trustee, a
Responsible Officer of the Owner Trust or Indenture Trustee.
"Operative Documents" shall mean the Assignment of Construction
-------------------
Contract, Bill of Sale, the Guarantee, the Indenture, each Indenture
Supplement, the Charter Party, the Participation Agreement, the Secured
Notes, the Ship Mortgage and the Trust Agreement.
"Other Charter" or "Other Charter Party" shall mean any of the
------------- -------------------
Bareboat Charter Parties dated as of the Closing Date between either (i)
the Other Owner and the Charterer or (ii) the Other Owner and the Other
Charterer, as charterer, providing for the bareboat charter of one of the
Other Vessels.
"Other Charterer" shall mean MMFC I.
---------------
"Other Owner" shall mean any owner (or owners) from time to time of an
-----------
Other Vessel Interest.
"Other Vessel" shall mean any of the vessels identified as "Other
------------
Vessels" in Schedule 1 to the Charter Party.
"Other Vessel Interest" shall mean the rights of the Other Owner in a
---------------------
related Other Vessel, including its rights under the U.K. Documents.
"Outstanding" shall mean, when used with respect to the Secured
------------
Notes as of any date of determination, all Secured Notes theretofore
authenticated and delivered under the Indenture, except:
(i) Secured Notes theretofore cancelled by the Indenture
Trustee or delivered to the Indenture Trustee for cancellation;
(ii) Secured Notes or portions thereof for whose payment or
redemption money in the necessary amount has been theretofore
deposited with the Indenture Trustee, provided that such Secured Notes
--------
are to be redeemed and notice of such redemption has been duly given
and not revoked or otherwise withdrawn pursuant to the Indenture; and
15
<PAGE>
(iii) Secured Notes paid or in exchange for which or in lieu of
which other Secured Notes have been authenticated and delivered
pursuant to the Indenture;
provided, however, that in determining whether the Holders of the requisite
-------- -------
principal amount of Secured Notes Outstanding have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Secured Notes owned by the Owner Trust, the Charterer, the Owner
Participant, or any Affiliate of the Charterer, the Owner Trust or the
Owner Participant, shall be disregarded and deemed not to be Outstanding,
unless such Person owns 100% of the Secured Notes owned by all Persons,
except that, in determining whether the Indenture Trustee shall be
protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Secured Notes which the
Indenture Trustee knows to be so owned shall be so disregarded. Secured
Notes so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Indenture
Trustee the pledgee's right so to act with respect to such Secured Notes
and that the pledgee is not the Owner Trust, the Charterer, the Owner
Participant or any Affiliate of the Owner Trust, the Charterer or the Owner
Participant.
"Overdue Rate" shall mean a rate per annum equal to (i) with respect
------------
to amounts owing to any Loan Participant constituting payments or
prepayments of any Secured Note, the rate of interest on such Secured Note,
and (ii) with respect to amounts owing to the Owner Participant or the
Charterer, the rate of interest publicly announced from time to time by
Citibank, N.A. in New York City as its "prime" or "base" rate plus 1%
(computed on the basis of a 360-day year of twelve 30-day months).
"Owner" shall mean the Owner Trust.
-----
"Owner's Cost" shall mean the amount set forth as "Owner's Cost" in
------------
Schedule 1 to the Charter Party.
"Owner's Liens" shall mean Liens on or against all or any part of the
-------------
Vessel, the Vessel Interest, the Charter Party, the Trust Estate, the
Indenture Estate or any payment of Hire, Excess Hire or Additional Excess
Hire (a) which result from any act of, or any failure to act by, or any
Claim against, the Trust Company, the Resident Trustee or the Owner Trust
unrelated to its interest in the Vessel Interest, the administration of the
Trust Estate or the transactions contemplated by the Participation
Agreement or any other Operative Document, or which result from any
violation by the Trust Company,
16
<PAGE>
the Resident Trustee or the Owner Trust of any of the terms of the
Operative Documents, or (b) which result from Liens in favor of any taxing
authority by reason of any Tax owed by the Trust Company, the Resident
Trustee or the Owner Trust, except that Owner's Liens shall not include any
Lien resulting from any Tax for which the Charterer is obligated to
indemnify the Trust Company, the Resident Trustee or the Owner Trust until
such time as the Charterer shall have already paid to, or on behalf of, the
Trust Company, the Resident Trustee or the Owner Trust, as the case may be,
the Tax or an indemnity with respect to the same.
"Owner Participant" shall mean the party identified as such in
-----------------
Schedule 1 to the Participation Agreement and each Person to whom a
transfer is effected in accordance with Section 15 of the Participation
Agreement.
"Owner Participant's Liens" shall mean any Lien on or against the
-------------------------
Vessel, the Vessel Interest, the Charter Party, the Trust Estate or the
Indenture Estate or any payment of Hire, Excess Hire or Additional Excess
Hire (a) which results from any act of, or any failure to act by, or any
Claim against, the Owner Participant unrelated to the transactions
contemplated by the Operative Documents, or which result from any violation
by the Owner Participant of any of the terms of the Operative Documents, or
(b) which result from any Lien in favor of any taxing authority by reason
of any Tax owed by the Owner Participant, except that Owner Participant's
Liens shall not include any Lien resulting from any Tax for which the
Charterer is obligated to indemnify the Owner Participant (or any member of
its consolidated group) until such time as the Charterer shall have already
paid to, or on behalf of, the Owner Participant (or such member of its
consolidated group), the Tax or an indemnity with respect to the same.
"Owner Trust" shall have the meaning specified in the preamble to the
-----------
Trust Agreement.
"Owner Trust Documents" shall have the meaning specified in Section
---------------------
2.1 of the Trust Agreement.
"Owner Trust U.K. Documents" shall have the meaning specified in
--------------------------
Section 2.2 of the Trust Agreement.
"Owner Trustee" shall have the meaning specified in the preamble to
-------------
the Trust Agreement.
"Parent Guarantee" or "Parent Guaranty" shall mean the Guarantee.
---------------- ---------------
"Parent Guarantor" shall mean the Guarantor.
----------------
17
<PAGE>
"Participant" shall mean the Loan Participant or the Owner Participant and
-----------
"Participants" shall mean all of them.
------------
"Participation Agreement" shall mean the Participation Agreement dated
-----------------------
as of the Closing Date among the Charterer, the Owner Participant, the Pass
Through Trustee, the Indenture Trustee, the Owner Trust and the Managing
Trustee.
"Pass Through Certificates" shall mean any Certificates from time to
-------------------------
time issued and outstanding under and pursuant to the Pass Through Trust
Agreement.
"Pass Through Trust" shall mean the trust created by the Pass Through
------------------
Trust Agreement.
"Pass Through Trust Agreement" shall mean the Pass Through Trust
----------------------------
Agreement dated as of October 4, 1996 among the Guarantor, the Charterer,
the Other Charterer, six other subsidiaries of the Guarantor and the Pass
Through Trustee, as amended by the Pass Through Trust Supplement.
"Pass Through Trust Property" shall have the meaning specified in the
---------------------------
Pass Through Trust Agreement.
"Pass Through Trust Supplement" shall mean the supplement to the Pass
-----------------------------
Through Trust Agreement dated as of the Closing Date among the Guarantor,
the Charterer, the Other Charterer and the Pass Through Trustee.
"Pass Through Trustee" shall mean State Street Bank and Trust Company,
--------------------
not in its individual capacity except as expressly provided in the Pass
Through Trust Agreement and the Operative Documents, but solely as Pass
Through Trustee under the Pass Through Trust Agreement.
"Payment Guarantee Letter" shall mean the guarantee given by the
------------------------
Sumitomo Marine & Fire Insurance Co., Ltd. pursuant to Article 10 of the
Construction Contract.
"Permitted Investments" shall mean (i) obligations of the United
---------------------
States of America, or obligations fully guaranteed as to interest and
principal by the United States of America; (ii) certificates of deposit
issued by an Eligible Bank or interest-bearing insured accounts in an
Eligible Bank; (iii) commercial paper, rated at least P-1 (or comparable
rating) by Moody's Investors Service, Inc. (or any successor thereto) or at
least A-1 (or comparable rating) by Standard and Poor's Corporation (or any
successor thereto); or (iv) a money market fund registered under the
Investment Company Act of 1940, the portfolio of which is limited to U.S.
government obligations and U.S. agency obligations.
18
<PAGE>
"Permitted Liens" shall mean (a) the respective rights and interests of (x)
---------------
the Charterer, the Owner Participant, the Owner, the Indenture Trustee, and
the Holders, as provided in the Operative Documents and (y) prior to the
Delivery Date, the Builder under the Construction Contract, (b) Owner's
Liens, Owner Participant's Liens and Indenture Trustee's Liens, (c) Liens
for Taxes either not delinquent or being contested in good faith and by
appropriate proceedings, so long as such proceedings do not involve any
material danger of the sale, forfeiture or loss of any part of, the Vessel,
the Trust Estate or the Indenture Estate, or title thereto or any interest
therein or any material danger of the interference with the payment of
Hire, (d) materialmen's, mechanics', workers', repairmen's, employees' or
other like Liens, arising in the ordinary course of business, or arising in
the course of constructing, repairing, equipping or installing, modifying
or expanding the Vessel or any part thereof, for amounts either not more
than 60 days past due or being contested in good faith and by appropriate
proceedings so long as such proceedings do not involve any material danger
of the sale, forfeiture or loss of any part of the Vessel, the Trust Estate
or the Indenture Estate, or title thereto or any interest therein or any
material danger of the interference with the payment of Hire, (e) Liens
arising out of judgments or awards against the Charterer or any Permitted
Subcharterer with respect to which at the time an appeal or proceeding for
review is being prosecuted in good faith so long as such judgment, award or
appeal does not involve any material danger of the sale, forfeiture or loss
of any part of the Vessel, the Trust Estate or the Indenture Estate, or
title thereto or any interest therein or any material danger of the
interference with the payment of Hire, (f) the rights and interests of the
U.K. Lessor provided in the U.K. Documents (g) liens for current crew's
wages, for general average or salvage (including contract salvage) or for
wages of stevedores employed directly by the Charterer, MSCL, or the
operator, agent or master of the Vessel which in each case (A) are
unclaimed or covered by insurance or (B) for amounts either not more than
60 days past due or being contested in good faith and by appropriate
proceedings so long as such proceedings do not involve any material danger
of the sale, forfeiture or loss of any part of the Vessel, the Trust Estate
or the Indenture Estate, or title thereto or any interest therein or any
material danger of the interference with the payment of Hire, and Liens
which, under the laws of the Marshall Islands, take priority over the Ship
Mortgage and which are for amounts either not more than 60 days past due or
being contested in good faith and by appropriate proceedings so long as
such proceedings do not involve any material danger of the sale, forfeiture
19
<PAGE>
or loss of any part of the Vessel, the Vessel Interest, the Trust Estate or
the Indenture Estate, or title thereto or any interest therein and any
material danger of the interference with the payment of Hire, (h) Liens,
assignments and subleases permitted by Article 20(b) of the Charter Party
and the rights of MSCL under the Initial Subcharter and the rights of any
other subcharterer or any sub-subcharterer under any other subcharter (or
sub-subcharter) permitted by Article 20 of the Charter Party.
"Permitted Subcharterer" shall mean any subcharterer of the Vessel
----------------------
Interest under a subcharter in compliance with Article 20 of the Charter.
"Person" shall mean any individual, partnership, corporation, trust,
------
business trust, unincorporated association, joint venture, government or
any department or agency thereof, or any other entity.
"Preferred Stock" shall mean, with respect to any Person, any and all
---------------
shares, interests, participations or other equivalents (however designated)
of such Person's preferred or preference stock, whether now outstanding or
issued after the date of the Participation Agreement, and includes, without
limitation, all classes and series of preferred or preference stock.
"Premium" shall mean the Make-Whole Amount, if any, payable pursuant
-------
to Article III of the Indenture.
"Protocol of Delivery and Acceptance" shall mean a protocol of
-----------------------------------
delivery and acceptance to be executed by Charterer on the Delivery Date.
"PTE 90-24 " shall mean an Affiliate as defined in Prohibited
----------
Transaction Exemption 90-24 et al., Exemption Application No. D-8019 et
al., 55 Fed. Reg. 20,548 1990.
"Rate Excess" shall have the meaning specified in Schedule 2A to the
-----------
Charter Party.
"Rate Period" shall mean each six-month period during the term of the
-----------
Bareboat Charter Party ending on a Base Hire Payment Date, the first such
period commencing and ending on the dates specified in Schedule 1 of the
Charter Party.
"Rating Agency" shall mean each of Moody's and Standard & Poor's, or
-------------
if Moody's or Standard & Poor's shall no longer perform the function of a
securities rating agency, "Rating Agency" shall be deemed to refer to any
other nationally recognized rating agency designated by the Parent
Guarantor.
20
<PAGE>
"Rating Agency Confirmation" shall mean a prior written confirmation from
--------------------------
each Rating Agency that a specified action or event shall not result in the
downgrade or withdrawal of such Rating Agency's then current credit rating
of the Pass Through Certificates.
"Redelivery Date" shall have the meaning specified in Article 12(a) of
---------------
the Charter Party.
"Redemption Date" shall mean the date on which the Secured Notes are
---------------
to be redeemed or purchased pursuant to Section 3.02, 3.03 or 3.06 of the
Indenture.
"Redemption Price" shall have the meaning specified in Section 3.10 of
----------------
the Indenture.
"Release" shall mean the release, spill, emission, leaking, pumping,
-------
injection, deposit, disposal, discharge, dispersal, leaching or migrating
into the environment of any Hazardous Material through or in the air, soil,
surface water or groundwater, provided that the presence of Hydrocarbons
within any portion of the Vessel designed to produce, pump, process, store,
treat, refine or transport Hydrocarbons shall not be considered a Release.
"Remedial Action" shall mean actions required to (i) clean up, remove,
---------------
treat or in any other way address Hazardous Materials in the environment,
(ii) prevent the Release or further Release or minimize the further Release
of Hazardous Materials, or (iii) investigate and determine if a remedial
response is needed, to design such a response and post-remedial
investigation, monitoring, operation, maintenance and care.
"Request" shall have the meaning specified in Section 2.08(b) of the
-------
Indenture.
"Resident Trustee" means Wilmington Trust Company, a Delaware banking
----------------
corporation, acting in its individual capacity, and its successors and
assigns as Delaware Trustee under the Trust Agreement, acting in such
successors' and assigns' respective individual capacities.
"Responsible Officer", when used with respect to either Owner Trustee,
-------------------
the Indenture Trustee or the Pass Through Trustee, shall mean an officer in
its corporate trust administration department (or any successor group of
either Owner Trustee, the Indenture Trustee or the Pass Through Trustee, as
the case may be) or any other officer customarily performing functions
similar to those performed by any of the above designated officers and also
shall mean, with respect to a particular corporate
21
<PAGE>
trust matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"SEC" shall mean the Securities and Exchange Commission.
---
"Secured Notes" shall mean all notes from time to time issued and
-------------
outstanding under and pursuant to the Indenture.
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"Seller" shall meaning the entity identified as such on Schedule 1 to
------
the Charter Party.
Series 1996 A Secured Notes" shall mean the Secured Note issued under
---------------------------
Section 2.01(b) of the Indenture and any Series 1996 A Secured Note issued
in exchange therefor pursuant to Section 2.06 of the Indenture.
"Severable Modification" shall mean any Modification to the Vessel
--------- ------------
permitted under the Charter Party which can be readily removed from the
Vessel without causing material damage to the Vessel.
"Ship Mortgage" shall mean the First Ship Mortgage dated December 19,
-------------
1996 covering the Vessel from the Owner Trust to the Indenture Trustee.
"Special Indemnitee" shall have the meaning specified in Section 13.3
------------------
of the Participation Agreement.
"Special Termination Election" shall mean an election to terminate the
----------------------------
Charter pursuant to Article 18 thereof.
"Special Termination Events" shall mean the events specified as
--------------------------
Special Termination Events in Article 23(a) of the Charter.
"Special Termination Redemption Date" shall have the meaning set forth
-----------------------------------
in Section 3.03(a) of the Indenture.
"Specified Charter Event of Default" shall mean a Charter Party Event
----------------------------------
of Default described in paragraph (1), (7) or (8) of Article 21 of the
Charter Party or a Charter Party Default described in paragraph (1) or (7)
of Article 21 of the Charter Party.
"Standard & Poor's" shall mean Standard & Poor's Rating Group, a
-----------------
division of Dunn & Bradstreet, Inc.
22
<PAGE>
"Subsidiary" of any Person shall mean any corporation, association or
----------
other business entity of which more than fifty percent (50%) of the total
voting power of shares of Capital Stock entitled to vote in the election of
directors, managers or trustees thereof (without regard to the occurrence
of any contingency) is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries (within
the meaning of this definition) of that Person, or a combination thereof.
"Substitute Obligor" shall have the meaning set forth in Section 3.04
------------------
of the Indenture.
"Substitution Date" shall have the meaning set forth in Section 3.04
-----------------
of the Indenture.
"Substitution Date Agreement" shall have the meaning set forth in
---------------------------
Section 3.04 of the Indenture.
"Supplemental Hire" shall mean (i) any and all amounts, liabilities
-----------------
and obligations (other than Bareboat Hire) which the Charterer assumes or
agrees to pay to or on behalf of the Owner Trust, the Owner Participant,
the Trust Company, the Resident Trustee, the Pass Through Trustee, the Loan
Participant or the Indenture Trustee under any Operative Document,
including, without limitation, any payments of indemnification or
Termination Value or Premium and (ii) any amounts which are expressed in
the Indenture to be payable at the Charterer's expense.
"Tax" and "Taxes" shall have the respective meanings specified in
--- -----
Section 14.2 of the Participation Agreement.
"Tax Affiliate" shall mean an Affiliate of any corporation related to
-------------
the Charterer (within the meaning of Section 318 of the Code), or any
shareholder of the Charterer.
"Tax Claim" shall have the meaning specified in Section 13.2(e) of the
---------
Participation Agreement.
"Tax Indemnitee" shall mean each Owner Trustee (both in its individual
--------------
capacity and in its trust capacity), the Owner Participant, the Indenture
Trustee (both in its individual capacity and in its trust capacity), and
the Loan Participant, and their respective Affiliates, officers, directors,
agents, employees and servants but shall not include (i) the Pass Through
Trustee, (ii) any other Holder and (iii) any Certificateholder.
"Termination Date" shall have the meaning specified in Article 18(b)
----------------
of the Charter Party.
23
<PAGE>
"Termination Election" shall mean an election by the Charterer to terminate
--------------------
the Charter pursuant to Article 18(a) thereof.
"Termination Redemption Date" shall have the meaning specified in
---------------------------
Section 3.03(b) of the Indenture.
"Termination Value" shall mean as of any Termination Value
-----------------
Determination Date during the Charter Period, the amount set forth opposite
such date in Schedule 4 to the Charter Party.
"Termination Value Determination Date" shall mean any Business Day.
------------------------------------
"Transaction Expenses" shall mean the following fees, expenses,
--------------------
disbursements and costs incurred in connection with the preparation,
execution and delivery of the Operative Documents and the Pass Through
Trust Agreement and the consummation of the transactions contemplated
thereby on the Closing Date, as applicable, provided that invoices for all
--------
such fees, expenses, disbursements and costs shall have been presented for
payment on or prior to the ninetieth day following the Closing Date: (i)
the reasonable attorneys' fees and expenses of counsel to the Owner
Participant, each Owner Trustee, the Indenture Trustee, the Pass Through
Trustee and special admiralty counsel, (ii) the initial (but not ongoing)
fees and expenses of each Owner Trustee, the Pass Through Trustee and the
Indenture Trustee, (iii) printing, word processing and reproduction costs,
(iv) the fees and commissions of Morgan Stanley & Co. Incorporated as
underwriter in connection with the offering and sale of the Pass Through
Certificates, (v) other costs associated with the issuance of the Secured
Note and the Pass Through Certificates, independent rating agencies and
printer charges, and (vi) to the extent agreed with the Underwriter, the
reasonable fees, expenses and disbursements of special counsel for the
Underwriter in connection with the Operative Documents; provided that,
--------
other than as set forth in clause (iv) of this sentence, "Transaction
-----------
Expenses" shall not include the fees, expenses or disbursements of any law
--------
firm not specifically named in Section 4.6 of the Participation Agreement.
"Transferee" shall have the meaning specified in Section 14.2 of the
----------
Participation Agreement.
"Treasury Rate" shall mean, with respect to each Secured Note to be
-------------
redeemed or purchased, a per annum rate (expressed as a semiannual
equivalent and as a decimal and, in the case of United States Treasury
bills, converted to a bond equivalent yield), determined to be
24
<PAGE>
the per annum rate equal to the semiannual yield to maturity of United
States Treasury securities maturing on the Average Life Date of such
Secured Note, as determined by interpolation between the most recent weekly
average yields to maturity for two series of United States Treasury
securities, (A) one maturing as close as possible to, but earlier than, the
Average Life Date of such Secured Note and (B) the other maturing as close
as possible to, but later than, the Average Life Date of such Secured Note,
in each case as published in the most recent H.15(519) (or, if a weekly
average yield to maturity of United States Treasury securities maturing on
the Average Life Date of such Secured Note is reported in the most recent
H.15(519), as published in H.15(519)). H.15(519) shall mean "Statistical
Release H.15(519), Selected Interest Rates" or any successor publication,
published by the Board of Governors of the Federal Reserve System. The
most recent H.15(519) shall mean the latest H.15(519) which is published
prior to the close of business on the fourth Business Day preceding the
Redemption Date. For purposes hereof, "Average Life Date" shall mean, with
-----------------
respect to each Secured Note to be redeemed, the date which follows the
Redemption Date by a period equal to the Remaining Weighted Average Life of
such Secured Note. For purposes hereof, "Remaining Weighted Average Life"
-------------------------------
shall mean, for any Secured Note, as of any date of determination, the
number of days equal to the quotient obtained by dividing (a) the sum of
the products obtained by multiplying (i) the amount of each then remaining
installment of principal, including the payment due on the maturity of such
Secured Note by (ii) the number of days from and including the Redemption
Date to but excluding the scheduled payment date of such principal payment;
by (b) the then unpaid principal amount of such Secured Note.
"Treasury Regulations" shall mean the income tax regulations issued,
--------------------
published or promulgated under the Code by the United States Department of
the Treasury.
"Trust Agreement" shall mean the Amended and Restated Declaration and
---------------
Agreement of Trust dated as of December 19, 1996 among the Owner
Participant, the Resident Trustee and the Trust Company.
"Trust Company" shall mean Deutsche Morgan Grenfell (Cayman) Limited,
-------------
a Cayman Islands company in its individual capacity.
"Trust Certificate" shall mean an Officer's Certificate of the Owner
-----------------
Trust with regard to those matters set forth in Section 3.04(i) of the
Indenture.
25
<PAGE>
"Trust Estate" shall have the meaning specified in Section 3.2 of the
------------
Trust Agreement.
"Trust Expenses" shall have the meaning specified in Section 8.1 of
--------------
the Trust Agreement.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
-------------------
amended.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
---
of New York or in any other applicable jurisdiction.
"U.K. Documents" shall mean the Conditional Sale Agreement, the Head
--------------
Lease, the U.K. Lessor's Mortgage, the Lessor's Security Assignment and
each other instrument defined as an "Operative Document" in the Head Lease.
"U.K. Financing" shall mean the transactions contemplated by the U.K.
--------------
Documents.
"U.K. Lease Term" shall mean the term of the U.K. Lease set forth in
---------------
Schedule 1 of the Charter Party.
"U.K. Lessor" shall mean the entity identified as such in Schedule 1
------------
of the Charter Party.
"U.K. Lessor's Mortgage" shall mean the Mortgage dated December 10,
----------------------
1996 between U.K. Lessor and Owner Trust.
"U.K. Lessor's Security Assignment" shall mean the Lessor's Security
---------------------------------
Assignment.
"U.K. Obligations" shall have the meaning set forth in Section 13.3 of
----------------
the Participation Agreement.
"Underwriter" shall mean Morgan Stanley & Co. Incorporated, a Delaware
-----------
corporation.
"Underwriting Agreement" shall mean the Underwriting Agreement among
----------------------
the Guarantor, the Charterers and the Underwriter relating to the purchase
and sale of the Pass Through Certificates.
"Vessel" shall mean the very large crude carrier identified in
------
Schedule 1 to the Charter Party under the heading "Vessel", and all other
property installed or located therein and all assets from time to time
included or incorporated therein in which title thereto shall vest in the
Owner pursuant to the Charter Party.
26
<PAGE>
"Vessel Interest" shall mean the Owner's rights in the Vessel,
---------------
including its rights under the U.K. Documents.
27
<PAGE>
EXHIBIT 99.15
APPENDIX A
HULL NO. 1233
DEFINITIONS
-----------
The following terms shall have the following meanings for all purposes of
the Operative Documents referred to below, unless otherwise defined in an
Operative Document or the context thereof shall otherwise require and such
meanings are equally applicable both to the singular and plural forms of the
terms defined. Any term defined below by reference to any agreement or
instrument shall have such meaning whether or not such agreement or instrument
is in effect. The terms "hereof", "herein", "hereunder" and comparable terms
------ ------ ---------
refer to the entire agreement with respect to which such terms are used and not
to any particular Section, subsection, paragraph or other subdivision thereof.
Unless the context otherwise requires, references to (i) agreements shall
include sections, schedules, exhibits and appendices thereto and shall be deemed
to mean and include such agreements (and sections, schedules, exhibits and
appendices) as the same may be amended, supplemented and otherwise modified from
time to time, (ii) parties to agreements or government agencies shall be deemed
to include the successors and permitted assigns of such parties and the
successors and assigns of such agencies and (iii) laws or regulations shall be
deemed to mean such laws or regulations as the same may be amended from time to
time and any superseding laws or regulations covering the same subject matter.
Unless otherwise specified herein or in any Operative Document, all
accounting terms used in any Operative Document shall be interpreted, all
accounting determinations made pursuant to the terms of any Operative Documents
shall be made, and all financial statements delivered pursuant to the terms of
any Operative Document shall be prepared in accordance with GAAP.
"Accreted Value" when used in respect of the Secured Notes means, for
--------------
any specified date:
(i) if the specified date occurs on one of the following dates (each
an "Accrual Date"), the Accreted Value will equal the amount set forth
------------
below for such
<PAGE>
Accrual Date:
Accrual Date Accreted Value
------------ --------------
December 19, 1996 $54,622,315.40
July 2, 1997 $56,666,636.01
January 2, 1998 $58,641,468.28
July 2, 1998 $60,685,123.45
January 2, 1999 $62,800,000.00
July 2, 1999 $61,900,205.00
(ii) if the specified date occurs between two Accrual Dates, the
Accreted Value will equal the sum of (a) the Accreted Value for the Accrual
Date immediately preceding such specified date plus (b) an amount equal to
the interest that would accrue on the amount of such Accreted Value at the
interest rate of the Secured Note from such Accrual Date to such specified
date, using a 360-day year of twelve 30-day months as reduced from time to
time by the repayment of principal thereof; and
(iii) if the specified date occurs on or after the last Accrual Date,
the Accreted Value will equal the face amount of the Secured Note as
reduced from time to time by the repayment of the principal thereof.
"Accrual Date" shall have the meaning specified in the definition of
-------------
"Accreted Value".
"Actual Knowledge" shall mean, (i) as it applies to either Owner
----------------
Trustee (or the Owner Trust), the Indenture Trustee or the Pass Through
Trustee, actual knowledge of, including any information contained in any
written notices received by, an officer in its Corporate Trust
Administration department, (ii) as it applies to the Owner Participant,
actual knowledge of, including any information contained in any written
notices received by, any officer of the Owner Participant or any Affiliate
thereof whose responsibilities include administration of the transactions
contemplated by the Operative Documents, (iii) as it applies to the
Charterer, actual knowledge of, including any information contained in any
written notices received by, the Chief Executive Officer, the President or
any Vice President or any other officer of the Charterer whose
responsibilities include administration of the transactions contemplated by
the Operative Documents and (iv) as it applies to the Guarantor actual
knowledge of, including any information contained in any written notices
received by, the Chief Executive Officer, the President or any Vice
President or any other executive of the Guarantor whose responsibilities
include administration of the transactions contemplated by the Operative
Documents.
2
<PAGE>
"Additional Excess Hire" shall have the meaning specified in clause b
----------------------
of Schedule 2A of the Charter Party.
"Additional Excess Rate Hire" shall have the meaning specified in
---------------------------
clause b of Schedule 2A to the Charter Party.
"Additional Notes" shall mean non-recourse Secured Notes issued by the
----------------
Owner Trust in accordance with Section 2.08 of the Indenture.
"Affiliate" shall mean, with respect to any Person, any other Person,
---------
directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such Person. For purposes of this
definition, the term "control" (including the correlative meanings of the
-------
terms "controlling", "controlled by" and "under common control with"), as
----------- ------------- -------------------------
used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
"After-Tax Basis", in the context of determining the amount of a
---------------
payment to be made on such basis, shall mean the payment of an amount
which, after reduction by the net increase in foreign, federal, state and
local income tax liability of the recipient of such payment (which net
increase shall be calculated by taking into account any reduction in such
taxes resulting from any tax benefits realized or to be realized by the
recipient as a result of the event giving rise to such payment) shall be
equal to the amount required to be paid. In calculating the amount payable
by reason of this provision, all foreign, federal, state and local income
taxes payable and tax benefits realized or to be realized shall be
determined on the assumptions that (i) the recipient has a sufficient tax
base to be taxable on all income at the highest marginal tax rates then
applicable to corporate taxpayers taxed on the same basis as the recipient
that are then in effect in the applicable jurisdictions and that all tax
benefits are utilized at the highest marginal rates then applicable to
corporate taxpayers taxed on the same basis as the recipient that are then
in effect in the applicable jurisdictions, (ii) state and local income
taxes are payable, and state and local tax benefits are realized, in the
jurisdiction in which the recipient has its principal place of business,
and (iii) tax benefits to be realized in any taxable year other than the
year of payment are determined on a present value basis using the Debt
Rate.
3
<PAGE>
"Alteration" shall have the meaning specified in Section 15(a) of the
----------
Construction Contract.
"Amortization Schedule" shall mean, with respect to any Secured Note,
---------------------
the amortization schedule for such Secured Note set forth in Exhibit B to
the Indenture.
"Appraisal Procedure" shall mean a procedure for determining any
-------------------
amount, value or period. Such procedure shall be commenced by the delivery
of written notification as specified in the Operative Documents by the
Charterer to the Owner Trust or the Owner Participant, as the case may be,
or by the Owner Participant or the Owner Trust, as the case may be, to the
Charterer, that it desires to obtain an appraisal with respect to such
amount, value or period. If required by the terms of the applicable
Operative Documents, such parties shall first attempt to agree on such
matter. If such parties are unable to agree on such matter within the time
period specified in the applicable Operative Document, or if such parties
are not required to attempt to agree, such parties shall thereupon consult
for the purpose of selecting a mutually acceptable Independent appraiser.
If within 10 days from the date the parties are required to so consult,
they are unable to agree upon the appointment of a mutually acceptable
Independent appraiser, then each of such parties shall appoint an
Independent appraiser, and such Independent appraisers shall jointly
determine such matter. If one party does not so appoint an Independent
appraiser, then the Independent appraiser appointed by the other shall
determine such matter as the sole appraiser. If such two Independent
appraisers cannot agree on such matter within 20 days, such matters shall
be determined by such two Independent appraisers and a third Independent
appraiser chosen within 10 days after such 20-day period by such two
Independent appraisers or, if such three Independent appraisers fail to
reach an agreement, the determination of the appraiser that differs most
from the second highest determination shall be excluded (unless such
difference is less than ten percent from either of the other
determinations), the remaining two determinations shall be averaged (or all
three shall be averaged, if the third determination is not discarded due to
the preceding parenthetical) and such average shall constitute the
determination of the appraisers. If such two Independent appraisers fail
to agree upon the appointment of a third Independent appraiser within the
allotted time period, such appointment shall be made by the New York City
office of the American Arbitration Association or any organization
successor thereto, upon the request of any such parties from a panel of
arbitrators having familiarity with assets similar to the Vessel. The
determination of the appraisers so chosen shall be given
4
<PAGE>
within 20 days of the appointment of such third appraiser. Fees and
expenses of the appraisers appointed in connection with an Appraisal
Procedure shall be paid by the Charterer.
"Assigned Hire" shall have the meaning set forth in Section 4.01(a) of
-------------
the Indenture.
"Assignment of Construction Contract" shall mean the Assignment of
-----------------------------------
Construction Contract dated December 19, 1996 among Owner Participant,
MOSAT, Builder and the Owner Trust.
"Bareboat Hire" shall mean, for any Rate Period, the sum of the Base
-------------
Hire, the Excess Hire and the Additional Excess Hire for such Rate Period.
"Bareboat Market Rate" shall mean, for any Rate Period, the "Bareboat
--------------------
Market Rate" determined pursuant to Schedule 2B to the Charter Party for
such Rate Period.
"Base Hire" shall have the meaning specified in Schedule 2 to the
---------
Charter Party.
"Base Hire Payment Dates" during the Charter Period shall mean and
-----------------------
include each January 2 and July 2 during the Charter Period, commencing on
July 2, 1999.
"Bill of Sale" shall mean the Assignment and Bill of Sale of Vessel
------------
conveying the Vessel to the Owner Trust and delivered pursuant to Sections
3.1, 4.2 and 5.2 of the Participation Agreement.
"Board of Directors" shall mean, with respect to any Person, either
------------------
the board of directors of such Person or a duly authorized committee of
said board having power to act for such board with respect to the matter in
question.
"Builder" shall mean Sumitomo Heavy Industries, Inc., a Japanese
-------
corporation.
"Business Day" shall mean any day other than a Saturday or Sunday or
------------
any other day on which banks located in London, England, New York, New
York, Fairfax, Virginia, the city in which the Indenture Trustee Office is
located, the city in which the corporate trust department of the Managing
Trustee is located or, so long as any Pass Through Certificate is
Outstanding, the city in which the corporate trust department of the Pass
Through Trustee is located, are required or authorized to remain closed.
5
<PAGE>
"Business Trust Act" shall mean the Delaware Business Trust Act, 12
------------------
Del. C. c.38, as it may be amended from time to time.
"Capital Stock" shall mean, with respect to any Person, any and all
-------------
shares, interests, participations or other equivalents (however designated)
of such Person's capital stock, whether now outstanding or issued after the
date of the Participation Agreement, including, without limitation, all
Common Stock and Preferred Stock of such Person.
"Casualty Redemption Date" shall have the meaning specified in Section
------------------------
3.02 of the Indenture.
"Certificate" shall mean any one of the pass through certificates
-----------
executed and authenticated by the Pass Through Trustee, substantially in
the form of Exhibit A to the Pass Through Trust Agreement.
"Certificateholder" shall have the meaning specified in the Pass
-----------------
Through Trust Agreement.
"Charter" or "Charter Party" shall mean the VLCC Charter Party dated
------- -------------
as of the Closing Date between the Owner Trust and the Charterer.
"Charter Default" shall mean an event which, after giving of notice or
---------------
lapse of time, or both, would become a Charter Event of Default.
"Charter Event of Default" shall have the meaning specified in Article
------------------------
21 of the Charter Party.
"Charter Party Termination Date" shall mean the last day of the
------------------------------
Charter Period, whether occurring by reason of expiration of the Charter
Period or upon earlier termination of the Charter Party pursuant to the
terms thereof (including, without limitation, termination pursuant to
Article 22 of the Charter Party).
"Charter Period" shall mean the period beginning with the Delivery
--------------
Date and ending on the Charter Expiration Date set forth in Schedule 1 to
the Charter, as the same may be extended in accordance with Article 19(c)
of the Charter Party, or such earlier date on which the Charter Party is
terminated in accordance with the provisions thereof.
"Charterer" shall mean Mobil Marine Finance Company I Inc., a Delaware
---------
corporation.
"Claims" shall mean all liabilities (including, without limitation,
------
negligence, warranty, statutory,
6
<PAGE>
product, strict or absolute liability, liability in tort or otherwise),
obligations, responsibilities, losses, damages, penalties, fines,
sanctions, claims, Environmental Claims, actions, causes of action, suits,
investigations, judgments, Liens (including any Lien in favor of any
Governmental Authority for environmental liabilities and costs or
violations of any Environmental Laws), costs, expenses and disbursements,
of any kind or nature, including, without limitation, reasonable legal fees
and expenses and costs of investigation.
"Classification Society" shall mean the American Bureau of Shipping or
----------------------
any other classification society selected by the Charterer.
"Closing Date" shall mean December 19, 1996.
------------
"Code" shall mean the Internal Revenue Code of 1986.
----
"Common Stock" shall mean, with respect to any Person, any and all
------------
shares, interests, participations and other equivalents (however
designated, whether voting or non-voting) of such Person's common stock,
whether now outstanding or issued after the date of the Participation
Agreement, and includes, without limitation, all series and classes of such
common stock.
"Component" shall mean appliances, parts, instruments, appurtenances,
---------
accessories, equipment and other property of whatever nature originally
included in the Vessel on the Delivery Date.
"Conditional Sale Agreement" shall mean the Conditional Sale Agreement
--------------------------
dated November 25, 1996 between the Owner Trust and the U.K. Lessor.
"Construction Contract" shall mean the Shipbuilding Contract dated
---------------------
28th June between the Builder and MOSAT providing for the construction of
the Vessel and the Payment Guarantee Letter.
"Corporate Trust Office", when used with respect to the Pass Through
----------------------
Trustee, shall mean the office of the Pass Through Trustee in the city at
which at any particular time its corporate trust business shall be
principally administered, and when used with respect to the Indenture
Trustee, shall mean the Indenture Trustee Office.
"Cut-off Date" shall mean January 31, 1997.
------------
"Debt Rate" shall mean the weighted average interest rate borne by the
---------
Secured Notes.
7
<PAGE>
"Delaware Trustee" shall have the meaning specified in the preamble to
----------------
the Trust Agreement.
"Delivery Date" shall mean the date on which the Vessel is delivered
-------------
to the Owner, which is scheduled to occur on the date set forth as the
Scheduled Delivery Date in Schedule 1 of the Charter Party.
"Delivery Yard" shall mean the shipyard at which the vessel is to be
-------------
delivered as set forth in Schedule 1 of the Charter Party.
"Dollar" and "$" shall mean U.S. dollars.
------ -
"Eligible Bank" shall mean any bank or trust company, including the
-------------
Indenture Trustee and the Pass Through Trustee which shall be a member of
the Federal Reserve System and shall have a combined capital, surplus and
undivided profits of not less than $100,000,000.
"Environmental Claims" shall mean any Claim, action, cause of action,
--------------------
investigation or notice (written or oral) by any Person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, Remedial Action, Releases, governmental
response costs, natural resources damages, property damages, personal
injuries, or penalties) arising out of, based on or resulting from (a) the
presence, release into the environment, of any Hazardous Material at any
location, whether or not owned or operated by the Charterer, the
Subcharteree or MOSAT or (b) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
"Environmental Laws" shall mean all federal, state, foreign and local
------------------
laws and regulations, relating to pollution or protection of the
environment (including, without limitation, ambient air, surface, water,
groundwater, land surface or subsurface strata, wetlands, wildlife, aquatic
species, vegetation and natural resources), including, without limitation,
laws and regulations relating to emissions, discharges, Releases or
threatened Releases of Hazardous Materials or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials. Environmental Laws include,
but are not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"); the Federal Insecticide,
------
Fungicide, and Rodenticide Act ("FIFRA"); the Resource Conservation
-----
Recovery Act ("RCRA"); Oil Pollution Act of 1990 ("OPA"); the Superfund
---- ---
Amendments and Reauthorization Act of 1986 ("SARA"); the Toxic
----
8
<PAGE>
Substances Control Act ("TSCA"); the Hazardous Material Transportation Act;
----
the Clean Air Act; the Federal Water Pollution Control Act; the Safe
Drinking Water Act; and their state and local counterparts or equivalents.
"Environmental Permits" shall mean all permits, consents, licenses,
---------------------
certificates and other approvals or authorizations required under
Environmental Laws.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974.
"ERISA Affiliate" shall mean any entity treated as a single employer
---------------
with any Person pursuant to Section 414(b), (c), (m) or (o) of the Code.
"Event of Loss" shall mean any of the following events occurring on or
-------------
after the Delivery Date: (a) the (i) loss, theft, destruction or
disappearance of, or (ii) occurrence of damage (which, in the Charterer's
reasonable, good faith opinion, renders repair or replacement uneconomic)
to, the Vessel (or substantially the entirety of the Vessel); (b) the
permanent condemnation, confiscation or seizure of, or requisition of title
to, the Vessel by any Governmental Authority; (c) the requisition of use of
the Vessel by any Governmental Authority for a period which shall exceed
the remaining portion of the Charter Period; or (d) the receipt of
insurance proceeds based upon an actual or constructive total loss of the
Vessel.
"Excepted Payments" shall mean and include (i) any indemnity or other
-----------------
similar payment (whether or not Supplemental Hire) payable under any
Operative Document (including, without limitation, any amount payable by
the Guarantor under the Guarantee in respect of indemnity amounts payable
by the Charterer under any Operative Document) directly to any Person
(including, without limitation, the Trust Company, the Resident Trustee,
the Pass Through Trustee, each in its individual capacity) other than the
Indenture Trustee, any Holder, the Owner Trust, the Trust Estate or the
Indenture Estate; (ii) (A) insurance proceeds, if any, payable to the Owner
Trust or the Owner Participant under insurance separately maintained by the
Owner Trust or the Owner Participant as permitted by Section 16(b) of the
Charter Party except to the extent that the payment of any such proceeds
diminishes any recovery available under an insurance policy required to be
maintained under Section 16 of the Charter Party, or (B) proceeds of
personal injury or property damage liability insurance payable to or for
the benefit of the Trust Company, the Resident Trustee or the Owner
Participant under any Operative Document; (iii) any amount payable for the
account of the Owner Participant
9
<PAGE>
pursuant to Section 13.1 or 13.2 of the Participation Agreement (or any
amount payable by the Guarantor under the Guarantee in respect of amounts
payable for the account of the Owner Participant pursuant to Section 13.1
or 13.2 of the Participation Agreement); and (iv) interest at the Overdue
Rate payable by the Charterer (or the Guarantor) to the Trust Company, the
Resident Trustee or the Owner Participant on any of the amounts described
in clauses (i) through (iii) above; together with the right to demand,
collect, sue for, exercise remedies to enforce, or otherwise obtain amounts
referred to in clauses (i) through (iv) of this definition.
"Excess Hire" shall have the meaning specified in clause b. of
-----------
Schedule 2A of the Charter Party.
"Excess Hire Rate" shall have the meaning specified in clause b. of
----------------
Schedule 2A to the Charter Party.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
"Fair Market Sales Value" of any property or service as of any date
------------------------
shall mean the cash rent or cash price that would be obtained in an arm's-
length lease or sale, respectively, between an informed and willing lessee
or buyer (under no compulsion to lease or purchase) and an informed and
willing lessor or seller (under no compulsion to lease or sell) of the
property or services in question, disregarding the renewal option set forth
in the Charter Party and shall be determined on the basis that (unless
determined pursuant to Article 22 of the Charter Party) the Vessel has been
maintained in accordance with the requirements of the Charter Party (but
otherwise on an "as-is" basis).
"Final Delivery Date" shall mean the date set forth on Schedule 1 to
--------------------
the Bareboat Charter Party as the Final Delivery Date.
"Final Determination" shall mean (i) a decision, judgment, decree or
-------------------
other order by any court of competent jurisdiction that resolves the
matter, which decision, judgment, decree or other order has become final
(i.e., the earliest of when all allowable appeals have been exhausted by
-----
either party to the action or the time for filing such appeal has expired
or the Tax Indemnitee has notified the Charterer in writing that it does
not intend to make such an appeal, (ii) a closing agreement entered into
under Section 7121 of the Code (or any successor provision) or any other
settlement agreement entered into in connection with the administrative or
judicial proceedings, in any case with the Charterer's consent, (iii) the
expiration of the time for instituting an
10
<PAGE>
initial suit with respect to a claimed deficiency or for instituting a
claim for refund, or, if a refund claim was filed, the expiration of the
time for instituting suit with respect thereto or (iv) the point in time
when the Tax Indemnitee is no longer required to contest the imposition of
such Tax pursuant to Section 13.2(e) of the Participation Agreement.
"Full Accrual Date" shall mean January 2, 1999.
-----------------
"GAAP" shall mean generally accepted accounting principles in the
----
United States of America.
"Governmental Actions" shall mean all actions, authorizations,
--------------------
consents, approvals, waivers, exceptions, variances, franchises, filings,
orders, permits, licenses, exemptions, publications, notices to and
declarations of or with any Governmental Authority, including, without
limitation, those pertaining to Environmental Laws and Environmental
Permits.
"Governmental Authority" shall mean any nation or government, any
----------------------
state, county, municipality or other political subdivision thereof or any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Governmental Rules" shall mean applicable statutes, laws, rules,
------------------
codes, ordinances, decisions, regulations, permits, certificates and orders
of any Governmental Authority now or hereafter in effect and any
interpretation thereof by competent Governmental Authority, including any
judicial or administrative order, consent decree, settlement agreement or
judgment, including, without limitation, Environmental Laws.
"Guarantee" or "Guaranty" shall mean the Mobil Guarantee dated as of
--------- --------
the Closing Date by Guarantor in favor of the Managing Trustee, the
Delaware Trustee, the Owner Trust, the Owner Participant, the Indenture
Trustee and the Pass Through Trustee.
"Guarantor" shall mean Mobil Corporation, a Delaware corporation.
---------
"Hazardous Materials" shall mean all substances defined as such in the
-------------------
National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R.
(S) 300.5, or defined as such by, or regulated as such under, any law
relating to pollution or protection of the environment.
11
<PAGE>
"Head Lease" shall mean the Lease Agreement dated December 10, 1996
----------
between U.K. Lessor and the Owner Trust.
"Head Lessor" shall mean the U.K. Lessor.
-----------
"Hire" shall mean, collectively, Bareboat Hire and Supplemental Hire.
----
"Holder" shall mean a registered holder of a Secured Note and shall
------
include, so long as the Pass Through Trustee is a registered holder of a
Secured Note, the Pass Through Trustee.
"Indemnitee" shall mean each Owner Trust, the Resident Trustee, the
-----------
Trust Company, the Delaware Trustee, the Managing Trustee, the Owner
Participant, the Indenture Trustee (both in its individual and its trust
capacity), the Pass Through Trustee (both in its individual and trust
capacities), each Loan Participant, and their respective Affiliates,
shareholders, officers, directors, agents, employees and servants.
"Indenture" shall mean the Trust Indenture, Assignment of Charter and
---------
Head Lease and Security Agreement dated as of the Closing Date between the
Owner Trust and the Indenture Trustee.
"Indenture Default" shall mean an event which, after giving of notice
-----------------
or lapse of time, or both, would become an Indenture Event of Default.
"Indenture Estate" shall have the meaning specified in the Granting
----------------
Clause of the Indenture.
"Indenture Event of Default" shall have the meaning specified in
--------------------------
Section 5.02 of the Indenture.
"Indenture Indebtedness" shall have the meaning specified in the
----------------------
Recitals to the Indenture.
"Indenture Supplement" shall mean any indenture supplement that may be
--------------------
executed and delivered by the Owner Trust and the Indenture Trustee from
time to time.
"Indenture Trustee" shall have the meaning specified in the preamble
-----------------
to the Indenture.
"Indenture Trustee Office" shall mean the office of the Indenture
------------------------
Trustee initially located at Two International Place, Boston, MA 02110 or
such other office as may be designated by the Indenture Trustee to the
Owner Trust and the Charterer.
12
<PAGE>
"Indenture Trustee's Liens" shall mean Liens on or against all or any
-------------------------
part of the Vessel, the Vessel Interest, the Charter Party, the Trust
Estate, the Indenture Estate or any payment of Hire, Excess Hire or
Additional Excess Hire (a) which result from any act of, or failure to act
by, or any Claim against, the Indenture Trustee (in its individual capacity
or as trustee) unrelated to the transactions contemplated by the
Participation Agreement or any other Operative Document, or which result
from any violation by the Indenture Trustee (in its individual capacity or
as trustee) of any of the terms of the Operative Documents, or (b) which
result from Liens in favor of any taxing authority by reason of any Tax
owed by the Indenture Trustee (in its individual capacity or as trustee),
except that Indenture Trustee's Liens shall not include any Lien directly
resulting from any Tax for which the Charterer is obligated to indemnify
the Indenture Trustee (in its individual capacity or as trustee) until such
time as the Charterer shall have already paid to, or on behalf of, the
Indenture Trustee, the Tax or an indemnity with respect to the same.
"Independent" shall mean, when used with respect to any specified
-----------
Person, a Person who (1) is in fact independent, (2) does not have any
direct financial interest in the Trust Company, the Owner Trust, the Owner
Participant or the Charterer or any Affiliate of any of them and (3) is not
connected with the Trust Company, the Owner Participant or the Charterer or
any such Affiliate as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions. Whenever it is
provided that any Independent Person's opinion or certificate shall be
furnished to the Indenture Trustee, such Person shall be appointed by the
Charterer and approved by the Indenture Trustee in the exercise of
reasonable care and such opinion or certificate shall state that the signer
has read this definition and that the signer is Independent within the
meaning hereof.
"Independent Investment Banker" shall mean an independent investment
-----------------------------
banking institution of national standing appointed by the Charterer on
behalf of the Owner Trust; provided that if the Indenture Trustee shall not
--------
have received written notice of such an appointment at least 10 days prior
to the relevant Redemption Date or Charter Termination Date or if a Charter
Event of Default shall have occurred and be continuing, "Independent
-----------
Investment Banker" shall mean such an institution appointed by the
-----------------
Indenture Trustee.
"Initial Secured Note(s)" shall mean the Secured Note(s) issued under
-----------------------
the Indenture on the Closing date or
13
<PAGE>
any Secured Notes issued in exchange therefor pursuant to Sections 2.06 and
2.07 of the Indenture.
"Inflation Factor" shall mean the Producer Price Index as published by
----------------
the U.S. Department of Labor.
"Initial Subcharter" shall mean the Vessel Subcharter Agreement dated
------------------
as of the Closing Date between the Charterer and MSCL.
"Interest Payment Date" shall mean each January 2 and July 2.
---------------------
"Investment" shall have the meaning specified in Section 2.1 of the
----------
Participation Agreement.
"Joint Venture Agreement" shall mean the Joint Venture Agreement dated
-----------------------
June 27, 1996 among MOSAT, SAMCO and Samco (Cayman) Ltd., a Cayman Islands
company.
"Lessee Support Agreement" shall mean the agreement dated
-------------------------
December 10, 1996 among the Charterer, the U.K. Lessor and the Owner Trust
with respect to certain obligations of the Owner Trust under the Head
Lease.
"Lessor's Mortgage" shall mean the U.K. Lessor's Mortgage.
-----------------
"Lessor's Security Assignment" shall mean that certain Lessor's
----------------------------
Security Assignment dated December 19, 1996 among the Indenture Trustee,
the Owner Participant, the Owner Trust and the U.K. Lessor.
"Lien" shall mean any mortgage, pledge, security interest,
----
encumbrance, lien, right of others or charge of any kind, including,
without limitation, any Environmental Liens, any right of first refusal,
any title defect, conditional sale or other title retention agreement or
any lease in the nature thereof or any libel or complaint in admiralty or
the filing of, or agreement to give, any financing statement under the
Uniform Commercial Code of any jurisdiction.
"Loan Participant" shall mean and include each Holder (including, so
----------------
long as it holds a Secured Note, the Pass Through Trustee).
"Losses" shall have the meaning set forth in Section 13.3 of the
------
Participation Agreement.
"Majority in Interest of Holders of Notes" shall mean, as of any date
----------------------------------------
of determination, Holders holding in aggregate more than 50% of the total
principal amount of the Secured Notes Outstanding.
14
<PAGE>
"Make-Whole Amount" shall mean: with respect to any Series 1996 A Secured
-----------------
Note to be redeemed, or purchased on any Redemption Date, the amount which
the Independent Investment Banker determines as of the fourth Business Day
prior to such Redemption Date to equal the excess, if any, of (x) the sum
of the present values of all the remaining scheduled payments of principal
and interest from the Redemption Date to maturity of such Secured Note,
discounted semi-annually on each Interest Payment Date at a rate equal to
the Treasury Rate plus .10%, based on a 360-day year of twelve 30-day
months, over (y) the aggregate unpaid principal amount of such Secured Note
plus accrued but unpaid interest on such Secured Note (but not any accrued
interest in default) to such Redemption Date.
"Managing Trustee" shall mean the Trust Company not in its individual
----------------
capacity but solely as Managing Trustee under the Trust Agreement.
"Maturity Date" shall mean, with respect to any Secured Note, the date
-------------
specified as the "Maturity Date" for such Secured Note on Exhibit B to the
Indenture.
"MMFC I" shall mean Mobil Marine Finance Company I Inc., a Delaware
------
corporation.
"MMFC II" shall mean Mobil Marine Finance Company II Inc., a Delaware
-------
corporation.
"Modifications" shall mean alterations, modifications, additions and
-------------
improvements of or to the Vessel.
"Moody's" shall mean Moody's Investor Service, Inc.
-------
"MOSAT" shall mean Mobil Shipping and Transportation Company, a
-----
Liberian corporation.
"MSCL" shall mean Mobil Shipping Company Limited, a corporation formed
----
under the laws of England and Wales.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
-------------------
Section 4001(a)(3) of ERISA which is maintained for employees of the
Charterer or any of its ERISA Affiliates.
"Nonseverable Modification" shall mean any Modification to the Vessel
-------------------------
which is not a Severable Modification.
"Note Register" shall have the meaning specified in Section 2.04 of
-------------
the Indenture.
15
<PAGE>
"Officer's Certificate" and "Officers' Certificate" of any Person
--------------------- ---------------------
shall mean a certificate signed on behalf of such Person by the Chairman,
the President, any Vice President, any Assistant Vice President, Financial
Services Officer, the Controller, Assistant Treasurer or the Treasurer of
such Person or any other individual duly authorized and acting in such
capacity or, in the case of the Owner Trust or the Indenture Trustee, a
Responsible Officer of the Owner Trust or Indenture Trustee.
"Operative Documents" shall mean the Assignment of Construction
-------------------
Contract, Assignment of Construction Contract, the Guarantee, the
Indenture, each Indenture Supplement, the Charter Party, the Participation
Agreement, the Secured Notes, the Ship Mortgage and the Trust Agreement.
"Other Charter" or "Other Charter Party" shall mean any of the
------------- -------------------
Bareboat Charter Parties dated as of the Closing Date between either (i)
the Other Owner and the Charterer or (ii) the Other Owner and the Other
Charterer, as charterer, providing for the bareboat charter of one of the
Other Vessels.
"Other Charterer" shall mean MMFC II.
---------------
"Other Owner" shall mean any owner (or owners) from time to time of an
-----------
Other Vessel Interest.
"Other Vessel" shall mean any of the vessels identified as "Other
------------
Vessels" in Schedule 1 to the Charter Party.
"Other Vessel Interest" shall mean the rights of the Other Owner in a
---------------------
related Other Vessel, including its rights under the U.K. Documents.
"Outstanding" shall mean, when used with respect to the Secured
------------
Notes as of any date of determination, all Secured Notes theretofore
authenticated and delivered under the Indenture, except:
(i) Secured Notes theretofore cancelled by the Indenture
Trustee or delivered to the Indenture Trustee for cancellation;
(ii) Secured Notes or portions thereof for whose payment or
redemption money in the necessary amount has been theretofore
deposited with the Indenture Trustee, provided that such Secured Notes
--------
are to be redeemed and notice of such redemption has been duly given
and not revoked or otherwise withdrawn pursuant to the Indenture; and
16
<PAGE>
(iii) Secured Notes paid or in exchange for which or in lieu of
which other Secured Notes have been authenticated and delivered
pursuant to the Indenture;
provided, however, that in determining whether the Holders of the requisite
-------- -------
principal amount of Secured Notes Outstanding have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Secured Notes owned by the Owner Trust, the Charterer, the Owner
Participant, or any Affiliate of the Charterer, the Owner Trust or the
Owner Participant, shall be disregarded and deemed not to be Outstanding,
unless such Person owns 100% of the Secured Notes owned by all Persons,
except that, in determining whether the Indenture Trustee shall be
protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Secured Notes which the
Indenture Trustee knows to be so owned shall be so disregarded. Secured
Notes so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Indenture
Trustee the pledgee's right so to act with respect to such Secured Notes
and that the pledgee is not the Owner Trust, the Charterer, the Owner
Participant or any Affiliate of the Owner Trust, the Charterer or the Owner
Participant.
"Overdue Rate" shall mean a rate per annum equal to (i) with respect
------------
to amounts owing to any Loan Participant constituting payments or
prepayments of any Secured Note, the rate of interest on such Secured Note,
and (ii) with respect to amounts owing to the Owner Participant or the
Charterer, the rate of interest publicly announced from time to time by
Citibank, N.A. in New York City as its "prime" or "base" rate plus 1%
(computed on the basis of a 360-day year of twelve 30-day months).
"Owner" shall mean the Owner Trust.
-----
"Owner's Cost" shall mean the amount set forth as "Owner's Cost" in
------------
Schedule 1 to the Charter Party.
"Owner's Liens" shall mean Liens on or against all or any part of the
-------------
Vessel, the Vessel Interest, the Charter Party, the Trust Estate, the
Indenture Estate or any payment of Hire, Excess Hire or Additional Excess
Hire (a) which result from any act of, or any failure to act by, or any
Claim against, the Trust Company, the Resident Trustee or the Owner Trust
unrelated to its interest in the Vessel Interest, the administration of the
Trust Estate or the transactions contemplated by the Participation
Agreement or any other Operative Document, or which result from any
violation by the Trust Company,
17
<PAGE>
the Resident Trustee or the Owner Trust of any of the terms of the
Operative Documents, or (b) which result from Liens in favor of any taxing
authority by reason of any Tax owed by the Trust Company, the Resident
Trustee or the Owner Trust, except that Owner's Liens shall not include any
Lien resulting from any Tax for which the Charterer is obligated to
indemnify the Trust Company, the Resident Trustee or the Owner Trust until
such time as the Charterer shall have already paid to, or on behalf of, the
Trust Company, the Resident Trustee or the Owner Trust, as the case may be,
the Tax or an indemnity with respect to the same.
"Owner Participant" shall mean the party identified as such in
-----------------
Schedule 1 to the Participation Agreement and each Person to whom a
transfer is effected in accordance with Section 15 of the Participation
Agreement.
"Owner Participant's Liens" shall mean any Lien on or against the
-------------------------
Vessel, the Vessel Interest, the Charter Party, the Trust Estate or the
Indenture Estate or any payment of Hire, Excess Hire or Additional Excess
Hire (a) which results from any act of, or any failure to act by, or any
Claim against, the Owner Participant unrelated to the transactions
contemplated by the Operative Documents, or which result from any violation
by the Owner Participant of any of the terms of the Operative Documents, or
(b) which result from any Lien in favor of any taxing authority by reason
of any Tax owed by the Owner Participant, except that Owner Participant's
Liens shall not include any Lien resulting from any Tax for which the
Charterer is obligated to indemnify the Owner Participant (or any member of
its consolidated group) until such time as the Charterer shall have already
paid to, or on behalf of, the Owner Participant (or such member of its
consolidated group), the Tax or an indemnity with respect to the same.
"Owner Trust" shall have the meaning specified in the preamble to the
-----------
Trust Agreement.
"Owner Trust Documents" shall have the meaning specified in Section
---------------------
2.1 of the Trust Agreement.
"Owner Trust U.K. Documents" shall have the meaning specified in
--------------------------
Section 2.2 of the Trust Agreement.
"Owner Trustee" shall have the meaning specified in the preamble to
-------------
the Trust Agreement.
"Parent Guarantee" or "Parent Guaranty" shall mean the Guarantee.
---------------- ---------------
"Parent Guarantor" shall mean the Guarantor.
----------------
18
<PAGE>
"Participant" shall mean the Loan Participant or the Owner Participant and
-----------
"Participants" shall mean all of them.
------------
"Participation Agreement" shall mean the Participation Agreement dated
-----------------------
as of the Closing Date among the Charterer, the Owner Participant, the Pass
Through Trustee, the Indenture Trustee, the Owner Trust and the Managing
Trustee.
"Pass Through Certificates" shall mean any Certificates from time to
-------------------------
time issued and outstanding under and pursuant to the Pass Through Trust
Agreement.
"Pass Through Trust" shall mean the trust created by the Pass Through
------------------
Trust Agreement.
"Pass Through Trust Agreement" shall mean the Pass Through Trust
----------------------------
Agreement dated as of October 4, 1996 among the Guarantor, the Charterer,
the Other Charterer, six other subsidiaries of the Guarantor and the Pass
Through Trustee, as amended by the Pass Through Trust Supplement.
"Pass Through Trust Property" shall have the meaning specified in the
---------------------------
Pass Through Trust Agreement.
"Pass Through Trust Supplement" shall mean the supplement to the Pass
-----------------------------
Through Trust Agreement dated as of the Closing Date among the Guarantor,
the Charterer, the Other Charterer and the Pass Through Trustee.
"Pass Through Trustee" shall mean State Street Bank and Trust Company,
--------------------
not in its individual capacity except as expressly provided in the Pass
Through Trust Agreement and the Operative Documents, but solely as Pass
Through Trustee under the Pass Through Trust Agreement.
"Payment Guarantee Letter" shall mean the guarantee given by the
------------------------
Sumitomo Marine & Fire Insurance Co., Ltd. pursuant to Article 10 of the
Construction Contract.
"Permitted Investments" shall mean (i) obligations of the United
---------------------
States of America, or obligations fully guaranteed as to interest and
principal by the United States of America; (ii) certificates of deposit
issued by an Eligible Bank or interest-bearing insured accounts in an
Eligible Bank; (iii) commercial paper, rated at least P-1 (or comparable
rating) by Moody's Investors Service, Inc. (or any successor thereto) or at
least A-1 (or comparable rating) by Standard and Poor's Corporation (or any
successor thereto); or (iv) a money market fund registered under the
Investment Company Act of 1940, the portfolio of which is limited to U.S.
government obligations and U.S. agency obligations.
19
<PAGE>
"Permitted Liens" shall mean (a) the respective rights and interests of (x)
---------------
the Charterer, the Owner Participant, the Owner, the Indenture Trustee, and
the Holders, as provided in the Operative Documents and (y) prior to the
Delivery Date, the Builder under the Construction Contract, (b) Owner's
Liens, Owner Participant's Liens and Indenture Trustee's Liens, (c) Liens
for Taxes either not delinquent or being contested in good faith and by
appropriate proceedings, so long as such proceedings do not involve any
material danger of the sale, forfeiture or loss of any part of, the Vessel,
the Trust Estate or the Indenture Estate, or title thereto or any interest
therein or any material danger of the interference with the payment of
Hire, (d) materialmen's, mechanics', workers', repairmen's, employees' or
other like Liens, arising in the ordinary course of business, or arising in
the course of constructing, repairing, equipping or installing, modifying
or expanding the Vessel or any part thereof, for amounts either not more
than 60 days past due or being contested in good faith and by appropriate
proceedings so long as such proceedings do not involve any material danger
of the sale, forfeiture or loss of any part of the Vessel, the Trust Estate
or the Indenture Estate, or title thereto or any interest therein or any
material danger of the interference with the payment of Hire, (e) Liens
arising out of judgments or awards against the Charterer or any Permitted
Subcharterer with respect to which at the time an appeal or proceeding for
review is being prosecuted in good faith so long as such judgment, award or
appeal does not involve any material danger of the sale, forfeiture or loss
of any part of the Vessel, the Trust Estate or the Indenture Estate, or
title thereto or any interest therein or any material danger of the
interference with the payment of Hire, (f) the rights and interests of the
U.K. Lessor provided in the U.K. Documents (g) liens for current crew's
wages, for general average or salvage (including contract salvage) or for
wages of stevedores employed directly by the Charterer, MSCL, or the
operator, agent or master of the Vessel which in each case (A) are
unclaimed or covered by insurance or (B) for amounts either not more than
60 days past due or being contested in good faith and by appropriate
proceedings so long as such proceedings do not involve any material danger
of the sale, forfeiture or loss of any part of the Vessel, the Trust Estate
or the Indenture Estate, or title thereto or any interest therein or any
material danger of the interference with the payment of Hire, and Liens
which, under the laws of the Marshall Islands, take priority over the Ship
Mortgage and which are for amounts either not more than 60 days past due or
being contested in good faith and by appropriate proceedings so long as
such proceedings do not involve any material danger of the sale, forfeiture
20
<PAGE>
or loss of any part of the Vessel, the Vessel Interest, the Trust Estate or
the Indenture Estate, or title thereto or any interest therein and any
material danger of the interference with the payment of Hire, (h) Liens,
assignments and subleases permitted by Article 20(b) of the Charter Party
and the rights of MSCL under the Initial Subcharter and the rights of any
other subcharterer or any sub-subcharterer under any other subcharter (or
sub-subcharter) permitted by Article 20 of the Charter Party.
"Permitted Subcharterer" shall mean any subcharterer of the Vessel
----------------------
Interest under a subcharter in compliance with Article 20 of the Charter.
"Person" shall mean any individual, partnership, corporation, trust,
------
business trust, unincorporated association, joint venture, government or
any department or agency thereof, or any other entity.
"Preferred Stock" shall mean, with respect to any Person, any and all
---------------
shares, interests, participations or other equivalents (however designated)
of such Person's preferred or preference stock, whether now outstanding or
issued after the date of the Participation Agreement, and includes, without
limitation, all classes and series of preferred or preference stock.
"Premium" shall mean the Make-Whole Amount, if any, payable pursuant
-------
to Article III of the Indenture.
"Protocol of Delivery and Acceptance" shall mean a protocol of
-----------------------------------
delivery and acceptance to be executed by Charterer on the Delivery Date.
"PTE 90-24 " shall mean an Affiliate as defined in Prohibited
----------
Transaction Exemption 90-24 et al., Exemption Application No. D-8019 et
al., 55 Fed. Reg. 20,548 1990.
"Rate Excess" shall have the meaning specified in Schedule 2A to the
-----------
Charter Party.
"Rate Period" shall mean each six-month period during the term of the
-----------
Bareboat Charter Party ending on a Base Hire Payment Date, the first such
period commencing and ending on the dates specified in Schedule 1 of the
Charter Party.
"Rating Agency" shall mean each of Moody's and Standard & Poor's, or
-------------
if Moody's or Standard & Poor's shall no longer perform the function of a
securities rating agency, "Rating Agency" shall be deemed to refer to any
other nationally recognized rating agency designated by the Parent
Guarantor.
21
<PAGE>
"Rating Agency Confirmation" shall mean a prior written confirmation from
--------------------------
each Rating Agency that a specified action or event shall not result in the
downgrade or withdrawal of such Rating Agency's then current credit rating
of the Pass Through Certificates.
"Redelivery Date" shall have the meaning specified in Article 12(a) of
---------------
the Charter Party.
"Redemption Date" shall mean the date on which the Secured Notes are
---------------
to be redeemed or purchased pursuant to Section 3.02, 3.03 or 3.06 of the
Indenture.
"Redemption Price" shall have the meaning specified in Section 3.10 of
----------------
the Indenture.
"Release" shall mean the release, spill, emission, leaking, pumping,
-------
injection, deposit, disposal, discharge, dispersal, leaching or migrating
into the environment of any Hazardous Material through or in the air, soil,
surface water or groundwater, provided that the presence of Hydrocarbons
within any portion of the Vessel designed to produce, pump, process, store,
treat, refine or transport Hydrocarbons shall not be considered a Release.
"Remedial Action" shall mean actions required to (i) clean up, remove,
---------------
treat or in any other way address Hazardous Materials in the environment,
(ii) prevent the Release or further Release or minimize the further Release
of Hazardous Materials, or (iii) investigate and determine if a remedial
response is needed, to design such a response and post-remedial
investigation, monitoring, operation, maintenance and care.
"Request" shall have the meaning specified in Section 2.08(b) of the
-------
Indenture.
"Resident Trustee" means Wilmington Trust Company, a Delaware banking
----------------
corporation, acting in its individual capacity, and its successors and
assigns as Delaware Trustee under the Trust Agreement, acting in such
successors' and assigns' respective individual capacities.
"Responsible Officer", when used with respect to either Owner Trustee,
-------------------
the Indenture Trustee or the Pass Through Trustee, shall mean an officer in
its corporate trust administration department (or any successor group of
either Owner Trustee, the Indenture Trustee or the Pass Through Trustee, as
the case may be) or any other officer customarily performing functions
similar to those performed by any of the above designated officers and also
shall mean, with respect to a particular corporate
22
<PAGE>
trust matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"SEC" shall mean the Securities and Exchange Commission.
---
"Secured Notes" shall mean all notes from time to time issued and
-------------
outstanding under and pursuant to the Indenture.
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"Seller" shall meaning the entity identified as such on Schedule 1 to
------
the Charter Party.
Series 1996 A Secured Notes" shall mean the Secured Note issued under
---------------------------
Section 2.01(b) of the Indenture and any Series 1996 A Secured Note issued
in exchange therefor pursuant to Section 2.06 of the Indenture.
"Severable Modification" shall mean any Modification to the Vessel
--------- ------------
permitted under the Charter Party which can be readily removed from the
Vessel without causing material damage to the Vessel.
"Ship Mortgage" shall mean the First Ship Mortgage dated December 19,
-------------
1996 covering the Vessel from the Owner Trust to the Indenture Trustee.
"Special Indemnitee" shall have the meaning specified in Section 13.3
------------------
of the Participation Agreement.
"Special Termination Election" shall mean an election to terminate the
----------------------------
Charter pursuant to Article 18 thereof.
"Special Termination Events" shall mean the events specified as
--------------------------
Special Termination Events in Article 23(a) of the Charter.
"Special Termination Redemption Date" shall have the meaning set forth
-----------------------------------
in Section 3.03(a) of the Indenture.
"Specified Charter Event of Default" shall mean a Charter Party Event
----------------------------------
of Default described in paragraph (1), (7) or (8) of Article 21 of the
Charter Party or a Charter Party Default described in paragraph (1) or (7)
of Article 21 of the Charter Party.
"Standard & Poor's" shall mean Standard & Poor's Rating Group, a
-----------------
division of Dunn & Bradstreet, Inc.
23
<PAGE>
"Subsidiary" of any Person shall mean any corporation, association or
----------
other business entity of which more than fifty percent (50%) of the total
voting power of shares of Capital Stock entitled to vote in the election of
directors, managers or trustees thereof (without regard to the occurrence
of any contingency) is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries (within
the meaning of this definition) of that Person, or a combination thereof.
"Substitute Obligor" shall have the meaning set forth in Section 3.04
------------------
of the Indenture.
"Substitution Date" shall have the meaning set forth in Section 3.04
-----------------
of the Indenture.
"Substitution Date Agreement" shall have the meaning set forth in
---------------------------
Section 3.04 of the Indenture.
"Supervisory Agreement" shall mean the Agreement dated as of June 28,
---------------------
1996 between MOSAT and the Owner Participant providing for supervising the
construction of the Vessel.
"Supplemental Hire" shall mean (i) any and all amounts, liabilities
-----------------
and obligations (other than Bareboat Hire) which the Charterer assumes or
agrees to pay to or on behalf of the Owner Trust, the Owner Participant,
the Trust Company, the Resident Trustee, the Pass Through Trustee, the Loan
Participant or the Indenture Trustee under any Operative Document,
including, without limitation, any payments of indemnification or
Termination Value or Premium and (ii) any amounts which are expressed in
the Indenture to be payable at the Charterer's expense.
"Tax" and "Taxes" shall have the respective meanings specified in
--- -----
Section 14.2 of the Participation Agreement.
"Tax Affiliate" shall mean an Affiliate of any corporation related to
-------------
the Charterer (within the meaning of Section 318 of the Code), or any
shareholder of the Charterer.
"Tax Claim" shall have the meaning specified in Section 13.2(e) of the
---------
Participation Agreement.
"Tax Indemnitee" shall mean each Owner Trustee (both in its individual
--------------
capacity and in its trust capacity), the Owner Participant, the Indenture
Trustee (both in its individual capacity and in its trust capacity), and
the Loan Participant, and their respective Affiliates, officers, directors,
agents, employees and servants but
24
<PAGE>
shall not include (i) the Pass Through Trustee, (ii) any other Holder and
(iii) any Certificateholder.
"Termination Date" shall have the meaning specified in Article 18(b)
----------------
of the Charter Party.
"Termination Election" shall mean an election by the Charterer to
--------------------
terminate the Charter pursuant to Article 18(a) thereof.
"Termination Redemption Date" shall have the meaning specified in
---------------------------
Section 3.03(b) of the Indenture.
"Termination Value" shall mean as of any Termination Value
-----------------
Determination Date during the Charter Period, the amount set forth opposite
such date in Schedule 4 to the Charter Party.
"Termination Value Determination Date" shall mean any Business Day.
------------------------------------
"Transaction Expenses" shall mean the following fees, expenses,
--------------------
disbursements and costs incurred in connection with the preparation,
execution and delivery of the Operative Documents and the Pass Through
Trust Agreement and the consummation of the transactions contemplated
thereby on the Closing Date, as applicable, provided that invoices for all
--------
such fees, expenses, disbursements and costs shall have been presented for
payment on or prior to the ninetieth day following the Closing Date: (i)
the reasonable attorneys' fees and expenses of counsel to the Owner
Participant, each Owner Trustee, the Indenture Trustee, the Pass Through
Trustee and special admiralty counsel, (ii) the initial (but not ongoing)
fees and expenses of each Owner Trustee, the Pass Through Trustee and the
Indenture Trustee, (iii) printing, word processing and reproduction costs,
(iv) the fees and commissions of Morgan Stanley & Co. Incorporated as
underwriter in connection with the offering and sale of the Pass Through
Certificates, (v) other costs associated with the issuance of the Secured
Note and the Pass Through Certificates, independent rating agencies and
printer charges, and (vi) to the extent agreed with the Underwriter, the
reasonable fees, expenses and disbursements of special counsel for the
Underwriter in connection with the Operative Documents; provided that,
--------
other than as set forth in clause (iv) of this sentence, "Transaction
-----------
Expenses" shall not include the fees, expenses or disbursements of any law
--------
firm not specifically named in Section 4.6 of the Participation Agreement.
"Transferee" shall have the meaning specified in Section 14.2 of the
----------
Participation Agreement.
25
<PAGE>
"Treasury Rate" shall mean, with respect to each Secured Note to be
-------------
redeemed or purchased, a per annum rate (expressed as a semiannual
equivalent and as a decimal and, in the case of United States Treasury
bills, converted to a bond equivalent yield), determined to be the per
annum rate equal to the semiannual yield to maturity of United States
Treasury securities maturing on the Average Life Date of such Secured Note,
as determined by interpolation between the most recent weekly average
yields to maturity for two series of United States Treasury securities, (A)
one maturing as close as possible to, but earlier than, the Average Life
Date of such Secured Note and (B) the other maturing as close as possible
to, but later than, the Average Life Date of such Secured Note, in each
case as published in the most recent H.15(519) (or, if a weekly average
yield to maturity of United States Treasury securities maturing on the
Average Life Date of such Secured Note is reported in the most recent
H.15(519), as published in H.15(519)). H.15(519) shall mean "Statistical
Release H.15(519), Selected Interest Rates" or any successor publication,
published by the Board of Governors of the Federal Reserve System. The
most recent H.15(519) shall mean the latest H.15(519) which is published
prior to the close of business on the fourth Business Day preceding the
Redemption Date. For purposes hereof, "Average Life Date" shall mean, with
-----------------
respect to each Secured Note to be redeemed, the date which follows the
Redemption Date by a period equal to the Remaining Weighted Average Life of
such Secured Note. For purposes hereof, "Remaining Weighted Average Life"
-------------------------------
shall mean, for any Secured Note, as of any date of determination, the
number of days equal to the quotient obtained by dividing (a) the sum of
the products obtained by multiplying (i) the amount of each then remaining
installment of principal, including the payment due on the maturity of such
Secured Note by (ii) the number of days from and including the Redemption
Date to but excluding the scheduled payment date of such principal payment;
by (b) the then unpaid principal amount of such Secured Note.
"Treasury Regulations" shall mean the income tax regulations issued,
--------------------
published or promulgated under the Code by the United States Department of
the Treasury.
"Trust Agreement" shall mean the Amended and Restated Declaration and
---------------
Agreement of Trust dated as of December 19, 1996 among the Owner
Participant, the Resident Trustee and the Trust Company.
"Trust Company" shall mean Deutsche Morgan Grenfell (Cayman) Limited,
-------------
a Cayman Islands company in its individual capacity.
26
<PAGE>
"Trust Certificate" shall mean an Officer's Certificate of the Owner
-----------------
Trust with regard to those matters set forth in Section 3.04(i) of the
Indenture.
"Trust Estate" shall have the meaning specified in Section 3.2 of the
------------
Trust Agreement.
"Trust Expenses" shall have the meaning specified in Section 8.1 of
--------------
the Trust Agreement.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
-------------------
amended.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
---
of New York or in any other applicable jurisdiction.
"U.K. Documents" shall mean the Conditional Sale Agreement, the Head
--------------
Lease, the U.K. Lessor's Mortgage, the Lessor's Security Assignment and
each other instrument defined as an "Operative Document" in the Head Lease.
"U.K. Financing" shall mean the transactions contemplated by the U.K.
--------------
Documents.
"U.K. Lease Term" shall mean the term of the U.K. Lease set forth in
---------------
Schedule 1 of the Charter Party.
"U.K. Lessor" shall mean the entity identified as such in Schedule 1
------------
of the Charter Party.
"U.K. Lessor's Mortgage" shall mean the Mortgage dated December 10,
----------------------
1996 between U.K. Lessor and Owner Trust.
"U.K. Lessor's Security Assignment" shall mean the Lessor's Security
---------------------------------
Assignment.
"U.K. Obligations" shall have the meaning set forth in Section 13.3 of
----------------
the Participation Agreement.
"Underwriter" shall mean Morgan Stanley & Co. Incorporated, a Delaware
-----------
corporation.
"Underwriting Agreement" shall mean the Underwriting Agreement among
----------------------
the Guarantor, the Charterers and the Underwriter relating to the purchase
and sale of the Pass Through Certificates.
"Vessel" shall mean the very large crude carrier identified in
------
Schedule 1 to the Charter Party under the heading "Vessel", and all other
property installed or located therein and all assets from time to time
included
27
<PAGE>
or incorporated therein in which title thereto shall vest in the Owner
pursuant to the Charter Party.
"Vessel Interest" shall mean the Owner's rights in the Vessel,
---------------
including its rights under the U.K. Documents.
28
<PAGE>
EXHIBIT 99.16
APPENDIX A
HULL NO. 1234
DEFINITIONS
-----------
The following terms shall have the following meanings for all purposes of
the Operative Documents referred to below, unless otherwise defined in an
Operative Document or the context thereof shall otherwise require and such
meanings are equally applicable both to the singular and plural forms of the
terms defined. Any term defined below by reference to any agreement or
instrument shall have such meaning whether or not such agreement or instrument
is in effect. The terms "hereof", "herein", "hereunder" and comparable terms
------ ------ ---------
refer to the entire agreement with respect to which such terms are used and not
to any particular Section, subsection, paragraph or other subdivision thereof.
Unless the context otherwise requires, references to (i) agreements shall
include sections, schedules, exhibits and appendices thereto and shall be deemed
to mean and include such agreements (and sections, schedules, exhibits and
appendices) as the same may be amended, supplemented and otherwise modified from
time to time, (ii) parties to agreements or government agencies shall be deemed
to include the successors and permitted assigns of such parties and the
successors and assigns of such agencies and (iii) laws or regulations shall be
deemed to mean such laws or regulations as the same may be amended from time to
time and any superseding laws or regulations covering the same subject matter.
Unless otherwise specified herein or in any Operative Document, all
accounting terms used in any Operative Document shall be interpreted, all
accounting determinations made pursuant to the terms of any Operative Documents
shall be made, and all financial statements delivered pursuant to the terms of
any Operative Document shall be prepared in accordance with GAAP.
"Accreted Value" when used in respect of the Secured Notes means, for
--------------
any specified date:
(i) if the specified date occurs on one of the following dates (each
an "Accrual Date"), the Accreted Value will equal the amount set forth
------------
below for such
<PAGE>
Accrual Date Accreted Value
------------ --------------
December 19, 1996 $52,782,810.60
July 2, 1997 $54,758,308.95
January 2, 1998 $56,666,636.01
July 2, 1998 $58,641,468.28
January 2, 1999 $60,685,123.45
July 2, 1999 $62,800,000.00
(ii) if the specified date occurs between two Accrual Dates, the
Accreted Value will equal the sum of (a) the Accreted Value for the Accrual
Date immediately preceding such specified date plus (b) an amount equal to
the interest that would accrue on the amount of such Accreted Value at the
interest rate of the Secured Note from such Accrual Date to such specified
date, using a 360-day year of twelve 30-day months; and
(iii) if the specified date occurs on or after the last Accrual Date,
the Accreted Value will equal the face amount of the Secured Note as
reduced from time to time by the repayment of principal thereof.
"Accrual Date" shall have the meaning specified in the definition of
-------------
"Accreted Value".
"Actual Knowledge" shall mean, (i) as it applies to either Owner
----------------
Trustee (or the Owner Trust), the Indenture Trustee or the Pass Through
Trustee, actual knowledge of, including any information contained in any
written notices received by, an officer in its Corporate Trust
Administration department, (ii) as it applies to the Owner Participant,
actual knowledge of, including any information contained in any written
notices received by, any officer of the Owner Participant or any Affiliate
thereof whose responsibilities include administration of the transactions
contemplated by the Operative Documents, (iii) as it applies to the
Charterer, actual knowledge of, including any information contained in any
written notices received by, the Chief Executive Officer, the President or
any Vice President or any other officer of the Charterer whose
responsibilities include administration of the transactions contemplated by
the Operative Documents and (iv) as it applies to the Guarantor actual
knowledge of, including any information contained in any written notices
received by, the Chief Executive Officer, the President or any Vice
President or any other executive of the Guarantor whose responsibilities
include administration of the transactions contemplated by the Operative
Documents.
2
<PAGE>
"Additional Excess Hire" shall have the meaning specified in clause b
----------------------
of Schedule 2A of the Charter Party.
"Additional Excess Rate Hire" shall have the meaning specified in
---------------------------
clause b of Schedule 2A to the Charter Party.
"Additional Notes" shall mean non-recourse Secured Notes issued by the
----------------
Owner Trust in accordance with Section 2.08 of the Indenture.
"Affiliate" shall mean, with respect to any Person, any other Person,
---------
directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such Person. For purposes of this
definition, the term "control" (including the correlative meanings of the
-------
terms "controlling", "controlled by" and "under common control with"), as
----------- ------------- -------------------------
used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
"After-Tax Basis", in the context of determining the amount of a
---------------
payment to be made on such basis, shall mean the payment of an amount
which, after reduction by the net increase in foreign, federal, state and
local income tax liability of the recipient of such payment (which net
increase shall be calculated by taking into account any reduction in such
taxes resulting from any tax benefits realized or to be realized by the
recipient as a result of the event giving rise to such payment) shall be
equal to the amount required to be paid. In calculating the amount payable
by reason of this provision, all foreign, federal, state and local income
taxes payable and tax benefits realized or to be realized shall be
determined on the assumptions that (i) the recipient has a sufficient tax
base to be taxable on all income at the highest marginal tax rates then
applicable to corporate taxpayers taxed on the same basis as the recipient
that are then in effect in the applicable jurisdictions and that all tax
benefits are utilized at the highest marginal rates then applicable to
corporate taxpayers taxed on the same basis as the recipient that are then
in effect in the applicable jurisdictions, (ii) state and local income
taxes are payable, and state and local tax benefits are realized, in the
jurisdiction in which the recipient has its principal place of business,
and (iii) tax benefits to be realized in any taxable year other than the
year of payment are determined on a present value basis using the Debt
Rate.
3
<PAGE>
"Alteration" shall have the meaning specified in Section 15(a) of the
----------
Construction Contract.
"Amortization Schedule" shall mean, with respect to any Secured Note,
---------------------
the amortization schedule for such Secured Note set forth in Exhibit B to
the Indenture.
"Appraisal Procedure" shall mean a procedure for determining any
-------------------
amount, value or period. Such procedure shall be commenced by the delivery
of written notification as specified in the Operative Documents by the
Charterer to the Owner Trust or the Owner Participant, as the case may be,
or by the Owner Participant or the Owner Trust, as the case may be, to the
Charterer, that it desires to obtain an appraisal with respect to such
amount, value or period. If required by the terms of the applicable
Operative Documents, such parties shall first attempt to agree on such
matter. If such parties are unable to agree on such matter within the time
period specified in the applicable Operative Document, or if such parties
are not required to attempt to agree, such parties shall thereupon consult
for the purpose of selecting a mutually acceptable Independent appraiser.
If within 10 days from the date the parties are required to so consult,
they are unable to agree upon the appointment of a mutually acceptable
Independent appraiser, then each of such parties shall appoint an
Independent appraiser, and such Independent appraisers shall jointly
determine such matter. If one party does not so appoint an Independent
appraiser, then the Independent appraiser appointed by the other shall
determine such matter as the sole appraiser. If such two Independent
appraisers cannot agree on such matter within 20 days, such matters shall
be determined by such two Independent appraisers and a third Independent
appraiser chosen within 10 days after such 20-day period by such two
Independent appraisers or, if such three Independent appraisers fail to
reach an agreement, the determination of the appraiser that differs most
from the second highest determination shall be excluded (unless such
difference is less than ten percent from either of the other
determinations), the remaining two determinations shall be averaged (or all
three shall be averaged, if the third determination is not discarded due to
the preceding parenthetical) and such average shall constitute the
determination of the appraisers. If such two Independent appraisers fail
to agree upon the appointment of a third Independent appraiser within the
allotted time period, such appointment shall be made by the New York City
office of the American Arbitration Association or any organization
successor thereto, upon the request of any such parties from a panel of
arbitrators having familiarity with assets similar to the Vessel. The
determination of the appraisers so chosen shall be given
4
<PAGE>
within 20 days of the appointment of such third appraiser. Fees and
expenses of the appraisers appointed in connection with an Appraisal
Procedure shall be paid by the Charterer.
"Assigned Hire" shall have the meaning set forth in Section 4.01(a) of
-------------
the Indenture.
"Assignment of Construction Contract" shall mean the Assignment of
-----------------------------------
Construction Contract dated December 19, 1996 among Owner Participant,
MOSAT, Builder and the Owner Trust.
"Bareboat Hire" shall mean, for any Rate Period, the sum of the Base
-------------
Hire, the Excess Hire and the Additional Excess Hire for such Rate Period.
"Bareboat Market Rate" shall mean, for any Rate Period, the "Bareboat
--------------------
Market Rate" determined pursuant to Schedule 2B to the Charter Party for
such Rate Period.
"Base Hire" shall have the meaning specified in Schedule 2 to the
---------
Charter Party.
"Base Hire Payment Dates" during the Charter Period shall mean and
-----------------------
include each January 2 and July 2 during the Charter Period, commencing on
January 2, 2000.
"Bill of Sale" shall mean the Assignment and Bill of Sale of Vessel
------------
conveying the Vessel to the Owner Trust and delivered pursuant to Sections
3.1, 4.2 and 5.2 of the Participation Agreement.
"Board of Directors" shall mean, with respect to any Person, either
------------------
the board of directors of such Person or a duly authorized committee of
said board having power to act for such board with respect to the matter in
question.
"Builder" shall mean Sumitomo Heavy Industries, Inc., a Japanese
-------
corporation.
"Business Day" shall mean any day other than a Saturday or Sunday or
------------
any other day on which banks located in London, England, New York, New
York, Fairfax, Virginia, the city in which the Indenture Trustee Office is
located, the city in which the corporate trust department of the Managing
Trustee is located or, so long as any Pass Through Certificate is
Outstanding, the city in which the corporate trust department of the Pass
Through Trustee is located, are required or authorized to remain closed.
5
<PAGE>
"Business Trust Act" shall mean the Delaware Business Trust Act, 12
------------------
Del. C. c.38, as it may be amended from time to time.
"Capital Stock" shall mean, with respect to any Person, any and all
-------------
shares, interests, participations or other equivalents (however designated)
of such Person's capital stock, whether now outstanding or issued after the
date of the Participation Agreement, including, without limitation, all
Common Stock and Preferred Stock of such Person.
"Casualty Redemption Date" shall have the meaning specified in Section
------------------------
3.02 of the Indenture.
"Certificate" shall mean any one of the pass through certificates
-----------
executed and authenticated by the Pass Through Trustee, substantially in
the form of Exhibit A to the Pass Through Trust Agreement.
"Certificateholder" shall have the meaning specified in the Pass
-----------------
Through Trust Agreement.
"Charter" or "Charter Party" shall mean the VLCC Charter Party dated
------- -------------
as of the Closing Date between the Owner Trust and the Charterer.
"Charter Default" shall mean an event which, after giving of notice or
---------------
lapse of time, or both, would become a Charter Event of Default.
"Charter Event of Default" shall have the meaning specified in Article
------------------------
21 of the Charter Party.
"Charter Party Termination Date" shall mean the last day of the
------------------------------
Charter Period, whether occurring by reason of expiration of the Charter
Period or upon earlier termination of the Charter Party pursuant to the
terms thereof (including, without limitation, termination pursuant to
Article 22 of the Charter Party).
"Charter Period" shall mean the period beginning with the Delivery
--------------
Date and ending on the Charter Expiration Date set forth in Schedule 1 to
the Charter, as the same may be extended in accordance with Article 19(c)
of the Charter Party, or such earlier date on which the Charter Party is
terminated in accordance with the provisions thereof.
"Charterer" shall mean Mobil Marine Finance Company I Inc., a Delaware
---------
corporation.
"Claims" shall mean all liabilities (including, without limitation,
------
negligence, warranty, statutory,
6
<PAGE>
product, strict or absolute liability, liability in tort or otherwise),
obligations, responsibilities, losses, damages, penalties, fines,
sanctions, claims, Environmental Claims, actions, causes of action, suits,
investigations, judgments, Liens (including any Lien in favor of any
Governmental Authority for environmental liabilities and costs or
violations of any Environmental Laws), costs, expenses and disbursements,
of any kind or nature, including, without limitation, reasonable legal fees
and expenses and costs of investigation.
"Classification Society" shall mean the American Bureau of Shipping or
----------------------
any other classification society selected by the Charterer.
"Closing Date" shall mean December 19, 1996.
------------
"Code" shall mean the Internal Revenue Code of 1986.
----
"Common Stock" shall mean, with respect to any Person, any and all
------------
shares, interests, participations and other equivalents (however
designated, whether voting or non-voting) of such Person's common stock,
whether now outstanding or issued after the date of the Participation
Agreement, and includes, without limitation, all series and classes of such
common stock.
"Component" shall mean appliances, parts, instruments, appurtenances,
---------
accessories, equipment and other property of whatever nature originally
included in the Vessel on the Delivery Date.
"Conditional Sale Agreement" shall mean the Conditional Sale Agreement
--------------------------
dated November 25, 1996 between the Owner Trust and the U.K. Lessor.
"Construction Contract" shall mean the Shipbuilding Contract dated
---------------------
28th June between the Builder and MOSAT providing for the construction of
the Vessel and the Payment Guarantee Letter.
"Corporate Trust Office", when used with respect to the Pass Through
----------------------
Trustee, shall mean the office of the Pass Through Trustee in the city at
which at any particular time its corporate trust business shall be
principally administered, and when used with respect to the Indenture
Trustee, shall mean the Indenture Trustee Office.
"Cut-off Date" shall mean January 31, 1997.
------------
"Debt Rate" shall mean the weighted average interest rate borne by the
---------
Secured Notes.
7
<PAGE>
"Delaware Trustee" shall have the meaning specified in the preamble to
----------------
the Trust Agreement.
"Delivery Date" shall mean the date on which the Vessel is delivered
-------------
to the Owner, which is scheduled to occur on the date set forth as the
Scheduled Delivery Date in Schedule 1 of the Charter Party.
"Delivery Yard" shall mean the shipyard at which the vessel is to be
-------------
delivered as set forth in Schedule 1 of the Charter Party.
"Dollar" and "$" shall mean U.S. dollars.
------ -
"Eligible Bank" shall mean any bank or trust company, including the
-------------
Indenture Trustee and the Pass Through Trustee which shall be a member of
the Federal Reserve System and shall have a combined capital, surplus and
undivided profits of not less than $100,000,000.
"Environmental Claims" shall mean any Claim, action, cause of action,
--------------------
investigation or notice (written or oral) by any Person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, Remedial Action, Releases, governmental
response costs, natural resources damages, property damages, personal
injuries, or penalties) arising out of, based on or resulting from (a) the
presence, release into the environment, of any Hazardous Material at any
location, whether or not owned or operated by the Charterer, the
Subcharteree or MOSAT or (b) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
"Environmental Laws" shall mean all federal, state, foreign and local
------------------
laws and regulations, relating to pollution or protection of the
environment (including, without limitation, ambient air, surface, water,
groundwater, land surface or subsurface strata, wetlands, wildlife, aquatic
species, vegetation and natural resources), including, without limitation,
laws and regulations relating to emissions, discharges, Releases or
threatened Releases of Hazardous Materials or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials. Environmental Laws include,
but are not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"); the Federal Insecticide,
------
Fungicide, and Rodenticide Act ("FIFRA"); the Resource Conservation
-----
Recovery Act ("RCRA"); Oil Pollution Act of 1990 ("OPA"); the Superfund
---- ---
Amendments and Reauthorization Act of 1986 ("SARA"); the Toxic
----
8
<PAGE>
Substances Control Act ("TSCA"); the Hazardous Material Transportation Act;
----
the Clean Air Act; the Federal Water Pollution Control Act; the Safe
Drinking Water Act; and their state and local counterparts or equivalents.
"Environmental Permits" shall mean all permits, consents, licenses,
---------------------
certificates and other approvals or authorizations required under
Environmental Laws.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974.
"ERISA Affiliate" shall mean any entity treated as a single employer
---------------
with any Person pursuant to Section 414(b), (c), (m) or (o) of the Code.
"Event of Loss" shall mean any of the following events occurring on or
-------------
after the Delivery Date: (a) the (i) loss, theft, destruction or
disappearance of, or (ii) occurrence of damage (which, in the Charterer's
reasonable, good faith opinion, renders repair or replacement uneconomic)
to, the Vessel (or substantially the entirety of the Vessel); (b) the
permanent condemnation, confiscation or seizure of, or requisition of title
to, the Vessel by any Governmental Authority; (c) the requisition of use of
the Vessel by any Governmental Authority for a period which shall exceed
the remaining portion of the Charter Period; or (d) the receipt of
insurance proceeds based upon an actual or constructive total loss of the
Vessel.
"Excepted Payments" shall mean and include (i) any indemnity or other
-----------------
similar payment (whether or not Supplemental Hire) payable under any
Operative Document (including, without limitation, any amount payable by
the Guarantor under the Guarantee in respect of indemnity amounts payable
by the Charterer under any Operative Document) directly to any Person
(including, without limitation, the Trust Company, the Resident Trustee,
the Pass Through Trustee, each in its individual capacity) other than the
Indenture Trustee, any Holder, the Owner Trust, the Trust Estate or the
Indenture Estate; (ii) (A) insurance proceeds, if any, payable to the Owner
Trust or the Owner Participant under insurance separately maintained by the
Owner Trust or the Owner Participant as permitted by Section 16(b) of the
Charter Party except to the extent that the payment of any such proceeds
diminishes any recovery available under an insurance policy required to be
maintained under Section 16 of the Charter Party, or (B) proceeds of
personal injury or property damage liability insurance payable to or for
the benefit of the Trust Company, the Resident Trustee or the Owner
Participant under any Operative Document; (iii) any amount payable for the
account of the Owner Participant
9
<PAGE>
pursuant to Section 13.1 or 13.2 of the Participation Agreement (or any
amount payable by the Guarantor under the Guarantee in respect of amounts
payable for the account of the Owner Participant pursuant to Section 13.1
or 13.2 of the Participation Agreement); and (iv) interest at the Overdue
Rate payable by the Charterer (or the Guarantor) to the Trust Company, the
Resident Trustee or the Owner Participant on any of the amounts described
in clauses (i) through (iii) above; together with the right to demand,
collect, sue for, exercise remedies to enforce, or otherwise obtain amounts
referred to in clauses (i) through (iv) of this definition.
"Excess Hire" shall have the meaning specified in clause b. of
-----------
Schedule 2A of the Charter Party.
"Excess Hire Rate" shall have the meaning specified in clause b. of
----------------
Schedule 2A to the Charter Party.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
"Fair Market Sales Value" of any property or service as of any date
------------------------
shall mean the cash rent or cash price that would be obtained in an arm's-
length lease or sale, respectively, between an informed and willing lessee
or buyer (under no compulsion to lease or purchase) and an informed and
willing lessor or seller (under no compulsion to lease or sell) of the
property or services in question, disregarding the renewal option set forth
in the Charter Party and shall be determined on the basis that (unless
determined pursuant to Article 22 of the Charter Party) the Vessel has been
maintained in accordance with the requirements of the Charter Party (but
otherwise on an "as-is" basis).
"Final Delivery Date" shall mean the date set forth on Schedule 1 to
--------------------
the Bareboat Charter Party as the Final Delivery Date.
"Final Determination" shall mean (i) a decision, judgment, decree or
-------------------
other order by any court of competent jurisdiction that resolves the
matter, which decision, judgment, decree or other order has become final
(i.e., the earliest of when all allowable appeals have been exhausted by
-----
either party to the action or the time for filing such appeal has expired
or the Tax Indemnitee has notified the Charterer in writing that it does
not intend to make such an appeal, (ii) a closing agreement entered into
under Section 7121 of the Code (or any successor provision) or any other
settlement agreement entered into in connection with the administrative or
judicial proceedings, in any case with the Charterer's consent, (iii) the
expiration of the time for instituting an
10
<PAGE>
initial suit with respect to a claimed deficiency or for instituting a
claim for refund, or, if a refund claim was filed, the expiration of the
time for instituting suit with respect thereto or (iv) the point in time
when the Tax Indemnitee is no longer required to contest the imposition of
such Tax pursuant to Section 13.2(e) of the Participation Agreement.
"Full Accrual Date" shall mean July 2, 1999.
-----------------
"GAAP" shall mean generally accepted accounting principles in the
----
United States of America.
"Governmental Actions" shall mean all actions, authorizations,
--------------------
consents, approvals, waivers, exceptions, variances, franchises, filings,
orders, permits, licenses, exemptions, publications, notices to and
declarations of or with any Governmental Authority, including, without
limitation, those pertaining to Environmental Laws and Environmental
Permits.
"Governmental Authority" shall mean any nation or government, any
----------------------
state, county, municipality or other political subdivision thereof or any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Governmental Rules" shall mean applicable statutes, laws, rules,
------------------
codes, ordinances, decisions, regulations, permits, certificates and orders
of any Governmental Authority now or hereafter in effect and any
interpretation thereof by competent Governmental Authority, including any
judicial or administrative order, consent decree, settlement agreement or
judgment, including, without limitation, Environmental Laws.
"Guarantee" or "Guaranty" shall mean the Mobil Guarantee dated as of
--------- --------
the Closing Date by Guarantor in favor of the Managing Trustee, the
Delaware Trustee, the Owner Trust, the Owner Participant, the Indenture
Trustee and the Pass Through Trustee.
"Guarantor" shall mean Mobil Corporation, a Delaware corporation.
---------
"Hazardous Materials" shall mean all substances defined as such in the
-------------------
National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R.
(S) 300.5, or defined as such by, or regulated as such under, any law
relating to pollution or protection of the environment.
11
<PAGE>
"Head Lease" shall mean the Lease Agreement dated December 10, 1996
----------
between U.K. Lessor and the Owner Trust.
"Head Lessor" shall mean the U.K. Lessor.
-----------
"Hire" shall mean, collectively, Bareboat Hire and Supplemental Hire.
----
"Holder" shall mean a registered holder of a Secured Note and shall
------
include, so long as the Pass Through Trustee is a registered holder of a
Secured Note, the Pass Through Trustee.
"Indemnitee" shall mean each Owner Trust, the Resident Trustee, the
-----------
Trust Company, the Delaware Trustee, the Managing Trustee, the Owner
Participant, the Indenture Trustee (both in its individual and its trust
capacity), the Pass Through Trustee (both in its individual and trust
capacities), each Loan Participant, and their respective Affiliates,
shareholders, officers, directors, agents, employees and servants.
"Indenture" shall mean the Trust Indenture, Assignment of Charter and
---------
Head Lease and Security Agreement dated as of the Closing Date between the
Owner Trust and the Indenture Trustee.
"Indenture Default" shall mean an event which, after giving of notice
-----------------
or lapse of time, or both, would become an Indenture Event of Default.
"Indenture Estate" shall have the meaning specified in the Granting
----------------
Clause of the Indenture.
"Indenture Event of Default" shall have the meaning specified in
--------------------------
Section 5.02 of the Indenture.
"Indenture Indebtedness" shall have the meaning specified in the
----------------------
Recitals to the Indenture.
"Indenture Supplement" shall mean any indenture supplement that may be
--------------------
executed and delivered by the Owner Trust and the Indenture Trustee from
time to time.
"Indenture Trustee" shall have the meaning specified in the preamble
-----------------
to the Indenture.
"Indenture Trustee Office" shall mean the office of the Indenture
------------------------
Trustee initially located at Two International Place, Boston, MA 02110 or
such other office as may be designated by the Indenture Trustee to the
Owner Trust and the Charterer.
12
<PAGE>
"Indenture Trustee's Liens" shall mean Liens on or against all or any
-------------------------
part of the Vessel, the Vessel Interest, the Charter Party, the Trust
Estate, the Indenture Estate or any payment of Hire, Excess Hire or
Additional Excess Hire (a) which result from any act of, or failure to act
by, or any Claim against, the Indenture Trustee (in its individual capacity
or as trustee) unrelated to the transactions contemplated by the
Participation Agreement or any other Operative Document, or which result
from any violation by the Indenture Trustee (in its individual capacity or
as trustee) of any of the terms of the Operative Documents, or (b) which
result from Liens in favor of any taxing authority by reason of any Tax
owed by the Indenture Trustee (in its individual capacity or as trustee),
except that Indenture Trustee's Liens shall not include any Lien directly
resulting from any Tax for which the Charterer is obligated to indemnify
the Indenture Trustee (in its individual capacity or as trustee) until such
time as the Charterer shall have already paid to, or on behalf of, the
Indenture Trustee, the Tax or an indemnity with respect to the same.
"Independent" shall mean, when used with respect to any specified
-----------
Person, a Person who (1) is in fact independent, (2) does not have any
direct financial interest in the Trust Company, the Owner Trust, the Owner
Participant or the Charterer or any Affiliate of any of them and (3) is not
connected with the Trust Company, the Owner Participant or the Charterer or
any such Affiliate as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions. Whenever it is
provided that any Independent Person's opinion or certificate shall be
furnished to the Indenture Trustee, such Person shall be appointed by the
Charterer and approved by the Indenture Trustee in the exercise of
reasonable care and such opinion or certificate shall state that the signer
has read this definition and that the signer is Independent within the
meaning hereof.
"Independent Investment Banker" shall mean an independent investment
-----------------------------
banking institution of national standing appointed by the Charterer on
behalf of the Owner Trust; provided that if the Indenture Trustee shall not
--------
have received written notice of such an appointment at least 10 days prior
to the relevant Redemption Date or Charter Termination Date or if a Charter
Event of Default shall have occurred and be continuing, "Independent
-----------
Investment Banker" shall mean such an institution appointed by the
-----------------
Indenture Trustee.
"Initial Secured Note(s)" shall mean the Secured Note(s) issued under
-----------------------
the Indenture on the Closing date or
13
<PAGE>
any Secured Notes issued in exchange therefor pursuant to Sections 2.06 and
2.07 of the Indenture.
"Inflation Factor" shall mean the Producer Price Index as published by
----------------
the U.S. Department of Labor.
"Initial Subcharter" shall mean the Vessel Subcharter Agreement dated
------------------
as of the Closing Date between the Charterer and MSCL.
"Interest Payment Date" shall mean each January 2 and July 2.
---------------------
"Investment" shall have the meaning specified in Section 2.1 of the
----------
Participation Agreement.
"Joint Venture Agreement" shall mean the Joint Venture Agreement dated
-----------------------
June 27, 1996 among MOSAT, SAMCO and Samco (Cayman) Ltd., a Cayman Islands
company.
"Lessee Support Agreement" shall mean the agreement dated
-------------------------
December 10, 1996 among the Charterer, the U.K. Lessor and the Owner Trust
with respect to certain obligations of the Owner Trust under the Head
Lease.
"Lessor's Mortgage" shall mean the U.K. Lessor's Mortgage.
-----------------
"Lessor's Security Assignment" shall mean that certain Lessor's
----------------------------
Security Assignment dated December 19, 1996 among the Indenture Trustee,
the Owner Participant, the Owner Trust and the U.K. Lessor.
"Lien" shall mean any mortgage, pledge, security interest,
----
encumbrance, lien, right of others or charge of any kind, including,
without limitation, any Environmental Liens, any right of first refusal,
any title defect, conditional sale or other title retention agreement or
any lease in the nature thereof or any libel or complaint in admiralty or
the filing of, or agreement to give, any financing statement under the
Uniform Commercial Code of any jurisdiction.
"Loan Participant" shall mean and include each Holder (including, so
----------------
long as it holds a Secured Note, the Pass Through Trustee).
"Losses" shall have the meaning set forth in Section 13.3 of the
------
Participation Agreement.
"Majority in Interest of Holders of Notes" shall mean, as of any date
----------------------------------------
of determination, Holders holding in aggregate more than 50% of the total
principal amount of the Secured Notes Outstanding.
14
<PAGE>
"Make-Whole Amount" shall mean: with respect to any Series 1996 A Secured
-----------------
Note to be redeemed, or purchased on any Redemption Date, the amount which
the Independent Investment Banker determines as of the fourth Business Day
prior to such Redemption Date to equal the excess, if any, of (x) the sum
of the present values of all the remaining scheduled payments of principal
and interest from the Redemption Date to maturity of such Secured Note,
discounted semi-annually on each Interest Payment Date at a rate equal to
the Treasury Rate plus .10%, based on a 360-day year of twelve 30-day
months, over (y) the aggregate unpaid principal amount of such Secured Note
plus accrued but unpaid interest on such Secured Note (but not any accrued
interest in default) to such Redemption Date.
"Managing Trustee" shall mean the Trust Company not in its individual
----------------
capacity but solely as Managing Trustee under the Trust Agreement.
"Maturity Date" shall mean, with respect to any Secured Note, the date
-------------
specified as the "Maturity Date" for such Secured Note on Exhibit B to the
Indenture.
"MMFC I" shall mean Mobil Marine Finance Company I Inc., a Delaware
------
corporation.
"MMFC II" shall mean Mobil Marine Finance Company II Inc., a Delaware
-------
corporation.
"Modifications" shall mean alterations, modifications, additions and
-------------
improvements of or to the Vessel.
"Moody's" shall mean Moody's Investor Service, Inc.
-------
"MOSAT" shall mean Mobil Shipping and Transportation Company, a
-----
Liberian corporation.
"MSCL" shall mean Mobil Shipping Company Limited, a corporation formed
----
under the laws of England and Wales.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
-------------------
Section 4001(a)(3) of ERISA which is maintained for employees of the
Charterer or any of its ERISA Affiliates.
"Nonseverable Modification" shall mean any Modification to the Vessel
-------------------------
which is not a Severable Modification.
"Note Register" shall have the meaning specified in Section 2.04 of
-------------
the Indenture.
15
<PAGE>
"Officer's Certificate" and "Officers' Certificate" of any Person
--------------------- ---------------------
shall mean a certificate signed on behalf of such Person by the Chairman,
the President, any Vice President, any Assistant Vice President, Financial
Services Officer, the Controller, Assistant Treasurer or the Treasurer of
such Person or any other individual duly authorized and acting in such
capacity or, in the case of the Owner Trust or the Indenture Trustee, a
Responsible Officer of the Owner Trust or Indenture Trustee.
"Operative Documents" shall mean the Assignment of Construction
-------------------
Contract, Assignment of Construction Contract, the Guarantee, the
Indenture, each Indenture Supplement, the Charter Party, the Participation
Agreement, the Secured Notes, the Ship Mortgage and the Trust Agreement.
"Other Charter" or "Other Charter Party" shall mean any of the
------------- -------------------
Bareboat Charter Parties dated as of the Closing Date between either (i)
the Other Owner and the Charterer or (ii) the Other Owner and the Other
Charterer, as charterer, providing for the bareboat charter of one of the
Other Vessels.
"Other Charterer" shall mean MMFC II.
---------------
"Other Owner" shall mean any owner (or owners) from time to time of an
-----------
Other Vessel Interest.
"Other Vessel" shall mean any of the vessels identified as "Other
------------
Vessels" in Schedule 1 to the Charter Party.
"Other Vessel Interest" shall mean the rights of the Other Owner in a
---------------------
related Other Vessel, including its rights under the U.K. Documents.
"Outstanding" shall mean, when used with respect to the Secured
------------
Notes as of any date of determination, all Secured Notes theretofore
authenticated and delivered under the Indenture, except:
(i) Secured Notes theretofore cancelled by the Indenture
Trustee or delivered to the Indenture Trustee for cancellation;
(ii) Secured Notes or portions thereof for whose payment or
redemption money in the necessary amount has been theretofore
deposited with the Indenture Trustee, provided that such Secured Notes
--------
are to be redeemed and notice of such redemption has been duly given
and not revoked or otherwise withdrawn pursuant to the Indenture; and
16
<PAGE>
(iii) Secured Notes paid or in exchange for which or in lieu of
which other Secured Notes have been authenticated and delivered
pursuant to the Indenture;
provided, however, that in determining whether the Holders of the requisite
-------- -------
principal amount of Secured Notes Outstanding have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Secured Notes owned by the Owner Trust, the Charterer, the Owner
Participant, or any Affiliate of the Charterer, the Owner Trust or the
Owner Participant, shall be disregarded and deemed not to be Outstanding,
unless such Person owns 100% of the Secured Notes owned by all Persons,
except that, in determining whether the Indenture Trustee shall be
protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Secured Notes which the
Indenture Trustee knows to be so owned shall be so disregarded. Secured
Notes so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Indenture
Trustee the pledgee's right so to act with respect to such Secured Notes
and that the pledgee is not the Owner Trust, the Charterer, the Owner
Participant or any Affiliate of the Owner Trust, the Charterer or the Owner
Participant.
"Overdue Rate" shall mean a rate per annum equal to (i) with respect
------------
to amounts owing to any Loan Participant constituting payments or
prepayments of any Secured Note, the rate of interest on such Secured Note,
and (ii) with respect to amounts owing to the Owner Participant or the
Charterer, the rate of interest publicly announced from time to time by
Citibank, N.A. in New York City as its "prime" or "base" rate plus 1%
(computed on the basis of a 360-day year of twelve 30-day months).
"Owner" shall mean the Owner Trust.
-----
"Owner's Cost" shall mean the amount set forth as "Owner's Cost" in
------------
Schedule 1 to the Charter Party.
"Owner's Liens" shall mean Liens on or against all or any part of the
-------------
Vessel, the Vessel Interest, the Charter Party, the Trust Estate, the
Indenture Estate or any payment of Hire, Excess Hire or Additional Excess
Hire (a) which result from any act of, or any failure to act by, or any
Claim against, the Trust Company, the Resident Trustee or the Owner Trust
unrelated to its interest in the Vessel Interest, the administration of the
Trust Estate or the transactions contemplated by the Participation
Agreement or any other Operative Document, or which result from any
violation by the Trust Company,
17
<PAGE>
the Resident Trustee or the Owner Trust of any of the terms of the
Operative Documents, or (b) which result from Liens in favor of any taxing
authority by reason of any Tax owed by the Trust Company, the Resident
Trustee or the Owner Trust, except that Owner's Liens shall not include any
Lien resulting from any Tax for which the Charterer is obligated to
indemnify the Trust Company, the Resident Trustee or the Owner Trust until
such time as the Charterer shall have already paid to, or on behalf of, the
Trust Company, the Resident Trustee or the Owner Trust, as the case may be,
the Tax or an indemnity with respect to the same.
"Owner Participant" shall mean the party identified as such in
-----------------
Schedule 1 to the Participation Agreement and each Person to whom a
transfer is effected in accordance with Section 15 of the Participation
Agreement.
"Owner Participant's Liens" shall mean any Lien on or against the
-------------------------
Vessel, the Vessel Interest, the Charter Party, the Trust Estate or the
Indenture Estate or any payment of Hire, Excess Hire or Additional Excess
Hire (a) which results from any act of, or any failure to act by, or any
Claim against, the Owner Participant unrelated to the transactions
contemplated by the Operative Documents, or which result from any violation
by the Owner Participant of any of the terms of the Operative Documents, or
(b) which result from any Lien in favor of any taxing authority by reason
of any Tax owed by the Owner Participant, except that Owner Participant's
Liens shall not include any Lien resulting from any Tax for which the
Charterer is obligated to indemnify the Owner Participant (or any member of
its consolidated group) until such time as the Charterer shall have already
paid to, or on behalf of, the Owner Participant (or such member of its
consolidated group), the Tax or an indemnity with respect to the same.
"Owner Trust" shall have the meaning specified in the preamble to the
-----------
Trust Agreement.
"Owner Trust Documents" shall have the meaning specified in Section
---------------------
2.1 of the Trust Agreement.
"Owner Trust U.K. Documents" shall have the meaning specified in
--------------------------
Section 2.2 of the Trust Agreement.
"Owner Trustee" shall have the meaning specified in the preamble to
-------------
the Trust Agreement.
"Parent Guarantee" or "Parent Guaranty" shall mean the Guarantee.
---------------- ---------------
"Parent Guarantor" shall mean the Guarantor.
----------------
18
<PAGE>
"Participant" shall mean the Loan Participant or the Owner Participant and
-----------
"Participants" shall mean all of them.
------------
"Participation Agreement" shall mean the Participation Agreement dated
-----------------------
as of the Closing Date among the Charterer, the Owner Participant, the Pass
Through Trustee, the Indenture Trustee, the Owner Trust and the Managing
Trustee.
"Pass Through Certificates" shall mean any Certificates from time to
-------------------------
time issued and outstanding under and pursuant to the Pass Through Trust
Agreement.
"Pass Through Trust" shall mean the trust created by the Pass Through
------------------
Trust Agreement.
"Pass Through Trust Agreement" shall mean the Pass Through Trust
----------------------------
Agreement dated as of October 4, 1996 among the Guarantor, the Charterer,
the Other Charterer, six other subsidiaries of the Guarantor and the Pass
Through Trustee, as amended by the Pass Through Trust Supplement.
"Pass Through Trust Property" shall have the meaning specified in the
---------------------------
Pass Through Trust Agreement.
"Pass Through Trust Supplement" shall mean the supplement to the Pass
-----------------------------
Through Trust Agreement dated as of the Closing Date among the Guarantor,
the Charterer, the Other Charterer and the Pass Through Trustee.
"Pass Through Trustee" shall mean State Street Bank and Trust Company,
--------------------
not in its individual capacity except as expressly provided in the Pass
Through Trust Agreement and the Operative Documents, but solely as Pass
Through Trustee under the Pass Through Trust Agreement.
"Payment Guarantee Letter" shall mean the guarantee given by the
------------------------
Sumitomo Marine & Fire Insurance Co., Ltd. pursuant to Article 10 of the
Construction Contract.
"Permitted Investments" shall mean (i) obligations of the United
---------------------
States of America, or obligations fully guaranteed as to interest and
principal by the United States of America; (ii) certificates of deposit
issued by an Eligible Bank or interest-bearing insured accounts in an
Eligible Bank; (iii) commercial paper, rated at least P-1 (or comparable
rating) by Moody's Investors Service, Inc. (or any successor thereto) or at
least A-1 (or comparable rating) by Standard and Poor's Corporation (or any
successor thereto); or (iv) a money market fund registered under the
Investment Company Act of 1940, the portfolio of which is limited to U.S.
government obligations and U.S. agency obligations.
19
<PAGE>
"Permitted Liens" shall mean (a) the respective rights and interests of (x)
---------------
the Charterer, the Owner Participant, the Owner, the Indenture Trustee, and
the Holders, as provided in the Operative Documents and (y) prior to the
Delivery Date, the Builder under the Construction Contract, (b) Owner's
Liens, Owner Participant's Liens and Indenture Trustee's Liens, (c) Liens
for Taxes either not delinquent or being contested in good faith and by
appropriate proceedings, so long as such proceedings do not involve any
material danger of the sale, forfeiture or loss of any part of, the Vessel,
the Trust Estate or the Indenture Estate, or title thereto or any interest
therein or any material danger of the interference with the payment of
Hire, (d) materialmen's, mechanics', workers', repairmen's, employees' or
other like Liens, arising in the ordinary course of business, or arising in
the course of constructing, repairing, equipping or installing, modifying
or expanding the Vessel or any part thereof, for amounts either not more
than 60 days past due or being contested in good faith and by appropriate
proceedings so long as such proceedings do not involve any material danger
of the sale, forfeiture or loss of any part of the Vessel, the Trust Estate
or the Indenture Estate, or title thereto or any interest therein or any
material danger of the interference with the payment of Hire, (e) Liens
arising out of judgments or awards against the Charterer or any Permitted
Subcharterer with respect to which at the time an appeal or proceeding for
review is being prosecuted in good faith so long as such judgment, award or
appeal does not involve any material danger of the sale, forfeiture or loss
of any part of the Vessel, the Trust Estate or the Indenture Estate, or
title thereto or any interest therein or any material danger of the
interference with the payment of Hire, (f) the rights and interests of the
U.K. Lessor provided in the U.K. Documents (g) liens for current crew's
wages, for general average or salvage (including contract salvage) or for
wages of stevedores employed directly by the Charterer, MSCL, or the
operator, agent or master of the Vessel which in each case (A) are
unclaimed or covered by insurance or (B) for amounts either not more than
60 days past due or being contested in good faith and by appropriate
proceedings so long as such proceedings do not involve any material danger
of the sale, forfeiture or loss of any part of the Vessel, the Trust Estate
or the Indenture Estate, or title thereto or any interest therein or any
material danger of the interference with the payment of Hire, and Liens
which, under the laws of the Marshall Islands, take priority over the Ship
Mortgage and which are for amounts either not more than 60 days past due or
being contested in good faith and by appropriate proceedings so long as
such proceedings do not involve any material danger of the sale, forfeiture
20
<PAGE>
or loss of any part of the Vessel, the Vessel Interest, the Trust Estate or
the Indenture Estate, or title thereto or any interest therein and any
material danger of the interference with the payment of Hire, (h) Liens,
assignments and subleases permitted by Article 20(b) of the Charter Party
and the rights of MSCL under the Initial Subcharter and the rights of any
other subcharterer or any sub-subcharterer under any other subcharter (or
sub-subcharter) permitted by Article 20 of the Charter Party.
"Permitted Subcharterer" shall mean any subcharterer of the Vessel
----------------------
Interest under a subcharter in compliance with Article 20 of the Charter.
"Person" shall mean any individual, partnership, corporation, trust,
------
business trust, unincorporated association, joint venture, government or
any department or agency thereof, or any other entity.
"Preferred Stock" shall mean, with respect to any Person, any and all
---------------
shares, interests, participations or other equivalents (however designated)
of such Person's preferred or preference stock, whether now outstanding or
issued after the date of the Participation Agreement, and includes, without
limitation, all classes and series of preferred or preference stock.
"Premium" shall mean the Make-Whole Amount, if any, payable pursuant
-------
to Article III of the Indenture.
"Protocol of Delivery and Acceptance" shall mean a protocol of
-----------------------------------
delivery and acceptance to be executed by Charterer on the Delivery Date.
"PTE 90-24 " shall mean an Affiliate as defined in Prohibited
----------
Transaction Exemption 90-24 et al., Exemption Application No. D-8019 et
al., 55 Fed. Reg. 20,548 1990.
"Rate Excess" shall have the meaning specified in Schedule 2A to the
-----------
Charter Party.
"Rate Period" shall mean each six-month period during the term of the
-----------
Bareboat Charter Party ending on a Base Hire Payment Date, the first such
period commencing and ending on the dates specified in Schedule 1 of the
Charter Party.
"Rating Agency" shall mean each of Moody's and Standard & Poor's, or
-------------
if Moody's or Standard & Poor's shall no longer perform the function of a
securities rating agency, "Rating Agency" shall be deemed to refer to any
other nationally recognized rating agency designated by the Parent
Guarantor.
21
<PAGE>
"Rating Agency Confirmation" shall mean a prior written confirmation from
--------------------------
each Rating Agency that a specified action or event shall not result in the
downgrade or withdrawal of such Rating Agency's then current credit rating
of the Pass Through Certificates.
"Redelivery Date" shall have the meaning specified in Article 12(a) of
---------------
the Charter Party.
"Redemption Date" shall mean the date on which the Secured Notes are
---------------
to be redeemed or purchased pursuant to Section 3.02, 3.03 or 3.06 of the
Indenture.
"Redemption Price" shall have the meaning specified in Section 3.10 of
----------------
the Indenture.
"Release" shall mean the release, spill, emission, leaking, pumping,
-------
injection, deposit, disposal, discharge, dispersal, leaching or migrating
into the environment of any Hazardous Material through or in the air, soil,
surface water or groundwater, provided that the presence of Hydrocarbons
within any portion of the Vessel designed to produce, pump, process, store,
treat, refine or transport Hydrocarbons shall not be considered a Release.
"Remedial Action" shall mean actions required to (i) clean up, remove,
---------------
treat or in any other way address Hazardous Materials in the environment,
(ii) prevent the Release or further Release or minimize the further Release
of Hazardous Materials, or (iii) investigate and determine if a remedial
response is needed, to design such a response and post-remedial
investigation, monitoring, operation, maintenance and care.
"Request" shall have the meaning specified in Section 2.08(b) of the
-------
Indenture.
"Resident Trustee" means Wilmington Trust Company, a Delaware banking
----------------
corporation, acting in its individual capacity, and its successors and
assigns as Delaware Trustee under the Trust Agreement, acting in such
successors' and assigns' respective individual capacities.
"Responsible Officer", when used with respect to either Owner Trustee,
-------------------
the Indenture Trustee or the Pass Through Trustee, shall mean an officer in
its corporate trust administration department (or any successor group of
either Owner Trustee, the Indenture Trustee or the Pass Through Trustee, as
the case may be) or any other officer customarily performing functions
similar to those performed by any of the above designated officers and also
shall mean, with respect to a particular corporate
22
<PAGE>
trust matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"SEC" shall mean the Securities and Exchange Commission.
---
"Secured Notes" shall mean all notes from time to time issued and
-------------
outstanding under and pursuant to the Indenture.
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"Seller" shall meaning the entity identified as such on Schedule 1 to
------
the Charter Party.
Series 1996 A Secured Notes" shall mean the Secured Note issued under
---------------------------
Section 2.01(b) of the Indenture and any Series 1996 A Secured Note issued
in exchange therefor pursuant to Section 2.06 of the Indenture.
"Severable Modification" shall mean any Modification to the Vessel
--------- ------------
permitted under the Charter Party which can be readily removed from the
Vessel without causing material damage to the Vessel.
"Ship Mortgage" shall mean the First Ship Mortgage dated December 19,
-------------
1996 covering the Vessel from the Owner Trust to the Indenture Trustee.
"Special Indemnitee" shall have the meaning specified in Section 13.3
------------------
of the Participation Agreement.
"Special Termination Election" shall mean an election to terminate the
----------------------------
Charter pursuant to Article 18 thereof.
"Special Termination Events" shall mean the events specified as
--------------------------
Special Termination Events in Article 23(a) of the Charter.
"Special Termination Redemption Date" shall have the meaning set forth
-----------------------------------
in Section 3.03(a) of the Indenture.
"Specified Charter Event of Default" shall mean a Charter Party Event
----------------------------------
of Default described in paragraph (1), (7) or (8) of Article 21 of the
Charter Party or a Charter Party Default described in paragraph (1) or (7)
of Article 21 of the Charter Party.
"Standard & Poor's" shall mean Standard & Poor's Rating Group, a
-----------------
division of Dunn & Bradstreet, Inc.
23
<PAGE>
"Subsidiary" of any Person shall mean any corporation, association or
----------
other business entity of which more than fifty percent (50%) of the total
voting power of shares of Capital Stock entitled to vote in the election of
directors, managers or trustees thereof (without regard to the occurrence
of any contingency) is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries (within
the meaning of this definition) of that Person, or a combination thereof.
"Substitute Obligor" shall have the meaning set forth in Section 3.04
------------------
of the Indenture.
"Substitution Date" shall have the meaning set forth in Section 3.04
-----------------
of the Indenture.
"Substitution Date Agreement" shall have the meaning set forth in
---------------------------
Section 3.04 of the Indenture.
"Supervisory Agreement" shall mean the Agreement dated as of June 28,
---------------------
1996 between MOSAT and the Owner Participant providing for supervising the
construction of the Vessel.
"Supplemental Hire" shall mean (i) any and all amounts, liabilities
-----------------
and obligations (other than Bareboat Hire) which the Charterer assumes or
agrees to pay to or on behalf of the Owner Trust, the Owner Participant,
the Trust Company, the Resident Trustee, the Pass Through Trustee, the Loan
Participant or the Indenture Trustee under any Operative Document,
including, without limitation, any payments of indemnification or
Termination Value or Premium and (ii) any amounts which are expressed in
the Indenture to be payable at the Charterer's expense.
"Tax" and "Taxes" shall have the respective meanings specified in
--- -----
Section 14.2 of the Participation Agreement.
"Tax Affiliate" shall mean an Affiliate of any corporation related to
-------------
the Charterer (within the meaning of Section 318 of the Code), or any
shareholder of the Charterer.
"Tax Claim" shall have the meaning specified in Section 13.2(e) of the
---------
Participation Agreement.
"Tax Indemnitee" shall mean each Owner Trustee (both in its individual
--------------
capacity and in its trust capacity), the Owner Participant, the Indenture
Trustee (both in its individual capacity and in its trust capacity), and
the Loan Participant, and their respective Affiliates, officers, directors,
agents, employees and servants but
24
<PAGE>
shall not include (i) the Pass Through Trustee, (ii) any other Holder and
(iii) any Certificateholder.
"Termination Date" shall have the meaning specified in Article 18(b)
----------------
of the Charter Party.
"Termination Election" shall mean an election by the Charterer to
--------------------
terminate the Charter pursuant to Article 18(a) thereof.
"Termination Redemption Date" shall have the meaning specified in
---------------------------
Section 3.03(b) of the Indenture.
"Termination Value" shall mean as of any Termination Value
-----------------
Determination Date during the Charter Period, the amount set forth opposite
such date in Schedule 4 to the Charter Party.
"Termination Value Determination Date" shall mean any Business Day.
------------------------------------
"Transaction Expenses" shall mean the following fees, expenses,
--------------------
disbursements and costs incurred in connection with the preparation,
execution and delivery of the Operative Documents and the Pass Through
Trust Agreement and the consummation of the transactions contemplated
thereby on the Closing Date, as applicable, provided that invoices for all
--------
such fees, expenses, disbursements and costs shall have been presented for
payment on or prior to the ninetieth day following the Closing Date: (i)
the reasonable attorneys' fees and expenses of counsel to the Owner
Participant, each Owner Trustee, the Indenture Trustee, the Pass Through
Trustee and special admiralty counsel, (ii) the initial (but not ongoing)
fees and expenses of each Owner Trustee, the Pass Through Trustee and the
Indenture Trustee, (iii) printing, word processing and reproduction costs,
(iv) the fees and commissions of Morgan Stanley & Co. Incorporated as
underwriter in connection with the offering and sale of the Pass Through
Certificates, (v) other costs associated with the issuance of the Secured
Note and the Pass Through Certificates, independent rating agencies and
printer charges, and (vi) to the extent agreed with the Underwriter, the
reasonable fees, expenses and disbursements of special counsel for the
Underwriter in connection with the Operative Documents; provided that,
--------
other than as set forth in clause (iv) of this sentence, "Transaction
-----------
Expenses" shall not include the fees, expenses or disbursements of any law
--------
firm not specifically named in Section 4.6 of the Participation Agreement.
"Transferee" shall have the meaning specified in Section 14.2 of the
----------
Participation Agreement.
25
<PAGE>
"Treasury Rate" shall mean, with respect to each Secured Note to be
-------------
redeemed or purchased, a per annum rate (expressed as a semiannual
equivalent and as a decimal and, in the case of United States Treasury
bills, converted to a bond equivalent yield), determined to be the per
annum rate equal to the semiannual yield to maturity of United States
Treasury securities maturing on the Average Life Date of such Secured Note,
as determined by interpolation between the most recent weekly average
yields to maturity for two series of United States Treasury securities, (A)
one maturing as close as possible to, but earlier than, the Average Life
Date of such Secured Note and (B) the other maturing as close as possible
to, but later than, the Average Life Date of such Secured Note, in each
case as published in the most recent H.15(519) (or, if a weekly average
yield to maturity of United States Treasury securities maturing on the
Average Life Date of such Secured Note is reported in the most recent
H.15(519), as published in H.15(519)). H.15(519) shall mean "Statistical
Release H.15(519), Selected Interest Rates" or any successor publication,
published by the Board of Governors of the Federal Reserve System. The
most recent H.15(519) shall mean the latest H.15(519) which is published
prior to the close of business on the fourth Business Day preceding the
Redemption Date. For purposes hereof, "Average Life Date" shall mean, with
-----------------
respect to each Secured Note to be redeemed, the date which follows the
Redemption Date by a period equal to the Remaining Weighted Average Life of
such Secured Note. For purposes hereof, "Remaining Weighted Average Life"
-------------------------------
shall mean, for any Secured Note, as of any date of determination, the
number of days equal to the quotient obtained by dividing (a) the sum of
the products obtained by multiplying (i) the amount of each then remaining
installment of principal, including the payment due on the maturity of such
Secured Note by (ii) the number of days from and including the Redemption
Date to but excluding the scheduled payment date of such principal payment;
by (b) the then unpaid principal amount of such Secured Note.
"Treasury Regulations" shall mean the income tax regulations issued,
--------------------
published or promulgated under the Code by the United States Department of
the Treasury.
"Trust Agreement" shall mean the Amended and Restated Declaration and
---------------
Agreement of Trust dated as of December 19, 1996 among the Owner
Participant, the Resident Trustee and the Trust Company.
"Trust Company" shall mean Deutsche Morgan Grenfell (Cayman) Limited,
-------------
a Cayman Islands company in its individual capacity.
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"Trust Certificate" shall mean an Officer's Certificate of the Owner
-----------------
Trust with regard to those matters set forth in Section 3.04(i) of the
Indenture.
"Trust Estate" shall have the meaning specified in Section 3.2 of the
------------
Trust Agreement.
"Trust Expenses" shall have the meaning specified in Section 8.1 of
--------------
the Trust Agreement.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
-------------------
amended.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
---
of New York or in any other applicable jurisdiction.
"U.K. Documents" shall mean the Conditional Sale Agreement, the Head
--------------
Lease, the U.K. Lessor's Mortgage, the Lessor's Security Assignment and
each other instrument defined as an "Operative Document" in the Head Lease.
"U.K. Financing" shall mean the transactions contemplated by the U.K.
--------------
Documents.
"U.K. Lease Term" shall mean the term of the U.K. Lease set forth in
---------------
Schedule 1 of the Charter Party.
"U.K. Lessor" shall mean the entity identified as such in Schedule 1
------------
of the Charter Party.
"U.K. Lessor's Mortgage" shall mean the Mortgage dated December 10,
----------------------
1996 between U.K. Lessor and Owner Trust.
"U.K. Lessor's Security Assignment" shall mean the Lessor's Security
---------------------------------
Assignment.
"U.K. Obligations" shall have the meaning set forth in Section 13.3 of
----------------
the Participation Agreement.
"Underwriter" shall mean Morgan Stanley & Co. Incorporated, a Delaware
-----------
corporation.
"Underwriting Agreement" shall mean the Underwriting Agreement among
----------------------
the Guarantor, the Charterers and the Underwriter relating to the purchase
and sale of the Pass Through Certificates.
"Vessel" shall mean the very large crude carrier identified in
------
Schedule 1 to the Charter Party under the heading "Vessel", and all other
property installed or located therein and all assets from time to time
included
27
<PAGE>
or incorporated therein in which title thereto shall vest in the Owner
pursuant to the Charter Party.
"Vessel Interest" shall mean the Owner's rights in the Vessel,
---------------
including its rights under the U.K. Documents.
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