<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 5, 1997
Mobil Corporation
-----------------
(Exact Name of registrant as specified in its charter)
Delaware 1-7555 13-2850309
- --------------------------------------------------------------------------------
(State of Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
3225 Gallows Road
Fairfax, Virginia
22037-0001
(Address of principal
executive offices)
Registrant's telephone number, including area code (703) 846-3000
No Change
-----------------------------------------------------
(Former name or former address, if changed since last report)
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Item 7. Exhibits. The documents listed below are filed as Exhibits
with reference to the Registration Statement (the "Registration Statement") on
Form S-3 (Registration No. 333-13457) of Mobil Corporation (the "Company"),
Mobil Equipment Finance Company Inc. (the "Charterer"), and certain other
subsidiaries of the Company. The Registration Statement and the Prospectus
Supplement, dated December 2, 1997, to the Prospectus, dated November 12,
1996, relate to the offering of the Company's Pass Through Certificates, Series
1997-C.
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
1.1 Underwriting Agreement, dated as of December 2, 1997, among
Mobil Corporation, Mobil Equipment Finance Company Inc. and
Salomon Brothers Inc.
4.1 Pass Through Trust Supplement No. 1997-C, dated as of December
5, 1997, among Mobil Corporation, Mobil Equipment Finance
Company Inc., and State Street Bank and Trust Company.
4.2 Form of Trust Indenture, Assignment of Charter and Head Lease
and Security Agreement, dated as of December 5, 1997, between QM
Tanker 1177 Trust, as Owner Trust, and State Street Bank and
Trust Company, as Indenture Trustee.
4.3 Form of Series 1997 C-1 Secured Non-recourse Discount Note
(QM Tanker No. 1177 Trust).
4.4 Form of Charter Party, dated as of December 5, 1997, between QM
Tanker 1177 Trust, as Owner, and Mobil Equipment Finance Company
Inc., as Charterer (Charter of Hull No. 1177).
4.5 Form of Declaration and Agreement of Trust, relating to QM
Tanker 1177 Trust, dated as of December 5, 1997, among QM
Tanker 1177 Trust, as Owner Trust, QM Tanker Co., LLC, as
Owner Participant, Deutsche Morgan Grenfell (Cayman) Limited, as
Managing Trustee, and Wilmington Trust Company, as Delaware
Trustee.
4.6 Form of Participation Agreement, dated as of December 5, 1997,
among Mobil Equipment Finance Company Inc., as Charterer, QM
Tanker Co., LLC, as Owner Participant, QM Tanker 1177 Trust, as
Owner Trust, Deutsche Morgan Grenfell (Cayman) Limited, as
Managing Trustee, State Street Bank and Trust Company, as Pass
Through Trustee and Loan Participant, and State Street Bank and
Trust Company, as Indenture Trustee.
4.7 Form of Mobil Guaranty, dated as of December 5, 1997, among
Mobil Corporation, Deutsche Morgan Grenfell (Cayman) Limited,
as Managing Trustee, State Street Bank and Trust Company, as
Indenture Trustee, State Street Bank and Trust Company, as Pass
Through Trustee and Loan Participant, and QM Tanker Co., LLC,
as Owner Participant.
4.8 Form of Appendix of Definitions to Participation Agreement
relating to Hull No. 1177.
4.9 Form of Trust Indenture, Assignment of Charter and Head Lease
and Security Agreement, dated as of December 5, 1997, between QM
Tanker 1118 Trust, as Owner Trust, and State Street Bank and
Trust Company, as Indenture Trustee.
4.10 Form of Series 1997 C-2 Secured Non-recourse Discount Note (QM
Tanker No. 1178 Trust).
4.11 Form of Charter Party, dated as of December 5, 1997, between QM
Tanker 1178 Trust, as Owner, and Mobil Equipment Finance Company
Inc., as Charterer (Charter of Hull No. 1178).
4.12 Form of Declaration and Agreement of Trust, relating to QM
Tanker 1178 Trust, dated as of December 5, 1997, among QM
Tanker 1178 Trust, as Owner Trust, and QM Tanker Co., LLC, as
Owner Participant, Deutsche Morgan Grenfell (Cayman) Limited, as
Managing Trustee, and Wilmington Trust Company, as Delaware
Trustee.
4.13 Form of Participation Agreement, dated as of December 5, 1997,
among Mobil Equipment Finance Company Inc., as Charterer, QM
Tanker Co., LLC, as Owner Participant, QM Tanker 1178 Trust,
as Owner Trust, Deutsche Morgan Grenfell (Cayman) Limited, as
Managing Trustee, State Street Bank and Trust Company, as Pass
Through Trustee and Loan Participant, and State Street Bank and
Trust Company, as Indenture Trustee.
4.14 Form of Mobil Guaranty, dated as of December 5, 1997, among
Mobil Corporation and Deutsche Morgan Grenfell (Cayman) Limited,
as Managing Trustee, State Street Bank and Trust Company, as
Indenture Trustee, State Street Bank and Trust Company, as Pass
Through Trustee and Loan Participant and QM Tanker Co., LLC,
as Owner Participant (Charter of Hull No. 1178).
4.15 Form of Appendix of Definitions to Participation Agreement
relating to Hull No. 1178.
4.16 Form of Pass Through Certificate, Series 1997-C.
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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/ W.R. Arnheim
---------------------------------
Name: W.R. Arnheim
Title: Treasurer
Dated: December 12, 1997
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
1.1 Underwriting Agreement, dated as of December 2, 1997, among
Mobil Corporation, Mobil Equipment Finance Company Inc. and
Salomon Brothers Inc.
4.1 Pass Through Trust Supplement No. 1997-C, dated as of December
5, 1997, among Mobil Corporation, Mobil Equipment Finance
Company Inc., and State Street Bank and Trust Company.
4.2 Form of Trust Indenture, Assignment of Charter and Head Lease
and Security Agreement, dated as of December 5, 1997, between QM
Tanker 1177 Trust, as Owner Trust, and State Street Bank and
Trust Company, as Indenture Trustee.
4.3 Form of Series 1997 C-1 Secured Non-recourse Discount Note (QM
Tanker 1177 Trust).
4.4 Form of Charter Party, dated as of December 5, 1997, between QM
Tanker 1177 Trust, as Owner, and Mobil Equipment Finance Company
Inc., as Charterer (Charter of Hull No. 1177).
4.5 Form of Declaration and Agreement of Trust, relating to QM
Tanker 1177 Trust, dated as of December 5, 1997, among QM
Tanker 1177 Trust, as Owner Trust, and QM Tanker Co., LLC, as
Owner Participant, Deutsche Morgan Grenfell (Cayman) Limited, as
Managing Trustee, and Wilmington Trust Company, as Delaware
Trustee.
4.6 Form of Participation Agreement, dated as of December 5, 1997,
by and among Mobil Equipment Finance Company Inc., as Charterer,
QM Tanker Co., LLC, as Owner Participant, QM Tanker 1177 Trust,
as Owner Trust, Deutsche Morgan Grenfell (Cayman) Limited, as
Managing Trustee, State Street Bank and Trust Company, as Pass
Through Trustee and Loan Participant, and State Street Bank and
Trust Company, as Indenture Trustee.
4.7 Form of Mobil Guaranty, dated as of December 5, 1997, among
Mobil Corporation and Deutsche Morgan Grenfell (Cayman) Limited,
as Managing Trustee, State Street Bank and Trust Company, as
Indenture Trustee, State Street Bank and Trust Company as Pass
Through Trustee and Loan Participant, and QM Tanker Co., LLC,
as Owner Participant. (Charter of Hull No. 1177.)
4.8 Form of Appendix of Definitions to Participation Agreement
relating to Hull No. 1177.
4.9 Form of Trust Indenture, Assignment of Charter and Head Lease
and Security Agreement, dated as of December 5, 1997, between QM
Tanker 1178 Trust, as Owner Trust, and State Street Bank and
Trust Company, as Indenture Trustee.
4.10 Form of Series 1997 C-2 Secured Non-recourse Discount Note (QM
Tanker 1178 Trust).
4.11 Form of Charter Party, dated as of December 5, 1997, between QM
Tanker 1178 Trust, as Owner, and Mobil Equipment Finance Company
Inc., as Charterer. (Charter of Hull No. 1178.)
4.12 Form of Declaration and Agreement of Trust, relating to QM
Tanker 1178 Trust, dated as of December 5, 1997, among QM
Tanker 1178 Trust, as Owner Trust, QM Tanker Co., LLC, as
Owner Participant, Deutsche Morgan Grenfell (Cayman) Limited, as
Managing Trustee, and Wilmington Trust Company, as Delaware
Trustee.
4.13 Form of Participation Agreement, dated as of December 5, 1997,
among Mobil Equipment Finance Company Inc., as Charterer, QM
Tanker Co., LLC, as Owner Participant, QM Tanker 1178 Trust, as
Owner Trust, Deutsche Morgan Grenfell (Cayman) Limited, as
Managing Trustee, State Street Bank and Trust Company, as Pass
Through Trustee and Loan Participant, and State Street Bank and
Trust Company, as Indenture Trustee.
4.14 Form of Mobil Guaranty, dated as of December 5, 1997, among
Mobil Corporation and Deutsche Morgan Grenfell (Cayman) Limited,
as Managing Trustee, State Street Bank and Trust Company, as
Indenture Trustee, State Street Bank and Trust Company as Pass
Through Trustee and Loan Participant and QM Tanker Co., LLC,
as Owner Participant (Charter of Hull No. 1178).
4.15 Form of Appendix of Definitions to Participation Agreement
relating to Hull No. 1178.
4.16 Form of Pass Through Certificate, Series 1997-C.
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EXHIBIT 1.1
MOBIL CORPORATION
1997-C PASS THROUGH TRUST
PASS THROUGH CERTIFICATES
SERIES 1997-C
UNDERWRITING AGREEMENT
Dated: December 2, 1997
<PAGE>
December 2, 1997
Salomon Brothers Inc
Seven World Trade Center
New York, NY 10048
Ladies and Gentlemen:
Mobil Equipment Finance Company Inc., a Delaware corporation (the
"Company"), in connection with the financing of the debt portion of two lease
transactions (each with respect to a double-hulled LR1 crude oil tank vessel
(each a "Vessel" and collectively, the "Vessels")) in which the Company, as
charterer, proposes that State Street Bank and Trust Company, as trustee (the
"Pass Through Trustee"), will issue and sell to you its Pass Through
Certificates, Series 1997-C, 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 Company and the Pass
Through Trustee and the other parties described therein, as supplemented by the
Pass Through Trust Supplement No. 1997-C, dated as of December 5, 1997 (the
"Trust Supplement"), among the Guarantor, the Company 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 two Trust Indenture,
Assignment of Charter and Head Lease and Security Agreements, dated as of
December 5, 1997, each between the related Owner Trust and the related Indenture
Trustee (each, an "Indenture").
The Guarantor and the Company 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 promulgated under 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 pass through certificates thereunder.
A prospectus supplement 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 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 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
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2
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 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 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 Company represent and warrant to, and agree with, you
that:
(a) The Guarantor and the Company 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 the 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
Company 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 on form T-1 (the "Statement of Eligibility") under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act") of the Pass
Through Trustee.
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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 Company 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 the 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 (if any) 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 Company 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 each of the Guarantor and the 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 the 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
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4
adverse effect, whether with respect to the Guarantor or the Company, as
applicable, is referred to herein as a "Material Adverse Effect").
(g) Each subsidiary of the Guarantor (other than the Company) 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 the Company is, or is to be, a
party, have each been duly authorized by the Guarantor and/or the Company,
as the case may be, and, when duly executed and delivered by the Guarantor
and/or the Company, as the case may be, and assuming the due authorization,
execution and delivery thereof by the other parties thereto, each such
document will constitute valid and binding obligations of the Guarantor
and/or the 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 laws which may affect the
remedies provided therein, which laws, however, do not make such remedies
inadequate for the practical realization of the rights and remedies
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 the 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 generally and by general
principles of equity; and the Holders thereof will be entitled to the
benefits of the Designated Agreement.
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5
(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 the 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 the Company is, or is to be, a
party, the consummation by the Guarantor and/or the Company of the
transactions contemplated by, and compliance by the Guarantor and the
Company with the terms of, each such document do not and will not result in
any violation of the charter or by-laws of the Guarantor or the 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 the
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 the 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 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
such conflicts, breaches or defaults or liens, charges or encumbrances that
would not result in a Material Adverse Effect).
(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 the 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 the Company is, or is to be, a
party, or the consummation by the Guarantor or the Company of the
transactions contemplated by each such document, except (i) such as are
required
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6
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, (ii) those which if not obtained would not result in a Material
Adverse Effect and (iii) such as otherwise are required in connection with
the transactions contemplated by such documents which are not required to
be obtained or applied for prior to the Closing Date.
(n) Except as disclosed in the Prospectus, there are no legal or
governmental proceedings pending or, to the knowledge of the Company or the
Guarantor, threatened to which the Guarantor or any of its subsidiaries is
a party or to which any of the properties of 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 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 the 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.
(r) Neither the Guarantor nor the Company has taken or will take,
directly or indirectly, any actions prohibited by Regulation M under the
Exchange Act.
II.
Subject to the terms and conditions set forth herein, and in reliance
upon the representations and warranties herein contained, the Guarantor and the
Company agree to cause the Pass Through Trustee to sell to you, and you agree to
purchase from the Pass
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7
Through Trustee, the aggregate principal amount of Offered Certificates
(including full accretion) set forth in Schedule A at a purchase price of
85.811% of the principal aggregate stated amount (including full accretion)
thereof.
The Guarantor and the Company 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
Company are further advised by you that the Offered Certificates are to be
offered to the public initially at .% of their aggregate stated principal amount
(including full accretion) -- the public offering price -- plus 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
Trusts to you an amount equal to that percentage of the aggregate 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 deducting the amount of such compensation from the purchase
price of the Offered Certificates.
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8
III.
Delivery of and payment for the Offered Certificates shall be made at
the offices of Dewey Ballantine LLP, 1301 Avenue of the Americas, New York, New
York, at 9:00 A.M. (New York time) on December 5, 1997, or such other date, time
and place as may be agreed upon by the Guarantor, the Company 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 Company 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 LLP, special counsel for the Guarantor and the Company
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;
(ii) The Offered Certificates, the Designated Agreement, the
Participation Agreements, the Indentures, the Secured Notes, the
Parent
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9
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 the 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 the Company is a party, or the
consummation by the Guarantor and/or the Company of the transactions
contemplated by such documents, 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 the Company;
(vii) The Participation Agreements, the Designated Agreement,
the Charters, the Parent Guaranties and the other Operative Documents
and the UK Documents to which the Guarantor and/or the Company is a
party have been duly authorized, executed and delivered by the
Guarantor and/or the Company, as the case may be, and, assuming the
due authorization, execution and delivery thereof by the other parties
thereto, each is a valid and binding obligation of the Guarantor and
the Company enforceable against the
<PAGE>
10
Guarantor and the 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
remedies provided thereby;
(viii) 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;
(ix) 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 the Pass Through Trust;
(x) None of the Trusts is required to be registered under the
Investment Company Act of 1940, as amended;
(xi) Upon consummation of the transactions contemplated by the
Participation Agreements, on the Closing Date, assuming due
authorization, execution and delivery by the related Owner Trust and
due authentication by the related Indenture Trustee, each Secured Note
will constitute the valid and binding obligation of the related Owner
Trust, enforceable against such Owner Trust 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 the holders of each Secured Note will be entitled to the benefits
of the applicable Indenture; and
(xii) 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;
<PAGE>
11
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 the Company is 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 (viii) 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," "Use of Proceeds and Outline of the Transaction," "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 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 Company 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
<PAGE>
12
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 the Company is 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 Guarantor and the 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;
(iv) Each of the Guarantor, the Company 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 its 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 the Company, the failure to obtain or file would
not have a Material Adverse Effect;
(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 the 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 the Company is a party, or the consummation by
the Guarantor and/or the Company of the transactions contemplated by
each such document, 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;
<PAGE>
13
(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 the 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, the Charters, the Parent Guaranties and other Operative
Documents and the UK Documents, to which the Guarantor and/or the
Company is a party have each been duly authorized, executed and
delivered by the Guarantor and/or the Company, as the case may be.
The execution and delivery by the Guarantor and/or the 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 the Company is a party, the issuance and sale of the Offered
Certificates, the consummation by the Guarantor and/or the Company of
the transactions contemplated in this Agreement, the Designated
Agreement, the Participation Agreements, the Charters, the Parent
Guaranties, such other Operative Documents, such other UK Documents
and in the Registration Statement and compliance by the Guarantor
and/or the 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 the 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 the Company
under (A) any indenture, mortgage, loan agreement, note, lease or
other agreement or instrument known to such counsel, to which the
Guarantor or the Company is a party or by which it may be bound or to
which
<PAGE>
14
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 the 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 the 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 the 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 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," "Use of Proceeds and
Outline of the Transaction," "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," "Use of Proceeds and Outline of the Transaction," "Diagram of
Payments," "Description of the Pass Through
<PAGE>
15
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, 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 to execute, deliver and perform its obligations
under the Designated Agreement, the Offered Certificates, the
Participation Agreements, the Indentures 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,
executed and delivered the Designated Agreement, the Participation
Agreements, the Indentures and the other Operative Documents to which
it is a party, each of which constitutes a valid and binding
obligation 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 its
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);
<PAGE>
16
(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 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 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 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,
<PAGE>
17
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 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 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
<PAGE>
18
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 the
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, the Controller or any Assistant Treasurer 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, the
Controller or any Assistant Treasurer of the 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.
(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 form and substance satisfactory to you,
containing statements and information of the type ordinarily included in
auditors' "comfort letters" to underwriters, 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 Closing Date shall have been satisfied on the Closing Date; the
representations and warranties of the Guarantor and the 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, Treasurer or Assistant
Treasurer of the Guarantor and the 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 representations and warranties of the Guarantor contained in
the Guaranty 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)
<PAGE>
19
and you shall have received a certificate of a Vice President, Treasurer or
Assistant Treasurer of the Guarantor, dated as of the Closing Date, to such
effect.
(l) The Guarantor and the 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 the 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 the Company covenant as follows:
(a) To furnish to 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 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 Company) to which
Offered Certificates may have been sold by or on behalf of 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.
<PAGE>
20
(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 the 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 the 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 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 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 the 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
Company shall have furnished any amendments or supplements thereto) or caused by
any omission or
<PAGE>
21
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/or the Company
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,
with respect to any person asserting any such losses, claims, damages or
liabilities who purchased Offered Certificates from you or any person
controlling you, if a copy of the Prospectus (as then amended or supplemented if
the Guarantor or the Company 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
Company, each of their directors, each of their officers who sign the
Registration Statement and each person, if any, who controls the Guarantor or
the 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 Company to you, but only with reference to
information relating to you furnished to the Guarantor and/or the Company 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 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
<PAGE>
22
the Guarantor and the Company, and such directors, officers and control persons
of the Guarantor and the Company, such firm shall be designated in writing by
the Guarantor or the Company, as the case may be. 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 Company 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 Company 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 Company on the one hand and
you on the other hand shall be deemed to be in the 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 Company 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 Company 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 Company 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
<PAGE>
23
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 Company
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 the Company, its officers or directors or any other person
controlling the Guarantor or the Company and (iii) acceptance of and payment for
any of the Offered Certificates.
VII.
This Agreement shall be subject to termination in your absolute
discretion, by notice given to the Guarantor or the Company, 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 the 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.
<PAGE>
24
If this Agreement shall be terminated by you, because of any failure
or refusal on the part of the Guarantor or the Company to comply with the terms
or to fulfill any of the conditions of this Agreement, or if for any reason the
Guarantor or the Company shall be unable to perform its obligations under this
Agreement, the Guarantor and the 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 EQUIPMENT FINANCE
COMPANY INC.
By:_____________________________
MOBIL CORPORATION
By:______________________________
Accepted as of the date first
above written:
SALOMON BROTHERS INC
By:______________________________
<PAGE>
SCHEDULE A
Aggregate
Pass Through Principal Final
Certificate Amount Distribution Underwriting
----------- -------------- Date Commissions
Designation at Maturity Interest Rate ------------ -------------
- -------------- ----------- --------------
1997-C $61,200,000 6.69% 1/02/ 2018 .70%
=======================================================================
<PAGE>
EXHIBIT 4.1
This Pass Through Trust Supplement No. 1997-C, dated as of December 5, 1997
(herein called the "Trust Supplement"), among Mobil Corporation, a Delaware
----------------
corporation (the "Guarantor"), Mobil Equipment Finance Company Inc., a Delaware
---------
corporation ("MEFC") (the "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 Company, seven 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 the 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 Company 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 "1997-C Trust") for the benefit of the
------------
Certificateholders, and the initial Certificateholders as the grantors of the
1997-C Trust, by their respective acceptances of the Certificates, join in the
creation of this 1997-C 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 1997-C" (hereinafter defined as the "Series
------
1997-C Certificates"). Each Series 1997-C Certificate represents a Fractional
- -------------------
Undivided Interest in the 1997-C Trust created hereby.
The terms and conditions applicable to the Series 1997-C Certificates are
as follows:
(a) The aggregate principal amount at maturity of the Series 1997-C
Certificates that shall be authenticated under the Agreement (except for
Series 1997-C Certificates authenticated and delivered pursuant to Sections
3.3, 3.4 and 3.5 of the Basic Agreement) upon their initial issuance is
$61,400,000.
(b) The Cut-off Date is December 12, 1997.
(c) The Regular Distribution Dates with respect to any payment of
Scheduled Payments means each January 2 and July 2, commencing July 2,
2000, 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 1997-C Certificates shall be in the form
attached hereto as Exhibit A.
---------
(ii) The Series 1997-C Certificates shall be Book-Entry
Certificates and shall be subject to the conditions set forth in the Letter
of Representations among the Guarantor, the Company, 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 related Owner
Participant, will issue on a non-recourse basis, the Secured Notes, the
proceeds of which shall be used, among other things, to finance a portion
of the purchase price to such Owner Trust's interest in one of the
following LR1 crude oil tank vessels being built by Hyundai Heavy
Industries, Co., Ltd., a Korean corporation, and Hyundai Corporation, a
Korean corporation (together, the "Builder"), and to be registered in the
Marshall Islands or such other jurisdiction as determined by the Owner
Participant and acceptable to the Company and which is not materially less
favorable to the Indenture Trustee, as trustee for the holders of the
Secured Notes (together, the "Vessels");
1. Hull No. 1177 being built under the Construction Contract dated
November 24, 1997 and scheduled to be delivered in the fourth
quarter of 1999 ("Hull No. 1177").
-------------
2. Hull No. 1178 being built under the Construction Contract dated
November 24, 1997 and scheduled to be delivered in the fourth
quarter of 1999 ("Hull No. 1178").
-------------
(h) The proceeds of the Series 1997-C Certificates shall be used to
purchase the Secured Notes in the respective principal amounts and at the
purchase prices specified below:
<PAGE>
4
Principal Payable at
Vessel Purchase Price Maturity
- --------------- -------------- --------------------
Hull No. 1177 $26,344,063.02 $30,700,000.00
Hull No. 1178 $26,344,063.02 $30,700,000.00
-------------- --------------
Total $52,688,126.04 $61,400,000.00
The Secured Notes are not senior or subordinate to any other Secured Notes.
(i) The Series 1997-C Certificates are not subject to any
intercreditor agreement, liquidity or credit facility or other similar
agreement. Neither the Guarantor nor the Company may deliver Series 1997-C
Certificates or cash to the Trustee in exchange for Secured Notes.
(j) The related Note Documents include:
(i) Each of the following Indentures:
Trust Indenture, Assignment of Charter and Head Lease and Security
Agreement (QM Tanker 1177 Trust), dated as of December 5, 1997;
Trust Indenture, Assignment of Charter and Head Lease and Security
Agreement (QM Tanker 1178 Trust), dated as of December 5, 1997;
(ii) the following Secured Notes:
Series 1997 C-1 Secured Non-Recourse Note (QM Tanker 1177 Trust),
dated December 5, 1997;
Series 1997 C-2 Secured Non-Recourse Note (QM Tanker 1178 Trust),
dated December 5, 1997;
(iii) the following Charters:
Charter Party (Hull No. 1177), dated as of December 5, 1997;
Charter Party (Hull No.1178), dated as of December 5, 1997;
(iv) the following Participation Agreements:
<PAGE>
5
Participation Agreement (QM Tanker 1177 Trust), dated as of December
5, 1997;
Participation Agreement (QM Tanker 1178 Trust), dated as of December
5, 1997;
(v) the following Trust Agreements:
Declaration and Agreement of Trust (QM Tanker 1177 Trust), dated
November 19, 1997;
Declaration and Agreement of Trust (QM Tanker 1178 Trust), dated
November 19, 1997;
(vi) the following Guaranties:
Mobil Guarantee (Hull No. 1177), dated December 5, 1997;
Mobil Guarantee (Hull No. 1178), dated December 5, 1997;
(vii) each ship mortgage to be delivered by the U.K. Lessor (as
defined in the Indenture), as mortgagor, in favor of the respective
Owner Trust, as mortgagee, with respect to each Vessel upon delivery
of such mortgage by the U.K. Lessor;
(viii) the following Head Leases between the U.K. Lessor and the
respective Owner Trust, as lessee:
Lease Agreement (Hull No. 1177), dated November 24, 1997 with QM
Tanker 1177 Trust;
Lease Agreement (Hull No. 1178), dated November 24, 1997 with QM
Tanker 1178 Trust;
(ix) the following Lessee Support Agreements among the U.K.
Lessor, the Company, as Charterer, and the respective Owner Trust:
Lessee Support Agreement (Hull No. 1177), dated December 5, 1997;
Lessee Support Agreement (Hull No. 1178), dated December 5, 1997;
<PAGE>
6
(x) each U.K. Lessor's Security Assignment with respect to each
Vessel among the U.K. Lessor, the related Owner Trust and the Owner
Participant (as defined in the Indenture) to be delivered upon
delivery of the related Vessel and delivery to the related Owner Trust
by the U.K. Lessor; and
(xi) the following Deed of Guaranty by Abbey National Treasury
Services PLC to the related Owner Trust:
Deed of Guaranty (Hull No. 1177), dated November 24, 1997;
Deed of Guaranty (Hull No. 1178), dated November 24, 1997;
ARTICLE III
DEFINITIONS
Section 3.01. Definitions. For the purposes of the 1997-C 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. Each of the
Series 1997 C-1 Secured Non-Recourse Note issued in respect of Hull No.
1177 and the Series 1997 C-2 Secured Non-Recourse Note issued in respect of
Hull No. 1178 is an Accreting Secured Note until (but not including) April
1, 2000.
Guaranty: Means each guaranty of the Guarantor of the obligations of
--------
the 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
<PAGE>
7
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 tenth decimal place, with .00000000005 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 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 in the related Vessel Interest,
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 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 Company, or for or in respect of the recitals and statements
contained herein, all of which recitals and statements are made solely by the
Company.
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.
<PAGE>
8
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.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01. Assignment of Charter. The Company will not assign its
---------------------
rights under Article 20(c) of either 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 the Company hereunder.
Section 5.02. Basic Agreement Ratified. Except and so far as herein
------------------------
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
-------------
1997-C 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
--------------------------
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 Company 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:__________________
Name:
Title:
MOBIL EQUIPMENT FINANCE COMPANY INC.
By: ____________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, Trustee
By: ______________________
Name:
Title:
<PAGE>
Exhibit A
Form of Pass Through Certificates, Series 1997-C
<PAGE>
Exhibit B
Letter of Representations
<PAGE>
Exhibit C
Pass Through Certificates, Series 1997-C
Scheduled Payments of Principal
<PAGE>
Exhibit C
Pass Through Certificates, Series 1997-C
Scheduled Payments of Principal
<TABLE>
<CAPTION>
Scheduled Scheduled
Accretion of Payments of
Date/Regular Distribution Date Discount Principal
- ------------------------------ ------------------- ---------------------
<S> <C> <C>
December 5, 1997 0.00 0.00
January 2, 1998 264,362.67 0.00
July 2, 1998 1,771,260.75 0.00
January 2, 1999 1,830,509.42 0.00
July 2, 1999 1,891,739.96 0.00
January 2, 2000 1,955,018.66 0.00
July 2, 2000 998,982.50 452,242.26
January 2, 2001 0.00 942,432.35
July 2, 2001 0.00 973,956.71
January 2, 2002 0.00 1,006,535.56
July 2, 2002 0.00 1,040,204.18
January 2, 2003 0.00 1,074,999.01
July 2, 2003 0.00 1,110,957.73
January 2, 2004 0.00 1,148,119.26
July 2, 2004 0.00 1,186,523.85
January 2, 2005 0.00 1,226,213.07
July 2, 2005 0.00 1,267,229.90
January 2, 2006 0.00 1,309,618.74
July 2, 2006 0.00 1,353,425.49
January 2, 2007 0.00 1,398,697.57
July 2, 2007 0.00 1,445,484.00
January 2, 2008 0.00 1,493,835.44
July 2, 2008 0.00 1,543,804.24
January 2, 2009 0.00 1,595,444.49
July 2, 2009 0.00 1,648,812.11
January 2, 2010 0.00 1,703,964.87
July 2, 2010 0.00 1,760,962.50
January 2, 2011 0.00 1,819,866.69
July 2, 2011 0.00 1,880,741.24
January 2, 2012 0.00 1,943,652.03
July 2, 2012 0.00 2,008,667.19
January 2, 2013 0.00 2,075,857.11
July 2, 2013 0.00 2,145,294.53
January 2, 2014 0.00 2,217,054.63
July 2, 2014 0.00 2,291,215.11
January 2, 2015 0.00 2,367,856.25
July 2, 2015 0.00 2,447,061.04
January 2, 2016 0.00 2,528,915.24
July 2, 2016 0.00 2,613,507.45
January 2, 2017 0.00 2,700,929.28
July 2, 2017 0.00 2,791,275.36
January 2, 2018 0.00 2,884,643.52
</TABLE>
<PAGE>
EXHIBIT 4.2
TRUST INDENTURE, ASSIGNMENT OF CHARTER AND HEAD LEASE
AND SECURITY AGREEMENT
among
QM TANKER 1177 TRUST,
a Delaware Business Trust,
created under the
Trust Agreement dated
as of November 19, 1997, with
the Owner Participant thereto
and
STATE STREET BANK AND TRUST COMPANY
Indenture Trustee
Dated as of December 5, 1997
Leveraged Lease of one LR 1 Crude Oil Tank Vessel
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.................................. 6
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............................ 8
SECTION 2.04. Note Register................................ 9
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............................. 11
SECTION 2.09. Termination of Interest in Indenture Estate.. 15
SECTION 2.10. Equally and Ratably Secured.................. 15
ARTICLE III
REDEMPTION AND REFUNDING
SECTION 3.01. Generally.................................... 15
SECTION 3.02. Mandatory Casualty Redemption................ 16
SECTION 3.03. Mandatory Early Termination Redemption....... 16
SECTION 3.04. Assumption of Obligations of Owner Trust..... 17
SECTION 3.05. Optional Redemption.......................... 19
SECTION 3.06. Owner Trust's and Owner Participant's Option
to Redeem or Purchase Secured Notes......... 19
SECTION 3.07. Deposited Redemption Moneys.................. 21
SECTION 3.08. Acquisition of Secured Notes................. 21
SECTION 3.09. Condition to Redemption and Refunding........ 21
SECTION 3.10. Notice of Certain Redemptions................ 21
<PAGE>
ii
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE INDENTURE ESTATE;
ACTIONS UPON VESSEL DELIVERY
SECTION 4.01. Distribution of Hire........................... 22
SECTION 4.02. Certain Distributions.......................... 23
SECTION 4.03. Distribution After Indenture Event of Default.. 24
SECTION 4.04. Application of Payments on Secured Notes....... 26
SECTION 4.05. Applications of Payments According to
Applicable Operative Document Provisions..... 26
SECTION 4.06. Amounts Received for Which No Provision Is Made.27
SECTION 4.07. Payment Procedures..............................27
SECTION 4.08. Application of Payments Under Parent Guaranty...28
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................................... 28
SECTION 5.02. Indenture Events of Default..................... 31
SECTION 5.03. Certain Rights.................................. 32
SECTION 5.04. Remedies........................................ 34
SECTION 5.05. Suit; Possession; Title; Sale of
Indenture Estate.............................................. 36
SECTION 5.06. Remedies Cumulative............................. 40
SECTION 5.07. Discontinuance of Proceedings................... 40
SECTION 5.08. Waiver of Past Defaults......................... 40
SECTION 5.09. No Action Contrary to Certain Third
Party Rights.................................................. 40
SECTION 5.10. Rights of Holders of Secured Notes.............. 41
SECTION 5.11. Limitation on Suits by Holders.................. 41
ARTICLE VI
DUTIES OF THE INDENTURE TRUSTEE
SECTION 6.01. Certain Actions................................. 42
SECTION 6.02. Action Upon Instructions........................ 42
SECTION 6.03. Release of Lien of Indenture.................... 43
<PAGE>
iii
SECTION 6.04. Indemnification................................. 44
SECTION 6.05. No Implied Duties............................... 45
SECTION 6.06. Duties to Remove Certain Liens.................. 45
SECTION 6.07. No Action Except Under Operative Documents or
Instructions.................................. 45
SECTION 6.08. Certain Rights of the Owner Trust and the Owner
Participant................................... 45
SECTION 6.09. Filing of Financing and Continuation Statements..46
SECTION 6.10. Publishing of Notices............................46
SECTION 6.11. Taxes; Withholding; Information Reporting........46
ARTICLE VII
THE INDENTURE TRUSTEE AND THE OWNER TRUSTEE
SECTION 7.01. Acceptance of Trusts and Duties................. 47
SECTION 7.02. Absence of Duties Except as Specified........... 47
SECTION 7.03. No Representations or Warranties................ 47
SECTION 7.04. No Segregation of Moneys; No Interest;
Investments.................................... 48
SECTION 7.05. Reliance; Agents; Advice of Counsel............. 49
SECTION 7.06. No Compensation from Holders or Indenture Estate.49
SECTION 7.07. Right of the Indenture Trustee to Perform
Covenants, Etc.................................50
SECTION 7.08. Moneys for Payments in Respect of Notes to be
in Trust......................................50
SECTION 7.09. Disposition of Moneys Held for Payments of Notes.50
ARTICLE VIII
SUCCESSOR TRUSTEES AND ADDITIONAL TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee............... 51
SECTION 8.02. Resignation of Indenture Trustee; Appointment of
Successor..................................... 51
SECTION 8.03. Co-Trustees and Separate Trustees............... 53
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Indenture Supplements Without Consent of
Holders....................................... 55
SECTION 9.02. Supplements and Amendments to Operative
Documents With Consent Holders of Notes....... 56
SECTION 9.03. Execution of Indenture Supplement, Amendments,
Etc........................................... 61
SECTION 9.04. Effect of Indenture Supplement................. 61
SECTION 9.05. Reference in Secured Notes to Indenture
Supplements................................... 61
<PAGE>
iv
SECTION 9.06. Notices of Indenture Supplements and Amendments,
Etc............................................. 61
SECTION 9.07. Charterer Rights.................................. 62
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture.......................... 62
SECTION 10.02. No Legal Title to Indenture Estate in Holders..... 63
SECTION 10.03. Power of Attorney................................. 64
SECTION 10.04. Regarding the Owner Trust and the Owner Trustees.. 64
SECTION 10.05. Notices........................................... 65
SECTION 10.06. Severability of Provisions........................ 65
SECTION 10.07. No Oral Modification or Continuing Waivers........ 66
SECTION 10.08. Successors and Assigns............................ 66
SECTION 10.09. Headings; Table of Contents....................... 66
SECTION 10.10. Normal Commercial Relations....................... 66
SECTION 10.11. Governing Law..................................... 66
SECTION 10.12. Execution......................................... 67
SECTION 10.13. Security Agreement................................ 67
SECTION 10.14. Benefits of Indenture............................. 67
Appendix A Definitions
Schedule 1 Description of Vessel
Exhibit A Form of Secured Note
Exhibit B Maturity Dates, Esq.
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 5, 1997 (this "Indenture"), between QM TANKER
---------
1177 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, an "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 "Resident Trust Company") have heretofore entered into the
Declaration of Agreement of Trust dated as of November 19, 1997 (the "Trust
-----
Agreement"), whereby, among other things, the Cayman Trust Company and the
- ---------
Resident Trust Company in their respective capacities as Managing Trustee and
Resident 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 1997-C-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 hereunder, 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 Interest (by
virtue of the grant hereunder), the Head Lease, the Charter, the Parent
Guaranty, any proceeds from the U.K. Lessor's Mortgage (upon delivery thereof as
described below), the U.K. Lessor's Security Assignment (upon delivery thereof
as described below) and the
<PAGE>
2
Bank Guarantee and all payments and other amounts received hereunder or
thereunder (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 Participant and the other Holders and for the
benefit and security of the Loan Participant 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 to the extent
provided herein 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 HEAD LEASE
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 Participant) 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, 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
<PAGE>
3
collectively, together with all of the Indenture Trustee's right, title and
interest in and to the Vessel Interest, by virtue of the grant hereunder,
including all property hereafter subjected to the Lien of this Indenture 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) under and pursuant to the Head Lease,
including, without limitation, any Modification or Alteration to the Vessel
which, pursuant to the terms of the Head Lease and the Charter, become part
of the Vessel Interest of the Owner Trust;
(b) all rights to receive all amounts that are received by the Owner
Trust from the Builder under the Supervisory Agreement or from Shinhan Bank
under the bank letter of guarantee referred to in the Construction
Contract, and which the Owner Trust is entitled to retain unconditionally
for its own benefit in accordance with the terms of the Head Lease (and not
as agent for the U.K. Lessor), including, without limitation, all moneys
due and to become due to the Owner Trust under such Head Lease, subject to
the rights of the U.K. Lessor under such Head Lease.
(c) the Charter, including, without limitation, (i) all amounts of
hire, rent, income insurance proceeds and requisition, indemnity or other
payments of any kind (other than Excepted Payments) 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 Head Lease, the Lessee Support Agreement, the Bank Guarantee,
the U.K. Lessor's Security Assignment (upon delivery thereof by the U.K.
Lessor) and any proceeds from the U.K. Lessor's Mortgage (upon delivery
thereof by the U.K. Lessor), 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 of the Vessel or the Vessel Interest, 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 provided that, notwithstanding the foregoing provisions or anything
herein to the contrary, so long as no Charter Event of Default has occurred and
is continuing, the leasehold interest granted to the Charterer under the Charter
shall not be subject to the Lien of this Indenture or be part of the Indenture
Estate, and nothing in this Indenture shall affect the rights of the Charterer
under the Charter; 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 (except as provided herein
or under any Operative
<PAGE>
5
Document), 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 (except as to the Indenture Trustee,
if the Indenture Trustee shall have become the "Owner" under the Charter). 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.
Pursuant to clause 5.2(B) of the Head Lease, the U.K. Lessor has
covenanted with the Owner Trust that it shall (at the expense of the Owner
Trust) (i) upon delivery of the Vessel to the U.K. Lessor and upon documentation
of the Vessel under the laws of Marshall Islands (or such other jurisdiction as
is permitted by the Operative Documents and the U.K. Documents) in the name of
the U.K. Lessor as holder of title to the Vessel, execute and deliver to the
Owner Trust the U.K. Lessor's Mortgage; and (ii) upon delivery of the Vessel to
the U.K. Lessor aforesaid, execute and deliver to the Owner Trust the U.K.
Lessor's Security Assignment, in each case securing certain of the U.K. Lessor's
obligations to the Owner Trust under the Head Lease. Pursuant to this
Indenture, the Owner Trust hereby grants, pledges, assigns and mortgages all of
its rights and interest under the U.K. Lessor's Security Assignment and to any
proceeds from the U.K. Lessor's Mortgage to the Indenture Trustee, as part of
the Indenture Estate hereunder.
Accordingly, the Owner Trust and the Indenture Trustee hereby agree
for themselves and for the benefit and security of the Holders as follows:
<PAGE>
6
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 hereof, 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 1997-C-1 Secured Notes. The Series
-----------------------------
1997-C-1 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;
<PAGE>
7
(iv) bear interest on the unpaid principal amount thereof from the
date of such Series 1997-C-1 Secured Notes to and including 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 hereto (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.
(d) No Registration of Transfer or Exchange Upon Redemption. The
-------------------------------------------------------
Indenture Trustee shall not be required (i) to register the transfer of or to
exchange any Secured Note during a period beginning at the opening of business
15 Business Days before the day of the mailing of a notice of redemption (or
purchase in lieu of redemption) of Secured Notes pursuant to Article III and
ending at the close of business on the day of such mailing or (ii) to register
the transfer of or to exchange any Secured Note called for redemption (or
purchase in lieu of redemption) pursuant to Article III.
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
<PAGE>
8
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. If any Holder does not specify one
of the foregoing methods, payment will be made by check mailed to the registered
address of the Holder. In the event the Indenture Trustee shall fail to make
any payment as provided in the preceding sentences 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 at the Federal Funds overnight rate.
(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
<PAGE>
9
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 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
<PAGE>
10
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 Resident 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.
(d) The Indenture Trustee shall cancel all Secured Notes surrendered
for replacement, redemption, registration of transfer, exchange, payment or
cancellation and shall destroy canceled Secured Notes.
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
<PAGE>
11
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 Trust 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 Trust 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) the cost of any Modifications to the Vessel undertaken pursuant to
Article 13 of the Charter or (ii) the cost of any Alteration to the Vessel
undertaken pursuant to Section 15 of the Construction Contract. Any Additional
Notes issued hereunder may be issued to any Person, including, without
limitation affiliates of the Guarantor, other than the Pass Through Trustee.
(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
<PAGE>
12
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,
or subordinate to, all other Secured Notes issued pursuant to the terms hereof;
provided that, if any Additional Notes are issued that rank subordinate to any
Secured Notes, any additional issuances of Additional Notes, as provided
hereunder, may rank senior to such subordinated Additional Notes but not senior
to the Secured Notes originally issued hereunder.
(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 reasonably satisfactory to the Indenture
Trustee, which shall be executed by the Owner Trust and the Indenture Trustee.
Such indenture supplement shall set forth:
(i) the aggregate principal amount of such Additional Notes (which
amount with respect to Additional Notes issued pursuant to clause (a)(i) or
a(ii) of this Section 2.08 shall not exceed 100% of the cost of such
Modifications or Alterations, as the case may be) and the premium, if any,
and interest thereon;
(ii) after giving effect to the issuance of the Additional Notes
pursuant to clause (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 amount shall not
exceed 80% of the initial cost of the Vessel;
(iii) after giving effect to the issuance of the Additional Notes
pursuant to clauses (a)(i) or (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 amount shall
not exceed 85% of the total Fair Market Sales Value of the Vessel (as
determined pursuant to the mutual agreement of the Owner Trust and the
Charterer and otherwise by the Appraisal Procedure) after giving effect to
such Modifications or Alterations. In the event that the issuance of
Additional Notes shall occur prior to the Delivery Date, the Fair Market
Sales Value of the Vessel shall be determined by reference to the amounts
paid or payable to the Builder under the Construction Contract and the
amounts paid or payable to the Supervisor under the Supervisory Agreement;
(iv) 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);
<PAGE>
13
(v) the date of maturity of such Additional Notes (which shall be no later
than the end of the Charter Period);
(vi) the date from which, and the date or dates on which, interest is
payable (which shall be Interest Payment Dates);
(vii) 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);
(viii) 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
(ix) 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
<PAGE>
14
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 such interest in all property included in such
Modification or Alteration, if any, and to subject such property, subject
to the Head Lease, to the Lien of this Indenture, subject to no Liens
except Permitted Liens;
(v) in the event that the issuance of Additional Notes shall occur on
or after the delivery of the U.K. Lessor's Mortgage and if title to such
Modifications or Alterations shall be transferred to the U.K. Lessor, an
amendment to the U.K. Lessor's Mortgage so that the lien thereof will cover
and include the Modifications or Alterations 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) Outstanding on such date;
(vii) originals or certified copies of all corporate actions
necessary for the due and valid issuance 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, in each case to
the extent practicable, 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 12.3 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 the creation and perfection of the security
interest in such Modification or Alteration
<PAGE>
15
(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 or any supplement to 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>
16
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 obligate the Builder to pay a refund under the Construction Contract
or (iii) the Vessel shall not have been delivered to the U.K. Lessor by the
Builder and accepted by the Charterer 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, but not including, 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 obligate the Builder to pay a
refund under 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 a Person
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, but not including, such Special Termination
Redemption Date plus, in the event the Special Termination Redemption Date
occurs prior to the Premium Termination Date, a premium equal to the Make-Whole
Amount, if any, and otherwise without premium.
(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, but not including, such Termination Redemption Date plus,
in the event the Termination Redemption Date occurs prior to the Premium
Termination Date, a premium equal to the Make-Whole Amount, if any, and
otherwise without premium.
<PAGE>
17
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 3.03 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 hereof, 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 subject to
the mortgage and security interest of this Indenture (and the Ship Mortgage
referred to in clause (iv) below) in favor of the Indenture Trustee and is
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 hereto as Exhibit C;
(iv) the Substitute Obligor shall have executed and delivered to the
Indenture Trustee a first priority ship mortgage, substantially in the form
of Exhibit E hereto (the "Ship Mortgage") in favor of Indenture Trustee
-------------
which shall be subject to the security interest of this Indenture and
become part of the Indenture Estate;
(v) 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;
<PAGE>
18
(vi) 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;
(vii) 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;
(viii) 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;
<PAGE>
19
(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, each of 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, as the case
may be, 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, but not including, the date of
redemption, plus, in the event the Secured Notes are redeemed prior to the
Premium Termination Date, a premium equal to the Make-Whole Amount, if any, and
otherwise without the Make-Whole Amount or any other premium.
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 180 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 180 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 or (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 and the Loan Participant 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
<PAGE>
20
the unpaid principal amount of such Secured Notes, together with any accrued and
unpaid interest thereon to, but not including, the date of redemption, plus in
the case of any redemption or purchase pursuant to clause (a) above prior to the
Premium Termination Date, a premium equal to the Make-Whole Amount, if any, with
respect to such Secured Notes, 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 prior to the
Premium Termination Date, 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 of 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 Participant 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 and 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, the 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 the Loan Participant in and to the
Secured Notes held by the Loan Participant. On and after such Redemption Date,
the Indenture Trustee shall no longer treat the former Loan Participant as the
"Loan Participant", except for purposes of the Loan Participant's right to
receive their respective portions of the
<PAGE>
21
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,
herein or in any other Operative Document.
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 (except as provided
herein) 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 Interest pursuant to Article 18 of the Charter, and if the Owner
Trust does not sell the Vessel Interest on or prior to the Redemption Date, then
such notice of redemption may be revoked by the Owner Trust.
<PAGE>
22
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;
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 (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 (except for Additional Notes, if any, which are subordinate to the
Initial Secured Notes and other Secured Notes), in the proportion that the
amount of such payment or payments then due
<PAGE>
23
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 (other
than Excepted Payments) 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) In the event the Secured
---------------------
Notes are to be redeemed pursuant to Section 3.02, 3.03 or 3.05 hereof, any
payment received by the Indenture Trustee from the Owner Trust or the Charterer
pursuant to Section 3.02, 3.03 or 3.05 hereof 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;
<PAGE>
24
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.
(c) Application of Certain Payments in Case of Event of Loss. Except
--------------------------------------------------------
as otherwise provided in the second sentence of this Section 4.02(c), any
amounts received directly or through the Charterer from any Governmental
Authority or other Person pursuant to Article 14 of the Charter with respect to
the Vessel as the result of an Event of Loss, to the extent that such amounts
are not at the time required or permitted to be paid to, or retained by, the
Charterer pursuant to said Article 14, and any amounts of insurance proceeds for
damage to the Vessel received directly or through the Charterer from any insurer
pursuant to Article 16 of the Charter with respect thereto as the result of an
Event of Loss, to the extent such amounts are not at the time required to be
paid to, or retained, by the Charterer pursuant to Article 16, shall, except as
otherwise provided in the next sentence, be applied in reduction of the
Charterer's obligations to pay Termination Value as provided in the Charter and
the remainder, if any, shall, except as provided in the next sentence, be
distributed to the Owner Trust to be held or distributed in accordance with the
terms of the Charter. Notwithstanding this Section 4.02(c) or Section 4.03
hereof, any amounts held by the Indenture Trustee, including, without
limitation, pursuant to Section 14 of the Charter, which are payable to the
Charterer pursuant to the terms of the Charter or held by the Indenture Trustee
in accordance with Article 29(h) of the Charter shall be (i) so paid to the
Charterer or (ii) held by the Indenture Trustee as security for the obligations
of the Charterer, in each case in accordance with the applicable provisions of
the Charter.
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 and 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
<PAGE>
25
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 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
<PAGE>
26
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.
For the avoidance of doubt, no Make Whole Amount or any other premium
shall be due and payable on the Secured Notes as a consequence of the
acceleration of the Secured Notes as a result of an Indenture of Default.
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 (including in the case of
payments or amounts that would be payable to the Charterer as provided in
Article 14 and 29(h) of the Charter), 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
<PAGE>
27
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.
(c) The Indenture Trustee will distribute promptly upon receipt any
indemnity or other payment received by it from the Owner Trust or the Charterer
in respect of the Indenture Trustee in its individual capacity or any Holder
pursuant to either Section 13.1 or 13.2 of the Participation Agreement directly
to the Person entitled thereto.
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
<PAGE>
28
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, 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,
and upon delivery of the Vessel, the U.K. Lessor's Security Assignment and the
proceeds of the U.K. Lessor's Mortgage, to perfect or maintain the Lien of this
Indenture 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
<PAGE>
29
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) (i) 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, (A) accept any payment from the Charterer, (B)
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, (C)
enter into any agreement amending or supplementing any Operative Document, (D)
execute or grant any waiver or modification of, or consent under, the terms of
any Operative Document, (E) settle or compromise any claim arising under any
Operative Document, or (F) 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.
(ii) 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 any Specified U.K. Document or this Indenture, 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 under such Specified U.K. Documents
hereby assigned to anyone other than the Indenture Trustee, and that the Owner
Trust will not, except as provided in or permitted by this Indenture or such
Specified U.K. Document or unless any of the following actions is not materially
less favorable to the Indenture Trustee, as trustee for the Holders of the
Secured Notes, (A) enter into any agreement amending or supplementing any
Specified U.K. Document, (B) execute or grant any waiver or modification of, or
consent under, the terms of any Specified U.K. Document, (C) settle or
compromise any claim arising under any Specified U.K. Document, or (D) submit or
consent to the submission of any dispute, difference or other matter arising
under or in respect of any Specified U.K. Document to arbitration thereunder.
For purpose of this Indenture "Specified U.K. Documents" means the Head Lease,
the U.K. Lessor's Security Assignment, the Bank Guarantee, the U.K. Lessor's
Mortgage and the Lessee Support Agreement.
<PAGE>
30
(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 the Owner
Trust's 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.
<PAGE>
31
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 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
<PAGE>
32
(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 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
<PAGE>
33
(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 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; provided that neither the Owner Participant nor
the Owner Trustee shall attempt to recover
<PAGE>
34
any such amount paid by it on behalf of the Charterer pursuant to Section
5.03(a) except by demanding of the Charterer payment of such amount or by
commencing an action against the Charterer to require the payment of such
amount.
(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 such case the Indenture Trustee, subject to Sections 5.03,
5.04(d), 5.05, 5.09 and 6.08 and the rights of the U.K. Lessor, 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 claiming under the Owner Trust (excluding the Charterer if
a Charter Event of Default has not occurred and is not continuing) 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, subject to the rights of the U.K. Lessor,
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
<PAGE>
35
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 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 Trust 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,
<PAGE>
36
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 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, subject to the rights of the U.K. Lessor, 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 (excluding the Charterer if a Charter Event of
Default shall not have occurred and be continuing) 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
<PAGE>
37
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 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, the Owner Trust, the Owner Participant 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
<PAGE>
38
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 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.
<PAGE>
39
(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 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
<PAGE>
40
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 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 this Indenture (including, without
limitation, Section
<PAGE>
41
5.04 and 5.05 hereof) or 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;
(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.
<PAGE>
42
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 or any other
Operative Document. 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 material 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
<PAGE>
43
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 Lien of this Indenture on the
Indenture Estate shall terminate and 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, 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 reasonable 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 Owner Trust.
(b) Release of the Vessel Interest upon Transfer. Upon any transfer
--------------------------------------------
by the Owner Trust of the Vessel Interest pursuant to Article 18 or 23 of the
Charter or any retention by the Owner Trust of the Vessel Interest 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 Lien of the Indenture Estate shall terminate and the
Indenture Trustee, upon the written request of the Owner Trust or Charterer,
shall execute and deliver to, or as directed by, the Owner Trust or Charterer,
all appropriate instruments (in due form for recording or filing), releasing the
Vessel Interest 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. The reasonable 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 Owner Trust.
(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 lien of the Indenture Estate shall terminate and 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 Interest and all other property
relating thereto and then constituting a portion of the Indenture Estate from
the Lien of this Indenture. 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 Owner Trust
(d) Disposition, Substitution and Release of Vessel Included in the
---------------------------------------------------------------
Indenture Estate During Continuation of Charter. So long as the Charter is in
- -----------------------------------------------
effect, any
<PAGE>
44
Alterations, Modifications and improvements in and additions to the Vessel
shall, subject to the Head Lease, become subject to the Lien of this Indenture
and be leased to the Charterer under the Charter; provided that, to the extent
--------
permitted by and as provided in the Head Lease and the Charter, the Charterer
shall have the right, at any time and from time to time, without any release
from or consent by the Owner Trustee or the Indenture Trustee or any other
Person, to remove and/or replace any item of property constituting part of the
Vessel and to make alterations, improvements and Modifications in, and
additions to, the Vessel to the extent set forth in the Head Lease and the
Charter. Each of the Indenture Trustee and the Owner Trustee agrees that, to
the extent permitted by and as provided in the Head Lease and the Charter, title
to any such removed or replaced item of property, shall vest in the Charterer.
The Indenture Trustee shall from time to time execute an appropriate written
instrument or instruments to confirm the release of the security interest of the
Indenture Trustee in any such replaced item of property, as provided in this
Section 6.03(d) in each case upon receipt by the Indenture Trustee of a request
of the Charterer stating that said action was duly taken by the Charterer in
conformity with this Section 6.03(d) and that the execution of such written
instrument or instruments is appropriate to evidence such release of a security
interest under this Section 6.03(d). The reasonable cost and expense (including
reasonable legal fees and expenses) associated with any action taken by the
Indenture Trustee pursuant to the provisions of this Section 6.03(d) 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 by its counsel that such action is contrary to the terms hereof
or of any other Operative Document, or is contrary to applicable law.
<PAGE>
45
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 Interest 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 and (iii) 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) 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
<PAGE>
46
(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) and subject to Section 5.02(d), 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 under the Specified U.K. Documents.
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
<PAGE>
47
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 required by Section 3.04, if
applicable, 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
<PAGE>
48
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 provided further, that in the event the
Indenture Trustee shall not have received such written direction from such
appropriate party, such amounts shall be invested in investments of the type
described in clause (iv) of the definition of Permitted Investments. 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.
<PAGE>
49
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 Document,
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), provided that, so long as no Charter Event of Default
shall have occurred and be continuing, no such Persons (other than counsel to
the Indenture Trustee or its accountants) shall be retained by the Indenture
Trustee without the consent of the Charterer, such consent not to be
unreasonably withheld.
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 Resident 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>
50
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. (a)
------------------------------------------------
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 (i) the
date three years after the date of such setting aside, (ii) 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 (iii) 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>
51
(b) All moneys and U.S. Government Obligations deposited with the
Indenture Trustee pursuant to Section 10.01 shall be held in trust and applied
by it, in accordance with the provisions of the Secured Notes and this
Indenture, to the payment to the Holders of all sums due and to become due
thereon for principal and interest, but such money need not be segregated from
other funds except to the extent required by law.
The Indenture Trustee shall promptly pay or return to the Owner
Trustee upon the written request of the Owner Trustee any money or U.S.
Government Obligations held by it at any time that are not required for the
payment of the amounts described in the proceeding sentence for which money or
U.S. Government Obligations have been deposited pursuant to Section 10.01.
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). The Owner Trust (acting pursuant to
instructions from the Charterer) may remove the Indenture Trustee if:
(1) the Indenture Trustee fails to comply with Sections 6.06 or
8.02(c) hereof;
(2) the Indenture Trustee is adjudged as bankrupt or an insolvent;
(3) a receiver or public officer takes charge of the Indenture Trustee
or its property; or
<PAGE>
52
(4) the Indenture Trustee becomes incapable of acting.
In the case of the resignation or removal of the Indenture Trustee, the Owner
Trust (acting pursuant to instructions from the Charterer) 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 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 and all books and records relating to the
administration of the Indenture Estate.
(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, regularly engaged in or having expertise in leveraged leasing. 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
<PAGE>
53
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 U.K. Lessor's Mortgage, the U.K. Lessor's Security Assignment or
the Ship Mortgage required by Section 3.04, if applicable, 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 Charterer, 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
Charterer or 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 Charterer or the Owner Trust; and each of the Charterer 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 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).
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54
(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, acceptable to
the Charterer. 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
<PAGE>
55
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
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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;
(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 to make any other changes not
inconsistent with the provisions hereof, 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
<PAGE>
56
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 Owner Trust may not modify, amend or supplement the
Charter, the Participation Agreement, the Trust Agreement, the Head Lease, and
any other Operative Document or U.K. Document included in the Indenture Estate,
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 any such proposed modification, amendment or
supplement is required by this Indenture or 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, whether or not an Indenture Event of Default exists, 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 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 Charter, the Trust Agreement or 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, the Charter, the Trust
<PAGE>
57
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 the amount of any payment upon any mandatory or optional
repayment, purchase or redemption of, 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 required to take or approve any action 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 such that such payments would be insufficient to pay
principal of and interest on the Secured Notes as the same become due
hereunder;
(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
<PAGE>
58
(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, at the
request of the Owner Trust:
(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 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
<PAGE>
59
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);
(iv) modify, amend or supplement the Construction Contract; provided
that this provision shall not apply if 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
<PAGE>
60
(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.
(d) 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 the Participation Agreement, in form satisfactory to the
Indenture Trustee, for any of the following purposes:
(i) to add to the covenants of any other party thereto for the benefit
of the Indenture Trustee or the Holders or to surrender any right or power
therein conferred upon any other party thereto;
(ii) to cure any ambiguity, to correct or supplement any provision
therein which may be defective or inconsistent with any other provisions
thereof, to make any other changes not inconsistent with the provisions thereof,
provided that such action shall not adversely affect the interest of any Holder;
(iii) to provide for the assumption by the Charterer of the
obligations of the Owner Trust under this Indenture in accordance with the terms
and conditions applicable thereto specified in Section 3.04, including, without
limitation, such amendments to this Indenture or the Participation Agreement as
may be necessary or desirable in order to effectuate such assumption and
accomplish the purposes thereof (provided that such amendments to such shall not
adversely affect the interests of the Loan Participants;
(iv) 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;
(v) to make any other provisions with respect to matters or questions
arising under the Participation Agreement so long as such action shall not
adversely affect the interests of the Loan Participants;
(vi) to add to the rights of the Indenture Trustee or the Holders; or
(vii) to provide for the establishment and issuance of Additional
Notes pursuant to Section 2.08 hereof.
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61
(c) 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, but it shall be sufficient if such action shall approve the substance
thereof.
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 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
<PAGE>
62
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, when:
(a) 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 shall have been paid in full; or
(b) the Indenture Trustee shall have sold or made other final
disposition of all property and all moneys or other property or proceeds
constituting part of the Indenture Estate in accordance with the terms
hereof; or
(c) all Secured Notes not theretofore delivered to the Indenture
Trustee for cancellation have become due and payable (whether upon stated
maturity, as a result of redemption or upon acceleration), or will become
due and payable (including as a result of redemption in respect of which
irrevocable notice has been given to the Indenture Trustee on or prior to
the date of such deposit) at maturity within one year, and there has been
deposited with the Indenture Trustee in trust for the purpose of paying and
discharging the entire indebtedness on the Secured Notes not theretofore
canceled by the Indenture Trustee or delivered to the Indenture Trustee for
cancellation, an amount in cash sufficient without reinvestment thereof to
discharge such indebtedness, including the principal of and interest on the
Secured Notes to the date of such deposit (in the case of Secured Notes
which have become due and payable), or to the maturity thereof, as the case
may be; or
(d) (i) the Owner Trust has deposited or caused to be deposited
irrevocably (except as provided in Section 7.09(b)) with the Indenture
Trustee as trust funds in trust, specifically pledged as security for, and
dedicated solely to, the benefit of the
<PAGE>
63
Holders, (A) money in an amount, or (B) U.S. Government Obligations which,
through the payment of interest and principal in respect thereof in
accordance with their terms, will provide (not later than one Business Day
before the due date or any payment referred to below in this clause) money
in an amount, or (C) a combination of money and U.S. Government Obligations
referred to in the foregoing clause (B), sufficient, in the opinion of a
nationally recognized firm of independent certified public accountants
expressed in a written certification thereof delivered to the Indenture
Trustee, to pay and discharge each installment of principal of and interest
on the Outstanding Secured Notes on the dates such payments of principal or
interest are due (including as a result of redemption in respect of which
irrevocable notice has been given to the Indenture Trustee on or prior to
the date of such deposit), and no Charter Event of Default under paragraph
7 of Article 21 of the Charter shall have occurred and be continuing on the
date of such deposit or at any time during the period ending on the 91st
day after such date; provided, however, that upon the making of the deposit
referred to above in clause (A), the right of the Owner Trust to cause the
redemption of Secured Notes (except a redemption in respect of which
irrevocable notice has theretofore been given) shall terminate; and (ii)
(A) such deposit will not constitute an Indenture Event of Default under
this Indenture or a default or event of default under any other agreement
or instrument to which the Owner Trust or the Charterer is a party or by
which it is bound and (B) the Charterer has delivered to the Indenture
Trustee an Officer's Certificate to the effect that all conditions
precedent relating to the termination of this Indenture under this Section
10.01(d) have been complied with; and (iii) the Charterer has delivered to
the Indenture Trustee an Officer's Certificate and an Opinion of Counsel to
the effect that there has been published by the Internal Revenue Service a
ruling to the effect that Loan Participants will not recognize income, gain
or loss for Federal income tax purposes as a result of the exercise by the
Owner Trust of its option under this Section 10.01(d) and will be subject
to Federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such option had not been
exercised; and (iv) all other amounts then due and payable hereunder to any
Holder or the Indenture Trustee have been paid;
provided, however, that the obligations of the Indenture Trustee contained in
- -------- -------
Sections 2.01 through 2.10, 6.11 and 7.09 shall survive. 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
<PAGE>
64
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 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 Resident 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
<PAGE>
65
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.
(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.
(c) No Recourse Against Others. No director, officer, employee or
--------------------------
stockholder, as such, of the Charterer, the Guarantor, the Owner Trustee or the
Owner Participant, as the case may be, shall have any liability for any
obligations of the Charterer, the Guarantor, the Owner Trust or the Owner
Participant, as the case may be, under this Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. Each Loan
Participant by accepting a Secured Note waives and releases all such liability.
The waiver and release are part of the consideration for the issue of the
Secured Notes.
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
<PAGE>
66
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, 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.
<PAGE>
67
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>
Appendix A
to Indenture
------------
DEFINITIONS
-----------
Appendix A filed separately.
APP-1
<PAGE>
Schedule 1
to Indenture
------------
DESCRIPTION OF VESSEL
---------------------
That certain double-hulled, double-bottomed LR 1 crude oil tank vessel,
designated as Hull No. 1177, to be constructed by Hyundai Heavy Industries Co.,
Ltd. and Hyundai Corporation, in Ulsan, Korea, pursuant to the Construction
Contract, and expected to be delivered in the fourth quarter of 1999. The
Vessel will have a designed deadweight capacity of approximately 105,500 metric
tons.
SCH-1-1
<PAGE>
Exhibit A
to Indenture
------------
FORM OF
SERIES 1997 C-1 SECURED NON-RECOURSE DISCOUNT NOTE
QM TANKER 1177 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).
QM TANKER 1177 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 19, 1997,
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 1997-C Pass Through Trust (the "Pass Through Trust") created by the Pass
Through Trust Agreement, dated as of October 4,
<PAGE>
1996, as supplemented and amended by that certain Pass Through Trust Supplement,
dated as of December 5, 1997 (as 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
July 2, 2000 and thereafter on each January 2 and July 2 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 5, 1997 (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 1997 C-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 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 Resident 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:
QM TANKER 1177 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 1997 C-1 Secured Notes due
_______ of QM TANKER 1177 TRUST, the Owner Trust as described in the within-
mentioned Indenture.
STATE STREET BANK AND
TRUST COMPANY, not in its
individual capacity, but solely
as Indenture Trustee
By:______________________________
Authorized Signatory
EXHA-6
<PAGE>
Schedule I to
Exhibit A to
Indenture
---------
SERIES 1997 C-1 SECURED NON-RECOURSE DISCOUNT NOTE
QM TANKER 1177 TRUST
Payment Aggregate Payment
Interest Payment Date Percentage Amount
- --------------------- ---------- ------
EXHA-7
<PAGE>
Exhibit B-1
to Indenture
------------
SERIES 1997 C-1 SECURED NON-RECOURSE DISCOUNT NOTE
QM TANKER 1177 TRUST
Payment Aggregate Payment
Regular Distribution Date Percentage Amount
- ------------------------- ---------- ------
January 2, 1998 -- --
July 2, 1998 -- --
January 2, 1999 -- --
July 2, 1999 -- --
January 2, 2000 -- --
July 2, 2000 0.7366% 226,121.13
January 2, 2001 1.5349% 471,216.17
July 2, 2001 1.5862% 486,978.36
January 2, 2002 1.6393% 503,267.78
July 2, 2002 1.6941% 520,102.09
January 2, 2003 1.7508% 537,499.50
July 2, 2003 1.8094% 555,478.86
January 2, 2004 1.8699% 574,059.63
July 2, 2004 1.9324% 593,261.93
January 2, 2005 1.9971% 613,106.54
July 2, 2005 2.0639% 633,614.95
January 2, 2006 2.1329% 654,809.37
July 2, 2006 2.2043% 676,712.74
January 2, 2007 2.2780% 699,348.78
July 2, 2007 2.3542% 722,742.00
January 2, 2008 2.4330% 746,917.72
July 2, 2008 2.5143% 771,902.12
January 2, 2009 2.5984% 797,722.25
July 2, 2009 2.6854% 824,406.05
January 2, 2010 2.7752% 851,982.44
July 2, 2010 2.8680% 880,481.25
January 2, 2011 2.9640% 909,933.35
July 2, 2011 3.0631% 940,370.62
January 2, 2012 3.1656% 971,826.02
July 2, 2012 3.2714% 1,004,333.60
January 2, 2013 3.3809% 1,037,928.55
July 2, 2013 3.4940% 1,072,647.26
January 2, 2014 3.6108% 1,108,527.32
July 2, 2014 3.7316% 1,145,607.55
January 2, 2015 3.8564% 1,183,928.13
July 2, 2015 3.9854% 1,223,530.52
January 2, 2016 4.1188% 1,264,457.62
July 2, 2016 4.2565% 1,306,753.73
January 2, 2017 4.3989% 1,350,464.64
July 2, 2017 4.5461% 1,395,637.68
January 2, 2018 4.6981% 1,442,321.76
EXHB-1
<PAGE>
Exhibit B-2
to Indenture
------------
Issuance of Series 1997 C-1 Secured Notes
-----------------------------------------
The issuance of the Series 1997 C-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 1997 C Pass Through Trust:
6.69% Certificates due January 2, 2018
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), QM TANKER 1177 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 19, 1997, as amended, among Deutsche Morgan
Grenfell (Cayman) Limited, Wilmington Trust Company and QM TANKER CO. LLC, a
Cayman Islands limited life company, as owner participant, MOBIL EQUIPMENT
FINANCE COMPANY 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 Resident trustee (together with its permitted successors and assigns, the
"Resident Trustee"), each acting not individually, except as otherwise provided
----------------
herein (when acting in such individual capacities, the "
Trust Company" and "Resident Trust Company", respectively), but solely as
- ------------- ----------------------
trustees for the Substitute Obligor (the Managing Trustee and the Resident
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.
QM TANKER 1177 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 EQUIPMENT FINANCE COMPANY 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 QM TANKER 1177 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.
QM TANKER 1177, 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
Vessel ______
<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 ____ "_____" (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
1997-C 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.
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 __________________.
EXHE-1
<PAGE>
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;
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 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
EXHE-2
<PAGE>
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.
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.
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:
EXHE-3
<PAGE>
(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 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 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
EXHE-4
<PAGE>
Mortgagee), the whole or any part of the Vessel wherever the same may be, and to
take possession of and hold the same; and
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 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.
EXHE-5
<PAGE>
(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 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.
EXHE-6
<PAGE>
(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
__________________________.
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 ___________, _____, 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
SERIES 1997 C-1 SECURED NON-RECOURSE DISCOUNT NOTE
QM TANKER 1177 TRUST
Maturity Date: January 2, 2018
Registered No. 1997-C-1 New York, New York
December 5, 1997
Principal Sum at Full Accrual Date: $31,700,000Interest Rate Per Annum:
6.69%
Full Accrual Date: March 31, 2000
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
6.69% (rounded to two decimal (for each $1,000 principal amount at
places), compounded semiannually on the Full Accrual Date and at
each January 2 and July 2, maturity): $141.89
commencing on the Full Accrual Date
(computed after giving effect to (i) Issue Price (for each $1,000
the accretion of original issue principal amount at maturity):
discount prior to the Full Accrual $858.11
Date and (ii) payment of interest on
each Janaury 2 and July 2 from and
after the Full Accrual Date to the
Maturity Date at the rate of
interest set forth above).
QM TANKER 1177 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 19, 1997,
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 1997-C Pass Through Trust (the "Pass Through Trust") created by the Pass
Through Trust Agreement, dated as of October 4, 1996, as supplemented and
amended by that certain Pass Through Trust Supplement, dated as of December 5,
1997 (as supplemented and amended, the "Agreement"), or registered assigns
(collectively, the "Holders"), the principal sum of THIRTY-ONE MILLION SEVEN
HUNDRED THOUSAND DOLLARS ($31,700,000) (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
<PAGE>
2
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 July 2, 2000 and thereafter
on each January 2 and July 2 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 5, 1997 (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.
This Secured Note is one of the Owner Trust's Series 1997 C-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
<PAGE>
3
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 Resident 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.
<PAGE>
4
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.
<PAGE>
5
IN WITNESS WHEREOF, the Owner Trust has caused this Secured Note to be
duly executed.
Date: December 5, 1997
QM TANKER 1177 TRUST
Owner Trust
By: DEUTSCHE MORGAN GRENFELL, (CAYMAN)
LIMITED, not in its individual capacity,
but solely as Managing Trustee under the
Trust Agreement
By: /s/ David Egglishaw
------------------------------
Authorized Officer
DAVID EGGLISHAW
<PAGE>
6
Certificate of Authentication
-----------------------------
This Secured Note is one of the Series 1997 C-1 Secured Notes due
January 2, 2018 of QM TANKER 1177 TRUST, the Owner Trust as described in the
within-mentioned Indenture.
Date: December 5, 1997
STATE STREET BANK AND
TRUST COMPANY, not in its
individual capacity, but solely
as Indenture Trustee
By: /s/
----------------------
Authorized Signatory
<PAGE>
7
Schedule I
SERIES 1997 C-1 SECURED NON-RECOURSE DISCOUNT NOTE
QM TANKER 1177 TRUST
Payment Aggregate Payment
Regular Distribution Date Percentage Amount
- --------------------------- ----------- ------------
January 2, 1998 -- --
July 2, 1998 -- --
January 2, 1999 -- --
July 2, 1999 -- --
January 2, 2000 -- -
July 2, 2000 0.7366% 226,121.13
January 2, 2001 1.5349% 471,216.17
July 2, 2001 1.5862% 486,978.36
January 2, 2002 1.6393% 503,267.78
July 2, 2002 1.6941% 520,102.09
January 2, 2003 1.7508% 537,499.50
July 2, 2003 1.8094% 555,478.86
January 2, 2004 1.8699% 574,059.63
July 2, 2004 1.9324% 593,261.93
January 2, 2005 1.9971% 613,106.54
July 2, 2005 2.0639% 633,614.95
January 2, 2006 2.1329% 654,809.37
July 2, 2006 2.2043% 676,712.74
January 2, 2007 2.2780% 699,348.78
July 2, 2007 2.3542% 722,742.00
January 2, 2008 2.4330% 746,917.72
July 2, 2008 2.5143% 771,902.12
January 2, 2009 2.5984% 797,722.25
July 2, 2009 2.6854% 824,406.05
January 2, 2010 2.7752% 851,982.44
July 2, 2010 2.8680% 880,481.25
January 2, 2011 2.9640% 909,933.35
July 2, 2011 3.0631% 940,370.62
January 2, 2012 3.1656% 971,826.02
July 2, 2012 3.2714% 1,004,333.60
January 2, 2013 3.3809% 1,037,928.55
July 2, 2013 3.4940% 1,072,647.26
January 2, 2014 3.6108% 1,108,527.32
July 2, 2014 3.7316% 1,145,607.55
January 2, 2015 3.8564% 1,183,928.13
July 2, 2015 3.9854% 1,223,530.52
January 2, 2016 4.1188% 1,264,457.62
July 2, 2016 4.2565% 1,306,753.73
January 2, 2017 4.3989% 1,350,464.64
July 2, 2017 4.5461% 1,395,637.68
January 2, 2018 4.6981% 1,442,321.76
<PAGE>
EXHIBIT 4.4
CHARTER PARTY
dated as of
December 5, 1997
between
QM TANKER 1177 TRUST,
a trust created pursuant to the Delaware Business Trust Act
under the Declaration and Agreement of Trust
dated as of November 19, 1997
by Owner Participant,
Owner
and
MOBIL EQUIPMENT FINANCE COMPANY INC.
Charterer
- --------------------------------------------------------------------------------
Charter of Hull No. 1177
AS SET FORTH IN ARTICLE 20 OF THIS CHARTER PARTY, CERTAIN OF THE RIGHT, TITLE
AND INTEREST OF 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 THE INDENTURE TRUSTEE, UNDER THE TRUST INDENTURE, ASSIGNMENT OF CHARTER AND
HEAD LEASE, AND SECURITY AGREEMENT DATED AS OF DECEMBER 5, 1997 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>
BAREBOAT CHARTER PARTY
----------------------
AGREEMENT made as of the 5th day of December, 1997 between QM TANKER
1178 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, hereinafter called the
"Managing Trustee") (the Managing Trustee acting not individually, but solely as
trustee for the Owner Trust, hereinafter called "Owner Trustee"), and Mobil
Equipment Finance Company 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 LR1
crude oil tank vessel identified in Schedule 1 (hereinafter called the "Vessel")
on the Delivery Date.
WHEREAS, U.K. Lessor has entered into a Construction Contract dated
November 24, 1997 with Hyundai Corporation and Hyundai Heavy Industries Co. Ltd.
(together, hereinafter called the "Builder") providing for the construction and
sale of the Vessel to U.K. Lessor on the terms stated therein;
WHEREAS, Owner has entered into the Head Lease with U.K. Lessor pursuant
to which the Vessel has been let to Owner for the U.K. Lease Term; and
WHEREAS, Owner wishes to subject its interests in the Vessel, including
such interests under the Head Lease, to a charter in favor of 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 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.
<PAGE>
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 Party
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.
(d) Excess Hire. Payment of Excess Hire shall be payable to Owner or in
-----------
accordance with its instructions, semi-annually in arrears on March 1 and
September 1 of each year following the applicable Rate Period. The amount of
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 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 Charterer at least five
Business Days
2
<PAGE>
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.
ARTICLE 4.
Description of the Vessel; Documentation
----------------------------------------
(a) Description of Vessel. The Vessel will be built by 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 designed deadweight capacity of
approximately 105,500 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 Owner and Charterer may agree which is not materially less favorable to the
Indenture Trustee as trustee for holders of Secured Notes; and Charterer shall,
throughout the Charter Period maintain 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
3
<PAGE>
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 U.K. Lessor, (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. The Charterer acknowledges the assignment of certain of
---------
Owner's rights hereunder in accordance with the terms and conditions of the
Indenture, and agrees to comply in accordance with the terms of this Charter,
with such instructions and directions as the Indenture Trustee may, in place of
Owner, give hereunder in accordance with the provisions of the Indenture
following an Indenture Event of Default.
(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 Owner 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 to U.K. Lessor, 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.
4
<PAGE>
(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 Builder and the Supervisory Agent shall have been paid any
additional amounts then due under the Construction Contract and the Supervisory
Agreement, respectively, out of funds available for the purpose as contemplated
by the Operative Documents;
(ii) U.K. Lessor (or a person acting on behalf of U.K. Lessor in
accordance with the Supervisory Agreement) shall have accepted delivery of the
Vessel from the Builder and Owner shall have accepted delivery of the Vessel
from U.K. Lessor under the Head Lease and in evidence thereof appropriate
protocols of delivery and acceptance shall have been executed;
(iii) Owner shall have accepted possession and use of the Vessel under
the Head Lease;
(iv) Charterer shall have accepted delivery of the Vessel under this
Charter and in evidence thereof shall have executed and delivered to Owner the
Protocol of Delivery and Acceptance;
(v) title to the Vessel shall have been registered in the name of U.K.
Lessor in the Marshall Islands (or other jurisdiction designated by Owner
Participant acceptable to Charterer and not materially less favorable to the
Indenture Trustee as trustee for holders of the Secured Note);
(vi) U.K. Lessor shall have executed and delivered to Owner the Ship
Mortgage in the form attached to the Head Lease with such changes thereto as
Owner and the Indenture Trustee may agree and are not materially adverse to the
holder of the Secured Note, and Owner 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, and the rights of Owner to receive the proceeds of the Ship Mortgage
shall to the extent feasible have been validly assigned to the Indenture Trustee
as security for the Secured Notes;
(vii) Charterer shall have caused to be accomplished all other filings,
recordings or other action that are reasonably feasible and necessary or
desirable to establish Owner's right, title and interest in and to the Vessel
Interest, and to perfect the Lien on and security interest in the Indenture
Estate created by the Indenture;
(viii) on or prior to the Delivery Date, insurance complying in all
respects with the provisions of Section 16(a)(i) of this Charter shall be in
full force and effect and Owner Participant, the Pass Through Trustee and the
Indenture Trustee shall have received an Officer's Certificate of Charterer,
dated the Delivery Date, stating that such insurance complies in all respects
with the provisions of such Section 16(a)(i); and
5
<PAGE>
(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
(v), (vi) and (vii) of this Section 6(b)(i).
Any of such conditions may be amended or waived by agreement of Owner and
Charterer subject, in the case of any such amendment or waiver that would be
adverse to the 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 Supervisory Agreement, 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. Owner warrants and covenants 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), Charterer
shall at all times during the Charter Period be entitled to the quiet use and
enjoyment of the benefits of the Vessel, including the right to uninterrupted
possession and use of the Vessel but subject to the rights of the parties to the
U.K. Documents, and Owner shall not, save as provided under the U.K. 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 laws and regulations of the U.S. and of the Marshall Islands or
such other jurisdiction where the Vessel is registered, 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.
6
<PAGE>
ARTICLE 8.
Condition Upon Delivery
-----------------------
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 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 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.
7
<PAGE>
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 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, U.K. Lessor, 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, U.K. Lessor, 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 the U.K. 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
8
<PAGE>
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 Charterer's or
Permitted Subcharterers' servants, navigating and working the Vessel solely on
behalf of and at the risk of 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 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 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. At all times during the Charter Period,
Charterer shall 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 for similar Vessels (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 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 Charterer's noncompliance is in
9
<PAGE>
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, Owner, Owner Participant or U.K. Lessor, 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, U.K. Lessor, 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 but without prejudice to any rights it may have against, or
obligation of, Owner Participant with respect thereto) 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; provided that
unless a Charter Event of Default shall have occurred and be continuing, no such
inspection shall be made more than once in any calendar year. 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, the 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, 12 and 13 as
-----------------------
to the costs of maintaining, operating and modifying the Vessel and equipping it
with spares 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 (d) of Schedule 2B and without prejudice to
the obligation of Owner to comply with the provisions of Articles 13 and 14 of
the Joint Venture Agreement relating to operating, repair and maintenance costs
and drydock costs.
10
<PAGE>
ARTICLE 12.
Fuel, Lubricants, Water, Stores,
Equipment and Spare Replacement Parts
-------------------------------------
(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(k) 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 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, 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 pursuant to Article 12(a) on the Delivery Date and Redelivery Date,
11
<PAGE>
respectively, which sums shall be due and payable 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 Charterer shall have made the election provided
in Article 13(f) ("Required Modifications"). Charterer shall complete (or cause
to be completed) all Required 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 that are not Required
Modifications shall vest in Charterer or any Person designated by Charterer.
Charterer may, with the written consent of Owner Participant, remove (or allow
to be removed) any such Severable Modification prior to or upon the expiration
of the Charter Period. Title to any such Severable Modification remaining on
the Vessel upon the expiration of the Charter Period shall, to the extent
required by the Head Lease, vest in the Head Lessor.
(ii) Title to (x) Severable Modifications to the Vessel that are Required
Modifications and (y) Nonseverable Modifications to the Vessel, shall to the
extent required by the Head Lease vest in U.K. Lessor and shall otherwise vest
in Owner free and clear of all Liens except Permitted Liens.
(d) Payment for Modifications and Replacement Components. (i) Charterer
----------------------------------------------------
shall, with the written consent of Owner Participant, be permitted at any time
to finance
12
<PAGE>
the cost of any Severable Modification to the Vessel that is not a Required
Modification 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 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
U.K. Lessor and Owner's interest therein under the Head Lease 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 under the Head Lease
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 rights of U.K.
Lessor and the Lien of the Indenture; provided that Charterer shall account for
any net proceeds from any sale or other disposition of any items of such
property in accordance with the provisions of Schedule 2B and Articles 13 and 14
of the Joint Venture Agreement.
(f) Exemption from Certain Modifications. Notwithstanding the provisions
------------------------------------
of Article 13 (a), if in the reasonable estimation of Charterer any Severable or
13
<PAGE>
Nonseverable Modification that would otherwise be a Required Modifications
exceeds $1,000,000 multiplied by the Inflation Factor for the date of such
estimate, Charterer may, by notice to 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, U.K. Lessor, the Trust Estate, the Indenture Estate or the Vessel
Interest.
(g) Cost of Modifications. Charterer shall be entitled to recover from
---------------------
Owner Participant the cost of any Modification required to be paid by Owner
Participant pursuant to as provided in accordance with Schedule 2B hereto or
Articles 13 or 14 of the Joint Venture Agreement, as applicable, provided that
so long as the Lien of the Indenture shall not have been discharged, 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 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
14
<PAGE>
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 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,
15
<PAGE>
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, Permitted Subcharterers, 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 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
Title to this vessel is held by Abbey National December Leasing (4)
Limited. This vessel is under lease to Deutsche Morgan Grenfell (Cayman)
Limited, not in its individual capacity but solely as Managing Trustee
of QM Tanker 1177 Trust under the Declaration and Agreement of Trust
dated as of November 19, 1997, is further demise chartered to Mobil
Equipment Finance Company Inc. pursuant to a Bareboat Charter Party,
dated as of December 5, and is covered by a first Ship Mortgage dated
in favor of said Managing Trustee. Said lease and demise
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 lease,
demise 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
Charterer. 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 or other
relevant jurisdiction, (ii) cause the Ship Mortgage on the Vessel to cease to be
a first Ship Mortgage under the laws of the
16
<PAGE>
Marshall Islands or other relevant jurisdiction, or (iii) cause the Vessel to
cease to be entitled to the same classification that the Vessel had from the
Classification Society on the Delivery Date (subject to any reduction in
classification resulting from the age of the Vessel). Except as otherwise
directed by Owner or provided herein, Charterer shall prevent the name of any
Person other than that of Charterer, MSCL, the Guarantor, or any Affiliate of
any thereof or any Permitted Subcharterer 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. (i) Charterer shall carry and maintain or cause to be
--------
carried and maintained at all times during the Charter Period protection and
indemnity insurance (including pollution liability insurance), to the extent
such insurance is commercially available, on or with respect to the Vessel and
the operation thereof in such amounts, and with such deductibles or self-
insurance amounts, and in such forms as is consistent with Charterer's practices
for other similar vessels owned or chartered by it or its Affiliates. The
provisions of Rule 16 (Fleet Entry) of the Britannia Steam Ship Insurance
Association Limited (the "Association") will apply (or similar requirements of
any other insurer providing protection and indemnity insurance with respect to
the Vessel may apply) to the entry of the Vessel with the Association save that
the Association may not require Owner Participant or Owner to pay outstanding
calls on other ships in the fleet.
(ii) Any liability insurance carried in accordance with Section 16(a)(i)
shall provide in the policy or by special endorsement that:
(A) Owner, Owner Participant and, at such times as it is the mortgagee of
the Vessel, the Indenture Trustee, are included as additional insureds in
respect of all public liability policies, if any, carried in accordance with
Section 16(a)(i), and the Pass Through Trustee and, at such time as it is not
the mortgagee of the Vessel, the Indenture Trustee, are included as additional
insureds in respect of all such policies, if feasible, or are otherwise entitled
to the benefits of such insurance coverage; and
(B) such insurance shall be primary without right of contribution of any
other insurance carried by or on behalf of Owner, the Indenture Trustee, Owner
Participant or the Loan Participant;
(b) Adjustment of Losses. Losses, if any, with respect to the Vessel under
--------------------
all insurances or entries in protection and indemnity associations, whether or
not required to
17
<PAGE>
be carried under Section 16(a), shall be adjusted with the insurance companies,
including the filing of appropriate proceedings, by Charterer. Owner shall
cooperate with Charterer in making all proofs of loss and take all other
reasonable steps necessary to effect such adjustment with the insurance
companies.
(c) Application of Insurance Proceeds. All insurance proceeds in respect
---------------------------------
of insurance, if any, maintained by Charterer with respect to the Vessel and
payable under circumstances not constituting an Event of Loss shall be payable
to Charterer. All insurance proceeds in respect of hull insurance, if any,
maintained by Charterer with respect to the Vessel and payable as a result of an
Event of Loss shall, provided the lien of the Indenture shall have been
discharged, (i) if Termination Value in connection with such Event of Loss shall
already have been paid by Charterer, be applied (up to an amount not exceeding
the applicable Termination Value) to reimburse Charterer for its payment of such
Termination Value, and (ii) if Termination Value in connection with such Event
of Loss shall already not have been paid by Charterer, be applied (up to an
amount not exceeding the applicable Termination Value) in reduction of
Charterer's obligation to pay such Termination Value. The balance of such
proceeds and, if the lien of the Indenture shall have not been discharged, the
whole of such proceeds shall be paid over to or retained by Owner.
Notwithstanding the foregoing, the proceeds of any protection and indemnity or
other liability insurance shall be payable to the Person to whom such amount is
due.
(d) Additional Insurance. Nothing in this Section 10 shall prohibit Owner,
--------------------
Owner Participant, Charterer, the Indenture Trustee or the Pass Through Trustee
from acquiring or maintaining, at its own expense, additional insurance in such
amounts with respect to such risks as each such Person, as the case may be,
shall determine; provided that no such insurance carried by Owner, the Indenture
Trustee, the Pass Through Trustee or Owner Participant shall prevent Charterer
or any subcharterer from, or increase the cost to Charterer or any subcharterer
of, obtaining insurance respecting the Vessel as Charterer or any subcharterer
wishes. The proceeds of any such additional insurance will be for the account of
the party maintaining such additional insurance.
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.
18
<PAGE>
ARTICLE 18.
Early Termination
-----------------
(a) Decision. If Charterer shall determine in good faith that the
--------
continuation of this 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 this 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 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
19
<PAGE>
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 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 accrued 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 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 Make Whole Amount, 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 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
20
<PAGE>
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 U.K. Lessor is obliged to conclude the sale of
the Vessel or its rights under the Head Lease, the parties shall have no
obligation under Article 18(c), and any proceeds from such sale to which Owner
is entitled shall be applied against the obligations of 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
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 Charterer shall
pay hire for such extension at the same rate per day as in effect for the last
Rate Period during the unextended the 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 the Person then in fact holding
legal title to the Vessel, if it is eligible for such documentation, or in such
other name as 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), and shall include all
Modifications made hereunder, except those removed by Charterer to the extent
permitted hereby.
21
<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 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 security
interest in the Vessel Interest in favor of the Indenture Trustee. Charterer
hereby consents to such assignment and to the creation of such 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. Charterer (i) acknowledges that such assignment 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. 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 Charterer to Owner. Notwithstanding any other
provision herein, so long as any Secured Notes remain Outstanding, Owner hereby
directs, and 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 Charterer at least 5
Business Days prior to the due date thereof. Upon Charterer receiving notice or
22
<PAGE>
obtaining actual knowledge that an Indenture Event of Default shall have
occurred and be continuing, Charterer shall make all payments of Hire including
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, set-off or other
right or claim of any kind which Charterer may be able to assert against Owner
or 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, (iii) such assignment shall not result in any Tax on Owner or 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 Owner and Owner Participant or subject
Owner or Owner Participant to regulation by any Governmental Authority to which
Owner or 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 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 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
Owner and Owner Participant or subject Owner or Owner Participant to regulation
by any Governmental Authority to which Owner or Owner Participant would not have
been subject but for such subcharter, (v) no Specified
23
<PAGE>
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, (vii) any such subcharter
with a term in excess of six (6) months shall be approved by Owner prior to its
execution and (viii) any such subcharter complies with the provisions of Clause
17 of the Head Lease. 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 Excepted
Payment (unless Owner elects to have such failure to make such payment of 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 30 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 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
24
<PAGE>
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 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
25
<PAGE>
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 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;
26
<PAGE>
(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 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
27
<PAGE>
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
proceeds of such sale, together with interest at the Overdue Rate plus 2% 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, 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, 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 Default or Charter
Event of Default shall in any way be, or be construed to be, a waiver of any
future or subsequent Charter Default or Charter Event of
28
<PAGE>
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, 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 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 or the Vessel shall have been rejected thereunder or (iii)
termination of the Charter Period pursuant to Article 23(c) in circumstances
where there has been no assumption of the obligations of Owner in accordance
with Section 3.04 of the Indenture.
(b) Termination. Forthwith upon the occurrence of a Special Termination
-----------
Event, Charterer shall give notice of such event to Owner and the 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 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 Supervisory
Contract and the Vessel Interest,
29
<PAGE>
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 Joint Venture Agreement.
(c) Termination upon Termination of Head Lease. 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.
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.
30
<PAGE>
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 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
31
<PAGE>
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.
(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 (or the Indenture Trustee, as the case may
be) 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
32
<PAGE>
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 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
33
<PAGE>
Charter Party, the Investment by Owner Participant and the purchase of the
Secured Notes by the Loan Participant, any disposition of any interest of 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.
34
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Charter Party to be duly
executed as of the 5th day of December 1997.
QM TANKER 1178 TRUST
By: DEUTSCHE MORGAN GRENFELL
(CAYMAN) LIMITED, not in its
individual capacity, but solely as
Managing Trustee under the Trust
Agreement
By:
-------------------------------
Name:
Title:
MOBIL EQUIPMENT FINANCE
COMPANY INC.
By:
-------------------------------
Name:
Title:
[CHARTER -1177]
<PAGE>
Receipt of the original executed counterpart of the foregoing Bareboat
Charter Party is hereby acknowledged on this 5th day of December, 1997.
STATE STREET BANK AND TRUST
COMPANY,
not in its individual capacity, but
solely as Indenture Trustee
By:
-----------------------------
Name:
Title:
[Chattel Copy of Charter -- 1177]
<PAGE>
SCHEDULE 1
----------
Vessel: Hull No. 1177
Owner's Cost: $42,600,000
Builder: Hyundai Heavy Industries Co., Ltd.
Hyundai Corporation
Delivery Yard: Shipyard of Hyundai Heavy Industries Co., Ltd. in Ulsan, Korea
Scheduled Delivery Date: Fourth Quarter, 1999
Final Delivery Date: December 31, 2000
Charter Expiration Date: January 2, 2018
U.K. Lease Term: 30 years commencing on the Delivery Date
U.K. Lessor: Abbey National December Leasing (4) Limited
<PAGE>
SCHEDULE 2
----------
BASE HIRE
The base hire (the "Base Hire") for each Rate Period, shall be equal to the
amount set forth on the following page opposite the Base Hire Payment Date on
which such Rate Period expires.
<PAGE>
Mobil Basic Hire Schedule
Basic Hire Payment Date Basic Hire ($)
- ----------------------- ----------
January 2, 1998 0.00
July 2, 1998 0.00
January 2, 1999 0.00
July 2, 1999 0.00
January 2, 2000 745,283.71
July 2, 2000 1,490,567.42
January 2, 2001 1,490,567.42
July 2, 2001 1,490,567.42
January 2, 2002 1,490,567.42
July 2, 2002 1,490,567.42
January 2, 2003 1,490,567.42
July 2, 2003 1,490,567.42
January 2, 2004 1,490,567.42
July 2, 2004 1,490,567.42
January 2, 2005 1,490,567.42
July 2, 2005 1,490,567.42
January 2, 2006 1,490,567.42
July 2, 2006 1,490,567.42
January 2, 2007 1,490,567.42
July 2, 2007 1,490,567.42
January 2, 2008 1,490,567.42
July 2, 2008 1,490,567.42
January 2, 2009 1,490,567.42
July 2, 2009 1,490,567.42
January 2, 2010 1,490,567.42
July 2, 2010 1,490,567.42
January 2, 2011 1,490,567.42
July 2, 2011 1,490,567.42
January 2, 2012 1,490,567.42
July 2, 2012 1,490,567.42
January 2, 2013 1,490,567.42
July 2, 2013 1,490,567.42
January 2, 2014 1,490,567.42
July 2, 2014 1,490,567.42
January 2, 2015 1,490,567.42
July 2, 2015 1,490,567.42
January 2, 2016 1,490,567.42
July 2, 2016 1,490,567.42
January 2, 2017 1,490,567.42
July 2, 2017 1,490,567.42
January 2, 2018 1,490,567.42
<PAGE>
SCHEDULE 2A
-----------
BAREBOAT MARKET HIRE DETERMINATION
(a) The "Bareboat Market Rate" will be determined for each Rate Period pursuant
to Schedule 2B.
(b) If the aggregate of the applicable Bareboat Market Rate for all days during
a Rate Period exceeds the Base Hire for such Rate Period, such excess (as
adjusted pursuant to clause (d) of this Schedule 2A) shall be the "Excess
Hire".
(c) Charterer shall pay on the last day of each Rate Period on account of
Bareboat Hire for such Rate Period the amount that Charterer has advised
Owner Trust not less than 10 days prior to the commencement of such Rate
Period is Charterer's estimate of the amount payable as Bareboat Hire for
such Rate Period; provided that such amount shall not be less than the Base
Hire for such Rate Period. The difference between the amount so paid and
the amount finally determined in accordance with this Schedule 2A as the
Bareboat Hire applicable to such Rate Period (an "Overpayment" or
"Underpayment", as applicable) shall be settled, together with interest at
6.69% per annum from the last day of such Rate Period to the date of
payment, by the appropriate payment of any Overpayment by Owner to
Charterer; and of any Underpayment by Charterer to Owner; provided, that
under no circumstances shall the Bareboat Hire for any Rate Period be lower
than the Base Hire for such Rate Period.
(d) In the event the aggregate of the actual applicable Bareboat Market Rate
for all days during a Rate Period is less than the Base Hire for such Rate
Period, the amount of such difference (the "Shortfall") shall be applied to
reduce any Excess Hire in all succeeding Rate Periods until the amount of
the Deficit has been fully recovered together with interest at 6.69% per
annum from the date the Shortfall arose until it is repaid.
<PAGE>
SCHEDULE 2B
-----------
DETERMINATION OF BAREBOAT MARKET RATE
-------------------------------------
1. The Bareboat Market Rate for the Vessel shall be calculated for each Rate
Period retroactively no later than 60 days following the completion of said
period in accordance with the following provisions of this Section 2B,
which is subject to review and mutually agreed adjustment if Charterer or
any shareholder of the Owner Participant so requests during the Charter
Period. The Bareboat Market Rate shall be determined in accordance with
this Schedule 2B based on the Vessel's actual revenues earned less all
voyage and operating expenses for the applicable Rate Period. It is
understood that the Vessel's intended employment is the carriage of
worldwide crude oil cargoes, primarily Latin American and Caribbean sourced
crude, for the Guarantor and its Affiliates.
(a) In the event the Vessel carries crude oil cargoes for Affiliates of
the Guarantor, the Vessel's total voyage net time charter earnings
will be determined as follows: The Vessel's total voyage revenues will
be based on the actual quantity of cargo carried, plus deadfrieght
where applicable, in metric tons times the corresponding worldscale
flat rate in effect at the time of loading for the specific load and
discharge ports times the spot freight rate as assessed for the said
voyage by the Broker Panel (given as a percent of the worldscale rate
in effect at the time of loading). Demurrage earned, if any, will be
added to freight to determine total voyage revenues. All voyage costs
including but not limited to bunkers and port charges will be deducted
at cost from the total voyage revenues to determine net time charter
earnings for that voyage. For the purpose of determining voyage costs,
duration of a voyage will be from the tendering of Notice of Readiness
("NOR") at the first load port of one voyage to the tendering of NOR
at the first load port for the next voyage.
(b) In the event that a Vessel is chartered to a party not an Affiliate of
the Guarantor, the Vessel's total voyage net time charter earnings
will be determined as follows: The Vessel's revenues will be based on
the prevailing charter party agreement between an Affiliate of the
Guarantor and the third party. Any time charter in excess of six (6)
months shall be pre-approved by the Owner Participant prior to its
finalization. For single or consecutive voyage charters, freight and
demurrage revenues will be determined as indicated in the prevailing
charter party agreements(s). All voyage costs including but not
limited to bunkers and port charges will be deducted at cost from the
total voyage revenues to determine net time charter earnings for that
voyage(s). For the purpose of determining voyage costs, duration of a
voyage will be from the tendering of NOR at the first load port of one
voyage to the tendering of NOR at the first load port for the next
voyage
<PAGE>
(c) The Vessel's Net Time Charter Rate shall be determined by aggregating
net time charter earnings from all voyages for Affiliates of the
Guarantor and/or third party charters commenced and concluded during
the Rate Period and a pro rata portion of such earnings from voyages
occurring partially during the Rate Period and dividing by the total
number of days in the Rate Period less any days where the Vessel was
bareboat chartered to a party not an Affiliate of the Guarantor.
(d) Daily Operating Costs for each Rate Period will be the budgeted
operating costs for the Vessel for the calendar year in which such
Rate Period occurs (which shall be obtained from the operator by the
end of October for the upcoming year) divided by the actual number of
days in the year. At the end of each calendar year the actual
operating costs will be audited and the difference will be added to or
subtracted from the budget for the next calendar year as the case may
be. Daily Operating Costs will include manning, provisions, stores,
voyage repairs (excluding drydock costs, which include planned
overhauls and modifications, as provided in the Joint Venture
Agreement), insurance, etc. for the Vessels, plus any approved Vessel
expenses incurred by the Charterer on behalf of the Company, plus a
Vessel management fee of $425/day/Vessel which is subject to annual
adjustment for inflation using the U.K. Retail Price Index. If the
Charterer self insures the Vessels for Hull and Machinery, a proforma
Hull and Machinery premium will be included as determined by an
independent insurance broker.
(e) With the exception of the case where the Vessel is bareboat chartered
to a party other than an Affiliate of the Guarantor, the Bareboat
Market Rate for the Vessel will be calculated by deducting the
Vessel's Daily Operating Costs from its Net Time Charter Rate. In the
event that the Vessel is bareboat chartered to a party other than an
Affiliate of the Guarantor during all or any part of the Rate Period,
the bareboat charter rate received from the third party shall be the
Bareboat Market Rate during the term of that charter.
2. Bareboat Market Hire for any period of less than six months at the
commencement or conclusion of the Charter shall be determined in accordance with
the foregoing principles and appropriately prorated.
<PAGE>
SCHEDULE 3
----------
TERMINATION VALUES
------------------
Termination
Termination Value Value*
Determination Date* $
- ------------------ --------------
January 2, 1998................. 26,476,244.36
July 2, 1998.................... 27,361,874.73
January 2, 1999................. 28,277,129.44
July 2, 1999.................... 29,222,999.42
January 2, 2000................. 30,200,508.75
July 2, 2000.................... 30,473,878.87
January 2, 2001................. 30,002,662.70
July 2, 2001.................... 29,515,684.34
January 2, 2002................. 29,012,416.56
July 2, 2002.................... 28,492,314.47
January 2, 2003................. 27,954,814.97
July 2, 2003.................... 27,399,336.10
January 2, 2004................. 26,825,276.47
July 2, 2004.................... 25,618,908.01
January 2, 2005................. 24,985,293.06
July 2, 2005.................... 24,330,483.69
January 2, 2006................. 23,653,770.95
July 2, 2006.................... 22,954,422.16
January 2, 2007................. 22,231,680.16
July 2, 2007.................... 21,484,762.44
January 2, 2008................. 20,712,860.32
July 2, 2008.................... 19,915,138.07
January 2, 2009................. 19,090,732.02
July 2, 2009.................... 18,238,749.58
January 2, 2010................. 17,358,268.33
July 2, 2010.................... 16,448,334.99
January 2, 2011................. 15,507,964.37
July 2, 2011.................... 14,536,138.35
January 2, 2012................. 13,531,804.76
July 2, 2012.................... 12,493,876.20
January 2, 2013................. 11,421,228.94
July 2, 2013.................... 10,312,701.62
January 2, 2014................. 9,167.094.07
July 2, 2014.................... 7,983,165.94
January 2, 2015................. 6,759,635.42
July 2, 2015.................... 5,495,177.80
January 2, 2016................. 4,188,424.08
July 2, 2016.................... 2,837,959.44
January 2, 2017................. 1,442,321.76
July 2, 2017.................... 0.00
January 2, 2018................. 1,490,567.42
- ---------------
* In addition, any Business Day in between the dates shown above shall be a
Termination Value Determination Date, and the Termination Value for each such
date shall be the Termination Value shown above for the preceding January 2 or
July 2 together with interest accrued or accreted on such amount in accordance
with the terms of the Secured Note from the later of the Closing Date or the
previous January 2 or July 2.
<PAGE>
EXHIBIT 4.5
================================================================================
DECLARATION AND AGREEMENT OF TRUST
RELATING TO QM TANKER 1177 TRUST
among
QM TANKER CO. LLC
Owner Participant,
DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED
Managing Trustee,
and
WILMINGTON TRUST COMPANY
Delaware Trustee
_________________________________
Dated as of November 19, 1997
_________________________________
================================================================================
Lease Financing of 1 LR1 Class Crude Oil Tank Vessel
HULL NO. 1177
<PAGE>
DECLARATION AND AGREEMENT OF TRUST
RELATING TO QM TANKER 1177 TRUST
DECLARATION AND AGREEMENT OF TRUST (this "Trust Agreement") relating
to QM TANKER 1177 TRUST, dated and effective as of November 19, 1997, among
Deutsche Morgan Grenfell (Cayman) Limited, a Cayman Islands company (the "Trust
-----
Company"), as Managing Trustee ("Managing Trustee"), Wilmington Trust Company, a
- ------- ----------------
Delaware banking corporation (the "Resident Trustee"), as Delaware Trustee
----------------
("Delaware Trustee") (the Managing Trustee and the Delaware Trustee are
- ------------------
sometimes collectively referred to as the "Owner Trustees" and individually as
--------------
an "Owner Trustee"), and QM TANKER CO. LLC, a Cayman Islands limited life
-------------
company, as beneficial owner of the Trust Estate hereunder (the "Owner
-----
Participant").
- -----------
WHEREAS, the Owner Trustees and the Owner Participant wish to
establish QM TANKER 1177 Trust as a Delaware business trust (the "Trust" or
-----
"Owner Trust") pursuant to the Business Trust Act and this Trust Agreement for
- ------------
the purpose of conducting the activities described in this Trust Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the agreements contained in the other Operative Documents and the
acceptance by the Trust Company and the Resident Trustee of the trusts hereby
created, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
-----------
For the purposes hereof, terms used herein and not otherwise defined
shall have the respective meanings assigned to them in Appendix A (as the same
may from time to time be amended, restated, supplemented or otherwise modified).
Unless otherwise indicated, references in this Trust Agreement to Sections,
subsections, paragraphs and Appendices are to Sections, subsections, paragraphs
and Appendices of this Trust Agreement.
SECTION 2. AUTHORITY TO EXECUTE AND PERFORM
--------------------------------
VARIOUS DOCUMENTS
-----------------
<PAGE>
2.1 Authority to Execute and Perform Operative Documents and Related
----------------------------------------------------------------
Documents. The Owner Participant hereby authorizes and directs the Managing
- ---------
Trustee and the Managing Trustee agrees for the benefit of the Owner Participant
(i) on the Closing Date, to execute and deliver the Participation Agreement and,
upon receipt of the authorization and direction by the Owner Participant
pursuant to Section 2.11 of the Participation Agreement, to execute and deliver
the Operative Documents contemplated to be executed and delivered by the
Managing Trustee on the Closing Date and take the other actions contemplated to
be taken by the Managing Trustee on the Closing Date in the Operative Documents,
(ii) to execute and deliver any other agreement, instrument or certificate
contemplated by the Operative Documents as the Owner Participant from time to
time may direct in written instructions to the Managing Trustee (collectively,
with the Operative Documents, the "Owner Trust Documents"), (iii) subject to the
---------------------
terms of this Trust Agreement and of the other Operative Documents to which the
Managing Trustee is a party, to take whatever action shall be required to be
taken by the Managing Trustee by the terms of, and exercise its rights (upon
instructions received from the Owner Participant) and perform its duties under,
each of the documents, agreements, instruments and certificates referred to in
clauses (i) and (ii) of this Section 2.1 as set forth in such documents,
agreements, instruments and certificates, and (iv) subject to the terms and
limitations of this Trust Agreement and the other Operative Documents to which
it is a party, to take such other action in connection with the foregoing as the
Owner Participant may from time to time direct in written instructions to the
Managing Trustee.
2.2 Authority to Execute and Perform U.K. Documents and Related
-----------------------------------------------------------
Documents. The Managing Trustee agrees for the benefit of the Owner Participant
- ---------
(i) upon receipt of the authorization and direction by the Owner Participant, to
execute and deliver the U.K. Documents contemplated to be executed and delivered
by the Managing Trustee and to take the other actions contemplated to be taken
by the Managing Trustee under the U.K. Documents, (ii) to execute and deliver
any other agreement, instrument or certificate contemplated by the U.K.
Documents as the Owner Participant from time to time may direct in written
instructions to the Managing Trustee (all U.K. Documents to which the Trust is a
party being herein referred to as the "Owner Trust U.K. Documents"), (iii)
--------------------------
subject to the terms of this Trust Agreement and of the Owner Trust U. K.
Documents to which the Managing Trustee is a party, to take whatever action
shall be
2
<PAGE>
required to be taken by the Managing Trustee by the terms of, and exercise its
rights (upon instructions received from the Owner Participant) and perform its
duties under, each of the documents, agreements, instruments and certificates
referred to in clauses (i) and (ii) of this Section 2.2 as set forth in such
documents, agreements, instruments and certificates, and (iv) subject to the
terms of this Trust Agreement and the other Operative Documents and U.K
Documents to which it is a party, to take such other action in connection with
the foregoing as the Owner Participant may from time to time direct in written
instructions to the Managing Trustee.
2.3 Authority of Delaware Trustee to Execute and Perform Documents.
---------------------------------------------------------------
The Delaware Trustee agrees for the benefit of the Owner Participant, upon
receipt of the written authorization and direction by the Owner Participant, to
execute and deliver such documents and to take the other actions contemplated to
be taken by the Delaware Trustee as may be expressly set forth in such
authorization and direction.
SECTION 3. DECLARATION OF BUSINESS TRUST;
ORGANIZATION
------------------------------
3.1 Appointment of the Owner Trustees; Declaration of Trust. The
-------------------------------------------------------
Trust Company is hereby appointed Managing Trustee and the Resident Trustee is
hereby appointed Delaware Trustee and each hereby accepts such appointment. The
Managing Trustee agrees to hold the Trust Estate as Owner Trustee in trust upon
the terms and conditions and for the use and the benefit of the Owner
Participant as herein set forth. It is the intention of the parties hereto that
the trust created by this Trust Agreement constitute a business trust under the
Business Trust Act and that this Trust Agreement constitute the governing
instrument of such business trust. The parties intend, and this Trust Agreement
is intended to cause, the Trust to be characterized as a grantor trust for
federal income tax purposes. The provisions hereof shall be interpreted
accordingly and no party hereto shall take a contrary position for federal
income tax purposes.
3.2 Managing Trustee. The Trust Company agrees that it will hold as
----------------
Managing Trustee all estate, right, title and interest of the Trust in and to
the Vessel Interest, the Owner Trust Documents and the Owner Trust U.K.
Documents, and all money held by the Managing Trustee from time to time
hereunder, including, without limitation, all
3
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amounts of Hire, insurance proceeds, sales proceeds, rental proceeds, and
requisition, indemnity or other payments of any kind, but specifically excluding
Excepted Payments (collectively, the "Trust Estate"), upon the trusts set forth
------------
herein and for the use and benefit of the Owner Participant as sole beneficiary,
subject, however, to the provisions of and the Lien created by the Indenture.
3.3 Delaware Trustee. Notwithstanding any other provision of this
----------------
Trust Agreement, the Delaware Trustee shall not be entitled to exercise any of
the duties and responsibilities of the Managing Trustee described in this Trust
Agreement. The Delaware Trustee shall be an Owner Trustee for the sole and
limited purpose of fulfilling the requirements of (S) 3807 of the Business Trust
Act.
3.4 Name. The name of the Trust established by this Trust Agreement
----
is QM TANKER 1177 Trust. The Trust's activities may be conducted under such
name or under any other name deemed advisable by the Managing Trustee.
3.5 Purpose. The purposes for which the Trust is formed are (a) to
-------
carry on, subject to Section 6, the activities referred to in Section 2, and
otherwise administer, maintain, protect and preserve the Trust Estate and (b) to
engage, subject to Section 6, in any and all activities necessary, desirable,
convenient or incidental to the foregoing; provided, however, that so long as
-------- -------
the Lien of the Indenture shall be in effect and shall not have been discharged
pursuant to the terms thereof, without the prior written consent of the
Indenture Trustee, (i) the Trust will only engage in the business and activities
contemplated by the Operative Documents and the U.K. Documents and activities
incidental thereto and shall not engage in any other business or activities and
(ii) the Trust will not merge or consolidate with any other person.
3.6 Filing of Certificate of Trust. Upon the execution of this Trust
------------------------------
Agreement, the Owner Trustees shall execute the Certificate of Trust for the
Trust in the form attached hereto as Exhibit A, and the Delaware Trustee shall
cause the filing thereof with the Secretary of State of the State of Delaware.
3.7 Duration of Trust. The Trust shall remain in existence from
-----------------
November 19, 1997 until terminated in accordance with Section 9.
4
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SECTION 4. PAYMENTS
--------
4.1 Payments from Trust Estate Only. All payments to be made by the
-------------------------------
Managing Trustee under this Trust Agreement shall be made only from the assets
of or income and proceeds from the Trust Estate and only to the extent that the
Owner Trust shall have received income or proceeds from the Trust Estate to make
such payments in accordance with the terms hereof, except as specifically
provided herein. The Owner Participant agrees that it will look solely to the
assets of or the income and proceeds from the Trust Estate to the extent
available for payment as herein provided and that, except as expressly provided
herein, neither the Trust Company nor Resident Trustee shall be liable for any
amounts payable under this Trust Agreement or subject to any liability under
this Trust Agreement, and the Trust shall not incur any indebtedness except as
contemplated by the Operative Documents and the U.K. Documents.
4.2 Method of Payment. (a) All amounts payable to the Owner
-----------------
Participant or to the Indenture Trustee pursuant to this Trust Agreement shall
be paid by the Managing Trustee, if to the Owner Participant, by transferring
such amount in immediately available funds to such account at such financial
institution as the Owner Participant from time to time may direct or, if to the
Indenture Trustee, in the manner specified in the Indenture, in either case
without discretion on the part of the Managing Trustee.
(b) Notwithstanding the foregoing, the Managing Trustee will pay, if
so requested by the Owner Participant in writing, any or all amounts payable by
the Managing Trustee hereunder to the Owner Participant either (i) by crediting
such amount or amounts to an account or accounts maintained by the Owner
Participant with the Trust Company in immediately available funds, (ii) by
payment at the address for payment specified in Schedule 1 to the Participation
Agreement in immediately available funds or (iii) by mailing an official bank
check or checks in such amount or amounts payable to the Owner Participant at
such address as the Owner Participant shall have designated in writing to the
Managing Trustee.
(c) The Managing Trustee will pay all amounts payable by the Owner
Trustees hereunder on the day received (or on the next succeeding Business Day
if the funds to be so distributed shall not have been received by the Managing
Trustee prior to 11:00 a.m., New York City time, and the
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<PAGE>
Managing Trustee shall not have been reasonably able to distribute such funds to
the Owner Participant on the day received).
SECTION 5. DISTRIBUTIONS
-------------
5.1 Payments to the Indenture Trustee. So long as the Lien of the
---------------------------------
Indenture shall be in effect and shall not have been discharged pursuant to the
terms thereof, (i) if no Indenture Event of Default shall have occurred and be
continuing, all Base Hire, Termination Value and other Hire payable in
connection with an Event of Loss or termination of the Charter Party, insurance
payments and requisition and similar payments, and (ii) if an Indenture Event of
Default shall have occurred and be continuing all Hire and other payments of any
kind payable to the Trust or received by either Owner Trustee (other than, in
either case, Excepted Payments and payments received from the Indenture Trustee)
shall be payable directly to the Indenture Trustee for distribution in
accordance with the provisions of the Indenture, and if any such amount or
payment is received by the Owner Trustees, such amount or payment upon receipt
thereof shall be paid over to the Indenture Trustee without deduction, set-off
or adjustment of any kind for distribution in accordance with the provisions of
the Indenture.
5.2 Payments to the Owner Trustees. Any payment of the type referred
------------------------------
to in Section 5.1 received by any Owner Trustee after the Indenture shall have
been discharged pursuant to the terms thereof, any payment received from the
Indenture Trustee other than as specified in Section 5.3 and any other amount
received as part of the Trust Estate and for the application or distribution of
which no provision is made herein shall be distributed forthwith upon receipt by
such Owner Trustee in the following order of priority: first, so much of such
-----
payment as shall be required to reimburse the Owner Trustees for any expenses
not otherwise reimbursed as to which the Owner Trustees entitled to be so
reimbursed pursuant to the provisions hereof shall be retained by the Owner
Trustees; second, so much of the remainder for which provision as to the
------
application thereof is contained in any of the Owner Trust Documents or the
Owner Trust U.K. Documents shall be applied and distributed in accordance with
the terms of such Owner Trust Document or the Owner Trust U.K. Document as the
case may be; and third, the balance, if any, shall be paid to the Owner
-----
Participant.
6
<PAGE>
5.3 Excepted Payments. Any Excepted Payment received by any Owner
-----------------
Trustee shall be paid by such Owner Trustee to the Person to whom such Excepted
Payment is payable pursuant to the terms of the Owner Trust Documents or the
Owner Trust U.K. Documents.
5.4 Certain Distributions to the Owner Participant. All amounts from
----------------------------------------------
time to time distributable by the Indenture Trustee to the Owner Participant
pursuant to the terms of the Indenture shall, if paid to any Owner Trustee, be
distributed by such Owner Trustee to or at the direction of the Owner
Participant. All amounts received by the Owner Trustees prior to the Closing
Date shall be held and disbursed in accordance with the directions of the Owner
Participant.
5.5 No Shares, etc. The Trust shall not have or issue shares or
--------------
participation certificates or other transferable evidence of ownership.
SECTION 6. CERTAIN DUTIES OF THE OWNER TRUSTEES
------------------------------------
6.1 Notice of Certain Events. In the event that a Responsible
------------------------
Officer of the Managing Trustee shall have Actual Knowledge of any Charter Event
of Default, any Indenture Event of Default or any Event of Loss, the Managing
Trustee shall give prompt telephonic notice thereof (promptly confirmed in
writing) to the Owner Participant, the Charterer and the Indenture Trustee,
unless (in the case of notice to the Indenture Trustee or the Charterer) such
Charter Event of Default, Indenture Event of Default or Event of Loss, as the
case may be, has been remedied before the giving of such notice and the Managing
Trustee has Actual Knowledge that the Charter Event of Default, Indenture Event
of Default or Event of Loss has been so remedied. Subject to the terms of
Section 6.3, the Managing Trustee shall, after the occurrence of any such event,
take or refrain from taking such action with respect thereto, not inconsistent
with the provisions of the Operative Documents, with respect thereto as the
Managing Trustee shall be instructed in writing by the Owner Participant. If
the Managing Trustee shall not have received instructions as above provided
within 20 days after such notice of such event to the Owner Participant, the
Managing Trustee may, until it shall have received such instructions and subject
to the provisions of the Owner Trust Documents and the Owner Trust U.K.
Documents, 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
7
<PAGE>
such Charter Event of Default, Indenture Event of Default or Event of Loss, as
it shall deem advisable in the best interests of the Owner Participant.
6.2 Action Upon Instructions. (a) Subject to the terms of Sections
------------------------
6.1 and 6.3, upon the written instructions at any time and from time to time of
the Owner Participant, the Owner Trustees shall take or refrain from taking such
action or actions, not inconsistent with the provisions of any of the Owner
Trust Documents or the Owner Trust U.K. Documents, as may be specified in such
instructions. In the event that an Owner Trustee is unsure of the application
of any provision of this Trust Agreement or any other Owner Trust Document or
the Owner Trust U.K. Documents, such Owner Trustee may request and rely upon
instructions of the Owner Participant.
(b) Notwithstanding anything to the contrary set forth in Section 2.1
hereof, the Managing Trustee shall not, without instructions from the Owner
Participant, (x) exercise any right to retain the Vessel Interest under Article
18 of the Charter Party, or (y) consent to or approve any action or document as
being satisfactory to the Owner Trustee, or waive any condition or the
performance of any obligation in favor of such Owner Trustee or the Trust
Estate, or release the Charterer or the Head Lessor from any obligation under
the Operative Documents or the U.K. Documents.
6.3 Indemnification. Neither Owner Trustee shall be required to take
---------------
or refrain from taking any action under Sections 2.1, 2.2, 2.3, 6.1 or 6.2
(other than the actions specified in the first sentence of Section 6.1) unless
such Owner Trustee shall have been indemnified in its individual capacity by the
Owner Participant, in manner and form reasonably satisfactory to such Owner
Trustee, against any liability, fee, cost or expense (including, without
limitation, reasonable attorneys' fees) which may be incurred or charged in
connection therewith, other than any such liability, fee, cost or expense which
results from the willful misconduct (including, without limitation, willful
breach of contract) or gross negligence of such Owner Trustee, or the failure of
such Owner Trustee to use ordinary care in the receipt and disbursement of
funds, and, if the Owner Participant shall have directed an Owner Trustee to
take or refrain from taking any action under any Owner Trust Document or the
Owner Trust U.K. Document, the Owner Participant agrees to furnish such
indemnity (subject to the foregoing limitation) as shall be reasonably
satisfactory to
8
<PAGE>
such Owner Trustee, and in addition, to the extent not otherwise paid pursuant
to the terms of any other Owner Trust Document or the Owner Trust U.K. Document,
to pay the reasonable compensation of such Owner Trustee for the services
performed or to be performed by it pursuant to such direction as set forth in
Section 8.2. Neither Owner Trustee shall be required to take any action under
any Owner Trust Document or the Owner Trust U.K. Document if such Owner Trustee
reasonably shall determine, or shall have been advised by counsel, that such
action is likely to result in unindemnified personal liability to such Owner
Trustee or is contrary to the terms hereof or of any documents contemplated
hereby to which such Owner Trustee is a party, or otherwise contrary to law, and
such Owner Trustee in such case shall deliver promptly to the Owner Participant
written notice of the basis of its refusal to act.
6.4 No Duties Except as Specified. Neither Owner Trustee shall have
-----------------------------
any power, right, authority, duty or obligation to manage, control, use, make
any payment in respect of, register, record, insure, inspect, sell, dispose of
or otherwise deal with the Vessel or any other part of the Trust Estate, or to
otherwise take or refrain from taking any action under, or in connection with,
any Owner Trust Document or any Owner Trust U.K. Document, except as expressly
provided by the terms of this Trust Agreement, the Indenture, the Owner Trust
Documents or the Owner Trust U.K. Documents or in written instructions from the
Owner Participant received pursuant to Sections 2.1, 2.2, 2.3, 6.1 or 6.2; and
no implied duties or obligations shall be read into this Trust Agreement against
the Owner Trustees. Notwithstanding and without limiting the foregoing, the
Trust Company agrees that it will, in its individual capacity and at its own
expense, without any right to indemnification hereunder, promptly take all
action necessary to discharge and satisfy in full any Owner's Lien attributable
to it on any part of the Trust Estate and will claim no indemnity therefor
hereunder or under the Participation Agreement or under any other Operative
Document.
6.5 No Action Except Under Specified Documents or Instructions. The
----------------------------------------------------------
Owner Trustees shall not have any right, power or authority to, and each Owner
Trustee agrees that it will not manage, control, use, sell, dispose of or
otherwise deal with the Vessel or any other part of the Trust Estate except as
(i) expressly provided by the terms of this Trust Agreement, (ii) expressly
required by the terms of any Owner Trust Document or the Owner Trust U.K.
Document or (iii)
9
<PAGE>
expressly directed or authorized in written instructions from the Owner
Participant pursuant to Sections 2.1, 2.2, 2.3, 6.1 or 6.2. Except as provided
in this Trust Agreement, the Operative Documents or the U.K. Documents, the
Trust shall not maintain a separate office or possess property (other than the
Trust Estate), office supplies or equipment or have independent bank accounts
other than those bank accounts required to administer the Trust Estate or comply
with the terms of the Indenture, the Operative Documents and the U.K. Documents.
6.6 Tax Returns; Records. The Managing Trustee shall be
--------------------
responsible for the maintaining of all appropriate books and records relating to
the receipt and disbursement of all moneys which it may receive or be entitled
to hereunder or under any agreement contemplated hereby. The Managing Trustee
agrees, at the request and expense of the Owner Participant, to prepare or cause
to be prepared and to sign and/or file all tax returns with respect to the
transactions contemplated hereby or any agreement referred to herein; provided,
--------
however, that the Managing Trustee shall, to the extent it shall have timely
- -------
received all necessary information from the Owner Participant, send a copy of
the contemplated return to the Owner Participant not more than sixty (60) nor
less than thirty (30) days prior to the due date of the return. The Owner
Participant, upon request, will furnish the Managing Trustee with all such
information as may be reasonably required from the Owner Participant in
connection with the preparation of such tax returns. The Managing Trustee shall
keep copies of all returns delivered to or filed by it.
6.7 Absence of Certain Duties. Except in accordance with written
-------------------------
instructions furnished pursuant to Sections 2.1, 2.2, 2.3, 6.1 and 6.2, and
except as expressly provided in any Operative Document and without limiting the
generality of Section 6.4, neither Owner Trustee shall have any duty (i) to
file, record or deposit any Owner Trust Document or any Owner Trust U.K.
Document, including, without limitation, this Trust Agreement, or any other
document, or to maintain any such filing, recording or deposit, or to refile,
rerecord or redeposit any such document, (ii) to obtain insurance with respect
to the Vessel or to effect or maintain any such insurance, other than to receive
and forward to the Owner Participant any notices, policies, certificates or
binders furnished to the Owner Trust by the Charterer or its insurance brokers,
(iii) to maintain or mark the Vessel, (iv) to pay or discharge any tax,
assessment or
10
<PAGE>
other governmental charge, or any Lien or encumbrance of any kind, owing with
respect to or assessed or levied against any part of the Trust Estate, except as
provided in Section 6.4, (v) to confirm, verify, investigate or inquire into the
failure to receive any reports or financial statements of the Charterer or the
Guarantor, (vi) to inspect the Vessel at any time, or to ascertain or inquire as
to the performance or observance of any of the covenants of the Charterer or any
other Person under any Owner Trust Document or the Owner Trust U.K. Document
with respect to the Vessel or any other part of the Trust Estate or (vii) to
manage, control, use, sell, dispose of or otherwise deal with the Vessel or any
other part of the Trust Estate or any part thereof, except as provided in
clauses (i), (ii) and (iii) of Section 6.5.
6.8 Fixed Investment Trust. Notwithstanding anything herein to the
----------------------
contrary, neither Owner Trustee shall be authorized nor have any power to
reinvest the proceeds of the Trust Estate or to otherwise "vary the investment"
of the Owner Participant within the meaning of Treasury Regulations (S)
301.7701-4(c)(1).
6.9 Fiduciary Duty.
--------------
(a) To the extent that, at law or in equity, an Indemnitee has duties
(including fiduciary duties) and liabilities relating to the Trust or to any
other Person, such Indemnitee acting under this Agreement shall not be liable to
the Trust or to any other Person for its good faith reliance on the provisions
of this Agreement. To the extent that provisions of this Agreement restrict the
duties and liabilities of an Indemnitee otherwise existing at law or in equity,
such provisions are agreed by the parties hereto to replace such other duties
and liabilities of such Indemnitee.
(b) Unless otherwise expressly provided herein, whenever a conflict of
interest exists or arises among Indemnitees or between an Indemnitee and a
Person or as a result of any provision of this Agreement or any other agreement
contemplated herein, then the Managing Trustee shall resolve such conflict of
interest considering in each case: (i) the relative interest of each party
(including its own interest) in such conflict, agreement, transaction or
situation; (ii) the benefits and burdens relating to such interests; (iii) any
customary or accepted industry practices; and (iv) any applicable generally
accepted accounting practices or principles. In the absence of bad faith by the
Managing Trustee, the resolution provided by the
11
<PAGE>
Managing Trustee shall not constitute a breach of this Agreement or any other
agreement contemplated herein or of any duty or obligation of the Managing
Trustee at law or in equity or otherwise; and
(c) If an Indemnitee is permitted or required under this Agreement to
make a decision in its "good faith" or under another express standard, the
Indemnitee shall act under such express standard and shall not be subject to any
other or different standard imposed by this Agreement or by applicable law.
6.10 Place of Administration. The principal place of administration
-----------------------
of the trusts created hereby shall be in the Cayman Islands.
SECTION 7. THE OWNER TRUSTEES
------------------
7.1 Trustees. The number of Owner Trustees shall initially be two
--------
(2), and thereafter the number of Owner Trustees shall be such number as shall
be fixed from time to time by a written instrument signed by the Owner
Participant. The Owner Participant is entitled to appoint or remove without
cause any Owner Trustee at any time; provided, however, that the number of Owner
-------- -------
Trustees shall in no event be less than two (2); and provided, further, that at
-------- -------
all times there should be at least one Owner Trustee who, if an individual, is a
resident of the State of Delaware or which, if an entity, has its principal
place of business in the State of Delaware.
7.2 Acceptance of Trusts and Duties. Each Owner Trustee accepts the
-------------------------------
trusts hereby created and agrees to perform the same on the terms of this Trust
Agreement. Each Owner Trustee also agrees to disburse all moneys actually
received by it constituting part of the Trust Estate pursuant to the terms of
this Trust Agreement. Neither the Trust Company nor the Resident Trustee in
their respective individual capacities, shall be answerable or accountable under
any circumstances except, and in the case of such exceptions shall not be
entitled to indemnity hereunder, (i) for such Person's own willful misconduct
(including, without limitation, willful breach of contract) or gross negligence,
(ii) in the case of the inaccuracy of any of such Person's representations or
warranties contained in Section 7.4 hereof or in Section 8 of the Participation
Agreement or in any written certificate delivered pursuant to any Operative
Document or U.K. Document given expressly in such
12
<PAGE>
Person's individual capacity and not in its capacity as a trustee hereunder,
(iii) as arising from such Person's failure to perform obligations expressly
undertaken by such Person in the last sentence of Section 6.4 hereof or
expressly undertaken by such Person in Section 12.2 of the Participation
Agreement, (iv) for any Tax based on or measured by any fees, commissions or
compensation received by such Person for acting as Owner Trustee in connection
with any of the transactions contemplated by the Operative Documents or the U.K.
Documents, or (v) for such Person's failure to use ordinary care in the receipt
and disbursement of funds.
7.3 Furnishing of Documents. (a) Each Owner Trustee will furnish to
-----------------------
the Owner Participant, promptly upon receipt thereof, duplicates or copies of
all reports, notices, requests, demands, opinions, certificates, financial
statements and any other instruments furnished to such Owner Trustee under any
Owner Trust Document or any Owner Trust U.K. Document, unless such Owner Trustee
shall have determined that the same already has been actually received by the
Owner Participant.
(b) The Delaware Trustee shall furnish to the Managing Trustee,
promptly upon receipt thereof, a duplicate or copy of all reports, notices,
requests, demands, certificates, financial statements and any other instruments
furnished to the Delaware Trustee and relating to the Trust, this Trust
Agreement or the other parties hereto, provided, that the Delaware Trustee need
--------
not forward documents to the Managing Trustee if such Person originated the
documents or furnished them to the Delaware Trustee or is to receive any such
documents from any Person other than the Delaware Trustee according to an
express provision hereof or under any document to which the Managing Trustee is
a party.
13
<PAGE>
7.4 No Representations or Warranties as to the Vessel or Documents.
--------------------------------------------------------------
(a) NEITHER THE TRUST COMPANY, RESIDENT TRUSTEE, THE MANAGING TRUSTEE NOR THE
DELAWARE TRUSTEE MAKES ANY REPRESENTATION OR WARRANTY, 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, 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, except that each of
the Trust Company and the Resident Trustee hereby represents and warrants that
(i) on the Closing Date, the Trust shall have received whatever right, title
and/or interest in or to the Vessel as was conveyed to the Trust on such date
and (ii) the Vessel Interest shall be free and clear of Owner's Liens
attributable to the Trust Company and the Resident Trustee and (b) neither the
Trust Company, the Resident Trustee, the Managing Trustee nor the Delaware
Trustee makes any representation or warranty as to the validity or
enforceability of any Operative Document, or as to the correctness of any
statement therein, except to the extent that any such representation, warranty
or statement is expressly made in an Operative Document or in any written
certificate delivered pursuant thereto by any of the Owner Trustees, Resident
Trustee, or the Trust Company as the case may be, and except that the Trust
Company and Resident Trustee hereby represent and warrant that (i) this Trust
Agreement has been duly executed and delivered by the Trust Company and Resident
Trustee and each of the Owner Trust Documents has been or will be executed and
delivered by officers of the Trust Company, Resident Trustee or by each Owner
Trustee, as the case may be, who are or will be duly authorized to execute and
deliver documents on its behalf, (ii) each of the Trust Company and the Resident
Trustee have all corporate power and authority to execute, deliver and perform
this Trust Agreement and (iii) assuming the due authorization, execution and
delivery of this Trust Agreement by the Owner Participant, this Trust Agreement
constitutes the legal, valid and binding obligations of the Trust Company and
the Resident Trustee enforceable against the Trust Company and Resident Trustee,
respectively, in accordance with its terms.
7.5 No Segregation of Moneys; No Interest. Except as otherwise
-------------------------------------
provided herein, in any other Operative Document or in written instructions from
the Owner Participant, moneys received by any Owner Trustee hereunder need not
be segre-
14
<PAGE>
gated in any manner except to the extent required by law, and may be deposited
under such general conditions as may be prescribed by law, and such Owner
Trustee shall not be liable for any interest thereon.
7.6 Reliance; Advice of Counsel. Neither Owner Trustee 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 such Owner Trustee in good faith to be
genuine and reasonably believed by such Owner Trustee in good faith to be signed
by the proper party or parties. Any request, direction, order or demand of the
Owner Participant or the Charterer mentioned herein or in any other Operative
Document to which the Owner Trust is a party shall be sufficiently evidenced by
an Officer's Certificate of the Owner Participant or the Charterer, as the case
may be. An Owner Trustee may accept in good faith a certified copy of a
resolution of the Board of Directors or other governing body of any corporate
party as conclusive evidence that such resolution has been duly adopted by such
body and that the same is in full force and effect. As to any fact or matter
the manner of ascertainment of which is not specifically prescribed herein, an
Owner 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 such Owner Trustee for any action taken or
omitted to be taken by it in good faith in reliance thereon. In the
administration of the trusts hereunder, an Owner Trustee may execute any of the
trusts or powers hereof and perform its powers and duties hereunder directly or
through agents or attorneys, and may consult with counsel, accountants and other
skilled persons to be selected and employed by it, and an Owner Trustee shall
not be liable for anything done, suffered or omitted in good faith by such Owner
Trustee in accordance with the written advice or opinion within the scope of the
competence of any such counsel, accountants or other skilled persons and not
contrary to this Trust Agreement, except for the exercise of reasonable care in
the appointment of counsel, accountants or other skilled persons.
7.7 Not Acting in Individual Capacity. Except as provided in this
---------------------------------
Trust Agreement, in accepting the trusts hereby created each Owner Trustee
agrees to act solely as trustee hereunder and not in its individual capacity;
and all Persons having any claim against an Owner Trustee by reason of the
transactions contemplated by the Owner Trust Documents
15
<PAGE>
or the Owner Trust U.K. Documents shall look only to the Trust Estate (or a part
thereof, as the case may be) for payment or satisfaction thereof, except as
specifically provided in this Trust Agreement and except to the extent the Trust
Company or the Resident Trustee otherwise shall agree in any Owner Trust
Document or Owner Trust U.K. Document.
SECTION 8. INDEMNIFICATION; COMPENSATION
-----------------------------
8.1 Indemnification of the Trust Company and Resident Trustee. The
---------------------------------------------------------
Owner Participant agrees to assume liability for, and to indemnify and hold
harmless the Trust Company and the Resident Trustee (which terms shall include,
solely for purposes of this Section 8, each officer, director, employee and
agent thereof) against and from any and all liabilities, obligations, damages,
taxes (excluding any taxes, fees or other charges payable by the Trust Company
or the Resident Trustee or measured by any compensation received by each Owner
Trustee for its services hereunder), claims, actions, suits, out-of-pocket
costs, expenses and disbursements of any kind and nature whatsoever, including,
without limitation, the reasonable fees and expenses of counsel but excluding
internal costs and expenses such as salaries (collectively, "Trust Expenses")
--------------
which may be imposed on, incurred by or asserted at any time against the Trust
Company or the Resident Trustee (whether or not also indemnified by any other
Person); provided, however, that to the extent the Trust Company or the Resident
-------- -------
Trustee shall have actually received any payment in the nature of an indemnity
payment from any such other Person relating to a claim hereunder, the Trust
Company and the Resident Trustee shall not be entitled to the amount of any such
payment pursuant to this Section 8.1 in any way relating to or arising out of
(i) the administration of the Trust Estate or the action or inaction of the
Trust Company or Resident Trustee hereunder or under the other Owner Trust
Documents or the Owner Trust U.K. Documents, (ii) the Vessel or any part
thereof, (iii) the Owner Trust Documents or the Owner Trust U.K. Documents or
any of them, the issuance of the Secured Notes or the making of any investment
in the Vessel, payments made pursuant to any thereof or the enforcement by the
Trust Company or the Resident Trustee of any of such Person's rights under the
Owner Trust Documents or the Owner Trust U.K. Documents, or any other
transaction contemplated by the Owner Trust Documents or the Owner Trust U.K.
Documents, or (iv) the manufacture, financing, construction, purchase,
ownership, acquisition, acceptance, rejection, delivery, nondelivery,
possession, transportation, charter, subcharter,
16
<PAGE>
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 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 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; except only that the Owner
Participant shall not be required to indemnify the Trust Company or the Resident
Trustee for Trust Expenses arising or resulting from any of the matters (1)
described in clauses (i) through (v) of the last sentence of Section 7.2 or (2)
for which the Charterer would not have been required to indemnify the Trust
Company or the Resident Trustee pursuant to Section 14.1(a) or 14.2(b) of the
Participation Agreement (disregarding for this purpose (i) clauses 1, 4, 6, 8, 9
(to the extent any "other exclusion" referred to therein refers to clauses 4, 6,
8, 10, 11, 13, or 19 of the proviso to such 14.1(a)), 10, 11, 13 and 19 of the
proviso to Section 14.1(a) of the Participation Agreement and (ii) clauses 2, 5,
7, 10, 14, 15 and 16 of Section 14.2(b) of the Participation Agreement). The
indemnities contained in this Section 8.1 shall survive the termination of this
Trust Agreement. To secure the foregoing indemnities, each Owner Trustee shall
be entitled to apply any amount otherwise distributable to the Owner Participant
pursuant to Section 5.2 against any such indemnity which has not been paid when
due. The indemnities contained in this Section 8.1 extend to the Trust Company
and the Resident Trustee only and shall not be construed as indemnities of the
Trust Estate.
8.2 Compensation and Expenses. Each Owner Trustee agrees that it
-------------------------
shall have no right against the Owner Participant or the Trust Estate for any
fee as compensation for its services or for its expenses, to the extent that the
Charterer has paid such amounts pursuant to Section 2.10 or 14.1(g) of the
Participation Agreement. Subject to the preceding sentence, the Owner
Participant shall pay, or reimburse each Owner Trustee for, all reasonable
expenses of such Owner Trustee, together with reasonable compensation for its
services hereunder as provided herein, including, without limitation, the
reasonable compensation, expenses and disbursements of such agents,
representatives, experts and counsel as each Owner Trustee may employ in
connection with
17
<PAGE>
the exercise and performance of its or his rights and duties under the Owner
Trust Documents and the Owner Trust U.K. Documents (provided that the Trust
shall not have any employees), unless and to the extent that such Owner Trustee
otherwise receives payment or reimbursement pursuant to any Owner Trust Document
or any Owner Trust U.K. Document, whether or not the transactions contemplated
hereby are consummated.
SECTION 9. TERMINATION OF TRUST AGREEMENT
------------------------------
9.1 Termination of Trust Agreement. Subject to the terms of the
------------------------------
Participation Agreement, the Indenture and Sections 5 and 8.1 hereof, this Trust
Agreement and the trust created hereby shall terminate and the Trust Estate
shall be distributed to the Owner Participant, and this Trust Agreement shall be
of no further force or effect, upon the sale or other final disposition by the
Managing Trustee of all property constituting part of the Trust Estate and the
final distribution by the Managing Trustee of all moneys or other property or
proceeds constituting part of the Trust Estate in accordance with the terms of
Section 5.
9.2 Termination at Option of the Owner Participant. The provisions
----------------------------------------------
of Section 9.1 notwithstanding, but subject to Section 11.2, this Trust
Agreement and the trusts created hereby shall terminate and the Trust Estate
shall be distributed to the Owner Participant, and this Trust Agreement shall be
of no further force and effect, upon the election of the Owner Participant by
notice to each Owner Trustee to revoke the trusts created hereby; provided that,
--------
in addition to the giving of such notice, the Owner Participant, with the
cooperation of each Owner Trustee, shall execute and deliver such written
agreements and instruments and take such actions as shall be necessary in order
to cause the succession of the Owner Participant to all the rights, title,
interests, duties and liabilities of each Owner Trustee under the Owner Trust
Documents and the Owner Trust U.K. Documents (other than obligations
attributable to any gross negligence or willful misconduct of the Trust Company
or the Resident Trustee or any breach by either Owner Trustee of its or his
obligations under the Owner Trust Documents or the Owner Trust U.K. Documents);
provided, however, that prior to any such termination, the Lien of the Indenture
- -------- -------
on the Indenture Estate shall have been released, and full payment of the
principal of, or, premium (if any) and interest on the Secured Notes shall have
been made or the Indenture Trustee shall have consented to such termination.
18
<PAGE>
The written agreements and instruments referred to in the preceding sentence
shall be reasonably satisfactory in form and substance to each Owner Trustee and
shall release each Owner Trustee from all further obligations of the Owner
Trustees hereunder and under the agreements and other instruments mentioned in
the preceding sentence.
9.3 Distribution of Trust Estate Upon Termination. Upon any
---------------------------------------------
termination of the trust created hereby pursuant to Section 9.1 or 9.2, the
Owner Trustees shall transfer title to the Trust Estate (and assign all their
right, title and interest in, to and under each Operative Document) to the Owner
Participant or its designee. No later than the effective date of termination of
the trust created hereby the Owner Trustees or its designee(s) shall execute and
deliver to the Owner Participant a bill of sale and other written instrument or
instruments prepared by the Owner Participant in form and substance reasonably
satisfactory to the Owner Trustees evidencing the transfer of title to the Trust
Estate to the Owner Participant and, no later than the effective date of such
termination, the Owner Participant shall execute and deliver to the Owner
Trustees a written instrument in form and substance reasonably satisfactory to
the Owner Trustees evidencing discharge of the Owner Trustees from their
obligations hereunder and under the other Owner Trust Documents and the Owner
Trust U.K. Documents to which each Owner Trustee is a party except those
theretofore accrued and their obligations to release Owner's Liens.
SECTION 10. SUCCESSOR OWNER TRUSTEES,
-------------------------
CO-OWNER TRUSTEES AND
---------------------
SEPARATE OWNER TRUSTEES
-----------------------
10.1 Resignation and Successors. (a) An Owner Trustee may resign at
--------------------------
any time without cause by giving at least sixty (60) days' prior written notice
to the Owner Participant, with a copy to the Indenture Trustee and the
Charterer, such resignation to be effective on the expiration of such sixty (60)
day period. In addition, the Owner Participant at any time may remove an Owner
Trustee without cause by an instrument in writing delivered to such Owner
Trustee, the Indenture Trustee and the Charterer, such removal to be effective
upon the acceptance of appointment by a successor to such Owner Trustee under
paragraph (b) of this Section 10.1. In case of the resignation or removal of an
Owner Trustee, the Owner Participant may appoint a successor to such Owner
Trustee by an instrument in writing, signed by
19
<PAGE>
the Owner Participant. If a successor to an Owner Trustee shall not have been
appointed within thirty (30) days after the giving of written notice of such
resignation or the delivery of the written instrument with respect to such
removal, the Owner Trustee, the Owner Participant, the Indenture Trustee or the
Charterer may apply to any court of competent jurisdiction to appoint a
successor to the Owner Trustee reasonably acceptable to the Owner Participant to
act until such time, if any, as a successor shall have been appointed as above
provided in this Section 10.1. Any successor so appointed by such court shall
immediately and without further act be superseded by any successor to such Owner
Trustee appointed as above provided in this Section 10.1.
(b) Any successor Owner Trustee, however appointed, shall execute and
deliver to the predecessor Owner Trustee an instrument accepting such
appointment and shall give the Owner Participant, the Indenture Trustee and
Charterer written notice of such acceptance. Upon the execution and delivery of
such instrument, such successor Owner Trustee, without further act provided that
any required Governmental Actions have been obtained, shall become vested with
all the estates, properties, rights, powers, duties and trusts of the
predecessor Owner Trustee in the trusts hereunder with like effect as if
originally named an Owner Trustee herein; provided, however, that upon the
-------- -------
written request of such successor Owner Trustee, such predecessor Owner Trustee
shall execute and deliver an instrument transferring to such successor Owner
Trustee, upon the trusts herein expressed, all the estates, properties, rights,
powers, duties and trusts of such predecessor trustee as the Owner Trustee
hereunder, and such predecessor trustee shall duly assign, transfer, deliver and
pay over to such successor Owner Trustee all moneys or other property then held
by such predecessor trustee as the Owner Trustee upon the trusts herein
expressed. Upon the appointment of any successor Owner Trustee hereunder, the
predecessor trustee, pursuant to written instructions of the Owner Participant,
will execute all documents and take all reasonable action within its control in
order to cause such title held in the Trust Estate by such predecessor trustee
to be transferred to the successor Owner Trustee.
(c) Any successor to the Managing Trustee, however appointed, shall
be a bank or trust company incorporated and doing business within the Cayman
Islands or, with the consent of the Owner Participant, the United States and
having a
20
<PAGE>
combined capital and surplus of at least $50,000,000 reasonably acceptable to
the Owner Participant, if there be such an institution willing, able and legally
qualified to perform the duties of an Owner Trustee hereunder upon reasonable or
customary terms.
(d) Any corporation into which the Trust Company 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 Trust Company shall be
a party, or any corporation to which substantially all the corporate trust
business of the Trust Company may be transferred, shall be, subject to
compliance with the terms of paragraph (c) of this Section 10.1, the Managing
Trustee under this Trust Agreement without further act.
(e) Any successor to the Delaware Trustee, however appointed, shall
be a bank or trust company incorporated and doing business within the United
States of America, having its principal place of business in Delaware and having
a combined capital and surplus of at least $50,000,000 reasonably acceptable to
the Owner Participant, if there be such an institution willing, able and legally
qualified to perform the duties of an Owner Trustee hereunder upon reasonable or
customary terms. Any request, approval or consent in writing by the Managing
Trustee shall be sufficient warrant to such additional trustee or separate
trustee, as the case may be, to take such actions as may be so requested,
approved or consented to.
(f) Any corporation into which the Resident 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 Resident Trustee shall
be a party, or any corporation to which substantially all the corporate trust
business of Resident Trustee may be transferred, shall be, subject to compliance
with the terms of paragraph (e) of this Section 10.1, the Delaware Trustee under
this Trust Agreement without further act.
10.2 Additional and Separate Trustees. (a) If the Managing Trustee
--------------------------------
or the Owner Participant shall conclude that it is necessary or prudent in order
to conform to the law of any other jurisdiction in which all or any part of the
Trust Estate shall be situated, or to make or defend any claim or bring or
defend any suit with respect to the Trust Estate, the Secured Notes or any
Operative Document, or pursuant to advice of counsel satisfactory to it, or if
21
<PAGE>
the Managing Trustee shall have been directed to do so by the Owner Participant,
the Managing Trustee shall appoint another Person to act as additional or
separate trustee for all or any part of the Trust Estate with such property,
title, right, power or duty as the Managing Trustee and the Owner Participant
may determine. In case any such additional trustee or separate trustee shall
resign or be removed, all the assets, property, rights, powers or duties of such
additional trustee or separate trustee, as the case may be, so far as permitted
by any applicable law, shall vest in and be exercised by a new successor to such
additional trustee, appointed in the manner otherwise provided in this Trust
Agreement.
(b) In the event that either the Owner Participant or the Managing
Trustee shall determine to appoint another Person as additional or separate
trustee, the Managing Trustee and the Owner Participant shall execute and
deliver an agreement supplemental hereto, and all other instruments and
agreements necessary or proper to constitute another bank or trust company, or
one or more Persons approved by the Managing Trustee and the Owner Participant,
either to act as an additional trustee or trustees of all or any part of the
Trust Estate, jointly with the Owner Trustees, or to act as separate trustee or
trustees of all or any part of the Trust Estate, in any such case with such
powers as may be provided in such agreement supplemental hereto, and to vest in
such bank, trust company or Person as such additional trustee or separate
trustee, as the case may be, any property, title, right, or power deemed
necessary or proper by the Managing Trustee or the Owner Participant, subject to
the remaining provisions of this Section 10.2. In the event the Owner
Participant shall not have joined in the execution of such agreement
supplemental hereto within fifteen (15) days after the receipt of a written
request from the Managing Trustee so to do without providing a reasonable basis
for such failure to join, the Managing Trustee may act under the foregoing
provisions of this Section 10.2 without the concurrence of the Owner
Participant; and the Owner Participant hereby appoints the Managing Trustee its
agent and attorney-in-fact to act for the Owner Participant under the foregoing
provisions of this Section 10.2 in the event of the occurrence of either of such
contingencies. No additional trustee hereunder shall be an Affiliate or agent
of the Charterer. The Managing Trustee may execute, deliver and perform any
deed, conveyance, assignment or other instrument in writing as may be required
by an additional trustee or separate trustee for more fully and certainly
22
<PAGE>
vesting in and confirming to such Person any property, title, right or power
which, by the terms of such agreement supplemental hereto, are expressed to be
conveyed or conferred to or upon such additional trustee or separate trustee,
and the Owner Participant shall, upon the Managing Trustee's request, join
therein and execute, acknowledge and deliver the same; and the Owner Participant
hereby appoints the Managing Trustee its agent and attorney-in-fact to execute,
acknowledge and deliver any such deed, conveyance, assignment or other
instrument in the event that such Owner Participant shall not itself execute and
deliver the same within fifteen (15) days after receipt by it of such request so
to do.
(c) Every additional trustee and separate trustee hereunder shall, to
the extent permitted by law, be appointed to act and the Owner Trustees shall
act, subject to the following provisions and conditions:
(i) to the extent permitted by applicable law, all powers, duties,
obligations and rights conferred or imposed upon such Owner Trustee in
respect of the receipt, custody, management, investment and payment of
moneys, shall be exercised solely by such Owner Trustee;
(ii) all other rights, powers, duties, and obligations conferred or
imposed upon such Owner Trustee shall be conferred or imposed upon and
exercised or performed by such Owner Trustee and such additional
trustee or trustees and separate trustee or trustees jointly, except
to the extent that under any law of the jurisdiction in which any
particular act or acts are to be performed by such Owner Trustee shall
be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties, and obligations (including the
holding of title to the Trust Estate in any such jurisdiction) shall
be exercised and performed by such additional trustee or trustees or
separate trustee or trustees;
23
<PAGE>
(iii) no power hereby given to, or with respect to which it is hereby
provided may be exercised by, any such additional trustee or separate
trustee shall be exercised hereunder by such additional trustee or
separate trustee or except jointly with, or with the consent of, the
Owner Trustee; and
(iv) no trustee hereunder shall be personally liable for
reason of any act or omission of any other trustee hereunder.
(d) If at any time the Managing Trustee and the Owner Participant
shall deem it no longer necessary or prudent in order to conform to any
applicable law or shall be advised by its counsel that it is no longer necessary
or prudent in the interest of the Owner Trustees and the Owner Participant to
maintain the appointment of such additional or separate trustee as provided
herein, the Owner Trustees and the Owner Participant shall execute and deliver
any agreement supplemental hereto and all other instruments and agreements
necessary or proper to remove any such additional or separate trustee. In the
event that the Owner Participant shall not have joined in the execution of such
agreement supplemental hereto, instruments and agreements, the Managing Trustee
may act on behalf of the Owner Participant to the same extent provided above in
this Section 10.2.
(e) Any additional trustee or separate trustee may at any time by an
instrument in writing constitute either Owner Trustee its agent or attorney-in-
fact with full power and authority, to the extent which may be authorized by
applicable law, to do all acts and things and exercise all discretion which it
is authorized or permitted to do or exercise, for and in its behalf and in its
name. In case any such additional trustee or separate trustee shall die, become
incapable of acting, resign or be removed, all the assets, property, rights,
powers, trusts, duties and obligations of such additional trustee or separate
trustee, as the case may be, so far as permitted by law, shall vest in and be
exercised by the Owner Trustees without necessity of any act by any party and
without the appointment of a new successor to such additional or separate
trustee, unless and until a successor is appointed in the manner provided in
this Section 10.2.
24
<PAGE>
(f) Each additional or separate trustee appointed pursuant to this
Section 10.2 shall be subject to, and shall have the benefit of, Sections 6.1
through 6.7 and Sections 8.1 and 11.2 insofar as they apply to the Owner
Trustees. No appointing of, or action by, any additional trustee will relieve
the Owner Trustees of any of its obligations hereunder or under any other
Operative Document. Any request, approval or consent in writing by the Managing
Trustee shall be sufficient warrant to such additional trustee or separate
trustee, as the case may be, to take such actions as may be so requested,
approved or consented to.
SECTION 11. SUPPLEMENTS AND AMENDMENTS
--------------------------
11.1 Supplements and Amendments. Subject to the terms of the
--------------------------
Operative Documents and the U.K. Documents, at the written request of the Owner
Participant, this Trust Agreement shall be amended by a written instrument
signed by the Trust Company and the Owner Participant (provided however, that in
-------- -------
the event such amendment adversely affects the duties or obligations of the
Resident Trustee, such amendment shall be signed by the Resident Trustee as
well), but if in the reasonable opinion of the Trust Company (or Resident
Trustee, if applicable) any instrument required to be so executed adversely
affects any right, duty or liability of, or immunity or indemnity in favor of
the Trust Company (or Resident Trustee, if applicable), under this Trust
Agreement or any of the documents contemplated hereby to which it is a party, or
would cause or result in any conflict with or breach of any term, condition or
provision of, or default under, its charter documents or by-laws or any document
contemplated hereby to which it is a party, the Trust Company (or Resident
Trustee, if applicable), in its sole discretion may decline to execute such
instrument.
11.2 Limitation on Amendments. The provisions of Section 11.1
------------------------
notwithstanding, but subject to Sections 11.1(g) and 17.6(b) of the
Participation Agreement, (i) this Trust Agreement may not be revoked or
terminated by the Owner Participant and (ii) the Owner Participant shall not
request the Trust Company or Resident Trustee to execute any amendment which
would result in the trusts created hereunder being terminated or which would
materially adversely affect the Indenture Estate or the holders of the Secured
Notes, in either case prior to the release of the Lien of the Indenture on the
Indenture Estate or prior to the payment in full of the principal of, premium
(if any) and interest on the
25
<PAGE>
Secured Notes unless the Indenture Trustee shall have consented to any such
revocation, termination or amendment.
SECTION 12. MISCELLANEOUS
-------------
12.1 No Legal Title to Trust Estate in the Owner Participant. The
-------------------------------------------------------
Owner Participant shall not have legal title to any part of the Trust Estate.
No transfer, by operation of law or otherwise, of any right, title and interest
of the Owner Participant in and to the Trust Estate or hereunder shall operate
to terminate this Trust Agreement or the trusts created hereby or entitle any
successor or transferee to an accounting or to the transfer to it of legal title
to any part of the Trust Estate.
12.2 Sale of the Vessel by the Managing Trustee is Binding. Any
-----------------------------------------------------
sale, transfer or other conveyance of the Vessel or other property included in
the Trust Estate or any part thereof by the Managing Trustee made pursuant to
the terms of this Trust Agreement or any other Operative Document or Owner Trust
U.K. Document shall bind the Owner Participant and shall be effective to
transfer or convey all right, title and interest of the Owner Trustees and the
Owner Participant in and to the Vessel Interest or other property included in
the Trust Estate or part 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 Owner Trustees.
12.3 Notices. Unless otherwise expressly specified or permitted by
-------
the terms hereof, all notices hereunder shall be given as provided in Section
17.3 of the Participation Agreement.
12.4 Severability of Provisions. Any provision of this Trust
--------------------------
Agreement 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 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
26
<PAGE>
thereof that renders any term or provision hereof invalid or unenforceable in
any respect.
12.5 Separate Counterparts. This Trust Agreement may be executed by
---------------------
the parties hereto 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.
12.6 Successors and Assigns. This Trust Agreement, including the
----------------------
terms and provisions hereof, shall be binding upon the Owner Participant, the
Trust Company, Resident Trustee and each Owner Trustee, whichever is applicable
pursuant to the terms hereof, and their respective successors and assigns, and
inure to the benefit of the Owner Participant, the Trust Company, Resident
Trustee or each Owner Trustee, whichever is applicable pursuant to the terms
hereof, and their respective successors and permitted assigns, all as herein
provided. Any request, notice, direction, consent, waiver or other instrument
or action by the Owner Participant shall bind the successors and assigns of the
Owner Participant.
12.7 Transfer of Owner Participant's Interest. (a) All provisions of
----------------------------------------
Section 15 of the Participation Agreement shall (with the same force and effect
as if set forth in full, mutatis mutandis, in this Section 12.7) be applicable
----------------
to any assignment, conveyance or other transfer by any Owner Participant of any
of its right, title or interest in and to the Trust Estate or this Trust
Agreement or any other Operative Document and notwithstanding (S) 3805(d) of the
Delaware Business Trust Act the Owner Participant may only transfer its interest
in compliance with that provision.
(b) In the event that at any time there shall be more than one Owner
Participant pursuant to the provisions of Section 13 of the Participation
Agreement, then in each such case, as used herein, the term "Owner Participant"
shall be deemed to refer to each such Owner Participant, except that any
reference to consents, approvals or waivers of the "Owner Participant" as used
herein shall require the consent, approval or waiver of each such Owner
Participant. At any time that there shall be required to be made hereunder any
distribution, disbursement, assignment or other transfer of monies or, any other
item whatsoever, then such distribution, disbursement, assignment or other
transfer shall be made pro rata to each Owner Participant existing at such time
in accordance with their respective interests hereunder. If
27
<PAGE>
there shall be more than one Owner Participant, no Owner Participant shall be
liable for performance by any other Owner Participant of such other Owner
Participant's obligations under the Operative Documents or the U.K. Documents or
in respect of actions taken by any other Owner Participant except as otherwise
expressly so set forth.
12.8 Headings; Table of Contents. The division of this Trust
---------------------------
Agreement 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 hereof.
12.9 GOVERNING LAW. THIS TRUST AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH JURISDICTION.
12.10 Performance by the Owner Participant. Any obligation of the
------------------------------------
Trust Company, the Resident Trustee or either Owner Trustee hereunder or under
any other Operative Document or other document contemplated hereby, may be
performed by the Owner Participant and any such performance shall not be
construed as a revocation of the trusts created hereby.
12.11 The Owner Trust Documents. If any provision in this Trust
-------------------------
Agreement shall conflict with or otherwise be inconsistent with the terms of any
Owner Trust Document or any Owner Trust U.K. Document, the terms of such Owner
Trust Document or Owner Trust U.K. Document shall control.
12.12 Performance of Obligations to Indenture Trustee. After the
-----------------------------------------------
Indenture shall have been discharged and all of the principal of an premium, if
any, and interest on the Secured Note is paid in full pursuant to the terms
thereof, the provisions of this Trust Agreement 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 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.
12.13 Trust Agreement for Benefit of Parties Only. Unless otherwise
-------------------------------------------
expressly provided herein, nothing herein shall be construed to give any Person
other than the Owner
28
<PAGE>
Trustees and the Owner Participant and to the extent provided in Sections 5.1,
6.1, 9.2, 10.1 and 11.2, the Indenture Trustee and the holders of the Secured
Notes any legal or equitable right, remedy or claim under or in respect of this
Trust Agreement and this Trust Agreement shall be held to be for the sole and
exclusive benefit of the Owner Trustees, the Owner Participant, the Indenture
Trustee and the holders of the Secured Notes.
12.14 Limitation on Owner Participant's Liability. Except as
-------------------------------------------
expressly set forth herein, the Owner Participant shall not have any liability
for the performance of this Trust Agreement.
12.15 No Petition. Unless otherwise agreed in writing by both the
-----------
Indenture Trustee and Owner Participant, each Owner Trustee and the Owner
Participant hereby covenant and agree to the fullest extent permitted by law
that they will not at any time institute on behalf of or against the Trust or
join in any institution on behalf of or against the Trust, of any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, proceedings
under any United States Federal or state bankruptcy or similar law.
12.16 Waiver, Etc. No term or provision hereof may be changed,
------------
waived, discharged or terminated orally, but only by an instrument in writing
entered into in compliance with the terms of Section 11 hereof and any waiver of
the terms hereof shall be effective only in the specific instance and for the
specific purpose given.
29
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this Trust
Agreement to be duly executed as of the date first above written.
DEUTSCHE MORGAN GRENFELL (CAYMAN)
LIMITED, not in its individual
capacity, except as expressly
provided herein, but solely as
Managing Owner Trustee
By: ________________________
Its:
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided herein,
but solely as Delaware Owner Trustee
By: _______________________
Its:
QM TANKER CO. L.L.C.
By: _______________________
Its:
[QM TANKER 1177 TRUST]
<PAGE>
Appendix A
----------
<PAGE>
Exhibit A
---------
Form of Certificate of Trust of [_______] Trust
This Certificate of Trust (the "Trust"), dated as of November ___,
1997, is being duly executed and filed by Wilmington Trust Company and Deutsche
Morgan Grenfell (Cayman) Limited, a Cayman Islands company, as trustees, to form
a business trust under the Delaware Business Trust Act (12 Del. C. (S)3801 et
------- --
seq.).
- ---
(a) Name. The name of the business trust formed hereby is
----
[_______________] Trust.
(b) Delaware Trustee. The name and business address of the
----------------
trustee of the Trust with its principal place of business in the State
of Delaware is _________________________ .
IN WITNESS WHEREOF, the undersigned, being all of the trustees of the
Trust, have executed this Certificate of Trust as of the date first-above
written.
[DELAWARE TRUSTEE], as Trustee
By: ____________________________
Name:
Title:
[SPC TRUSTEE], as Trustee
By: ____________________________
Name:
Title:
<PAGE>
EXHIBIT 4.6
PARTICIPATION AGREEMENT
among
MOBIL EQUIPMENT FINANCE COMPANY INC.,
Charterer
QM TANKER CO., LLC,
Owner Participant
QM TANKER 1177 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 5, 1997
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Lease Financing of One LR1 Crude Oil Tank Vessel
Hull No. 1177
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TABLE OF CONTENTS
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Page
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SECTION 1. DEFINITIONS; INTERPRETATION......................................... 2
SECTION 2. COMMITMENTS OF PARTICIPANTS; CLOSING; FUNDING; TRANSACTION EXPENSES.. 2
SECTION 3. CONDITIONS TO CLOSING BY THE CHARTERER............................... 5
SECTION 4. CONDITIONS TO CLOSING BY THE PASS THROUGH TRUSTEE.................... 7
SECTION 5. CONDITIONS TO CLOSING BY OWNER....................................... 12
SECTION 6. REPRESENTATIONS AND WARRANTIES OF.................................... 18
SECTION 7. REPRESENTATIONS AND WARRANTIES OF THE OWNER PARTICIPANT.............. 21
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE PASS THROUGH TRUSTEE........... 23
SECTION 9. REPRESENTATIONS AND WARRANTIES OF THE TRUST
COMPANY AND OWNER TRUST.............................................. 24
SECTION 10. REPRESENTATIONS AND WARRANTIES OF INDENTURE
TRUSTEE............................................................. 27
SECTION 11. CHARTERER COVENANT................................................. 28
SECTION 12. OTHER COVENANTS AND AGREEMENTS..................................... 31
SECTION 13. INDEMNIFICATION.................................................... 36
SECTION 14. TRANSFER OF AN OWNER PARTICIPANT'S................................. 47
SECTION 15. MISCELLANEOUS...................................................... 49
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PARTICIPATION AGREEMENT
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THIS PARTICIPATION AGREEMENT, dated as of December 5, 1997, is among
MOBIL EQUIPMENT FINANCE COMPANY INC., a Delaware corporation ("Charterer"), QM
TANKER CO., LLC, a Cayman Islands limited life company ("Owner Participant"),
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 ("Pass
Through Trustee"), QM TANKER 1177 TRUST, a trust created pursuant to the
Delaware Business Trust Act under the Trust Agreement, ("Owner Trust"), DEUTSCHE
MORGAN GRENFELL (CAYMAN) LIMITED, a Cayman Islands company (the "Trust
Company"), not in its individual capacity except to the extent expressly set
forth herein but solely as Managing Trustee under the Trust Agreement (in such
capacity, "Managing Trustee"), 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. ("Indenture Trustee").
RECITALS:
A. The Owner Trust desires to finance its acquisition of the Vessel
Interest 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 U.K.
Lessor has entered into the Construction Contract pursuant to which the U.K.
Lessor will pay the purchase contract price for the Vessel.
E. Prior to the execution and delivery of this Agreement, the Owner
Trust and the U.K. Lessor have entered 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
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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,
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.
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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
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
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notice of the Closing Date set forth in this Section 2.4.
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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
LLP, 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 the 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
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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.
2.8 Conclusion of U.K. Arrangements. (a) The parties acknowledge
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that prior to the Closing Date, the U.K. Financing was 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.
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 Charterer.
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 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
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underwriting commissions of Salomon Brothers, Inc 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.
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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 Closing 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 Construction Contract;
(d) the Supervisory Agreement;
(e) the Head Lease;
(f) the Indenture;
(g) the Secured Note;
(h) the Guaranty;
(i) the Trust Agreement;
(j) the Pass Through Trust Agreement;
(k) the Pass Through Trust Supplement;
(l) the Underwriting Agreement; and
(m) the Pass Through Trust Certificate
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
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Trustee and the original Pass Through Trust Certificate shall be delivered
as instructed by the Pass Through Trustee).
3.2 Legality, Etc. No change shall have occurred after November 21,
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1997 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 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
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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, any other Operative Document, to which it is
or will be a party, or the Pass Through Trust Agreement or (y) the ability of
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.
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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.
SECTION 4. CONDITIONS TO CLOSING BY
THE PASS THROUGH TRUSTEE
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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 Closing 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 Construction Contract;
(d) the Supervisory Agreement;
(e) the Indenture;
(f) the Secured Note;
(g) the Trust Agreement; and
(h) the Parent Guarantee;
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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 November 21,
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1997 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
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action or proceeding shall have been commenced that could result in an Event of
Loss.
4.5 [Reserved].
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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 LLP, special counsel to the Charterer and the
Guarantor, substantially in the form of Exhibit A-2;
(c) [reserved];
(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 LLP, counsel to the Indenture Trustee, substantially
in the form of Exhibit A-7;
(h) Bingham Dana LLP counsel to the Pass Through Trustee,
substantially in the form of Exhibit A-8;
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(i) Dewey Ballantine LLP 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 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)
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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 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
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(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 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
11
<PAGE>
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) [except
-----------------------------
as set forth in Schedule 4,] all filings and recordings and other action
necessary or advisable to perfect the security interest in 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 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. 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 Construction Contract, Head Lease,
Supervisory Agreement, and Lessee Support Agreement 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
12
<PAGE>
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 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 Closing 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 Construction Contract;
(d) the Supervisory Agreement;
(e) the Indenture;
(f) the Secured Note;
(g) the Trust Agreement; and
(h) the Guaranty;
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 November 24,
-------------
1997 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 [Reserved]
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
13
<PAGE>
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) [Reserved]
(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 LLP, counsel to the Indenture Trustee, substantially
in the form of Exhibit A-7;
(h) Bingham Dana LLP, counsel to the Pass Through Trustee,
substantially in the form of Exhibit A-8;
(i) Dewey Ballantine LLP, 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
14
<PAGE>
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 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
15
<PAGE>
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 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
16
<PAGE>
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 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 filings and recordings or other actions necessary or advisable to
perfect the security interest in the Indenture Estate created by the Indenture
(or arrangements therefor satisfactory to the Loan Participant), 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 security interest.
5.13 Sale of Pass Through Certificates. The 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 Charter. 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.
17
<PAGE>
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 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, each other
Operative Document to which it is a party and the Pass Through Trust Agreement.
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, any
other Operative Document to which it is a party, the Pass Through Trust
Agreement or the Pass Through Trust Supplement.
6.2 Authorization. The execution, delivery and performance by the
-------------
Charterer of this Agreement, each other Operative Document to which it is a
party, the Pass Through Trust Agreement and the Pass Through Trust Supplement
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. The Pass Through Trust Agreement, the
-------------------------
Pass Through Trust Supplement, this Agreement 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, (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,
18
<PAGE>
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 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
-----------------------------
filings and recordings and other action necessary or advisable to perfect the
security interest in 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 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
19
<PAGE>
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.
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 the
Underwriter, 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 the Other Vessel 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.
20
<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,
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 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.
21
<PAGE>
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.
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.
22
<PAGE>
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 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
23
<PAGE>
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 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.
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
24
<PAGE>
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 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.
25
<PAGE>
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 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.
26
<PAGE>
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 statements
with respect thereto or the sale or transfer of the Vessel Interest).
9.10 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.
9.11 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 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
27
<PAGE>
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 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 Maintenance of Corporate Existence, Etc. Subject to the
---------------------------------------
provisions of Section 11.2, 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.
28
<PAGE>
11.2 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 expressly
assume all of the obligations of the Charterer under the Operative
Documents;
(ii) immediately after giving effect to such transaction, no Charter
Event of Default shall have occurred and be continuing; and
(iii) 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 as an entirety in accordance
with this Section 11.2, 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 11.2 from its
liability hereunder.
11.3 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.
11.4 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 and the Charter, any supplements or amendments thereto
and restatements thereof and all financing statements, fixture filings and other
documents, to be
29
<PAGE>
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 security interest of the Indenture Trustee in the Indenture Estate
granted or intended to be created under the Indenture 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 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.
11.5 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, so long as
it is a subcharterer of the Vessel, 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 11.5 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.
11.6 Documentation of Vessels. The Charterer agrees that, at or
------------------------
before the time of delivery of the Vessel to the Owner Trust pursuant to the
Head Lease on the Delivery Date, the Charterer shall cause the Vessel to be
documented, on a provisional basis, in the name of the U.K. Lessor (but 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
U.K. Lessor promptly after the Delivery Date. The Charterer shall throughout
the Charter Period cause the documentation of the Vessel to be maintained 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 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, forfeiture or loss of any material part
30
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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 interest in the Vessel Interest.
11.7 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
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
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security interest of the Indenture Trustee in the Indenture Estate granted
or intended to be created under the Indenture 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 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 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.
(i) Trustee's Fees. The Owner Participant 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 Owner Participant
shall have the right to receive and review any substantiation relating to
any such ongoing expense as it may reasonably request.
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:
32
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(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 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
33
<PAGE>
contemplated by the 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 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)).
34
<PAGE>
(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.
(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.
35
<PAGE>
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 any 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
36
<PAGE>
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, (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 or in any Officer's Certificate
delivered by the Charterer or the Guarantor or (v) any claim for premiums or
other charges related to insurance carried by Charterer in accordance with the
provisions of Article 16 of the Charter; provided, however, that the Charterer
-------- -------
shall not be required to indemnify any Indemnitee under this Section 13.1 for
(1) any Claim to the extent attributable to acts, events, circumstances or
conditions which arise, occur or exist after the earliest of: (I) the return of
possession of the Vessel Interest to the Owner Trust or its designee pursuant to
the terms of the Charter 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 and (III) sale of the Vessel or the Vessel Interest to a third party
as contemplated by the Operative Documents or the U.K. Documents if the Charter
shall not be in effect following such sale, (2) any Claim to the extent
resulting from the willful misconduct or gross negligence of such Indemnitee or
of any member of its Related Indemnity Group (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 (or any member of its Related Indemnity Group at its
own expense or for which such Indemnitee is not entitled to indemnity or
reimbursement, (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, the Vessel Interest, the Secured Note, 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 (or any member of its Related Indemnitee Group) 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 attributable to the non-compliance by any
Indemnitee (or any member of its Related Indemnitee Group) with the terms of the
Operative Documents or to the extent resulting from 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) or
any member of its Related Indemnitee Group, (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 business, transaction or other activity in which such Indemnitee or any
member of such Indemnitee's Related Indemnitee Group 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 solely from a
Charter Event
37
<PAGE>
of Default, (8) any Claim to the extent attributable to the authorization or
giving or withholding by such Indemnitee or any member of its Related Indemnitee
Group 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 or any member of such Indemnitee's Related Indemnitee
Group for which such Indemnitee or any member of such Indemnitee's Related
Indemnitee Group is not indemnified hereunder as a result of any other exclusion
under this Section 13.1, (10) any Claim resulting from any 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 or any member of such
Indemnitee's Related Indemnitee Group 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 (or any member of its Related Indemnitee Group), (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 terms of any Operative
Document any amounts received and distributable by it thereunder, (16) any Claim
that constitutes a Permitted Lien or to the extent resulting from the imposition
of any Lien which the Indemnitee is required to lift and discharge pursuant to
any Operative Document or 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
or in connection with, or based upon any inaccuracy, incompleteness or
misleading nature of any statement or representation or alleged untrue statement
of a material fact contained in any written information supplied or made
available by such Indemnitee or any member of its Related Indemnitee Group
specifically for inclusion in the preparation of any offering document or
registration statement relating to the offer, sale or disposition of any Secured
Notes or the Pass Through Certificates, or any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; (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 or any member of such Indemnitee's Related
Indemnitee Group 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 or any member of
such Indemnitee's Related Indemnitee Group, (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
38
<PAGE>
pursuant to Section 3.06 of the Indenture, (21) any Claim arising from the
negligence or strict liability of such Indemnitee or any member of such
Indemnitee's Related Indemnitee Group to the extent indemnity therefor would be
in violation of applicable law or (22) any disputes between or among Indemnitees
or their respective Related Indemnitee Groups that arise from (A) a
misrepresentation by an Indemnitee or any member of its Related Indemnitee Group
or a failure by an Indemnitee or any member of its Related Indemnitee Group to
perform such Indemnitee's obligations, warranties and covenants under the
Operative Documents or (B) a dispute over the interpretation of the Operative
Documents that does not result from a Charter Event of Default.
(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 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
39
<PAGE>
and expenses of more than one counsel for each of (i) the Owner Participant, the
Owner Trustees 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 specified 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) Insured Claims. In the case of any Claim indemnified by the
--------------
Charterer hereunder which is covered by a policy of insurance maintained by the
Charterer (or any Affiliate thereof), each Indemnitee and each member of its
Related Indemnitee Group agrees to cooperate with the insurers in the exercise
of the insurers' rights to investigate, defend, or compromise such Claim to
retain the benefits of such insurance with respect to such Claim.
(e) 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 or any member of its Related Indemnitee Group ). 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.
(f) 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 any member of its Related Indemnitee Group or for
which the Charterer shall have reimbursed any Indemnitee or any member of its
Related Indemnitee Group 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 or any member of its Related Indemnitee Group on such amount plus the
amount of any tax savings realized directly or indirectly by such Indemnitee or
any member of its Related Indemnitee Group as a result of such payment made to
the Charterer.
(g) 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.
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
40
<PAGE>
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 which 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
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
41
<PAGE>
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 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
42
<PAGE>
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;
(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 the Pass Through Trustee for acting as Pass Through Trustee
under the Pass Through Trust Agreement;
(7) other than with respect to the Owner Participant, 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,
43
<PAGE>
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 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.
44
<PAGE>
(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 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
45
<PAGE>
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 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 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
46
<PAGE>
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.
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.
--------
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<PAGE>
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 14.
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 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
48
<PAGE>
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 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 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.
49
<PAGE>
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 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
50
<PAGE>
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.
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 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
51
<PAGE>
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 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 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
52
<PAGE>
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.
53
<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 EQUIPMENT FINANCE COMPANY INC.
By:_____________________________
Name:
Title:
OWNER PARTICIPANT: QM TANKER CO. LLC
By:_____________________________
Name:
Title:
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:_____________________________
Name:
Title:
OWNER TRUST: QM TANKER 1177 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:_________________________
Name:
Title:
[PARTICIPATION AGREEMENT - 1177]
<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:_____________________________
Name:
Title:
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:_____________________________
Name:
Title:
[PARTICIPATION AGREEMENT - 1177]
<PAGE>
APPENDIX A
DEFINITIONS
<PAGE>
SCHEDULE 1
to
Participation Agreement
-----------------------
ADDRESSES FOR NOTICES AND PAYMENTS
----------------------------------
<PAGE>
SCHEDULE 2
to
Participation Agreement
-----------------------
INVESTMENT
----------
<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 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.
<PAGE>
SCHEDULE 4
<PAGE>
Exhibit A-1
<PAGE>
Exhibit A-2
<PAGE>
Exhibit A-3
<PAGE>
Exhibit A-4
<PAGE>
Exhibit A-5
<PAGE>
Exhibit A-6
<PAGE>
Exhibit A-7
<PAGE>
Exhibit A-8
<PAGE>
Exhibit A-9
<PAGE>
Exhibit A-10
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. DEFINITIONS; INTERPRETATION......................................... 2
SECTION 2. COMMITMENTS OF PARTICIPANTS; CLOSING; FUNDING; TRANSACTION EXPENSES.. 2
SECTION 3. CONDITIONS TO CLOSING BY THE CHARTERER............................... 5
SECTION 4. CONDITIONS TO CLOSING BY THE PASS THROUGH TRUSTEE.................... 7
SECTION 5. CONDITIONS TO CLOSING BY OWNER....................................... 12
SECTION 6. REPRESENTATIONS AND WARRANTIES OF.................................... 18
SECTION 7. REPRESENTATIONS AND WARRANTIES OF THE OWNER PARTICIPANT.............. 21
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE PASS THROUGH TRUSTEE........... 23
SECTION 9. REPRESENTATIONS AND WARRANTIES OF THE TRUST
COMPANY AND OWNER TRUST.............................................. 24
SECTION 10. REPRESENTATIONS AND WARRANTIES OF INDENTURE
TRUSTEE............................................................. 27
SECTION 11. CHARTERER COVENANT................................................. 28
SECTION 12. OTHER COVENANTS AND AGREEMENTS..................................... 31
SECTION 13. INDEMNIFICATION.................................................... 36
SECTION 14. TRANSFER OF AN OWNER PARTICIPANT'S................................. 47
SECTION 15. MISCELLANEOUS...................................................... 49
</TABLE>
<PAGE>
EXHIBIT 4.7
- --------------------------------------------------------------------------------
MOBIL GUARANTY
among
MOBIL CORPORATION
and
DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED,
Managing Trustee
and
STATE STREET BANK AND TRUST COMPANY,
Indenture Trustee
and
STATE STREET BANK AND TRUST COMPANY,
Pass Through Trustee and Loan Participant
and
QM TANKER CO. L.L.C.,
Owner Participant
------------------------------
Dated as of December 5, 1997
------------------------------
- --------------------------------------------------------------------------------
Lease Financing of One LR1 Crude Oil Tank Vessel
Hull No. 1177
- --------------------------------------------------------------------------------
<PAGE>
MOBIL GUARANTY
THIS Guaranty, dated as of December 5, 1997 (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 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 Equipment Finance Company 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 5, 1997 (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):
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF GUARANTOR
Section 1.1. Representations and Warranties of Guarantor. The Guarantor
-------------------------------------------
hereby represents and warrants that:
(a) 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
<PAGE>
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 the financial condition of
the Guarantor and its subsidiaries on a consolidated basis or their business or
operations, or the Guarantor's ability to perform any of its obligations under
this Guaranty.
(b) 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.
(c) 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.
(d) 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 (except that no representation or warranty is made herein with respect to
the Securities Act, the Trust Indenture Act and the securities or Blue Sky laws
of the various states), (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.
(e) No Governmental Action and no consent of any other Person (including,
without limitation, any stockholder or creditor of the Guarantor) is required in
connection with the execution, delivery or performance of this Guaranty, except
such as are required under the Securities Act, the Trust Indenture Act and the
securities or Blue Sky laws of the various states.
(f) 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, 1996 and the
consolidated financial statements of the Guarantor set forth in its Quarterly
Report on Form 10-Q for each of the three month periods ended March 31, 1997,
June 30, 1997 and September 30, 1997 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, 1997,
2
<PAGE>
there has been no material adverse change in such consolidated financial
position of the Guarantor and its Subsidiaries, taken as a whole.
(g) Except as disclosed in the Guarantor's Annual Report on Form 10-K for the
year ended December 31, 1996 or the Guarantor's Quarterly Report on Form 10-Q
for the three month periods ended March 31, 1997, June 30, 1997 and September
30, 1997, 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.
(h) The Guarantor owns, directly or indirectly, 100% of the equity interest
in the Charterer.
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, 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 Assigned Hire, perform or observe or cause to be performed or
observed each such Obligation and shall pay the amount of each such unpaid
Obligation 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
3
<PAGE>
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 hereunder shall remain in full force and effect until
the Obligations are finally, 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 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;
4
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(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 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
5
<PAGE>
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 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
6
<PAGE>
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 owed to a Beneficiary when and
as the same shall become due, whether at the stated maturity thereof, by
acceleration or otherwise, such Beneficiary may proceed to enforce its rights
hereunder and such Beneficiary 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. The provisions
of Section 6.7 of the Pass Through Trust Agreement and Section 5.11 of the
Indenture shall apply to actions proposed to be commenced hereunder against the
Guarantor by the Certificateholders or by the Pass Through Trustee in its
capacity as Loan Participant.
Section 3.4. Guarantor to Pay Costs of Enforcement. The Guarantor agrees to
--------------------------------------
pay all costs, expenses 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) 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.
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
7
<PAGE>
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 equity securities and all regular and
periodic reports filed by the Guarantor with the SEC except for reports on SEC
Forms 3, 4 or 5 or any comparable reports.
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. Benefited 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
8
<PAGE>
applicable law, the parties hereto hereby waive any provision thereof that
renders any term or provision hereof invalid or unenforceable in any respect.
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.
9
<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
By: ____________________
Name:
Title:
ACCEPTED:
DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED, in its
individual capacity
By: ____________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY, in its
individual capacity and as Indenture Trustee
By: ____________________
Name:
Title:
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
By: ____________________
Name:
Title:
10
<PAGE>
QM TANKER CO., LLC
By: ____________________
Name:
Title:
QM TANKER 1177 TRUST
By: Deutsche Morgan Grenfell (Cayman)
Limited, as Managing Trustee
By: ____________________
Name:
Title:
11
<PAGE>
EXHIBIT 4.8
APPENDIX A
HULL NO. 1177
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 Accrual Date:
<PAGE>
Accrual Date Accreted Value
----------------- --------------
January 2, 1998 $26,476,244.36
July 2, 1998 27,361,874.73
January 2, 1999 28,277,129.44
July 2, 1999 29,222,999.42
January 2, 2000 30,200,508.75
March 31, 2000 30,700,000.00
(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 mean the dates specified as such 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 officer of the Guarantor whose
responsibilities include administration of the transactions contemplated by
the Operative Documents.
"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",
-----------
2
<PAGE>
"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.
"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
3
<PAGE>
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 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.
"Bank Guarantee" shall mean the Lessor's Guaranty.
--------------
"Bareboat Hire" shall mean, for any Rate Period, the sum of the Base
-------------
Hire and the 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, 2000.
"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 Hyundai Heavy Industries, Co. Ltd Inc., a
-------
Korean corporation, and Hyundai Corporation, a Korean corporation,
collectively.
"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
4
<PAGE>
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 LR1 Class Crude Oil Tank
------- -------------
Vessel Charter Party dated as of the Closing Date between the Owner Trust
and the Charterer relating to the Vessel.
"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 Party Termination 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 Equipment Finance Company 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,
5
<PAGE>
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 5, 1997.
------------
"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.
"Construction Contract" shall mean the Shipbuilding Contract dated
---------------------
November 24, 1997 between the Builder and the U.K. Lessor providing for the
construction and sale of the Vessel.
"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 March 31, 1998.
------------
"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
-------------
by the Builder to the U.K. Lessor, 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 of the Builder at Ulsan,
-------------
Korea.
"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.
6
<PAGE>
"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 applicable 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 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.
7
<PAGE>
"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 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.
"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 sales price that would be obtained in an arm's-length
sale, respectively, between an informed and willing buyer (under no
compulsion to 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
-----
8
<PAGE>
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 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 March 31, 2000.
-----------------
"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 Corporation 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.
"Head Lease" shall mean the Lease Agreement dated November 24, 1997
----------
between U.K. Lessor and the Owner Trust.
9
<PAGE>
"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.
"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 or Excess Hire or any
interest in any of the foregoing (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
10
<PAGE>
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 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 November 4, 1997 between MOSAT and QSC.
"Lessee Support Agreement" shall mean the agreement dated as of the
------------------------
Closing Date among the Charterer, the U.K. Lessor and the Owner Trust with
respect to certain obligations of the Owner Trust under the Head Lease.
11
<PAGE>
"Lessor's Guaranty" shall mean that certain Deed of Guarantee of
-----------------
Abbey National Treasury Services plc , dated November 24, 1997,
guaranteeing certain obligations of the Head Lessor under the Head Lease.
"Lessor's Mortgage" shall mean the U.K. Lessor's Mortgage.
-----------------
"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 (or any similar law) 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.
"Make-Whole Amount" shall mean: with respect to any Series 1997 C
-----------------
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.
"MEFC" shall mean Mobil Equipment Finance Company 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.
-------
12
<PAGE>
"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.
"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 Construction Contract, the
-------------------
Supervisory Agreement, the Guarantee, the Indenture, each Indenture
Supplement, the Charter Party, the Participation Agreement, the Secured
Notes, the Ship Mortgage (if in effect at the relevant time) and the Trust
Agreement.
"Other Owner Trust" shall mean QM Tanker 1178 Trust, the Delaware
-----------------
Business Trust which is the lessee under a head lease from the U.K. Lessor
of the Other Vessel.
"Other Charter" or "Other Charter Party" shall mean the Bareboat
------------- -------------------
Charter Party dated as of the Closing Date between the other Owner Trust
and the Charterer, providing for the bareboat charter of the Other Vessel.
"Other Vessel" shall mean the crude oil tank vessel identified as
------------
Hull No. 1178 in the shipbuilding contract dated November 24, 1997 between
Builder and U.K. Lessor.
"Other Vessel Interest" shall mean the rights of the Other Owner
---------------------
Trust in the 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
13
<PAGE>
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
(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 or Excess Hire or any interest in
any of the foregoing (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, 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
14
<PAGE>
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 of the Owner Participant interest 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 or Excess Hire or any interest in
any of the foregoing (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.
----------------
"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.
15
<PAGE>
"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,
seven 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.
"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.
"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 180 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
16
<PAGE>
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 180 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 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 180 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 Vessel Interest, the Trust Estate or the Indenture
Estate, 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 Permitted Subcharter.
"Permitted Subcharterer" shall mean any subcharterer or sub-
----------------------
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.
"QSC" shall mean the Qatar Shipping Company, a corporation existing
---
under by laws of Qatar.
17
<PAGE>
"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.
"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, 3.05 or 3.06 of
the Indenture.
"Redemption Price" shall have the meaning specified in Section 3.10
----------------
of the Indenture.
"Related Indemnitee Group" shall mean, with respect to any
------------------------
Indemnitee, his or its respective Affiliates, servants, officers,
employees, directors, shareholders and agents.
"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.
18
<PAGE>
"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 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 1997 C Secured Notes" shall mean the Secured Note issued
---------------------------
under Section 2.01(b) of the Indenture and any Series 1997 C 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 Preferred Ship Mortgage
-------------
covering the Vessel executed and delivered in accordance with Section 3.04
of the Indenture.
"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.
"Subsidiary" of any Person shall mean any corporation, association
----------
or other business entity of which more than fifty percent (50%) of the
total voting
19
<PAGE>
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
---------------------
November 24, 1997 between MOSAT, the Owner Trust, the U.K. Lessor and the
Builder, providing for supervising the construction of the Vessel and the
transfer by the U.K. Lessor of certain rights under the Construction
Contract.
"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.
"Termination Election" shall mean an election by the Charterer to
--------------------
terminate the Charter pursuant to Article 18(a) thereof.
20
<PAGE>
"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 the Underwriter 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 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
21
<PAGE>
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 Declaration and Agreement of Trust
---------------
dated as of November 19, 1997 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.
"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 Head Lease, the Lessor's Guaranty,
--------------
the U.K. Lessor's Mortgage, the U.K. 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.
22
<PAGE>
"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 First Ship Mortgage, dated
----------------------
on or about the Delivery Date and covering the Vessel, from the U.K. Lessor
to the Owner Trust, securing certain obligations of the U.K. Lessor under
the Head Lease.
"U.K. Lessor's Security Assignment" shall mean the Lessor's Security
---------------------------------
Assignment between the U.K. Lessor and the Owner Trust delivered on or
about the Delivery Date pursuant to the Head Lease.
"U.K. Obligations" shall have the meaning set forth in Section 13.3
----------------
of the Participation Agreement.
"Underwriter" shall mean Salomon Brothers, Inc, a Delaware
-----------
corporation.
"Underwriting Agreement" shall mean the Underwriting Agreement among
----------------------
the Guarantor, the Charterer and the Underwriter relating to the purchase
and sale of the Pass Through Certificates.
"Vessel" shall mean the LR1 Class crude oil tank vessel known as
------
Hull No. 1177 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 U.K. Lessor pursuant to the Head Lease.
"Vessel Interest" means all of the right, title and interest of the
---------------
Owner in the Vessel, comprising the Owner's rights under the Head Lease,
together with certain ancillary rights thereto, and including the rights in
such Vessel of the Owner under the Charter, Trust Agreement, Participation
Agreement and the Operative Documents (other than the right to receive
Excepted Payments) and the related U.K. Documents, and prior to the
delivery of the Vessel under the Construction Contract, the Owner's rights
under the Supervisory Agreement.
23
<PAGE>
EXHIBIT 4.9
TRUST INDENTURE, ASSIGNMENT OF CHARTER AND HEAD LEASE
AND SECURITY AGREEMENT
among
QM TANKER 1178 TRUST,
---------------------
a Delaware Business Trust,
created under the
Trust Agreement dated
as of November 19, 1997, with
the Owner Participant thereto
and
STATE STREET BANK AND TRUST COMPANY
Indenture Trustee
Dated as of December 5, 1997
Leveraged Lease of one LR 1 Crude Oil Tank Vessel
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.................................. 6
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............................ 8
SECTION 2.04. Note Register................................ 9
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............................. 11
SECTION 2.09. Termination of Interest in Indenture Estate.. 15
SECTION 2.10. Equally and Ratably Secured.................. 15
ARTICLE III
REDEMPTION AND REFUNDING
SECTION 3.01. Generally.................................... 15
SECTION 3.02. Mandatory Casualty Redemption................ 16
SECTION 3.03. Mandatory Early Termination Redemption....... 16
SECTION 3.04. Assumption of Obligations of Owner Trust..... 17
SECTION 3.05. Optional Redemption.......................... 19
SECTION 3.06. Owner Trust's and Owner Participant's
Option to Redeem or Purchase Secured
Notes........................................ 19
SECTION 3.07. Deposited Redemption Moneys.................. 21
SECTION 3.08. Acquisition of Secured Notes................. 21
SECTION 3.09. Condition to Redemption and Refunding........ 21
SECTION 3.10. Notice of Certain Redemptions................ 21
<PAGE>
ii
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE INDENTURE ESTATE;
ACTIONS UPON VESSEL DELIVERY
SECTION 4.01. Distribution of Hire......................... 22
SECTION 4.02. Certain Distributions........................ 23
SECTION 4.03. Distribution After Indenture Event of Default. 24
SECTION 4.04. Application of Payments on Secured Notes...... 26
SECTION 4.05. Applications of Payments According to
Applicable Operative Document Provisions.... 26
SECTION 4.06. Amounts Received for Which No Provision Is
Made........................................ 27
SECTION 4.07. Payment Procedures............................ 27
SECTION 4.08. Application of Payments Under Parent Guaranty. 28
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................... 28
SECTION 5.02. Indenture Events of Default................... 31
SECTION 5.03. Certain Rights................................ 32
SECTION 5.04. Remedies...................................... 34
SECTION 5.05. Suit; Possession; Title; Sale of
Indenture Estate............................ 36
SECTION 5.06. Remedies Cumulative........................... 40
SECTION 5.07. Discontinuance of Proceedings................. 40
SECTION 5.08. Waiver of Past Defaults....................... 40
SECTION 5.09. No Action Contrary to Certain Third
Party Rights................................ 40
SECTION 5.10. Rights of Holders of Secured Notes............ 41
SECTION 5.11. Limitation on Suits by Holders................ 41
ARTICLE VI
DUTIES OF THE INDENTURE TRUSTEE
SECTION 6.01. Certain Actions............................... 42
SECTION 6.02. Action Upon Instructions...................... 42
SECTION 6.03. Release of Lien of Indenture.................. 43
<PAGE>
iii
SECTION 6.04. Indemnification............................... 44
SECTION 6.05. No Implied Duties............................. 45
SECTION 6.06. Duties to Remove Certain Liens................ 45
SECTION 6.07. No Action Except Under Operative Documents
or Instructions............................. 45
SECTION 6.08. Certain Rights of the Owner Trust and the
Owner Participant........................... 45
SECTION 6.09. Filing of Financing and Continuation
Statements.................................. 46
SECTION 6.10. Publishing of Notices......................... 46
SECTION 6.11. Taxes; Withholding; Information Reporting..... 46
ARTICLE VII
THE INDENTURE TRUSTEE AND THE OWNER TRUSTEE
SECTION 7.01. Acceptance of Trusts and Duties............... 47
SECTION 7.02. Absence of Duties Except as Specified......... 47
SECTION 7.03. No Representations or Warranties.............. 47
SECTION 7.04. No Segregation of Moneys; No Interest;
Investments................................. 48
SECTION 7.05. Reliance; Agents; Advice of Counsel........... 49
SECTION 7.06. No Compensation from Holders or Indenture
Estate...................................... 49
SECTION 7.07. Right of the Indenture Trustee to Perform
Covenants, Etc.............................. 50
SECTION 7.08. Moneys for Payments in Respect of Notes to
be Held in Trust............................ 50
SECTION 7.09. Disposition of Moneys Held for Payments of
Notes....................................... 50
ARTICLE VIII
SUCCESSOR TRUSTEES AND ADDITIONAL TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee............. 51
SECTION 8.02. Resignation of Indenture Trustee; Appointment
of Successor............................... 51
SECTION 8.03. Co-Trustees and Separate Trustees............. 53
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Indenture Supplements Without Consent of
Holders.................................... 55
SECTION 9.02. Supplements and Amendments to Operative
Documents With Consent Holders of Notes.... 56
SECTION 9.03. Execution of Indenture Supplement,
Amendments, Etc............................ 61
SECTION 9.04. Effect of Indenture Supplement................ 61
SECTION 9.05. Reference in Secured Notes to Indenture
Supplements................................ 61
<PAGE>
iv
SECTION 9.06. Notices of Indenture Supplements and
Amendments, Etc........................... 61
SECTION 9.07. Charterer Rights.............................. 62
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture..................... 62
SECTION 10.02. No Legal Title to Indenture Estate in Holders. 63
SECTION 10.03. Power of Attorney............................. 64
SECTION 10.04. Regarding the Owner Trust and the Owner
Trustees................................... 64
SECTION 10.05. Notices....................................... 65
SECTION 10.06. Severability of Provisions.................... 65
SECTION 10.07. No Oral Modification or Continuing Waivers.... 66
SECTION 10.08. Successors and Assigns........................ 66
SECTION 10.09. Headings; Table of Contents................... 66
SECTION 10.10. Normal Commercial Relations................... 66
SECTION 10.11. Governing Law................................. 66
SECTION 10.12. Execution..................................... 67
SECTION 10.13. Security Agreement............................ 67
SECTION 10.14. Benefits of Indenture......................... 67
Appendix A Definitions
Schedule 1 Description of Vessel
Exhibit A Form of Secured Note
Exhibit B Maturity Dates, Esq.
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 5, 1997 (this "Indenture"), between QM TANKER
---------
1178 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, an "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 "Resident Trust Company") have heretofore entered into the
Declaration of Agreement of Trust dated as of November 19, 1997 (the "Trust
-----
Agreement"), whereby, among other things, the Cayman Trust Company and the
- ---------
Resident Trust Company in their respective capacities as Managing Trustee and
Resident 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 1997-C-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 hereunder, 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 Interest (by
virtue of the grant hereunder), the Head Lease, the Charter, the Parent
Guaranty, any proceeds from the U.K. Lessor's Mortgage (upon delivery thereof as
described below), the U.K. Lessor's Security Assignment (upon delivery thereof
as described below) and the
<PAGE>
2
Bank Guarantee and all payments and other amounts received hereunder or
thereunder (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 Participant and the other Holders and for the
benefit and security of the Loan Participant 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 to the extent
provided herein 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 HEAD LEASE
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 Participant) 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, 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
<PAGE>
3
collectively, together with all of the Indenture Trustee's right, title and
interest in and to the Vessel Interest, by virtue of the grant hereunder,
including all property hereafter subjected to the Lien of this Indenture 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) under and pursuant to the Head Lease,
including, without limitation, any Modification or Alteration to the Vessel
which, pursuant to the terms of the Head Lease and the Charter, become part
of the Vessel Interest of the Owner Trust;
(b) any amounts that are received by the Owner Trust from the Builder
under the Supervisory Agreement or from Shinhan Bank under the bank letter
of guarantee referred to in the Construction Contract,and, in each case,
which the Owner Trust is entitled to retain unconditionally for its own
benefit in accordance with the terms of the Head Lease (and not as agent
for the U.K. Lessor), including, without limitation, all moneys due and to
become due to the Owner Trust under such Head Lease, subject to the rights
of the U.K. Lessor under such Head Lease;
(c) the Charter, including, without limitation, (i) all amounts of
hire, rent, income insurance proceeds and requisition, indemnity or other
payments of any kind (other than Excepted Payments) 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 Head Lease, the Lessee Support Agreement, the Bank Guarantee,
the U.K. Lessor's Security Assignment (upon delivery thereof by the U.K.
Lessor) and any proceeds from the U.K. Lessor's Mortgage (upon delivery
thereof by the U.K. Lessor), 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 of the Vessel or the Vessel Interest, 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 provided that, notwithstanding the foregoing provisions or anything
herein to the contrary, so long as no Charter Event of Default has occurred and
is continuing, the leasehold interest granted to the Charterer under the Charter
shall not be subject to the Lien of this Indenture or be part of the Indenture
Estate, and nothing in this Indenture shall affect the rights of the Charterer
under the Charter; 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 (except as provided herein
or under any Operative
<PAGE>
5
Document), 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 (except as to the Indenture Trustee,
if the Indenture Trustee shall have become the "Owner" under the Charter). 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.
Pursuant to clause 5.2(B) of the Head Lease, the U.K. Lessor has
covenanted with the Owner Trust that it shall (at the expense of the Owner
Trust) (i) upon delivery of the Vessel to the U.K. Lessor and upon documentation
of the Vessel under the laws of Marshall Islands (or such other jurisdiction as
is permitted by the Operative Documents and the U.K. Documents) in the name of
the U.K. Lessor as holder of title to the Vessel, execute and deliver to the
Owner Trust the U.K. Lessor's Mortgage; and (ii) upon delivery of the Vessel to
the U.K. Lessor aforesaid, execute and deliver to the Owner Trust the U.K.
Lessor's Security Assignment, in each case securing certain of the U.K. Lessor's
obligations to the Owner Trust under the Head Lease. Pursuant to this
Indenture, the Owner Trust hereby grants, pledges, assigns and mortgages all of
its rights and interest under the U.K. Lessor's Security Assignment and to any
proceeds from the U.K. Lessor's Mortgage to the Indenture Trustee, as part of
the Indenture Estate hereunder.
Accordingly, the Owner Trust and the Indenture Trustee hereby agree
for themselves and for the benefit and security of the Holders as follows:
<PAGE>
6
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 hereof, 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 1997-C-2 Secured Notes. The Series
-----------------------------
1997-C-2 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;
<PAGE>
7
(iv) bear interest on the unpaid principal amount thereof from the
date of such Series 1997-C-2 Secured Notes to and including 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 hereto (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.
(d) No Registration of Transfer or Exchange Upon Redemption. The
-------------------------------------------------------
Indenture Trustee shall not be required (i) to register the transfer of or to
exchange any Secured Note during a period beginning at the opening of business
15 Business Days before the day of the mailing of a notice of redemption (or
purchase in lieu of redemption) of Secured Notes pursuant to Article III and
ending at the close of business on the day of such mailing or (ii) to register
the transfer of or to exchange any Secured Note called for redemption (or
purchase in lieu of redemption) pursuant to Article III.
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
<PAGE>
8
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. If any Holder does not specify one
of the foregoing methods, payment will be made by check mailed to the registered
address of the Holder. In the event the Indenture Trustee shall fail to make
any payment as provided in the preceding sentences 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 at the Federal Funds overnight rate.
(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
<PAGE>
9
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 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
<PAGE>
10
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 Resident 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.
(d) The Indenture Trustee shall cancel all Secured Notes surrendered
for replacement, redemption, registration of transfer, exchange, payment or
cancellation and shall destroy canceled Secured Notes.
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
<PAGE>
11
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 Trust 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 Trust 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) the cost of any Modifications to the Vessel undertaken pursuant to
Article 13 of the Charter or (ii) the cost of any Alteration to the Vessel
undertaken pursuant to Section 15 of the Construction Contract. Any Additional
Notes issued hereunder may be issued to any Person, including, without
limitation affiliates of the Guarantor, other than the Pass Through Trustee.
(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
<PAGE>
12
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,
or subordinate to, all other Secured Notes issued pursuant to the terms hereof;
provided that, if any Additional Notes are issued that rank subordinate to any
Secured Notes, any additional issuances of Additional Notes, as provided
hereunder, may rank senior to such subordinated Additional Notes but not senior
to the Secured Notes originally issued hereunder.
(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 reasonably satisfactory to the Indenture
Trustee, which shall be executed by the Owner Trust and the Indenture Trustee.
Such indenture supplement shall set forth:
(i) the aggregate principal amount of such Additional Notes (which
amount with respect to Additional Notes issued pursuant to clause (a)(i) or
a(ii) of this Section 2.08 shall not exceed 100% of the cost of such
Modifications or Alterations, as the case may be) and the premium, if any,
and interest thereon;
(ii) after giving effect to the issuance of the Additional Notes
pursuant to clause (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 amount shall not
exceed 80% of the initial cost of the Vessel;
(iii) after giving effect to the issuance of the Additional Notes
pursuant to clauses (a)(i) or (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 amount shall
not exceed 85% of the total Fair Market Sales Value of the Vessel (as
determined pursuant to the mutual agreement of the Owner Trust and the
Charterer and otherwise by the Appraisal Procedure) after giving effect to
such Modifications or Alterations. In the event that the issuance of
Additional Notes shall occur prior to the Delivery Date, the Fair Market
Sales Value of the Vessel shall be determined by reference to the amounts
paid or payable to the Builder under the Construction Contract and the
amounts paid or payable to the Supervisor under the Supervisory Agreement;
(iv) 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);
<PAGE>
13
(v) the date of maturity of such Additional Notes (which shall be no
later than the end of the Charter Period);
(vi) the date from which, and the date or dates on which, interest is
payable (which shall be Interest Payment Dates);
(vii) 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);
(viii) 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
(ix) 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
<PAGE>
14
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 such interest in all property included in such
Modification or Alteration, if any, and to subject such property, subject
to the Head Lease, to the Lien of this Indenture, subject to no Liens
except Permitted Liens;
(v) in the event that the issuance of Additional Notes shall occur on
or after the delivery of the U.K. Lessor's Mortgage and if title to such
Modifications or Alterations shall be transferred to the U.K. Lessor, an
amendment to the U.K. Lessor's Mortgage so that the lien thereof will cover
and include the Modifications or Alterations 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) Outstanding on such date;
(vii) originals or certified copies of all corporate actions
necessary for the due and valid issuance 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, in each case to
the extent practicable, 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 12.3 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 the creation and perfection of the security
interest in such Modification or Alteration
<PAGE>
15
(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 or any supplement to 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>
16
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 obligate the Builder to pay a refund under the Construction Contract
or (iii) the Vessel shall not have been delivered to the U.K. Lessor by the
Builder and accepted by the Charterer 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, but not including, 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 obligate the Builder to pay a
refund under 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 a Person
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, but not including, such Special Termination
Redemption Date plus, in the event the Special Termination Redemption Date
occurs prior to the Premium Termination Date, a premium equal to the Make-Whole
Amount, if any, and otherwise without premium.
(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, but not including, such Termination Redemption Date plus,
in the event the Termination Redemption Date occurs prior to the Premium
Termination Date, a premium equal to the Make-Whole Amount, if any, and
otherwise without premium.
<PAGE>
17
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 3.03 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 hereof, 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 subject to
the mortgage and security interest of this Indenture (and the Ship Mortgage
referred to in clause (iv) below) in favor of the Indenture Trustee and is
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 hereto as Exhibit C;
(iv) the Substitute Obligor shall have executed and delivered to the
Indenture Trustee a first priority ship mortgage, substantially in the form
of Exhibit E hereto (the "Ship Mortgage") in favor of Indenture Trustee
-------------
which shall be subject to the security interest of this Indenture and
become part of the Indenture Estate;
(v) 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;
<PAGE>
18
(vi) 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;
(vii) 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;
(viii) 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;
<PAGE>
19
(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, each of 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, as the case
may be, 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, but not including, the date of
redemption, plus, in the event the Secured Notes are redeemed prior to the
Premium Termination Date, a premium equal to the Make-Whole Amount, if any, and
otherwise without the Make-Whole Amount or any other premium.
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 180 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 180 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 or (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 and the Loan Participant 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
<PAGE>
20
the unpaid principal amount of such Secured Notes, together with any accrued and
unpaid interest thereon to, but not including, the date of redemption, plus in
the case of any redemption or purchase pursuant to clause (a) above prior to the
Premium Termination Date, a premium equal to the Make-Whole Amount, if any, with
respect to such Secured Notes, 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 prior to the
Premium Termination Date, 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 of 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 Participant 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 and 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, the 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 the Loan Participant in and to the
Secured Notes held by the Loan Participant. On and after such Redemption Date,
the Indenture Trustee shall no longer treat the former Loan Participant as the
"Loan Participant", except for purposes of the Loan Participant's right to
receive their respective portions of the
<PAGE>
21
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,
herein or in any other Operative Document.
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 (except as provided
herein) 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 Interest pursuant to Article 18 of the Charter, and if the Owner
Trust does not sell the Vessel Interest on or prior to the Redemption Date, then
such notice of redemption may be revoked by the Owner Trust.
<PAGE>
22
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;
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 (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 (except for Additional Notes, if any, which are subordinate to the
Initial Secured Notes and other Secured Notes), in the proportion that the
amount of such payment or payments then due
<PAGE>
23
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 (other
than Excepted Payments) 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) In the event the Secured
---------------------
Notes are to be redeemed pursuant to Section 3.02, 3.03 or 3.05 hereof, any
payment received by the Indenture Trustee from the Owner Trust or the Charterer
pursuant to Section 3.02, 3.03 or 3.05 hereof 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;
<PAGE>
24
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.
(c) Application of Certain Payments in Case of Event of Loss. Except
--------------------------------------------------------
as otherwise provided in the second sentence of this Section 4.02(c), any
amounts received directly or through the Charterer from any Governmental
Authority or other Person pursuant to Article 14 of the Charter with respect to
the Vessel as the result of an Event of Loss, to the extent that such amounts
are not at the time required or permitted to be paid to, or retained by, the
Charterer pursuant to said Article 14, and any amounts of insurance proceeds for
damage to the Vessel received directly or through the Charterer from any insurer
pursuant to Article 16 of the Charter with respect thereto as the result of an
Event of Loss, to the extent such amounts are not at the time required to be
paid to, or retained, by the Charterer pursuant to Article 16, shall, except as
otherwise provided in the next sentence, be applied in reduction of the
Charterer's obligations to pay Termination Value as provided in the Charter and
the remainder, if any, shall, except as provided in the next sentence, be
distributed to the Owner Trust to be held or distributed in accordance with the
terms of the Charter. Notwithstanding this Section 4.02(c) or Section 4.03
hereof, any amounts held by the Indenture Trustee, including, without
limitation, pursuant to Section 14 of the Charter, which are payable to the
Charterer pursuant to the terms of the Charter or held by the Indenture Trustee
in accordance with Article 29(h) of the Charter shall be (i) so paid to the
Charterer or (ii) held by the Indenture Trustee as security for the obligations
of the Charterer, in each case in accordance with the applicable provisions of
the Charter.
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 and 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
<PAGE>
25
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 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
<PAGE>
26
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.
For the avoidance of doubt, no Make Whole Amount or any other premium
shall be due and payable on the Secured Notes as a consequence of the
acceleration of the Secured Notes as a result of an Indenture of Default.
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 (including in the case of
payments or amounts that would be payable to the Charterer as provided in
Article 14 and 29(h) of the Charter), 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
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27
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.
(c) The Indenture Trustee will distribute promptly upon receipt any
indemnity or other payment received by it from the Owner Trust or the Charterer
in respect of the Indenture Trustee in its individual capacity or any Holder
pursuant to either Section 13.1 or 13.2 of the Participation Agreement directly
to the Person entitled thereto.
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
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28
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, 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,
and upon delivery of the Vessel, the U.K. Lessor's Security Assignment and the
proceeds of the U.K. Lessor's Mortgage, to perfect or maintain the Lien of this
Indenture 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
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29
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) (i) 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, (A) accept any payment from the Charterer, (B)
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, (C)
enter into any agreement amending or supplementing any Operative Document, (D)
execute or grant any waiver or modification of, or consent under, the terms of
any Operative Document, (E) settle or compromise any claim arising under any
Operative Document, or (F) 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.
(ii) 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 any Specified U.K. Document or this Indenture, 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 under such Specified U.K. Documents
hereby assigned to anyone other than the Indenture Trustee, and that the Owner
Trust will not, except as provided in or permitted by this Indenture or such
Specified U.K. Document or unless any of the following actions is not materially
less favorable to the Indenture Trustee, as trustee for the Holders of the
Secured Notes, (A) enter into any agreement amending or supplementing any
Specified U.K. Document, (B) execute or grant any waiver or modification of, or
consent under, the terms of any Specified U.K. Document, (C) settle or
compromise any claim arising under any Specified U.K. Document, or (D) submit or
consent to the submission of any dispute, difference or other matter arising
under or in respect of any Specified U.K. Document to arbitration thereunder.
For purpose of this Indenture "Specified U.K. Documents" means the Head Lease,
the U.K. Lessor's Security Assignment, the Bank Guarantee, the U.K. Lessor's
Mortgage and the Lessee Support Agreement.
<PAGE>
30
(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 the Owner
Trust's 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.
<PAGE>
31
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 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
<PAGE>
32
(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 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
<PAGE>
33
(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 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; provided that neither the Owner Participant nor
the Owner Trustee shall attempt to recover
<PAGE>
34
any such amount paid by it on behalf of the Charterer pursuant to Section
5.03(a) except by demanding of the Charterer payment of such amount or by
commencing an action against the Charterer to require the payment of such
amount.
(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 such case the Indenture Trustee, subject to Sections 5.03,
5.04(d), 5.05, 5.09 and 6.08 and the rights of the U.K. Lessor, 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 claiming under the Owner Trust (excluding the Charterer if
a Charter Event of Default has not occurred and is not continuing) 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, subject to the rights of the U.K. Lessor,
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
<PAGE>
35
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 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 Trust 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,
<PAGE>
36
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 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, subject to the rights of the U.K. Lessor, 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 (excluding the Charterer if a Charter Event of
Default shall not have occurred and be continuing) 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
<PAGE>
37
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 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, the Owner Trust, the Owner Participant 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
<PAGE>
38
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 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.
<PAGE>
39
(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 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
<PAGE>
40
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 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 this Indenture (including, without
limitation, Section
<PAGE>
41
5.04 and 5.05 hereof) or 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;
(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.
<PAGE>
42
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 or any other
Operative Document. 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 material 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
<PAGE>
43
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 Lien of this Indenture on the
Indenture Estate shall terminate and 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, 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 reasonable 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 Owner Trust.
(b) Release of the Vessel Interest upon Transfer. Upon any transfer
--------------------------------------------
by the Owner Trust of the Vessel Interest pursuant to Article 18 or 23 of the
Charter or any retention by the Owner Trust of the Vessel Interest 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 Lien of the Indenture Estate shall terminate and the
Indenture Trustee, upon the written request of the Owner Trust or Charterer,
shall execute and deliver to, or as directed by, the Owner Trust or Charterer,
all appropriate instruments (in due form for recording or filing), releasing the
Vessel Interest 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. The reasonable 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 Owner Trust.
(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 lien of the Indenture Estate shall terminate and 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 Interest and all other property
relating thereto and then constituting a portion of the Indenture Estate from
the Lien of this Indenture. 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 Owner Trust
(d) Disposition, Substitution and Release of Vessel Included in the
---------------------------------------------------------------
Indenture Estate During Continuation of Charter. So long as the Charter is in
- -----------------------------------------------
effect, any
<PAGE>
44
Alterations, Modifications and improvements in and additions to the Vessel
shall, subject to the Head Lease, become subject to the Lien of this Indenture
and be leased to the Charterer under the Charter; provided that, to the extent
--------
permitted by and as provided in the Head Lease and the Charter, the Charterer
shall have the right, at any time and from time to time, without any release
from or consent by the Owner Trustee or the Indenture Trustee or any other
Person, to remove and/or replace any item of property constituting part of the
Vessel and to make alterations, improvements and Modifications in, and
additions to, the Vessel to the extent set forth in the Head Lease and the
Charter. Each of the Indenture Trustee and the Owner Trustee agrees that, to
the extent permitted by and as provided in the Head Lease and the Charter, title
to any such removed or replaced item of property, shall vest in the Charterer.
The Indenture Trustee shall from time to time execute an appropriate written
instrument or instruments to confirm the release of the security interest of the
Indenture Trustee in any such replaced item of property, as provided in this
Section 6.03(d) in each case upon receipt by the Indenture Trustee of a request
of the Charterer stating that said action was duly taken by the Charterer in
conformity with this Section 6.03(d) and that the execution of such written
instrument or instruments is appropriate to evidence such release of a security
interest under this Section 6.03(d). The reasonable cost and expense (including
reasonable legal fees and expenses) associated with any action taken by the
Indenture Trustee pursuant to the provisions of this Section 6.03(d) 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 by its counsel that such action is contrary to the terms hereof
or of any other Operative Document, or is contrary to applicable law.
<PAGE>
45
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 Interest 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 and (iii) 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) 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
<PAGE>
46
(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) and subject to Section 5.02(d), 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 under the Specified U.K. Documents.
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
<PAGE>
47
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 required by Section 3.04, if
applicable, 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
<PAGE>
48
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 provided further, that in the event the
Indenture Trustee shall not have received such written direction from such
appropriate party, such amounts shall be invested in investments of the type
described in clause (iv) of the definition of Permitted Investments. 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.
<PAGE>
49
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 Document,
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), provided that, so long as no Charter Event of Default
shall have occurred and be continuing, no such Persons (other than counsel to
the Indenture Trustee or its accountants) shall be retained by the Indenture
Trustee without the consent of the Charterer, such consent not to be
unreasonably withheld.
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 Resident 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>
50
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. (a)
------------------------------------------------
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 (i) the
date three years after the date of such setting aside, (ii) 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 (iii) 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.
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51
(b) All moneys and U.S. Government Obligations deposited with the
Indenture Trustee pursuant to Section 10.01 shall be held in trust and applied
by it, in accordance with the provisions of the Secured Notes and this
Indenture, to the payment to the Holders of all sums due and to become due
thereon for principal and interest, but such money need not be segregated from
other funds except to the extent required by law.
The Indenture Trustee shall promptly pay or return to the Owner
Trustee upon the written request of the Owner Trustee any money or U.S.
Government Obligations held by it at any time that are not required for the
payment of the amounts described in the proceeding sentence for which money or
U.S. Government Obligations have been deposited pursuant to Section 10.01.
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). The Owner Trust (acting pursuant to
instructions from the Charterer) may remove the Indenture Trustee if:
(1) the Indenture Trustee fails to comply with Sections 6.06 or
8.02(c) hereof;
(2) the Indenture Trustee is adjudged as bankrupt or an insolvent;
(3) a receiver or public officer takes charge of the Indenture Trustee
or its property; or
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52
(4) the Indenture Trustee becomes incapable of acting.
In the case of the resignation or removal of the Indenture Trustee, the Owner
Trust (acting pursuant to instructions from the Charterer) 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 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 and all books and records relating to the
administration of the Indenture Estate.
(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, regularly engaged in or having expertise in leveraged leasing. 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
<PAGE>
53
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 U.K. Lessor's Mortgage, the U.K. Lessor's Security Assignment or
the Ship Mortgage required by Section 3.04, if applicable, 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 Charterer, 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
Charterer or 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 Charterer or the Owner Trust; and each of the Charterer 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 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).
<PAGE>
54
(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, acceptable to
the Charterer. 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
<PAGE>
55
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;
(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 to make any other changes not
inconsistent with the provisions hereof, 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
<PAGE>
56
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 Owner Trust may not modify, amend or supplement the
Charter, the Participation Agreement, the Trust Agreement, the Head Lease, and
any other Operative Document or U.K. Document included in the Indenture Estate,
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 any such proposed modification, amendment or
supplement is required by this Indenture or 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, whether or not an Indenture Event of Default exists, 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 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 Charter, the Trust Agreement or 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, the Charter, the Trust
<PAGE>
57
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 the amount of any payment upon any mandatory or optional
repayment, purchase or redemption of, 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 required to take or approve any action 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 such that such payments would be insufficient to pay
principal of and interest on the Secured Notes as the same become due
hereunder;
(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
<PAGE>
58
(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, at the
request of the Owner Trust:
(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 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
<PAGE>
59
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);
(iv) modify, amend or supplement the Construction Contract; provided
that this provision shall not apply if 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
<PAGE>
60
(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.
(d) 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 the Participation Agreement, in form satisfactory to the
Indenture Trustee, for any of the following purposes:
(i) to add to the covenants of any other party thereto for the benefit
of the Indenture Trustee or the Holders or to surrender any right or power
therein conferred upon any other party thereto;
(ii) to cure any ambiguity, to correct or supplement any provision
therein which may be defective or inconsistent with any other provisions
thereof, to make any other changes not inconsistent with the provisions thereof,
provided that such action shall not adversely affect the interest of any Holder;
(iii) to provide for the assumption by the Charterer of the
obligations of the Owner Trust under this Indenture in accordance with the terms
and conditions applicable thereto specified in Section 3.04, including, without
limitation, such amendments to this Indenture or the Participation Agreement as
may be necessary or desirable in order to effectuate such assumption and
accomplish the purposes thereof (provided that such amendments to such shall not
adversely affect the interests of the Loan Participants;
(iv) 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;
(v) to make any other provisions with respect to matters or questions
arising under the Participation Agreement so long as such action shall not
adversely affect the interests of the Loan Participants;
(vi) to add to the rights of the Indenture Trustee or the Holders; or
(vii) to provide for the establishment and issuance of Additional
Notes pursuant to Section 2.08 hereof.
<PAGE>
61
(c) 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, but it shall be sufficient if such action shall approve the substance
thereof.
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 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
<PAGE>
62
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, when:
(a) 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 shall have been paid in full; or
(b) the Indenture Trustee shall have sold or made other final
disposition of all property and all moneys or other property or proceeds
constituting part of the Indenture Estate in accordance with the terms
hereof; or
(c) all Secured Notes not theretofore delivered to the Indenture
Trustee for cancellation have become due and payable (whether upon stated
maturity, as a result of redemption or upon acceleration), or will become
due and payable (including as a result of redemption in respect of which
irrevocable notice has been given to the Indenture Trustee on or prior to
the date of such deposit) at maturity within one year, and there has been
deposited with the Indenture Trustee in trust for the purpose of paying and
discharging the entire indebtedness on the Secured Notes not theretofore
canceled by the Indenture Trustee or delivered to the Indenture Trustee for
cancellation, an amount in cash sufficient without reinvestment thereof to
discharge such indebtedness, including the principal of and interest on the
Secured Notes to the date of such deposit (in the case of Secured Notes
which have become due and payable), or to the maturity thereof, as the case
may be; or
(d) (i) the Owner Trust has deposited or caused to be deposited
irrevocably (except as provided in Section 7.09(b)) with the Indenture
Trustee as trust funds in trust, specifically pledged as security for, and
dedicated solely to, the benefit of the
<PAGE>
63
Holders, (A) money in an amount, or (B) U.S. Government Obligations which,
through the payment of interest and principal in respect thereof in
accordance with their terms, will provide (not later than one Business Day
before the due date or any payment referred to below in this clause) money
in an amount, or (C) a combination of money and U.S. Government Obligations
referred to in the foregoing clause (B), sufficient, in the opinion of a
nationally recognized firm of independent certified public accountants
expressed in a written certification thereof delivered to the Indenture
Trustee, to pay and discharge each installment of principal of and interest
on the Outstanding Secured Notes on the dates such payments of principal or
interest are due (including as a result of redemption in respect of which
irrevocable notice has been given to the Indenture Trustee on or prior to
the date of such deposit), and no Charter Event of Default under paragraph
7 of Article 21 of the Charter shall have occurred and be continuing on the
date of such deposit or at any time during the period ending on the 91st
day after such date; provided, however, that upon the making of the deposit
referred to above in clause (A), the right of the Owner Trust to cause the
redemption of Secured Notes (except a redemption in respect of which
irrevocable notice has theretofore been given) shall terminate; and (ii)
(A) such deposit will not constitute an Indenture Event of Default under
this Indenture or a default or event of default under any other agreement
or instrument to which the Owner Trust or the Charterer is a party or by
which it is bound and (B) the Charterer has delivered to the Indenture
Trustee an Officer's Certificate to the effect that all conditions
precedent relating to the termination of this Indenture under this Section
10.01(d) have been complied with; and (iii) the Charterer has delivered to
the Indenture Trustee an Officer's Certificate and an Opinion of Counsel to
the effect that there has been published by the Internal Revenue Service a
ruling to the effect that Loan Participants will not recognize income, gain
or loss for Federal income tax purposes as a result of the exercise by the
Owner Trust of its option under this Section 10.01(d) and will be subject
to Federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such option had not been
exercised; and (iv) all other amounts then due and payable hereunder to any
Holder or the Indenture Trustee have been paid;
provided, however, that the obligations of the Indenture Trustee contained in
- -------- -------
Sections 2.01 through 2.10, 6.11 and 7.09 shall survive. 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
<PAGE>
64
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 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 Resident 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
<PAGE>
65
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.
(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.
(c) No Recourse Against Others. No director, officer, employee or
--------------------------
stockholder, as such, of the Charterer, the Guarantor, the Owner Trustee or the
Owner Participant, as the case may be, shall have any liability for any
obligations of the Charterer, the Guarantor, the Owner Trust or the Owner
Participant, as the case may be, under this Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. Each Loan
Participant by accepting a Secured Note waives and releases all such liability.
The waiver and release are part of the consideration for the issue of the
Secured Notes.
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
<PAGE>
66
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, 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.
<PAGE>
67
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>
Appendix A
to Indenture
------------
DEFINITIONS
-----------
Appendix A filed separately.
APP-1
<PAGE>
Schedule 1
to Indenture
------------
DESCRIPTION OF VESSEL
---------------------
That certain double-hulled, double-bottomed LR 1 crude oil tank vessel,
designated as Hull No. 1178, to be constructed by Hyundai Heavy Industries Co.,
Ltd. and Hyundai Corporation, in Ulsan, Korea, pursuant to the Construction
Contract, and expected to be delivered in the fourth quarter of 1999. The
Vessel will have a designed deadweight capacity of approximately 105,500 metric
tons.
SCH-1-1
<PAGE>
Exhibit A
to Indenture
------------
FORM OF
SERIES 1997 C-2 SECURED NON-RECOURSE DISCOUNT NOTE
QM TANKER 1178 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).
QM TANKER 1178 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 19, 1997,
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 1997-C Pass Through Trust (the "Pass Through Trust") created by the Pass
Through Trust Agreement, dated as of October 4,
<PAGE>
1996, as supplemented and amended by that certain Pass Through Trust Supplement,
dated as of December 5, 1997 (as 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
July 2, 2000 and thereafter on each January 2 and July 2 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 5, 1997 (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 1997 C-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 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 Resident 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:
QM TANKER 1178 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 1997 C-2 Secured Notes due
_______ of QM TANKER 1178 TRUST, the Owner Trust as described in the within-
mentioned Indenture.
STATE STREET BANK AND
TRUST COMPANY, not in its
individual capacity, but solely
as Indenture Trustee
By:______________________________
Authorized Signatory
EXHA-6
<PAGE>
Schedule I to
Exhibit A to
Indenture
---------
SERIES 1997 C-2 SECURED NON-RECOURSE DISCOUNT NOTE
QM TANKER 1178 TRUST
Payment Aggregate Payment
Interest Payment Date Percentage Amount
- --------------------- ---------- ------
EXHA-7
<PAGE>
Exhibit B-1
to Indenture
------------
SERIES 1997 C-2 SECURED NON-RECOURSE DISCOUNT NOTE
QM TANKER 1178 TRUST
Payment Aggregate Payment
Regular Distribution Date Percentage Amount
- ------------------------- ---------- ------
January 2, 1998 -- --
July 2, 1998 -- --
January 2, 1999 -- --
July 2, 1999 -- --
January 2, 2000 -- --
July 2, 2000 0.7366% 226,121.13
January 2, 2001 1.5349% 471,216.17
July 2, 2001 1.5862% 486,978.36
January 2, 2002 1.6393% 503,267.78
July 2, 2002 1.6941% 520,102.09
January 2, 2003 1.7508% 537,499.50
July 2, 2003 1.8094% 555,478.86
January 2, 2004 1.8699% 574,059.63
July 2, 2004 1.9324% 593,261.93
January 2, 2005 1.9971% 613,106.54
July 2, 2005 2.0639% 633,614.95
January 2, 2006 2.1329% 654,809.37
July 2, 2006 2.2043% 676,712.74
January 2, 2007 2.2780% 699,348.78
July 2, 2007 2.3542% 722,742.00
January 2, 2008 2.4330% 746,917.72
July 2, 2008 2.5143% 771,902.12
January 2, 2009 2.5984% 797,722.25
July 2, 2009 2.6854% 824,406.05
January 2, 2010 2.7752% 851,982.44
July 2, 2010 2.8680% 880,481.25
January 2, 2011 2.9640% 909,933.35
July 2, 2011 3.0631% 940,370.62
January 2, 2012 3.1656% 971,826.02
July 2, 2012 3.2714% 1,004,333.60
January 2, 2013 3.3809% 1,037,928.55
July 2, 2013 3.4940% 1,072,647.26
January 2, 2014 3.6108% 1,108,527.32
July 2, 2014 3.7316% 1,145,607.55
January 2, 2015 3.8564% 1,183,928.13
July 2, 2015 3.9854% 1,223,530.52
January 2, 2016 4.1188% 1,264,457.62
July 2, 2016 4.2565% 1,306,753.73
January 2, 2017 4.3989% 1,350,464.64
July 2, 2017 4.5461% 1,395,637.68
January 2, 2018 4.6981% 1,442,321.76
EXHB-1
<PAGE>
Exhibit B-2
to Indenture
------------
Issuance of Series 1997 C-2 Secured Notes
-----------------------------------------
The issuance of the Series 1997 C-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 1997 C Pass Through Trust:
6.69% Certificates due January 2, 2018
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), QM TANKER 1178 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 19, 1997, as amended, among Deutsche Morgan Grenfell (Cayman)
Limited, Wilmington Trust Company and QM TANKER CO. LLC, a Cayman Islands
limited life company, as owner participant, MOBIL EQUIPMENT FINANCE COMPANY
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 Resident trustee (together with its permitted successors and assigns, the
"Resident Trustee"), each acting not individually, except as otherwise provided
----------------
herein (when acting in such individual capacities, the "
Trust Company" and "Resident Trust Company", respectively), but solely as
- ------------- ----------------------
trustees for the Substitute Obligor (the Managing Trustee and the Resident
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.
QM TANKER 1178 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 EQUIPMENT FINANCE COMPANY 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 QM TANKER 1178 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.
QM TANKER 1178, 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
Vessel ______
<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 ____ "_____" (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
1997-C 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.
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 __________________.
EXHE-1
<PAGE>
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;
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 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
EXHE-2
<PAGE>
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.
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.
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:
EXHE-3
<PAGE>
(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 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 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
EXHE-4
<PAGE>
Mortgagee), the whole or any part of the Vessel wherever the same may be, and to
take possession of and hold the same; and
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 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.
EXHE-5
<PAGE>
(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 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.
EXHE-6
<PAGE>
(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
__________________________.
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 ___________, _____, 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 4.10
SERIES 1997 C-2 SECURED NON-RECOURSE DISCOUNT NOTE
QM TANKER 1178 TRUST
Maturity Date: January 2, 2018
Registered No. 1997-C-2 New York, New York
December 5, 1997
Principal Sum at Full Accrual Date: $31,700,000Interest Rate Per Annum:
6.69%
Full Accrual Date: March 31, 2000
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
6.69% (rounded to two decimal (for each $1,000 principal amount at
places), compounded semiannually on the Full Accrual Date and at
each January 2 and July 2, maturity): $141.89
commencing on the Full Accrual Date
(computed after giving effect to (i) Issue Price (for each $1,000
the accretion of original issue principal amount at maturity):
discount prior to the Full Accrual $858.11
Date and (ii) payment of interest on
each Janaury 2 and July 2 from and
after the Full Accrual Date to the
Maturity Date at the rate of
interest set forth above).
QM TANKER 1178 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 19, 1997,
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 1997-C Pass Through Trust (the "Pass Through Trust") created by the Pass
Through Trust Agreement, dated as of October 4, 1996, as supplemented and
amended by that certain Pass Through Trust Supplement, dated as of December 5,
1997 (as supplemented and amended, the "Agreement"), or registered assigns
(collectively, the "Holders"), the principal sum of THIRTY-ONE MILLION SEVEN
HUNDRED THOUSAND DOLLARS ($31,700,000) (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
<PAGE>
2
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 July 2, 2000 and thereafter
on each January 2 and July 2 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 5, 1997 (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.
This Secured Note is one of the Owner Trust's Series 1997 C-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
<PAGE>
3
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 Resident 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.
<PAGE>
4
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.
<PAGE>
5
IN WITNESS WHEREOF, the Owner Trust has caused this Secured Note to be
duly executed.
Date: December 5, 1997
QM TANKER 1178 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
<PAGE>
6
Certificate of Authentication
-----------------------------
This Secured Note is one of the Series 1997 C-2 Secured Notes due
January 2, 2018 of QM TANKER 1178 TRUST, the Owner Trust as described in the
within-mentioned Indenture.
Date: December 5, 1997
STATE STREET BANK AND
TRUST COMPANY, not in its
individual capacity, but solely
as Indenture Trustee
By:
--------------------
Authorized Signatory
<PAGE>
Schedule I
SERIES 1997 C-2 SECURED NON-RECOURSE DISCOUNT NOTE
QM TANKER 1178 TRUST
Payment Aggregate Payment
Regular Distribution Date Percentage Amount
- --------------------------- ----------- ------------
January 2, 1998 -- --
July 2, 1998 -- --
January 2, 1999 -- --
July 2, 1999 -- --
January 2, 2000 -- --
July 2, 2000 0.7366% 226,121.13
January 2, 2001 1.5349% 471,216.17
July 2, 2001 1.5862% 486,978.36
January 2, 2002 1.6393% 503,267.78
July 2, 2002 1.6941% 520,102.09
January 2, 2003 1.7508% 537,499.50
July 2, 2003 1.8094% 555,478.86
January 2, 2004 1.8699% 574,059.63
July 2, 2004 1.9324% 593,261.93
January 2, 2005 1.9971% 613,106.54
July 2, 2005 2.0639% 633,614.95
January 2, 2006 2.1329% 654,809.37
July 2, 2006 2.2043% 676,712.74
January 2, 2007 2.2780% 699,348.78
July 2, 2007 2.3542% 722,742.00
January 2, 2008 2.4330% 746,917.72
July 2, 2008 2.5143% 771,902.12
January 2, 2009 2.5984% 797,722.25
July 2, 2009 2.6854% 824,406.05
January 2, 2010 2.7752% 851,982.44
July 2, 2010 2.8680% 880,481.25
January 2, 2011 2.9640% 909,933.35
July 2, 2011 3.0631% 940,370.62
January 2, 2012 3.1656% 971,826.02
July 2, 2012 3.2714% 1,004,333.60
January 2, 2013 3.3809% 1,037,928.55
July 2, 2013 3.4940% 1,072,647.26
January 2, 2014 3.6108% 1,108,527.32
July 2, 2014 3.7316% 1,145,607.55
January 2, 2015 3.8564% 1,183,928.13
July 2, 2015 3.9854% 1,223,530.52
January 2, 2016 4.1188% 1,264,457.62
July 2, 2016 4.2565% 1,306,753.73
January 2, 2017 4.3989% 1,350,464.64
July 2, 2017 4.5461% 1,395,637.68
January 2, 2018 4.6981% 1,442,321.76
<PAGE>
EXHIBIT 4.11
CHARTER PARTY
dated as of
December 5, 1997
between
QM TANKER 1178 TRUST,
a trust created pursuant to the Delaware Business Trust Act
under the Declaration and Agreement of Trust
dated as of November 19, 1997
by Owner Participant,
Owner
and
MOBIL EQUIPMENT FINANCE COMPANY INC.
Charterer
- --------------------------------------------------------------------------------
Charter of Hull No. 1178
AS SET FORTH IN ARTICLE 20 OF THIS CHARTER PARTY, CERTAIN OF THE RIGHT, TITLE
AND INTEREST OF 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 THE INDENTURE TRUSTEE, UNDER THE TRUST INDENTURE, ASSIGNMENT OF CHARTER AND
HEAD LEASE, AND SECURITY AGREEMENT DATED AS OF DECEMBER 5, 1997 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>
BAREBOAT CHARTER PARTY
----------------------
AGREEMENT made as of the 5th day of December, 1997 between QM TANKER 1178
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, hereinafter called the
"Managing Trustee") (the Managing Trustee acting not individually, but solely as
trustee for the Owner Trust, hereinafter called "Owner Trustee"), and Mobil
Equipment Finance Company 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 LR1
crude oil tank vessel identified in Schedule 1 (hereinafter called the "Vessel")
on the Delivery Date.
WHEREAS, U.K. Lessor has entered into a Construction Contract dated
November 24, 1997 with Hyundai Corporation and Hyundai Heavy Industries Co. Ltd.
(together, hereinafter called the "Builder") providing for the construction and
sale of the Vessel to U.K. Lessor on the terms stated therein;
WHEREAS, Owner has entered into the Head Lease with U.K. Lessor pursuant to
which the Vessel has been let to Owner for the U.K. Lease Term; and
WHEREAS, Owner wishes to subject its interests in the Vessel, including
such interests under the Head Lease, to a charter in favor of 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 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.
<PAGE>
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 Party 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.
(d) Excess Hire. Payment of Excess Hire shall be payable to Owner or in
-----------
accordance with its instructions, semi-annually in arrears on March 1 and
September 1 of each year following the applicable Rate Period. The amount of
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 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 Charterer at least five
Business Days
2
<PAGE>
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.
ARTICLE 4.
Description of the Vessel; Documentation
----------------------------------------
(a) Description of Vessel. The Vessel will be built by 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 designed deadweight capacity of
approximately 105,500 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 Owner and Charterer may agree which is not materially less favorable to the
Indenture Trustee as trustee for holders of Secured Notes; and Charterer shall,
throughout the Charter Period maintain 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
3
<PAGE>
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 U.K. Lessor,
(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. The Charterer acknowledges the assignment of certain
----------
of Owner's rights hereunder in accordance with the terms and conditions of the
Indenture, and agrees to comply in accordance with the terms of this Charter,
with such instructions and directions as the Indenture Trustee may, in place of
Owner, give hereunder in accordance with the provisions of the Indenture
following an Indenture Event of Default.
(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 Owner 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 to U.K. Lessor, 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.
4
<PAGE>
(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 Builder and the Supervisory Agent shall have been paid any
additional amounts then due under the Construction Contract and the Supervisory
Agreement, respectively, out of funds available for the purpose as contemplated
by the Operative Documents;
(ii) U.K. Lessor (or a person acting on behalf of U.K. Lessor in accordance
with the Supervisory Agreement) shall have accepted delivery of the Vessel from
the Builder and Owner shall have accepted delivery of the Vessel from U.K.
Lessor under the Head Lease and in evidence thereof appropriate protocols of
delivery and acceptance shall have been executed;
(iii) Owner shall have accepted possession and use of the Vessel under the
Head Lease;
(iv) Charterer shall have accepted delivery of the Vessel under this
Charter and in evidence thereof shall have executed and delivered to Owner the
Protocol of Delivery and Acceptance;
(v) title to the Vessel shall have been registered in the name of U.K.
Lessor in the Marshall Islands (or other jurisdiction designated by Owner
Participant acceptable to Charterer and not materially less favorable to the
Indenture Trustee as trustee for holders of the Secured Note);
(vi) U.K. Lessor shall have executed and delivered to Owner the Ship
Mortgage in the form attached to the Head Lease with such changes thereto as
Owner and the Indenture Trustee may agree and are not materially adverse to the
holder of the Secured Note, and Owner 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, and the rights of Owner to receive the proceeds of the Ship Mortgage
shall to the extent feasible have been validly assigned to the Indenture Trustee
as security for the Secured Notes;
(vii) Charterer shall have caused to be accomplished all other filings,
recordings or other action that are reasonably feasible and necessary or
desirable to establish Owner's right, title and interest in and to the Vessel
Interest, and to perfect the Lien on and security interest in the Indenture
Estate created by the Indenture;
(viii) on or prior to the Delivery Date, insurance complying in all
respects with the provisions of Section 16(a)(i) of this Charter shall be in
full force and effect and Owner Participant, the Pass Through Trustee and the
Indenture Trustee shall have received an Officer's Certificate of Charterer,
dated the Delivery Date, stating that such insurance complies in all respects
with the provisions of such Section 16(a)(i); and
5
<PAGE>
(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
(v), (vi) and (vii) of this Section 6(b)(i).
Any of such conditions may be amended or waived by agreement of Owner and
Charterer subject, in the case of any such amendment or waiver that would be
adverse to the 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 Supervisory Agreement, 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. Owner warrants and covenants 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), Charterer
shall at all times during the Charter Period be entitled to the quiet use and
enjoyment of the benefits of the Vessel, including the right to uninterrupted
possession and use of the Vessel but subject to the rights of the parties to the
U.K. Documents, and Owner shall not, save as provided under the U.K. 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 laws and regulations of the U.S. and of the Marshall Islands or
such other jurisdiction where the Vessel is registered, 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.
6
<PAGE>
ARTICLE 8.
Condition Upon Delivery
-----------------------
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 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 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.
7
<PAGE>
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 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, U.K. Lessor, 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, U.K. Lessor, 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 the U.K. 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
8
<PAGE>
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 Charterer's or
Permitted Subcharterers' servants, navigating and working the Vessel solely on
behalf of and at the risk of 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 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 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. At all times during the Charter Period,
Charterer shall 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 for similar Vessels (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 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 Charterer's noncompliance is in
9
<PAGE>
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, Owner, Owner Participant or U.K. Lessor, 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, U.K. Lessor, 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 but without prejudice to any rights it may have against, or
obligation of, Owner Participant with respect thereto) 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; provided that
unless a Charter Event of Default shall have occurred and be continuing, no such
inspection shall be made more than once in any calendar year. 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, the 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, 12 and 13 as
------------------------
to the costs of maintaining, operating and modifying the Vessel and equipping it
with spares 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 (d) of Schedule 2B and without prejudice to
the obligation of Owner to comply with the provisions of Articles 13 and 14 of
the Joint Venture Agreement relating to operating, repair and maintenance costs
and drydock costs.
10
<PAGE>
ARTICLE 12.
Fuel, Lubricants, Water, Stores,
Equipment and Spare Replacement Parts
-------------------------------------
(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(k) 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 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, 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 pursuant to Article 12(a) on the Delivery Date and Redelivery Date,
11
<PAGE>
respectively, which sums shall be due and payable 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 Charterer shall have made the election provided
in Article 13(f) ("Required Modifications"). Charterer shall complete (or cause
to be completed) all Required 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 that are not Required
Modifications shall vest in Charterer or any Person designated by Charterer.
Charterer may, with the written consent of Owner Participant, remove (or allow
to be removed) any such Severable Modification prior to or upon the expiration
of the Charter Period. Title to any such Severable Modification remaining on
the Vessel upon the expiration of the Charter Period shall, to the extent
required by the Head Lease, vest in the Head Lessor.
(ii) Title to (x) Severable Modifications to the Vessel that are
Required Modifications and (y) Nonseverable Modifications to the Vessel, shall
to the extent required by the Head Lease vest in U.K. Lessor and shall otherwise
vest in Owner free and clear of all Liens except Permitted Liens.
(d) Payment for Modifications and Replacement Components. (i)
----------------------------------------------------
Charterer shall, with the written consent of Owner Participant, be permitted at
any time to finance
12
<PAGE>
the cost of any Severable Modification to the Vessel that is not a Required
Modification 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 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
U.K. Lessor and Owner's interest therein under the Head Lease 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 under the Head Lease
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 rights of U.K. Lessor and the Lien of the Indenture; provided that
--------
Charterer shall account for any net proceeds from any sale or other disposition
of any items of such property in accordance with the provisions of Schedule 2B
and Articles 13 and 14 of the Joint Venture Agreement.
(f) Exemption from Certain Modifications. Notwithstanding the
------------------------------------
provisions of Article 13 (a), if in the reasonable estimation of Charterer any
Severable or
13
<PAGE>
Nonseverable Modification that would otherwise be a Required Modifications
exceeds $1,000,000 multiplied by the Inflation Factor for the date of such
estimate, Charterer may, by notice to 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, U.K. Lessor, the Trust Estate, the Indenture Estate or the Vessel
Interest.
(g) Cost of Modifications. Charterer shall be entitled to recover
---------------------
from Owner Participant the cost of any Modification required to be paid by Owner
Participant pursuant to as provided in accordance with Schedule 2B hereto or
Articles 13 or 14 of the Joint Venture Agreement, as applicable, provided that
so long as the Lien of the Indenture shall not have been discharged, 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 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
14
<PAGE>
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 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,
15
<PAGE>
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, Permitted Subcharterers, 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 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
Title to this vessel is held by Abbey National December Leasing (4)
Limited. This vessel is under lease to Deutsche Morgan Grenfell (Cayman)
Limited, not in its individual capacity but solely as Managing Trustee
of QM Tanker 1178 Trust under the Declaration and Agreement of Trust
dated as of November 19, 1997, is further demise chartered to Mobil
Equipment Finance Company Inc. pursuant to a Bareboat Charter Party,
dated as of December 5, and is covered by a first Ship Mortgage dated
_______________ in favor of said Managing Trustee. Said lease and demise
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 lease,
demise 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
Charterer. 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 or other
relevant jurisdiction, (ii) cause the Ship Mortgage on the Vessel to cease to be
a first Ship Mortgage under the laws of the
16
<PAGE>
Marshall Islands or other relevant jurisdiction, or (iii) cause the Vessel to
cease to be entitled to the same classification that the Vessel had from the
Classification Society on the Delivery Date (subject to any reduction in
classification resulting from the age of the Vessel). Except as otherwise
directed by Owner or provided herein, Charterer shall prevent the name of any
Person other than that of Charterer, MSCL, the Guarantor, or any Affiliate of
any thereof or any Permitted Subcharterer 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. (i) Charterer shall carry and maintain or cause to be
--------
carried and maintained at all times during the Charter Period protection and
indemnity insurance (including pollution liability insurance), to the extent
such insurance is commercially available, on or with respect to the Vessel and
the operation thereof in such amounts, and with such deductibles or self-
insurance amounts, and in such forms as is consistent with Charterer's practices
for other similar vessels owned or chartered by it or its Affiliates. The
provisions of Rule 16 (Fleet Entry) of the Britannia Steam Ship Insurance
Association Limited (the "Association") will apply (or similar requirements of
any other insurer providing protection and indemnity insurance with respect to
the Vessel may apply) to the entry of the Vessel with the Association save that
the Association may not require Owner Participant or Owner to pay outstanding
calls on other ships in the fleet.
(ii) Any liability insurance carried in accordance with Section
16(a)(i) shall provide in the policy or by special endorsement that:
(A) Owner, Owner Participant and, at such times as it is the mortgagee
of the Vessel, the Indenture Trustee, are included as additional insureds in
respect of all public liability policies, if any, carried in accordance with
Section 16(a)(i), and the Pass Through Trustee and, at such time as it is not
the mortgagee of the Vessel, the Indenture Trustee, are included as additional
insureds in respect of all such policies, if feasible, or are otherwise entitled
to the benefits of such insurance coverage; and
(B) such insurance shall be primary without right of contribution of
any other insurance carried by or on behalf of Owner, the Indenture Trustee,
Owner Participant or the Loan Participant;
(b) Adjustment of Losses. Losses, if any, with respect to the Vessel
--------------------
under all insurances or entries in protection and indemnity associations,
whether or not required to
17
<PAGE>
be carried under Section 16(a), shall be adjusted with the insurance companies,
including the filing of appropriate proceedings, by Charterer. Owner shall
cooperate with Charterer in making all proofs of loss and take all other
reasonable steps necessary to effect such adjustment with the insurance
companies.
(c) Application of Insurance Proceeds. All insurance proceeds in
---------------------------------
respect of insurance, if any, maintained by Charterer with respect to the Vessel
and payable under circumstances not constituting an Event of Loss shall be
payable to Charterer. All insurance proceeds in respect of hull insurance, if
any, maintained by Charterer with respect to the Vessel and payable as a result
of an Event of Loss shall, provided the lien of the Indenture shall have been
discharged, (i) if Termination Value in connection with such Event of Loss shall
already have been paid by Charterer, be applied (up to an amount not exceeding
the applicable Termination Value) to reimburse Charterer for its payment of such
Termination Value, and (ii) if Termination Value in connection with such Event
of Loss shall already not have been paid by Charterer, be applied (up to an
amount not exceeding the applicable Termination Value) in reduction of
Charterer's obligation to pay such Termination Value. The balance of such
proceeds and, if the lien of the Indenture shall have not been discharged, the
whole of such proceeds shall be paid over to or retained by Owner.
Notwithstanding the foregoing, the proceeds of any protection and indemnity or
other liability insurance shall be payable to the Person to whom such amount is
due.
(d) Additional Insurance. Nothing in this Section 10 shall prohibit
--------------------
Owner, Owner Participant, Charterer, the Indenture Trustee or the Pass Through
Trustee from acquiring or maintaining, at its own expense, additional insurance
in such amounts with respect to such risks as each such Person, as the case may
be, shall determine; provided that no such insurance carried by Owner, the
--------
Indenture Trustee, the Pass Through Trustee or Owner Participant shall prevent
Charterer or any subcharterer from, or increase the cost to Charterer or any
subcharterer of, obtaining insurance respecting the Vessel as Charterer or any
subcharterer wishes. The proceeds of any such additional insurance will be for
the account of the party maintaining such additional insurance.
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.
18
<PAGE>
ARTICLE 18.
Early Termination
-----------------
(a) Decision. If Charterer shall determine in good faith that the
--------
continuation of this 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 this 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 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
19
<PAGE>
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 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 accrued 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 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 Make Whole Amount, 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 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
20
<PAGE>
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 U.K. Lessor is obliged to conclude the
sale of the Vessel or its rights under the Head Lease, the parties shall have no
obligation under Article 18(c), and any proceeds from such sale to which Owner
is entitled shall be applied against the obligations of 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
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 Charterer shall
pay hire for such extension at the same rate per day as in effect for the last
Rate Period during the unextended the 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 the Person then in fact holding
legal title to the Vessel, if it is eligible for such documentation, or in such
other name as 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), and shall include all
Modifications made hereunder, except those removed by Charterer to the extent
permitted hereby.
21
<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 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
security interest in the Vessel Interest in favor of the Indenture Trustee.
Charterer hereby consents to such assignment and to the creation of such
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. Charterer (i) acknowledges that such
assignment 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. 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 Charterer to Owner.
Notwithstanding any other provision herein, so long as any Secured Notes remain
Outstanding, Owner hereby directs, and 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
Charterer at least 5 Business Days prior to the due date thereof. Upon
Charterer receiving notice or
22
<PAGE>
obtaining actual knowledge that an Indenture Event of Default shall have
occurred and be continuing, Charterer shall make all payments of Hire including
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, set-off or other
right or claim of any kind which Charterer may be able to assert against Owner
or 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, (iii) such assignment shall not result in any Tax on Owner or 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 Owner and Owner Participant or subject
Owner or Owner Participant to regulation by any Governmental Authority to which
Owner or 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 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 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
Owner and Owner Participant or subject Owner or Owner Participant to regulation
by any Governmental Authority to which Owner or Owner Participant would not have
been subject but for such subcharter, (v) no Specified
23
<PAGE>
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, (vii) any such subcharter
with a term in excess of six (6) months shall be approved by Owner prior to its
execution and (viii) any such subcharter complies with the provisions of Clause
17 of the Head Lease. 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 Excepted
Payment (unless Owner elects to have such failure to make such payment of 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 30 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 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
24
<PAGE>
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 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
25
<PAGE>
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 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;
26
<PAGE>
(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 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
27
<PAGE>
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
proceeds of such sale, together with interest at the Overdue Rate plus 2% 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, 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, 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 Default or Charter
Event of Default shall in any way be, or be construed to be, a waiver of any
future or subsequent Charter Default or Charter Event of
28
<PAGE>
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, 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 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 or the Vessel shall have been rejected thereunder or (iii)
termination of the Charter Period pursuant to Article 23(c) in circumstances
where there has been no assumption of the obligations of Owner in accordance
with Section 3.04 of the Indenture.
(b) Termination. Forthwith upon the occurrence of a Special
-----------
Termination Event, Charterer shall give notice of such event to Owner and the
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
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 Supervisory Contract and the Vessel Interest,
29
<PAGE>
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 Joint Venture Agreement.
(c) Termination upon Termination of Head Lease. 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.
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.
30
<PAGE>
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 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
31
<PAGE>
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.
(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 (or the Indenture Trustee, as the case may
be) 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
32
<PAGE>
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 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
33
<PAGE>
Charter Party, the Investment by Owner Participant and the purchase of the
Secured Notes by the Loan Participant, any disposition of any interest of 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.
34
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Charter Party to be duly
executed as of the 5th day of December, 1997.
QM TANKER 1178 TRUST
By: Deutsche Morgan Grenfell
(Cayman) Limited, not in its individual
capacity, but solely as Managing Trustee
under the Trust Agreement
By:______________________________
Name:
Title:
MOBIL EQUIPMENT FINANCE
COMPANY INC.
By:______________________________
Name:
Title:
[CHARTER - 1178]
<PAGE>
Receipt of the original executed counterpart of the foregoing Bareboat
Charter Party is hereby acknowledged on this 5th day of December, 1997.
STATE STREET BANK AND TRUST
COMPANY,
not in its individual capacity, but solely as
Indenture Trustee
By:
------------------------------
Name:
Title:
[Chattel Copy of Charter--1178]
<PAGE>
SCHEDULE 1
----------
Vessel: Hull No. 1178
Owner's Cost: $42,600,000
Builder: Hyundai Heavy Industries Co., Ltd.
Hyundai Corporation
Delivery Yard: Shipyard of Hyundai Heavy Industries Co., Ltd. in Ulsan, Korea
Scheduled Delivery Date: Fourth Quarter, 1999
Final Delivery Date: December 31, 2000
Charter Expiration Date: January 2, 2018
U.K. Lease Term: 30 years commencing on the Delivery Date
U.K. Lessor: Abbey National December Leasing (4) Limited
<PAGE>
SCHEDULE 2
----------
BASE HIRE
The base hire (the "Base Hire") for each Rate Period, shall be equal to the
amount set forth on the following page opposite the Base Hire Payment Date on
which such Rate Period expires.
<PAGE>
<TABLE>
<CAPTION>
Mobil Basic Hire Schedule
Basic Hire Payment Date Basic Hire ($)
- ----------------------- ----------
<S> <C>
January 2, 1998 0.00
July 2, 1998 0.00
January 2, 1999 0.00
July 2, 1999 0.00
January 2, 2000 0.00
July 2, 2000 745,283.71
January 2, 2001 1,490,567.42
July 2, 2001 1,490,567.42
January 2, 2002 1,490,567.42
July 2, 2002 1,490,567.42
January 2, 2003 1,490,567.42
July 2, 2003 1,490,567.42
January 2, 2004 1,490,567.42
July 2, 2004 1,490,567.42
January 2, 2005 1,490,567.42
July 2, 2005 1,490,567.42
January 2, 2006 1,490,567.42
July 2, 2006 1,490,567.42
January 2, 2007 1,490,567.42
July 2, 2007 1,490,567.42
January 2, 2008 1,490,567.42
July 2, 2008 1,490,567.42
January 2, 2009 1,490,567.42
July 2, 2009 1,490,567.42
January 2, 2010 1,490,567.42
July 2, 2010 1,490,567.42
January 2, 2011 1,490,567.42
July 2, 2011 1,490,567.42
January 2, 2012 1,490,567.42
July 2, 2012 1,490,567.42
January 2, 2013 1,490,567.42
July 2, 2013 1,490,567.42
January 2, 2014 1,490,567.42
July 2, 2014 1,490,567.42
January 2, 2015 1,490,567.42
July 2, 2015 1,490,567.42
January 2, 2016 1,490,567.42
July 2, 2016 1,490,567.42
January 2, 2017 1,490,567.42
July 2, 2017 1,490,567.42
January 2, 2018 1,490,567.42
</TABLE>
<PAGE>
SCHEDULE 2A
-----------
BAREBOAT MARKET HIRE DETERMINATION
<PAGE>
SCHEDULE 2B
-----------
DETERMINATION OF BAREBOAT MARKET RATE
-------------------------------------
<PAGE>
(c) The Vessel's Net Time Charter Rate shall be determined by aggregating
net time charter earnings from all voyages for Affiliates of the
Guarantor and/or third party charters commenced and concluded during the
Rate Period and a pro rata portion of such earnings from voyages
occurring partially during the Rate Period and dividing by the total
number of days in the Rate Period less any days where the Vessel was
bareboat chartered to a party not an Affiliate of the Guarantor.
(d) Daily Operating Costs for each Rate Period will be the budgeted
operating costs for the Vessel for the calendar year in which such Rate
Period occurs (which shall be obtained from the operator by the end of
October for the upcoming year) divided by the actual number of days in
the year. At the end of each calendar year the actual operating costs
will be audited and the difference will be added to or subtracted from
the budget for the next calendar year as the case may be. Daily
Operating Costs will include manning, provisions, stores, voyage repairs
(excluding drydock costs, which include planned overhauls and
modifications, as provided in the Joint Venture Agreement), insurance,
etc. for the Vessels, plus any approved Vessel expenses incurred by the
Charterer on behalf of the Company, plus a Vessel management fee of
$425/day/Vessel which is subject to annual adjustment for inflation
using the U.K. Retail Price Index. If the Charterer self insures the
Vessels for Hull and Machinery, a proforma Hull and Machinery premium
will be included as determined by an independent insurance broker.
(e) With the exception of the case where the Vessel is bareboat chartered to
a party other than an Affiliate of the Guarantor, the Bareboat Market
Rate for the Vessel will be calculated by deducting the Vessel's Daily
Operating Costs from its Net Time Charter Rate. In the event that the
Vessel is bareboat chartered to a party other than an Affiliate of the
Guarantor during all or any part of the Rate Period, the bareboat
charter rate received from the third party shall be the Bareboat Market
Rate during the term of that charter.
2. Bareboat Market Hire for any period of less than six months at the
commencement or conclusion of the Charter shall be determined in accordance
with the foregoing principles and appropriately prorated.
<PAGE>
SCHEDULE 3
----------
TERMINATION VALUES
------------------
Termination
Termination Value Value/*/
Determination Date/*/ $
- ------------------ -----------
January 2, 1998............ 26,476,244.36
July 2, 1998............... 27,361,874.73
January 2, 1999............ 28,277,129.44
July 2, 1999............... 29,222,999.42
January 2, 2000............ 30,200,508.75
July 2, 2000............... 30,473,878.87
January 2, 2001............ 30,002,662.70
July 2, 2001............... 29,515,684.34
January 2, 2002............ 29,012,416.56
July 2, 2002............... 28,492,314.47
January 2, 2003............ 27,954,814.97
July 2, 2003............... 26,399,336.10
January 2, 2004............ 26,825,276.47
July 2, 2004............... 26,232,014.55
January 2, 2005............ 25,618,908.01
July 2, 2005............... 24,985,293.06
January 2, 2006............ 24,330,483.69
July 2, 2006............... 23,653,770.95
January 2, 2007............ 22,954,422.16
July 2, 2007............... 22,231,680.16
January 2, 2008............ 21,484,762.44
July 2, 2008............... 20,712,860.32
January 2, 2009............ 19,915,139.07
July 2, 2009............... 19,090,732.02
January 2, 2010............ 18,238,749.58
July 2, 2010............... 17,358,268.33
January 2, 2011............ 16,448,334.99
July 2, 2011............... 15,507,964.37
January 2, 2012............ 14,536,138.35
July 2, 2012............... 13,531,804.76
January 2, 2013............ 12,493,876.20
July 2, 2013............... 11,421,228.94
January 2, 2014............ 10,312,701.62
July 2, 2014............... 9,167,094.07
January 2, 2015............ 7,983,165.94
July 2, 2015............... 6,759,635.42
January 2, 2016............ 5,495,177.80
July 2, 2016............... 4,188,424.08
January 2, 2017............ 2,837,959.44
July 2, 2017............... 1,442,321.76
January 2, 2018............ 0.00
- --------------------
/*/ In addition, any Business Day in between the dates shown above shall be a
Termination Value Determination Date, and the Termination Value for each such
date shall be the Termination Value shown above for the preceding January 2 or
July 2 together with interest accrued or accreted on such amount in accordance
with the terms of the Secured Note from the later of the Closing Date or the
previous January 2 or July 2.
<PAGE>
EXHIBIT 4.12
================================================================================
DECLARATION AND AGREEMENT OF TRUST
RELATING TO QM TANKER 1178 TRUST
among
QM TANKER CO. LLC
Owner Participant,
DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED
Managing Trustee,
and
WILMINGTON TRUST COMPANY
Delaware Trustee
_________________________________
Dated as of November 19, 1997
_________________________________
================================================================================
Lease Financing of 1 LR1 Class Crude Oil Tank Vessel
HULL NO. 1178
<PAGE>
DECLARATION AND AGREEMENT OF TRUST
RELATING TO QM TANKER 1178 TRUST
DECLARATION AND AGREEMENT OF TRUST (this "Trust Agreement") relating
to QM TANKER 1178 TRUST, dated and effective as of November 19, 1997, among
Deutsche Morgan Grenfell (Cayman) Limited, a Cayman Islands company (the "Trust
-----
Company"), as Managing Trustee ("Managing Trustee"), Wilmington Trust Company, a
- ------- ----------------
Delaware banking corporation (the "Resident Trustee"), as Delaware Trustee
----------------
("Delaware Trustee") (the Managing Trustee and the Delaware Trustee are
- ------------------
sometimes collectively referred to as the "Owner Trustees" and individually as
--------------
an "Owner Trustee"), and QM TANKER CO. LLC, a Cayman Islands limited life
-------------
company, as beneficial owner of the Trust Estate hereunder (the "Owner
-----
Participant").
- -----------
WHEREAS, the Owner Trustees and the Owner Participant wish to
establish QM TANKER 1178 Trust as a Delaware business trust (the "Trust" or
-----
"Owner Trust") pursuant to the Business Trust Act and this Trust Agreement for
- ------------
the purpose of conducting the activities described in this Trust Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the agreements contained in the other Operative Documents and the
acceptance by the Trust Company and the Resident Trustee of the trusts hereby
created, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
-----------
For the purposes hereof, terms used herein and not otherwise defined
shall have the respective meanings assigned to them in Appendix A (as the same
may from time to time be amended, restated, supplemented or otherwise modified).
Unless otherwise indicated, references in this Trust Agreement to Sections,
subsections, paragraphs and Appendices are to Sections, subsections, paragraphs
and Appendices of this Trust Agreement.
SECTION 2. AUTHORITY TO EXECUTE AND PERFORM
--------------------------------
VARIOUS DOCUMENTS
-----------------
<PAGE>
2.1 Authority to Execute and Perform Operative Documents and Related
----------------------------------------------------------------
Documents. The Owner Participant hereby authorizes and directs the Managing
- ---------
Trustee and the Managing Trustee agrees for the benefit of the Owner Participant
(i) on the Closing Date, to execute and deliver the Participation Agreement and,
upon receipt of the authorization and direction by the Owner Participant
pursuant to Section 2.11 of the Participation Agreement, to execute and deliver
the Operative Documents contemplated to be executed and delivered by the
Managing Trustee on the Closing Date and take the other actions contemplated to
be taken by the Managing Trustee on the Closing Date in the Operative Documents,
(ii) to execute and deliver any other agreement, instrument or certificate
contemplated by the Operative Documents as the Owner Participant from time to
time may direct in written instructions to the Managing Trustee (collectively,
with the Operative Documents, the "Owner Trust Documents"), (iii) subject to the
---------------------
terms of this Trust Agreement and of the other Operative Documents to which the
Managing Trustee is a party, to take whatever action shall be required to be
taken by the Managing Trustee by the terms of, and exercise its rights (upon
instructions received from the Owner Participant) and perform its duties under,
each of the documents, agreements, instruments and certificates referred to in
clauses (i) and (ii) of this Section 2.1 as set forth in such documents,
agreements, instruments and certificates, and (iv) subject to the terms and
limitations of this Trust Agreement and the other Operative Documents to which
it is a party, to take such other action in connection with the foregoing as the
Owner Participant may from time to time direct in written instructions to the
Managing Trustee.
2.2 Authority to Execute and Perform U.K. Documents and Related
-----------------------------------------------------------
Documents. The Managing Trustee agrees for the benefit of the Owner Participant
- ---------
(i) upon receipt of the authorization and direction by the Owner Participant, to
execute and deliver the U.K. Documents contemplated to be executed and delivered
by the Managing Trustee and to take the other actions contemplated to be taken
by the Managing Trustee under the U.K. Documents, (ii) to execute and deliver
any other agreement, instrument or certificate contemplated by the U.K.
Documents as the Owner Participant from time to time may direct in written
instructions to the Managing Trustee (all U.K. Documents to which the Trust is a
party being herein referred to as the "Owner Trust U.K. Documents"), (iii)
--------------------------
subject to the terms of this Trust Agreement and of the Owner Trust U. K.
Documents to which the Managing Trustee is a party, to take whatever action
shall be
2
<PAGE>
required to be taken by the Managing Trustee by the terms of, and exercise its
rights (upon instructions received from the Owner Participant) and perform its
duties under, each of the documents, agreements, instruments and certificates
referred to in clauses (i) and (ii) of this Section 2.2 as set forth in such
documents, agreements, instruments and certificates, and (iv) subject to the
terms of this Trust Agreement and the other Operative Documents and U.K
Documents to which it is a party, to take such other action in connection with
the foregoing as the Owner Participant may from time to time direct in written
instructions to the Managing Trustee.
2.3 Authority of Delaware Trustee to Execute and Perform Documents.
---------------------------------------------------------------
The Delaware Trustee agrees for the benefit of the Owner Participant, upon
receipt of the written authorization and direction by the Owner Participant, to
execute and deliver such documents and to take the other actions contemplated to
be taken by the Delaware Trustee as may be expressly set forth in such
authorization and direction.
SECTION 3. DECLARATION OF BUSINESS TRUST;
ORGANIZATION
------------------------------
3.1 Appointment of the Owner Trustees; Declaration of Trust. The
-------------------------------------------------------
Trust Company is hereby appointed Managing Trustee and the Resident Trustee is
hereby appointed Delaware Trustee and each hereby accepts such appointment. The
Managing Trustee agrees to hold the Trust Estate as Owner Trustee in trust upon
the terms and conditions and for the use and the benefit of the Owner
Participant as herein set forth. It is the intention of the parties hereto that
the trust created by this Trust Agreement constitute a business trust under the
Business Trust Act and that this Trust Agreement constitute the governing
instrument of such business trust. The parties intend, and this Trust Agreement
is intended to cause, the Trust to be characterized as a grantor trust for
federal income tax purposes. The provisions hereof shall be interpreted
accordingly and no party hereto shall take a contrary position for federal
income tax purposes.
3.2 Managing Trustee. The Trust Company agrees that it will hold as
----------------
Managing Trustee all estate, right, title and interest of the Trust in and to
the Vessel Interest, the Owner Trust Documents and the Owner Trust U.K.
Documents, and all money held by the Managing Trustee from time to time
hereunder, including, without limitation, all
3
<PAGE>
amounts of Hire, insurance proceeds, sales proceeds, rental proceeds, and
requisition, indemnity or other payments of any kind, but specifically excluding
Excepted Payments (collectively, the "Trust Estate"), upon the trusts set forth
------------
herein and for the use and benefit of the Owner Participant as sole beneficiary,
subject, however, to the provisions of and the Lien created by the Indenture.
3.3 Delaware Trustee. Notwithstanding any other provision of this
----------------
Trust Agreement, the Delaware Trustee shall not be entitled to exercise any of
the duties and responsibilities of the Managing Trustee described in this Trust
Agreement. The Delaware Trustee shall be an Owner Trustee for the sole and
limited purpose of fulfilling the requirements of (S) 3807 of the Business Trust
Act.
3.4 Name. The name of the Trust established by this Trust Agreement
----
is QM TANKER 1178 Trust. The Trust's activities may be conducted under such
name or under any other name deemed advisable by the Managing Trustee.
3.5 Purpose. The purposes for which the Trust is formed are (a) to
-------
carry on, subject to Section 6, the activities referred to in Section 2, and
otherwise administer, maintain, protect and preserve the Trust Estate and (b) to
engage, subject to Section 6, in any and all activities necessary, desirable,
convenient or incidental to the foregoing; provided, however, that so long as
-------- -------
the Lien of the Indenture shall be in effect and shall not have been discharged
pursuant to the terms thereof, without the prior written consent of the
Indenture Trustee, (i) the Trust will only engage in the business and activities
contemplated by the Operative Documents and the U.K. Documents and activities
incidental thereto and shall not engage in any other business or activities and
(ii) the Trust will not merge or consolidate with any other person.
3.6 Filing of Certificate of Trust. Upon the execution of this Trust
------------------------------
Agreement, the Owner Trustees shall execute the Certificate of Trust for the
Trust in the form attached hereto as Exhibit A, and the Delaware Trustee shall
cause the filing thereof with the Secretary of State of the State of Delaware.
3.7 Duration of Trust. The Trust shall remain in existence from
-----------------
November 19, 1997 until terminated in accordance with Section 9.
4
<PAGE>
SECTION 4. PAYMENTS
--------
4.1 Payments from Trust Estate Only. All payments to be made by the
-------------------------------
Managing Trustee under this Trust Agreement shall be made only from the assets
of or income and proceeds from the Trust Estate and only to the extent that the
Owner Trust shall have received income or proceeds from the Trust Estate to make
such payments in accordance with the terms hereof, except as specifically
provided herein. The Owner Participant agrees that it will look solely to the
assets of or the income and proceeds from the Trust Estate to the extent
available for payment as herein provided and that, except as expressly provided
herein, neither the Trust Company nor Resident Trustee shall be liable for any
amounts payable under this Trust Agreement or subject to any liability under
this Trust Agreement, and the Trust shall not incur any indebtedness except as
contemplated by the Operative Documents and the U.K. Documents.
4.2 Method of Payment. (a) All amounts payable to the Owner
-----------------
Participant or to the Indenture Trustee pursuant to this Trust Agreement shall
be paid by the Managing Trustee, if to the Owner Participant, by transferring
such amount in immediately available funds to such account at such financial
institution as the Owner Participant from time to time may direct or, if to the
Indenture Trustee, in the manner specified in the Indenture, in either case
without discretion on the part of the Managing Trustee.
(b) Notwithstanding the foregoing, the Managing Trustee will pay, if
so requested by the Owner Participant in writing, any or all amounts payable by
the Managing Trustee hereunder to the Owner Participant either (i) by crediting
such amount or amounts to an account or accounts maintained by the Owner
Participant with the Trust Company in immediately available funds, (ii) by
payment at the address for payment specified in Schedule 1 to the Participation
Agreement in immediately available funds or (iii) by mailing an official bank
check or checks in such amount or amounts payable to the Owner Participant at
such address as the Owner Participant shall have designated in writing to the
Managing Trustee.
(c) The Managing Trustee will pay all amounts payable by the Owner
Trustees hereunder on the day received (or on the next succeeding Business Day
if the funds to be so distributed shall not have been received by the Managing
Trustee prior to 11:00 a.m., New York City time, and the
5
<PAGE>
Managing Trustee shall not have been reasonably able to distribute such funds to
the Owner Participant on the day received).
SECTION 5. DISTRIBUTIONS
-------------
5.1 Payments to the Indenture Trustee. So long as the Lien of the
---------------------------------
Indenture shall be in effect and shall not have been discharged pursuant to the
terms thereof, (i) if no Indenture Event of Default shall have occurred and be
continuing, all Base Hire, Termination Value and other Hire payable in
connection with an Event of Loss or termination of the Charter Party, insurance
payments and requisition and similar payments, and (ii) if an Indenture Event of
Default shall have occurred and be continuing all Hire and other payments of any
kind payable to the Trust or received by either Owner Trustee (other than, in
either case, Excepted Payments and payments received from the Indenture Trustee)
shall be payable directly to the Indenture Trustee for distribution in
accordance with the provisions of the Indenture, and if any such amount or
payment is received by the Owner Trustees, such amount or payment upon receipt
thereof shall be paid over to the Indenture Trustee without deduction, set-off
or adjustment of any kind for distribution in accordance with the provisions of
the Indenture.
5.2 Payments to the Owner Trustees. Any payment of the type referred
------------------------------
to in Section 5.1 received by any Owner Trustee after the Indenture shall have
been discharged pursuant to the terms thereof, any payment received from the
Indenture Trustee other than as specified in Section 5.3 and any other amount
received as part of the Trust Estate and for the application or distribution of
which no provision is made herein shall be distributed forthwith upon receipt by
such Owner Trustee in the following order of priority: first, so much of such
-----
payment as shall be required to reimburse the Owner Trustees for any expenses
not otherwise reimbursed as to which the Owner Trustees entitled to be so
reimbursed pursuant to the provisions hereof shall be retained by the Owner
Trustees; second, so much of the remainder for which provision as to the
------
application thereof is contained in any of the Owner Trust Documents or the
Owner Trust U.K. Documents shall be applied and distributed in accordance with
the terms of such Owner Trust Document or the Owner Trust U.K. Document as the
case may be; and third, the balance, if any, shall be paid to the Owner
-----
Participant.
6
<PAGE>
5.3 Excepted Payments. Any Excepted Payment received by any Owner
-----------------
Trustee shall be paid by such Owner Trustee to the Person to whom such Excepted
Payment is payable pursuant to the terms of the Owner Trust Documents or the
Owner Trust U.K. Documents.
5.4 Certain Distributions to the Owner Participant. All amounts from
----------------------------------------------
time to time distributable by the Indenture Trustee to the Owner Participant
pursuant to the terms of the Indenture shall, if paid to any Owner Trustee, be
distributed by such Owner Trustee to or at the direction of the Owner
Participant. All amounts received by the Owner Trustees prior to the Closing
Date shall be held and disbursed in accordance with the directions of the Owner
Participant.
5.5 No Shares, etc. The Trust shall not have or issue shares or
--------------
participation certificates or other transferable evidence of ownership.
SECTION 6. CERTAIN DUTIES OF THE OWNER TRUSTEES
------------------------------------
6.1 Notice of Certain Events. In the event that a Responsible
------------------------
Officer of the Managing Trustee shall have Actual Knowledge of any Charter Event
of Default, any Indenture Event of Default or any Event of Loss, the Managing
Trustee shall give prompt telephonic notice thereof (promptly confirmed in
writing) to the Owner Participant, the Charterer and the Indenture Trustee,
unless (in the case of notice to the Indenture Trustee or the Charterer) such
Charter Event of Default, Indenture Event of Default or Event of Loss, as the
case may be, has been remedied before the giving of such notice and the Managing
Trustee has Actual Knowledge that the Charter Event of Default, Indenture Event
of Default or Event of Loss has been so remedied. Subject to the terms of
Section 6.3, the Managing Trustee shall, after the occurrence of any such event,
take or refrain from taking such action with respect thereto, not inconsistent
with the provisions of the Operative Documents, with respect thereto as the
Managing Trustee shall be instructed in writing by the Owner Participant. If
the Managing Trustee shall not have received instructions as above provided
within 20 days after such notice of such event to the Owner Participant, the
Managing Trustee may, until it shall have received such instructions and subject
to the provisions of the Owner Trust Documents and the Owner Trust U.K.
Documents, 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
7
<PAGE>
such Charter Event of Default, Indenture Event of Default or Event of Loss, as
it shall deem advisable in the best interests of the Owner Participant.
6.2 Action Upon Instructions. (a) Subject to the terms of Sections
------------------------
6.1 and 6.3, upon the written instructions at any time and from time to time of
the Owner Participant, the Owner Trustees shall take or refrain from taking such
action or actions, not inconsistent with the provisions of any of the Owner
Trust Documents or the Owner Trust U.K. Documents, as may be specified in such
instructions. In the event that an Owner Trustee is unsure of the application
of any provision of this Trust Agreement or any other Owner Trust Document or
the Owner Trust U.K. Documents, such Owner Trustee may request and rely upon
instructions of the Owner Participant.
(b) Notwithstanding anything to the contrary set forth in Section 2.1
hereof, the Managing Trustee shall not, without instructions from the Owner
Participant, (x) exercise any right to retain the Vessel Interest under Article
18 of the Charter Party, or (y) consent to or approve any action or document as
being satisfactory to the Owner Trustee, or waive any condition or the
performance of any obligation in favor of such Owner Trustee or the Trust
Estate, or release the Charterer or the Head Lessor from any obligation under
the Operative Documents or the U.K. Documents.
6.3 Indemnification. Neither Owner Trustee shall be required to take
---------------
or refrain from taking any action under Sections 2.1, 2.2, 2.3, 6.1 or 6.2
(other than the actions specified in the first sentence of Section 6.1) unless
such Owner Trustee shall have been indemnified in its individual capacity by the
Owner Participant, in manner and form reasonably satisfactory to such Owner
Trustee, against any liability, fee, cost or expense (including, without
limitation, reasonable attorneys' fees) which may be incurred or charged in
connection therewith, other than any such liability, fee, cost or expense which
results from the willful misconduct (including, without limitation, willful
breach of contract) or gross negligence of such Owner Trustee, or the failure of
such Owner Trustee to use ordinary care in the receipt and disbursement of
funds, and, if the Owner Participant shall have directed an Owner Trustee to
take or refrain from taking any action under any Owner Trust Document or the
Owner Trust U.K. Document, the Owner Participant agrees to furnish such
indemnity (subject to the foregoing limitation) as shall be reasonably
satisfactory to
8
<PAGE>
such Owner Trustee, and in addition, to the extent not otherwise paid pursuant
to the terms of any other Owner Trust Document or the Owner Trust U.K. Document,
to pay the reasonable compensation of such Owner Trustee for the services
performed or to be performed by it pursuant to such direction as set forth in
Section 8.2. Neither Owner Trustee shall be required to take any action under
any Owner Trust Document or the Owner Trust U.K. Document if such Owner Trustee
reasonably shall determine, or shall have been advised by counsel, that such
action is likely to result in unindemnified personal liability to such Owner
Trustee or is contrary to the terms hereof or of any documents contemplated
hereby to which such Owner Trustee is a party, or otherwise contrary to law, and
such Owner Trustee in such case shall deliver promptly to the Owner Participant
written notice of the basis of its refusal to act.
6.4 No Duties Except as Specified. Neither Owner Trustee shall have
-----------------------------
any power, right, authority, duty or obligation to manage, control, use, make
any payment in respect of, register, record, insure, inspect, sell, dispose of
or otherwise deal with the Vessel or any other part of the Trust Estate, or to
otherwise take or refrain from taking any action under, or in connection with,
any Owner Trust Document or any Owner Trust U.K. Document, except as expressly
provided by the terms of this Trust Agreement, the Indenture, the Owner Trust
Documents or the Owner Trust U.K. Documents or in written instructions from the
Owner Participant received pursuant to Sections 2.1, 2.2, 2.3, 6.1 or 6.2; and
no implied duties or obligations shall be read into this Trust Agreement against
the Owner Trustees. Notwithstanding and without limiting the foregoing, the
Trust Company agrees that it will, in its individual capacity and at its own
expense, without any right to indemnification hereunder, promptly take all
action necessary to discharge and satisfy in full any Owner's Lien attributable
to it on any part of the Trust Estate and will claim no indemnity therefor
hereunder or under the Participation Agreement or under any other Operative
Document.
6.5 No Action Except Under Specified Documents or Instructions. The
----------------------------------------------------------
Owner Trustees shall not have any right, power or authority to, and each Owner
Trustee agrees that it will not manage, control, use, sell, dispose of or
otherwise deal with the Vessel or any other part of the Trust Estate except as
(i) expressly provided by the terms of this Trust Agreement, (ii) expressly
required by the terms of any Owner Trust Document or the Owner Trust U.K.
Document or (iii)
9
<PAGE>
expressly directed or authorized in written instructions from the Owner
Participant pursuant to Sections 2.1, 2.2, 2.3, 6.1 or 6.2. Except as provided
in this Trust Agreement, the Operative Documents or the U.K. Documents, the
Trust shall not maintain a separate office or possess property (other than the
Trust Estate), office supplies or equipment or have independent bank accounts
other than those bank accounts required to administer the Trust Estate or comply
with the terms of the Indenture, the Operative Documents and the U.K. Documents.
6.6 Tax Returns; Records. The Managing Trustee shall be
--------------------
responsible for the maintaining of all appropriate books and records relating to
the receipt and disbursement of all moneys which it may receive or be entitled
to hereunder or under any agreement contemplated hereby. The Managing Trustee
agrees, at the request and expense of the Owner Participant, to prepare or cause
to be prepared and to sign and/or file all tax returns with respect to the
transactions contemplated hereby or any agreement referred to herein; provided,
--------
however, that the Managing Trustee shall, to the extent it shall have timely
- -------
received all necessary information from the Owner Participant, send a copy of
the contemplated return to the Owner Participant not more than sixty (60) nor
less than thirty (30) days prior to the due date of the return. The Owner
Participant, upon request, will furnish the Managing Trustee with all such
information as may be reasonably required from the Owner Participant in
connection with the preparation of such tax returns. The Managing Trustee shall
keep copies of all returns delivered to or filed by it.
6.7 Absence of Certain Duties. Except in accordance with written
-------------------------
instructions furnished pursuant to Sections 2.1, 2.2, 2.3, 6.1 and 6.2, and
except as expressly provided in any Operative Document and without limiting the
generality of Section 6.4, neither Owner Trustee shall have any duty (i) to
file, record or deposit any Owner Trust Document or any Owner Trust U.K.
Document, including, without limitation, this Trust Agreement, or any other
document, or to maintain any such filing, recording or deposit, or to refile,
rerecord or redeposit any such document, (ii) to obtain insurance with respect
to the Vessel or to effect or maintain any such insurance, other than to receive
and forward to the Owner Participant any notices, policies, certificates or
binders furnished to the Owner Trust by the Charterer or its insurance brokers,
(iii) to maintain or mark the Vessel, (iv) to pay or discharge any tax,
assessment or
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other governmental charge, or any Lien or encumbrance of any kind, owing with
respect to or assessed or levied against any part of the Trust Estate, except as
provided in Section 6.4, (v) to confirm, verify, investigate or inquire into the
failure to receive any reports or financial statements of the Charterer or the
Guarantor, (vi) to inspect the Vessel at any time, or to ascertain or inquire as
to the performance or observance of any of the covenants of the Charterer or any
other Person under any Owner Trust Document or the Owner Trust U.K. Document
with respect to the Vessel or any other part of the Trust Estate or (vii) to
manage, control, use, sell, dispose of or otherwise deal with the Vessel or any
other part of the Trust Estate or any part thereof, except as provided in
clauses (i), (ii) and (iii) of Section 6.5.
6.8 Fixed Investment Trust. Notwithstanding anything herein to the
----------------------
contrary, neither Owner Trustee shall be authorized nor have any power to
reinvest the proceeds of the Trust Estate or to otherwise "vary the investment"
of the Owner Participant within the meaning of Treasury Regulations (S)
301.7701-4(c)(1).
6.9 Fiduciary Duty.
--------------
(a) To the extent that, at law or in equity, an Indemnitee has duties
(including fiduciary duties) and liabilities relating to the Trust or to any
other Person, such Indemnitee acting under this Agreement shall not be liable to
the Trust or to any other Person for its good faith reliance on the provisions
of this Agreement. To the extent that provisions of this Agreement restrict the
duties and liabilities of an Indemnitee otherwise existing at law or in equity,
such provisions are agreed by the parties hereto to replace such other duties
and liabilities of such Indemnitee.
(b) Unless otherwise expressly provided herein, whenever a conflict of
interest exists or arises among Indemnitees or between an Indemnitee and a
Person or as a result of any provision of this Agreement or any other agreement
contemplated herein, then the Managing Trustee shall resolve such conflict of
interest considering in each case: (i) the relative interest of each party
(including its own interest) in such conflict, agreement, transaction or
situation; (ii) the benefits and burdens relating to such interests; (iii) any
customary or accepted industry practices; and (iv) any applicable generally
accepted accounting practices or principles. In the absence of bad faith by the
Managing Trustee, the resolution provided by the
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Managing Trustee shall not constitute a breach of this Agreement or any other
agreement contemplated herein or of any duty or obligation of the Managing
Trustee at law or in equity or otherwise; and
(c) If an Indemnitee is permitted or required under this Agreement to
make a decision in its "good faith" or under another express standard, the
Indemnitee shall act under such express standard and shall not be subject to any
other or different standard imposed by this Agreement or by applicable law.
6.10 Place of Administration. The principal place of administration
-----------------------
of the trusts created hereby shall be in the Cayman Islands.
SECTION 7. THE OWNER TRUSTEES
------------------
7.1 Trustees. The number of Owner Trustees shall initially be two
--------
(2), and thereafter the number of Owner Trustees shall be such number as shall
be fixed from time to time by a written instrument signed by the Owner
Participant. The Owner Participant is entitled to appoint or remove without
cause any Owner Trustee at any time; provided, however, that the number of Owner
-------- -------
Trustees shall in no event be less than two (2); and provided, further, that at
-------- -------
all times there should be at least one Owner Trustee who, if an individual, is a
resident of the State of Delaware or which, if an entity, has its principal
place of business in the State of Delaware.
7.2 Acceptance of Trusts and Duties. Each Owner Trustee accepts the
-------------------------------
trusts hereby created and agrees to perform the same on the terms of this Trust
Agreement. Each Owner Trustee also agrees to disburse all moneys actually
received by it constituting part of the Trust Estate pursuant to the terms of
this Trust Agreement. Neither the Trust Company nor the Resident Trustee in
their respective individual capacities, shall be answerable or accountable under
any circumstances except, and in the case of such exceptions shall not be
entitled to indemnity hereunder, (i) for such Person's own willful misconduct
(including, without limitation, willful breach of contract) or gross negligence,
(ii) in the case of the inaccuracy of any of such Person's representations or
warranties contained in Section 7.4 hereof or in Section 8 of the Participation
Agreement or in any written certificate delivered pursuant to any Operative
Document or U.K. Document given expressly in such
12
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Person's individual capacity and not in its capacity as a trustee hereunder,
(iii) as arising from such Person's failure to perform obligations expressly
undertaken by such Person in the last sentence of Section 6.4 hereof or
expressly undertaken by such Person in Section 12.2 of the Participation
Agreement, (iv) for any Tax based on or measured by any fees, commissions or
compensation received by such Person for acting as Owner Trustee in connection
with any of the transactions contemplated by the Operative Documents or the U.K.
Documents, or (v) for such Person's failure to use ordinary care in the receipt
and disbursement of funds.
7.3 Furnishing of Documents. (a) Each Owner Trustee will furnish to
-----------------------
the Owner Participant, promptly upon receipt thereof, duplicates or copies of
all reports, notices, requests, demands, opinions, certificates, financial
statements and any other instruments furnished to such Owner Trustee under any
Owner Trust Document or any Owner Trust U.K. Document, unless such Owner Trustee
shall have determined that the same already has been actually received by the
Owner Participant.
(b) The Delaware Trustee shall furnish to the Managing Trustee,
promptly upon receipt thereof, a duplicate or copy of all reports, notices,
requests, demands, certificates, financial statements and any other instruments
furnished to the Delaware Trustee and relating to the Trust, this Trust
Agreement or the other parties hereto, provided, that the Delaware Trustee need
--------
not forward documents to the Managing Trustee if such Person originated the
documents or furnished them to the Delaware Trustee or is to receive any such
documents from any Person other than the Delaware Trustee according to an
express provision hereof or under any document to which the Managing Trustee is
a party.
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7.4 No Representations or Warranties as to the Vessel or Documents.
--------------------------------------------------------------
(a) NEITHER THE TRUST COMPANY, RESIDENT TRUSTEE, THE MANAGING TRUSTEE NOR THE
DELAWARE TRUSTEE MAKES ANY REPRESENTATION OR WARRANTY, 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, 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, except that each of
the Trust Company and the Resident Trustee hereby represents and warrants that
(i) on the Closing Date, the Trust shall have received whatever right, title
and/or interest in or to the Vessel as was conveyed to the Trust on such date
and (ii) the Vessel Interest shall be free and clear of Owner's Liens
attributable to the Trust Company and the Resident Trustee and (b) neither the
Trust Company, the Resident Trustee, the Managing Trustee nor the Delaware
Trustee makes any representation or warranty as to the validity or
enforceability of any Operative Document, or as to the correctness of any
statement therein, except to the extent that any such representation, warranty
or statement is expressly made in an Operative Document or in any written
certificate delivered pursuant thereto by any of the Owner Trustees, Resident
Trustee, or the Trust Company as the case may be, and except that the Trust
Company and Resident Trustee hereby represent and warrant that (i) this Trust
Agreement has been duly executed and delivered by the Trust Company and Resident
Trustee and each of the Owner Trust Documents has been or will be executed and
delivered by officers of the Trust Company, Resident Trustee or by each Owner
Trustee, as the case may be, who are or will be duly authorized to execute and
deliver documents on its behalf, (ii) each of the Trust Company and the Resident
Trustee have all corporate power and authority to execute, deliver and perform
this Trust Agreement and (iii) assuming the due authorization, execution and
delivery of this Trust Agreement by the Owner Participant, this Trust Agreement
constitutes the legal, valid and binding obligations of the Trust Company and
the Resident Trustee enforceable against the Trust Company and Resident Trustee,
respectively, in accordance with its terms.
7.5 No Segregation of Moneys; No Interest. Except as otherwise
-------------------------------------
provided herein, in any other Operative Document or in written instructions from
the Owner Participant, moneys received by any Owner Trustee hereunder need not
be segre-
14
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gated in any manner except to the extent required by law, and may be deposited
under such general conditions as may be prescribed by law, and such Owner
Trustee shall not be liable for any interest thereon.
7.6 Reliance; Advice of Counsel. Neither Owner Trustee 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 such Owner Trustee in good faith to be
genuine and reasonably believed by such Owner Trustee in good faith to be signed
by the proper party or parties. Any request, direction, order or demand of the
Owner Participant or the Charterer mentioned herein or in any other Operative
Document to which the Owner Trust is a party shall be sufficiently evidenced by
an Officer's Certificate of the Owner Participant or the Charterer, as the case
may be. An Owner Trustee may accept in good faith a certified copy of a
resolution of the Board of Directors or other governing body of any corporate
party as conclusive evidence that such resolution has been duly adopted by such
body and that the same is in full force and effect. As to any fact or matter
the manner of ascertainment of which is not specifically prescribed herein, an
Owner 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 such Owner Trustee for any action taken or
omitted to be taken by it in good faith in reliance thereon. In the
administration of the trusts hereunder, an Owner Trustee may execute any of the
trusts or powers hereof and perform its powers and duties hereunder directly or
through agents or attorneys, and may consult with counsel, accountants and other
skilled persons to be selected and employed by it, and an Owner Trustee shall
not be liable for anything done, suffered or omitted in good faith by such Owner
Trustee in accordance with the written advice or opinion within the scope of the
competence of any such counsel, accountants or other skilled persons and not
contrary to this Trust Agreement, except for the exercise of reasonable care in
the appointment of counsel, accountants or other skilled persons.
7.7 Not Acting in Individual Capacity. Except as provided in this
---------------------------------
Trust Agreement, in accepting the trusts hereby created each Owner Trustee
agrees to act solely as trustee hereunder and not in its individual capacity;
and all Persons having any claim against an Owner Trustee by reason of the
transactions contemplated by the Owner Trust Documents
15
<PAGE>
or the Owner Trust U.K. Documents shall look only to the Trust Estate (or a part
thereof, as the case may be) for payment or satisfaction thereof, except as
specifically provided in this Trust Agreement and except to the extent the Trust
Company or the Resident Trustee otherwise shall agree in any Owner Trust
Document or Owner Trust U.K. Document.
SECTION 8. INDEMNIFICATION; COMPENSATION
-----------------------------
8.1 Indemnification of the Trust Company and Resident Trustee. The
---------------------------------------------------------
Owner Participant agrees to assume liability for, and to indemnify and hold
harmless the Trust Company and the Resident Trustee (which terms shall include,
solely for purposes of this Section 8, each officer, director, employee and
agent thereof) against and from any and all liabilities, obligations, damages,
taxes (excluding any taxes, fees or other charges payable by the Trust Company
or the Resident Trustee or measured by any compensation received by each Owner
Trustee for its services hereunder), claims, actions, suits, out-of-pocket
costs, expenses and disbursements of any kind and nature whatsoever, including,
without limitation, the reasonable fees and expenses of counsel but excluding
internal costs and expenses such as salaries (collectively, "Trust Expenses")
--------------
which may be imposed on, incurred by or asserted at any time against the Trust
Company or the Resident Trustee (whether or not also indemnified by any other
Person); provided, however, that to the extent the Trust Company or the Resident
-------- -------
Trustee shall have actually received any payment in the nature of an indemnity
payment from any such other Person relating to a claim hereunder, the Trust
Company and the Resident Trustee shall not be entitled to the amount of any such
payment pursuant to this Section 8.1 in any way relating to or arising out of
(i) the administration of the Trust Estate or the action or inaction of the
Trust Company or Resident Trustee hereunder or under the other Owner Trust
Documents or the Owner Trust U.K. Documents, (ii) the Vessel or any part
thereof, (iii) the Owner Trust Documents or the Owner Trust U.K. Documents or
any of them, the issuance of the Secured Notes or the making of any investment
in the Vessel, payments made pursuant to any thereof or the enforcement by the
Trust Company or the Resident Trustee of any of such Person's rights under the
Owner Trust Documents or the Owner Trust U.K. Documents, or any other
transaction contemplated by the Owner Trust Documents or the Owner Trust U.K.
Documents, or (iv) the manufacture, financing, construction, purchase,
ownership, acquisition, acceptance, rejection, delivery, nondelivery,
possession, transportation, charter, subcharter,
16
<PAGE>
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 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 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; except only that the Owner
Participant shall not be required to indemnify the Trust Company or the Resident
Trustee for Trust Expenses arising or resulting from any of the matters (1)
described in clauses (i) through (v) of the last sentence of Section 7.2 or (2)
for which the Charterer would not have been required to indemnify the Trust
Company or the Resident Trustee pursuant to Section 14.1(a) or 14.2(b) of the
Participation Agreement (disregarding for this purpose (i) clauses 1, 4, 6, 8, 9
(to the extent any "other exclusion" referred to therein refers to clauses 4, 6,
8, 10, 11, 13, or 19 of the proviso to such 14.1(a)), 10, 11, 13 and 19 of the
proviso to Section 14.1(a) of the Participation Agreement and (ii) clauses 2, 5,
7, 10, 14, 15 and 16 of Section 14.2(b) of the Participation Agreement). The
indemnities contained in this Section 8.1 shall survive the termination of this
Trust Agreement. To secure the foregoing indemnities, each Owner Trustee shall
be entitled to apply any amount otherwise distributable to the Owner Participant
pursuant to Section 5.2 against any such indemnity which has not been paid when
due. The indemnities contained in this Section 8.1 extend to the Trust Company
and the Resident Trustee only and shall not be construed as indemnities of the
Trust Estate.
8.2 Compensation and Expenses. Each Owner Trustee agrees that it
-------------------------
shall have no right against the Owner Participant or the Trust Estate for any
fee as compensation for its services or for its expenses, to the extent that the
Charterer has paid such amounts pursuant to Section 2.10 or 14.1(g) of the
Participation Agreement. Subject to the preceding sentence, the Owner
Participant shall pay, or reimburse each Owner Trustee for, all reasonable
expenses of such Owner Trustee, together with reasonable compensation for its
services hereunder as provided herein, including, without limitation, the
reasonable compensation, expenses and disbursements of such agents,
representatives, experts and counsel as each Owner Trustee may employ in
connection with
17
<PAGE>
the exercise and performance of its or his rights and duties under the Owner
Trust Documents and the Owner Trust U.K. Documents (provided that the Trust
shall not have any employees), unless and to the extent that such Owner Trustee
otherwise receives payment or reimbursement pursuant to any Owner Trust Document
or any Owner Trust U.K. Document, whether or not the transactions contemplated
hereby are consummated.
SECTION 9. TERMINATION OF TRUST AGREEMENT
------------------------------
9.1 Termination of Trust Agreement. Subject to the terms of the
------------------------------
Participation Agreement, the Indenture and Sections 5 and 8.1 hereof, this Trust
Agreement and the trust created hereby shall terminate and the Trust Estate
shall be distributed to the Owner Participant, and this Trust Agreement shall be
of no further force or effect, upon the sale or other final disposition by the
Managing Trustee of all property constituting part of the Trust Estate and the
final distribution by the Managing Trustee of all moneys or other property or
proceeds constituting part of the Trust Estate in accordance with the terms of
Section 5.
9.2 Termination at Option of the Owner Participant. The provisions
----------------------------------------------
of Section 9.1 notwithstanding, but subject to Section 11.2, this Trust
Agreement and the trusts created hereby shall terminate and the Trust Estate
shall be distributed to the Owner Participant, and this Trust Agreement shall be
of no further force and effect, upon the election of the Owner Participant by
notice to each Owner Trustee to revoke the trusts created hereby; provided that,
--------
in addition to the giving of such notice, the Owner Participant, with the
cooperation of each Owner Trustee, shall execute and deliver such written
agreements and instruments and take such actions as shall be necessary in order
to cause the succession of the Owner Participant to all the rights, title,
interests, duties and liabilities of each Owner Trustee under the Owner Trust
Documents and the Owner Trust U.K. Documents (other than obligations
attributable to any gross negligence or willful misconduct of the Trust Company
or the Resident Trustee or any breach by either Owner Trustee of its or his
obligations under the Owner Trust Documents or the Owner Trust U.K. Documents);
provided, however, that prior to any such termination, the Lien of the Indenture
- -------- -------
on the Indenture Estate shall have been released, and full payment of the
principal of, or, premium (if any) and interest on the Secured Notes shall have
been made or the Indenture Trustee shall have consented to such termination.
18
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The written agreements and instruments referred to in the preceding sentence
shall be reasonably satisfactory in form and substance to each Owner Trustee and
shall release each Owner Trustee from all further obligations of the Owner
Trustees hereunder and under the agreements and other instruments mentioned in
the preceding sentence.
9.3 Distribution of Trust Estate Upon Termination. Upon any
---------------------------------------------
termination of the trust created hereby pursuant to Section 9.1 or 9.2, the
Owner Trustees shall transfer title to the Trust Estate (and assign all their
right, title and interest in, to and under each Operative Document) to the Owner
Participant or its designee. No later than the effective date of termination of
the trust created hereby the Owner Trustees or its designee(s) shall execute and
deliver to the Owner Participant a bill of sale and other written instrument or
instruments prepared by the Owner Participant in form and substance reasonably
satisfactory to the Owner Trustees evidencing the transfer of title to the Trust
Estate to the Owner Participant and, no later than the effective date of such
termination, the Owner Participant shall execute and deliver to the Owner
Trustees a written instrument in form and substance reasonably satisfactory to
the Owner Trustees evidencing discharge of the Owner Trustees from their
obligations hereunder and under the other Owner Trust Documents and the Owner
Trust U.K. Documents to which each Owner Trustee is a party except those
theretofore accrued and their obligations to release Owner's Liens.
SECTION 10. SUCCESSOR OWNER TRUSTEES,
-------------------------
CO-OWNER TRUSTEES AND
---------------------
SEPARATE OWNER TRUSTEES
-----------------------
10.1 Resignation and Successors. (a) An Owner Trustee may resign at
--------------------------
any time without cause by giving at least sixty (60) days' prior written notice
to the Owner Participant, with a copy to the Indenture Trustee and the
Charterer, such resignation to be effective on the expiration of such sixty (60)
day period. In addition, the Owner Participant at any time may remove an Owner
Trustee without cause by an instrument in writing delivered to such Owner
Trustee, the Indenture Trustee and the Charterer, such removal to be effective
upon the acceptance of appointment by a successor to such Owner Trustee under
paragraph (b) of this Section 10.1. In case of the resignation or removal of an
Owner Trustee, the Owner Participant may appoint a successor to such Owner
Trustee by an instrument in writing, signed by
19
<PAGE>
the Owner Participant. If a successor to an Owner Trustee shall not have been
appointed within thirty (30) days after the giving of written notice of such
resignation or the delivery of the written instrument with respect to such
removal, the Owner Trustee, the Owner Participant, the Indenture Trustee or the
Charterer may apply to any court of competent jurisdiction to appoint a
successor to the Owner Trustee reasonably acceptable to the Owner Participant to
act until such time, if any, as a successor shall have been appointed as above
provided in this Section 10.1. Any successor so appointed by such court shall
immediately and without further act be superseded by any successor to such Owner
Trustee appointed as above provided in this Section 10.1.
(b) Any successor Owner Trustee, however appointed, shall execute and
deliver to the predecessor Owner Trustee an instrument accepting such
appointment and shall give the Owner Participant, the Indenture Trustee and
Charterer written notice of such acceptance. Upon the execution and delivery of
such instrument, such successor Owner Trustee, without further act provided that
any required Governmental Actions have been obtained, shall become vested with
all the estates, properties, rights, powers, duties and trusts of the
predecessor Owner Trustee in the trusts hereunder with like effect as if
originally named an Owner Trustee herein; provided, however, that upon the
-------- -------
written request of such successor Owner Trustee, such predecessor Owner Trustee
shall execute and deliver an instrument transferring to such successor Owner
Trustee, upon the trusts herein expressed, all the estates, properties, rights,
powers, duties and trusts of such predecessor trustee as the Owner Trustee
hereunder, and such predecessor trustee shall duly assign, transfer, deliver and
pay over to such successor Owner Trustee all moneys or other property then held
by such predecessor trustee as the Owner Trustee upon the trusts herein
expressed. Upon the appointment of any successor Owner Trustee hereunder, the
predecessor trustee, pursuant to written instructions of the Owner Participant,
will execute all documents and take all reasonable action within its control in
order to cause such title held in the Trust Estate by such predecessor trustee
to be transferred to the successor Owner Trustee.
(c) Any successor to the Managing Trustee, however appointed, shall
be a bank or trust company incorporated and doing business within the Cayman
Islands or, with the consent of the Owner Participant, the United States and
having a
20
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combined capital and surplus of at least $50,000,000 reasonably acceptable to
the Owner Participant, if there be such an institution willing, able and legally
qualified to perform the duties of an Owner Trustee hereunder upon reasonable or
customary terms.
(d) Any corporation into which the Trust Company 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 Trust Company shall be
a party, or any corporation to which substantially all the corporate trust
business of the Trust Company may be transferred, shall be, subject to
compliance with the terms of paragraph (c) of this Section 10.1, the Managing
Trustee under this Trust Agreement without further act.
(e) Any successor to the Delaware Trustee, however appointed, shall
be a bank or trust company incorporated and doing business within the United
States of America, having its principal place of business in Delaware and having
a combined capital and surplus of at least $50,000,000 reasonably acceptable to
the Owner Participant, if there be such an institution willing, able and legally
qualified to perform the duties of an Owner Trustee hereunder upon reasonable or
customary terms. Any request, approval or consent in writing by the Managing
Trustee shall be sufficient warrant to such additional trustee or separate
trustee, as the case may be, to take such actions as may be so requested,
approved or consented to.
(f) Any corporation into which the Resident 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 Resident Trustee shall
be a party, or any corporation to which substantially all the corporate trust
business of Resident Trustee may be transferred, shall be, subject to compliance
with the terms of paragraph (e) of this Section 10.1, the Delaware Trustee under
this Trust Agreement without further act.
10.2 Additional and Separate Trustees. (a) If the Managing Trustee
--------------------------------
or the Owner Participant shall conclude that it is necessary or prudent in order
to conform to the law of any other jurisdiction in which all or any part of the
Trust Estate shall be situated, or to make or defend any claim or bring or
defend any suit with respect to the Trust Estate, the Secured Notes or any
Operative Document, or pursuant to advice of counsel satisfactory to it, or if
the
21
<PAGE>
Managing Trustee shall have been directed to do so by the Owner Participant, the
Managing Trustee shall appoint another Person to act as additional or separate
trustee for all or any part of the Trust Estate with such property, title,
right, power or duty as the Managing Trustee and the Owner Participant may
determine. In case any such additional trustee or separate trustee shall resign
or be removed, all the assets, property, rights, powers or duties of such
additional trustee or separate trustee, as the case may be, so far as permitted
by any applicable law, shall vest in and be exercised by a new successor to such
additional trustee, appointed in the manner otherwise provided in this Trust
Agreement.
(b) In the event that either the Owner Participant or the Managing
Trustee shall determine to appoint another Person as additional or separate
trustee, the Managing Trustee and the Owner Participant shall execute and
deliver an agreement supplemental hereto, and all other instruments and
agreements necessary or proper to constitute another bank or trust company, or
one or more Persons approved by the Managing Trustee and the Owner Participant,
either to act as an additional trustee or trustees of all or any part of the
Trust Estate, jointly with the Owner Trustees, or to act as separate trustee or
trustees of all or any part of the Trust Estate, in any such case with such
powers as may be provided in such agreement supplemental hereto, and to vest in
such bank, trust company or Person as such additional trustee or separate
trustee, as the case may be, any property, title, right, or power deemed
necessary or proper by the Managing Trustee or the Owner Participant, subject to
the remaining provisions of this Section 10.2. In the event the Owner
Participant shall not have joined in the execution of such agreement
supplemental hereto within fifteen (15) days after the receipt of a written
request from the Managing Trustee so to do without providing a reasonable basis
for such failure to join, the Managing Trustee may act under the foregoing
provisions of this Section 10.2 without the concurrence of the Owner
Participant; and the Owner Participant hereby appoints the Managing Trustee its
agent and attorney-in-fact to act for the Owner Participant under the foregoing
provisions of this Section 10.2 in the event of the occurrence of either of such
contingencies. No additional trustee hereunder shall be an Affiliate or agent
of the Charterer. The Managing Trustee may execute, deliver and perform any
deed, conveyance, assignment or other instrument in writing as may be required
by an additional trustee or separate trustee for more fully and certainly
22
<PAGE>
vesting in and confirming to such Person any property, title, right or power
which, by the terms of such agreement supplemental hereto, are expressed to be
conveyed or conferred to or upon such additional trustee or separate trustee,
and the Owner Participant shall, upon the Managing Trustee's request, join
therein and execute, acknowledge and deliver the same; and the Owner Participant
hereby appoints the Managing Trustee its agent and attorney-in-fact to execute,
acknowledge and deliver any such deed, conveyance, assignment or other
instrument in the event that such Owner Participant shall not itself execute and
deliver the same within fifteen (15) days after receipt by it of such request so
to do.
(c) Every additional trustee and separate trustee hereunder shall, to
the extent permitted by law, be appointed to act and the Owner Trustees shall
act, subject to the following provisions and conditions:
(i) to the extent permitted by applicable law, all powers, duties,
obligations and rights conferred or imposed upon such Owner Trustee in
respect of the receipt, custody, management, investment and payment of
moneys, shall be exercised solely by such Owner Trustee;
(ii) all other rights, powers, duties, and obligations conferred or
imposed upon such Owner Trustee shall be conferred or imposed upon and
exercised or performed by such Owner Trustee and such additional
trustee or trustees and separate trustee or trustees jointly, except
to the extent that under any law of the jurisdiction in which any
particular act or acts are to be performed by such Owner Trustee shall
be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties, and obligations (including the
holding of title to the Trust Estate in any such jurisdiction) shall
be exercised and performed by such additional trustee or trustees or
separate trustee or trustees;
23
<PAGE>
(iii) no power hereby given to, or with respect to which it is hereby
provided may be exercised by, any such additional trustee or separate
trustee shall be exercised hereunder by such additional trustee or
separate trustee or except jointly with, or with the consent of, the
Owner Trustee; and
(iv) no trustee hereunder shall be personally liable for reason of any
act or omission of any other trustee hereunder.
(d) If at any time the Managing Trustee and the Owner Participant
shall deem it no longer necessary or prudent in order to conform to any
applicable law or shall be advised by its counsel that it is no longer necessary
or prudent in the interest of the Owner Trustees and the Owner Participant to
maintain the appointment of such additional or separate trustee as provided
herein, the Owner Trustees and the Owner Participant shall execute and deliver
any agreement supplemental hereto and all other instruments and agreements
necessary or proper to remove any such additional or separate trustee. In the
event that the Owner Participant shall not have joined in the execution of such
agreement supplemental hereto, instruments and agreements, the Managing Trustee
may act on behalf of the Owner Participant to the same extent provided above in
this Section 10.2.
(e) Any additional trustee or separate trustee may at any time by an
instrument in writing constitute either Owner Trustee its agent or attorney-in-
fact with full power and authority, to the extent which may be authorized by
applicable law, to do all acts and things and exercise all discretion which it
is authorized or permitted to do or exercise, for and in its behalf and in its
name. In case any such additional trustee or separate trustee shall die, become
incapable of acting, resign or be removed, all the assets, property, rights,
powers, trusts, duties and obligations of such additional trustee or separate
trustee, as the case may be, so far as permitted by law, shall vest in and be
exercised by the Owner Trustees without necessity of any act by any party and
without the appointment of a new successor to such additional or separate
trustee, unless and until a successor is appointed in the manner provided in
this Section 10.2.
24
<PAGE>
(f) Each additional or separate trustee appointed pursuant to this
Section 10.2 shall be subject to, and shall have the benefit of, Sections 6.1
through 6.7 and Sections 8.1 and 11.2 insofar as they apply to the Owner
Trustees. No appointing of, or action by, any additional trustee will relieve
the Owner Trustees of any of its obligations hereunder or under any other
Operative Document. Any request, approval or consent in writing by the Managing
Trustee shall be sufficient warrant to such additional trustee or separate
trustee, as the case may be, to take such actions as may be so requested,
approved or consented to.
SECTION 11. SUPPLEMENTS AND AMENDMENTS
--------------------------
11.1 Supplements and Amendments. Subject to the terms of the
--------------------------
Operative Documents and the U.K. Documents, at the written request of the Owner
Participant, this Trust Agreement shall be amended by a written instrument
signed by the Trust Company and the Owner Participant (provided however, that in
-------- -------
the event such amendment adversely affects the duties or obligations of the
Resident Trustee, such amendment shall be signed by the Resident Trustee as
well), but if in the reasonable opinion of the Trust Company (or Resident
Trustee, if applicable) any instrument required to be so executed adversely
affects any right, duty or liability of, or immunity or indemnity in favor of
the Trust Company (or Resident Trustee, if applicable), under this Trust
Agreement or any of the documents contemplated hereby to which it is a party, or
would cause or result in any conflict with or breach of any term, condition or
provision of, or default under, its charter documents or by-laws or any document
contemplated hereby to which it is a party, the Trust Company (or Resident
Trustee, if applicable), in its sole discretion may decline to execute such
instrument.
11.2 Limitation on Amendments. The provisions of Section 11.1
------------------------
notwithstanding, but subject to Sections 11.1(g) and 17.6(b) of the
Participation Agreement, (i) this Trust Agreement may not be revoked or
terminated by the Owner Participant and (ii) the Owner Participant shall not
request the Trust Company or Resident Trustee to execute any amendment which
would result in the trusts created hereunder being terminated or which would
materially adversely affect the Indenture Estate or the holders of the Secured
Notes, in either case prior to the release of the Lien of the Indenture on the
Indenture Estate or prior to the payment in full of the principal of, premium
(if any) and interest on the
25
<PAGE>
Secured Notes unless the Indenture Trustee shall have consented to any such
revocation, termination or amendment.
SECTION 12. MISCELLANEOUS
-------------
12.1 No Legal Title to Trust Estate in the Owner Participant. The
-------------------------------------------------------
Owner Participant shall not have legal title to any part of the Trust Estate.
No transfer, by operation of law or otherwise, of any right, title and interest
of the Owner Participant in and to the Trust Estate or hereunder shall operate
to terminate this Trust Agreement or the trusts created hereby or entitle any
successor or transferee to an accounting or to the transfer to it of legal title
to any part of the Trust Estate.
12.2 Sale of the Vessel by the Managing Trustee is Binding. Any
-----------------------------------------------------
sale, transfer or other conveyance of the Vessel or other property included in
the Trust Estate or any part thereof by the Managing Trustee made pursuant to
the terms of this Trust Agreement or any other Operative Document or Owner Trust
U.K. Document shall bind the Owner Participant and shall be effective to
transfer or convey all right, title and interest of the Owner Trustees and the
Owner Participant in and to the Vessel Interest or other property included in
the Trust Estate or part 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 Owner Trustees.
12.3 Notices. Unless otherwise expressly specified or permitted by
-------
the terms hereof, all notices hereunder shall be given as provided in Section
17.3 of the Participation Agreement.
12.4 Severability of Provisions. Any provision of this Trust
--------------------------
Agreement 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 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
26
<PAGE>
thereof that renders any term or provision hereof invalid or unenforceable in
any respect.
12.5 Separate Counterparts. This Trust Agreement may be executed by
---------------------
the parties hereto 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.
12.6 Successors and Assigns. This Trust Agreement, including the
----------------------
terms and provisions hereof, shall be binding upon the Owner Participant, the
Trust Company, Resident Trustee and each Owner Trustee, whichever is applicable
pursuant to the terms hereof, and their respective successors and assigns, and
inure to the benefit of the Owner Participant, the Trust Company, Resident
Trustee or each Owner Trustee, whichever is applicable pursuant to the terms
hereof, and their respective successors and permitted assigns, all as herein
provided. Any request, notice, direction, consent, waiver or other instrument
or action by the Owner Participant shall bind the successors and assigns of the
Owner Participant.
12.7 Transfer of Owner Participant's Interest. (a) All provisions of
----------------------------------------
Section 15 of the Participation Agreement shall (with the same force and effect
as if set forth in full, mutatis mutandis, in this Section 12.7) be applicable
----------------
to any assignment, conveyance or other transfer by any Owner Participant of any
of its right, title or interest in and to the Trust Estate or this Trust
Agreement or any other Operative Document and notwithstanding (S) 3805(d) of the
Delaware Business Trust Act the Owner Participant may only transfer its interest
in compliance with that provision.
(b) In the event that at any time there shall be more than one Owner
Participant pursuant to the provisions of Section 13 of the Participation
Agreement, then in each such case, as used herein, the term "Owner Participant"
shall be deemed to refer to each such Owner Participant, except that any
reference to consents, approvals or waivers of the "Owner Participant" as used
herein shall require the consent, approval or waiver of each such Owner
Participant. At any time that there shall be required to be made hereunder any
distribution, disbursement, assignment or other transfer of monies or, any other
item whatsoever, then such distribution, disbursement, assignment or other
transfer shall be made pro rata to each Owner Participant existing at such time
in accordance with their respective interests hereunder. If
27
<PAGE>
there shall be more than one Owner Participant, no Owner Participant shall be
liable for performance by any other Owner Participant of such other Owner
Participant's obligations under the Operative Documents or the U.K. Documents or
in respect of actions taken by any other Owner Participant except as otherwise
expressly so set forth.
12.8 Headings; Table of Contents. The division of this Trust
---------------------------
Agreement 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 hereof.
12.9 GOVERNING LAW. THIS TRUST AGREEMENT SHALL BE GOVERNED
-------------
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
JURISDICTION.
12.10 Performance by the Owner Participant. Any obligation of the
------------------------------------
Trust Company, the Resident Trustee or either Owner Trustee hereunder or under
any other Operative Document or other document contemplated hereby, may be
performed by the Owner Participant and any such performance shall not be
construed as a revocation of the trusts created hereby.
12.11 The Owner Trust Documents. If any provision in this Trust
-------------------------
Agreement shall conflict with or otherwise be inconsistent with the terms of any
Owner Trust Document or any Owner Trust U.K. Document, the terms of such Owner
Trust Document or Owner Trust U.K. Document shall control.
12.12 Performance of Obligations to Indenture Trustee. After the
-----------------------------------------------
Indenture shall have been discharged and all of the principal of an premium, if
any, and interest on the Secured Note is paid in full pursuant to the terms
thereof, the provisions of this Trust Agreement 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 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.
12.13 Trust Agreement for Benefit of Parties Only. Unless otherwise
-------------------------------------------
expressly provided herein, nothing herein shall be construed to give any Person
other than the Owner
28
<PAGE>
Trustees and the Owner Participant and to the extent provided in Sections 5.1,
6.1, 9.2, 10.1 and 11.2, the Indenture Trustee and the holders of the Secured
Notes any legal or equitable right, remedy or claim under or in respect of this
Trust Agreement and this Trust Agreement shall be held to be for the sole and
exclusive benefit of the Owner Trustees, the Owner Participant, the Indenture
Trustee and the holders of the Secured Notes.
12.14 Limitation on Owner Participant's Liability. Except as
-------------------------------------------
expressly set forth herein, the Owner Participant shall not have any liability
for the performance of this Trust Agreement.
12.14 No Petition. Unless otherwise agreed in writing by both the
-----------
Indenture Trustee and Owner Participant, each Owner Trustee and the Owner
Participant hereby covenant and agree to the fullest extent permitted by law
that they will not at any time institute on behalf of or against the Trust or
join in any institution on behalf of or against the Trust, of any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, proceedings
under any United States Federal or state bankruptcy or similar law.
12.16 Waiver, Etc. No term or provision hereof may be changed,
------------
waived, discharged or terminated orally, but only by an instrument in writing
entered into in compliance with the terms of Section 11 hereof and any waiver of
the terms hereof shall be effective only in the specific instance and for the
specific purpose given.
29
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this Trust
Agreement to be duly executed as of the date first above written.
DEUTSCHE MORGAN GRENFELL (CAYMAN)
LIMITED, not in its individual
capacity, except as expressly
provided herein, but solely as
Managing Owner Trustee
By: ________________________
Its:
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as
expressly provided herein, but solely
as Delaware Owner Trustee
By: _______________________
Its:
QM TANKER CO. L.L.C.
By: _______________________
Its:
[QM TANKER 1178 TRUST]
<PAGE>
Appendix A
----------
<PAGE>
Exhibit A
---------
Form of Certificate of Trust of [_______] Trust
This Certificate of Trust (the "Trust"), dated as of November ___,
1997, is being duly executed and filed by Wilmington Trust Company and Deutsche
Morgan Grenfell (Cayman) Limited, a Cayman Islands company, as trustees, to form
a business trust under the Delaware Business Trust Act (12 Del. C. (S)3801 et
------- --
seq.).
- ---
(a) Name. The name of the business trust formed hereby is
----
[_______________] Trust.
(b) Delaware Trustee. The name and business address of the
----------------
trustee of the Trust with its principal place of business in the
State of Delaware is _________________________.
IN WITNESS WHEREOF, the undersigned, being all of the trustees of
the Trust, have executed this Certificate of Trust as of the date first-above
written.
[DELAWARE TRUSTEE], as Trustee
By: ____________________________
Name:
Title:
[SPC TRUSTEE], as Trustee
By: ____________________________
Name:
Title:
<PAGE>
EXHIBIT 4.13
PARTICIPATION AGREEMENT
among
MOBIL EQUIPMENT FINANCE COMPANY INC.,
Charterer
QM TANKER CO., LLC,
Owner Participant
QM TANKER 1178 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 5, 1997
=======================================================================
Lease Financing of One LR1 Crude Oil Tank Vessel
Hull No. 1178
=======================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
SECTION 1. DEFINITIONS; INTERPRETATION................................................. 2
SECTION 2. COMMITMENTS OF PARTICIPANTS; CLOSING; FUNDING; TRANSACTION EXPENSES.......... 2
SECTION 3. CONDITIONS TO CLOSING BY THE CHARTERER....................................... 5
SECTION 4. CONDITIONS TO CLOSING BY THE PASS THROUGH TRUSTEE............................ 7
SECTION 5. CONDITIONS TO CLOSING BY OWNER............................................... 13
SECTION 6. REPRESENTATIONS AND WARRANTIES OF............................................ 18
SECTION 7. REPRESENTATIONS AND WARRANTIES OF THE OWNER
PARTICIPANT.................................................................. 22
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE PASS THROUGH TRUSTEE................... 24
SECTION 9. REPRESENTATIONS AND WARRANTIES OF THE TRUST
COMPANY AND OWNER TRUST...................................................... 25
SECTION 10. REPRESENTATIONS AND WARRANTIES OF INDENTURE
TRUSTEE..................................................................... 28
SECTION 11. CHARTERER COVENANT.......................................................... 30
SECTION 12. OTHER COVENANTS AND AGREEMENTS.............................................. 32
SECTION 13. INDEMNIFICATION............................................................. 38
SECTION 14. TRANSFER OF AN OWNER PARTICIPANT'S.......................................... 50
SECTION 15. MISCELLANEOUS............................................................... 52
</TABLE>
<PAGE>
PARTICIPATION AGREEMENT
-----------------------
THIS PARTICIPATION AGREEMENT, dated as of December 5, 1997, is among
MOBIL EQUIPMENT FINANCE COMPANY INC., a Delaware corporation ("Charterer"), QM
TANKER CO., LLC, a Cayman Islands limited life company ("Owner Participant"),
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 ("Pass
Through Trustee"), QM TANKER 1178 TRUST, a trust created pursuant to the
Delaware Business Trust Act under the Trust Agreement, ("Owner Trust"), DEUTSCHE
MORGAN GRENFELL (CAYMAN) LIMITED, a Cayman Islands company (the "Trust
Company"), not in its individual capacity except to the extent expressly set
forth herein but solely as Managing Trustee under the Trust Agreement (in such
capacity, "Managing Trustee"), 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. ("Indenture Trustee").
RECITALS:
A. The Owner Trust desires to finance its acquisition of the
Vessel Interest 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
U.K. Lessor has entered into the Construction Contract pursuant to which the
U.K. Lessor will pay the purchase contract price for the Vessel.
E. Prior to the execution and delivery of this Agreement, the
Owner Trust and the U.K. Lessor have entered 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.
<PAGE>
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,
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
2
<PAGE>
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
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
LLP, 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 the 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
3
<PAGE>
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.
2.8 Conclusion of U.K. Arrangements. (a) The parties acknowledge
-------------------------------
that prior to the Closing Date, the U.K. Financing was 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.
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 Charterer.
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 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 Salomon Brothers, Inc 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
4
<PAGE>
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 Closing 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 Construction Contract;
(d) the Supervisory Agreement;
(e) the Head Lease;
(f) the Indenture;
(g) the Secured Note;
(h) the Guaranty;
(i) the Trust Agreement;
(j) the Pass Through Trust Agreement;
5
<PAGE>
(k) the Pass Through Trust Supplement;
(l) the Underwriting Agreement; and
(m) the Pass Through Trust Certificate
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 and the original Pass
Through Trust Certificate shall be delivered as instructed by the Pass
Through Trustee).
3.2 Legality, Etc. No change shall have occurred after November 21,
-------------
1997 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 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, any other Operative Document, to which it is
or will be a party, or the Pass Through Trust Agreement or (y) the ability of
Guarantor to perform its obligations under the Guarantee.
6
<PAGE>
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.
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.
7
<PAGE>
4.2 Closing 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 Construction Contract;
(d) the Supervisory Agreement;
(e) the Indenture;
(f) the Secured Note;
(g) the Trust Agreement; and
(h) 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 November 21,
-------------
1997 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 [Reserved].
--------
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;
8
<PAGE>
(b) Dewey Ballantine LLP, special counsel to the Charterer and the
Guarantor, substantially in the form of Exhibit A-2;
(c) [reserved];
(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 LLP, counsel to the Indenture Trustee, substantially
in the form of Exhibit A-7;
(h) Bingham Dana LLP counsel to the Pass Through Trustee,
substantially in the form of Exhibit A-8;
(i) Dewey Ballantine LLP 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;
9
<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
(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:
10
<PAGE>
(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;
(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
11
<PAGE>
(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 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) [except
-----------------------------
as set forth in Schedule 4,] all filings and recordings and other action
necessary or advisable to perfect the
12
<PAGE>
security interest in 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 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. 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 Construction Contract, Head Lease,
Supervisory Agreement, and Lessee Support Agreement 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 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 Closing 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;
13
<PAGE>
(c) the Construction Contract;
(d) the Supervisory Agreement;
(e) the Indenture;
(f) the Secured Note;
(g) the Trust Agreement; and
(h) the Guaranty;
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 November 24,
-------------
1997 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 [Reserved]
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) [Reserved]
(d) Maples & Calder, special counsel to the Owner Participant,
substantially in the form of Exhibit A-4;
14
<PAGE>
(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 LLP, counsel to the Indenture Trustee, substantially
in the form of Exhibit A-7;
(h) Bingham Dana LLP, counsel to the Pass Through Trustee,
substantially in the form of Exhibit A-8;
(i) Dewey Ballantine LLP, 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;
15
<PAGE>
(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 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;
16
<PAGE>
(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.
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
17
<PAGE>
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 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 filings and recordings or other actions necessary or advisable to
perfect the security interest in the Indenture Estate created by the Indenture
(or arrangements therefor satisfactory to the Loan Participant), 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 security interest.
5.13 Sale of Pass Through Certificates. The 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 Charter. 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 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
18
<PAGE>
properties, and to enter into and perform its obligations under this Agreement,
each other Operative Document to which it is a party and the Pass Through Trust
Agreement. 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, any other Operative Document to which it is a party, the Pass
Through Trust Agreement or the Pass Through Trust Supplement.
6.2 Authorization. The execution, delivery and performance by the
-------------
Charterer of this Agreement, each other Operative Document to which it is a
party, the Pass Through Trust Agreement and the Pass Through Trust Supplement
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. The Pass Through Trust Agreement, the
-------------------------
Pass Through Trust Supplement, this Agreement 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, (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,
19
<PAGE>
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 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
-----------------------------
filings and recordings and other action necessary or advisable to perfect the
security interest in 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 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.
20
<PAGE>
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.
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 the
Underwriter, 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 the Other Vessel 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.
21
<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,
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 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
22
<PAGE>
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.
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.
23
<PAGE>
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 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
24
<PAGE>
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 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
25
<PAGE>
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.
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 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.
26
<PAGE>
(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 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
27
<PAGE>
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 statements
with respect thereto or the sale or transfer of the Vessel Interest).
9.10 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.
9.11 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:
28
<PAGE>
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 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 foresee), is reasonably likely materially and
adversely to
29
<PAGE>
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 Maintenance of Corporate Existence, Etc. Subject to the
---------------------------------------
provisions of Section 11.2, 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.
11.2 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 expressly
assume all of the obligations of the Charterer under the Operative
Documents;
(ii) immediately after giving effect to such transaction, no Charter
Event of Default shall have occurred and be continuing; and
(iii) 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
30
<PAGE>
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 as an entirety in accordance
with this Section 11.2, 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 11.2 from its
liability hereunder.
11.3 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.
11.4 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 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 security interest of the Indenture Trustee in
the Indenture Estate granted or intended to be created under the Indenture 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 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.
11.5 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
31
<PAGE>
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,
so long as it is a subcharterer of the Vessel, 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 11.5 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.
11.6 Documentation of Vessels. The Charterer agrees that, at or
------------------------
before the time of delivery of the Vessel to the Owner Trust pursuant to the
Head Lease on the Delivery Date, the Charterer shall cause the Vessel to be
documented, on a provisional basis, in the name of the U.K. Lessor (but 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
U.K. Lessor promptly after the Delivery Date. The Charterer shall throughout
the Charter Period cause the documentation of the Vessel to be maintained 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 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, 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 interest in the Vessel
Interest.
11.7 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:
32
<PAGE>
(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
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 security interest of the Indenture
Trustee in the Indenture Estate granted or intended to be created under the
Indenture 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
33
<PAGE>
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 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 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.
(i) Trustee's Fees. The Owner Participant 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 Owner Participant
shall have the right to receive and review any substantiation relating to
any such ongoing expense as it may reasonably request.
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
34
<PAGE>
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 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.
35
<PAGE>
(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 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.
36
<PAGE>
(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.
(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,
37
<PAGE>
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 any 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
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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, (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 or in any Officer's Certificate delivered by the Charterer
or the Guarantor or (v) any claim for premiums or other charges related to
insurance carried by Charterer in accordance with the provisions of Article 16
of the Charter; provided, however, that the Charterer shall not be required to
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indemnify any Indemnitee under this Section 13.1 for (1) any Claim to the extent
attributable to acts, events, circumstances or conditions which arise, occur or
exist after the earliest of: (I) the return of possession of the Vessel
Interest to the Owner Trust or its designee pursuant to the terms of the Charter
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 and (III) sale
of the Vessel or the Vessel Interest to a third party as contemplated by the
Operative Documents or the U.K. Documents if the Charter shall not be in effect
following such sale, (2) any Claim to the extent resulting from the willful
misconduct or gross negligence of such Indemnitee or of any member of its
Related Indemnity Group (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 (or any member of its Related Indemnity Group at its own expense or
for which such Indemnitee is not entitled to indemnity or reimbursement, (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, the Vessel
Interest, the Secured Note, 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 (or any
member of its Related Indemnitee Group) 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 attributable to the non-compliance by any Indemnitee (or any
member of its Related Indemnitee Group) with the terms of the Operative
Documents or to the extent resulting from 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) or any member of its
Related Indemnitee Group, (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 business,
transaction or other activity in which such Indemnitee or any member of such
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Indemnitee's Related Indemnitee Group 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 solely from a Charter Event
of Default, (8) any Claim to the extent attributable to the authorization or
giving or withholding by such Indemnitee or any member of its Related Indemnitee
Group 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 or any member of such Indemnitee's Related Indemnitee
Group for which such Indemnitee or any member of such Indemnitee's Related
Indemnitee Group is not indemnified hereunder as a result of any other exclusion
under this Section 13.1, (10) any Claim resulting from any 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 or any member of such
Indemnitee's Related Indemnitee Group 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 (or any member of its Related Indemnitee Group), (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 terms of any Operative
Document any amounts received and distributable by it thereunder, (16) any Claim
that constitutes a Permitted Lien or to the extent resulting from the imposition
of any Lien which the Indemnitee is required to lift and discharge pursuant to
any Operative Document or 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
or in connection with, or based upon any inaccuracy, incompleteness or
misleading nature of any statement or representation or alleged untrue statement
of a material fact contained in any written information supplied or made
available by such Indemnitee or any member of its Related Indemnitee Group
specifically for inclusion in the preparation of any offering document or
registration statement relating to the offer, sale or disposition of any Secured
Notes or the Pass Through Certificates, or any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; (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 or any member of such Indemnitee's Related
Indemnitee Group 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 or any member of
such Indemnitee's Related Indemnitee Group, (19) any Claim to the extent that
such Claim would not have arisen but for the appointment of a successor or an
additional Owner
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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, (21) any Claim arising
from the negligence or strict liability of such Indemnitee or any member of such
Indemnitee's Related Indemnitee Group to the extent indemnity therefor would be
in violation of applicable law or (22) any disputes between or among Indemnitees
or their respective Related Indemnitee Groups that arise from (A) a
misrepresentation by an Indemnitee or any member of its Related Indemnitee Group
or a failure by an Indemnitee or any member of its Related Indemnitee Group to
perform such Indemnitee's obligations, warranties and covenants under the
Operative Documents or (B) a dispute over the interpretation of the Operative
Documents that does not result from a Charter Event of Default.
(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 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
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<PAGE>
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, the Owner Trustees 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 specified 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) Insured Claims. In the case of any Claim indemnified by the
--------------
Charterer hereunder which is covered by a policy of insurance maintained by the
Charterer (or any Affiliate thereof), each Indemnitee and each member of its
Related Indemnitee Group agrees to cooperate with the insurers in the exercise
of the insurers' rights to investigate, defend, or compromise such Claim to
retain the benefits of such insurance with respect to such Claim.
(e) 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 or any member of its Related Indemnitee Group ). 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.
(f) 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 any member of its Related Indemnitee Group or for
which the Charterer shall have reimbursed any Indemnitee or any member of its
Related Indemnitee Group 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 or any member of its Related Indemnitee Group on such amount plus the
amount of any tax savings realized directly or indirectly by such Indemnitee or
any member of its Related Indemnitee Group as a result of such payment made to
the Charterer.
(g) 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
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amount shown on such written statement, in which case such verification shall be
at such Indemnitee's expense.
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 which 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
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(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
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)
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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 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
44
<PAGE>
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
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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;
(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 the Pass Through Trustee for acting as Pass Through Trustee under
the Pass Through Trust Agreement;
(7) other than with respect to the Owner Participant, 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;
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<PAGE>
(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 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,
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<PAGE>
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 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 Agreement, including,
without limitation, requirements relating to Taxes described in Section
13.2(b)(1).
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(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 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
48
<PAGE>
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 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
49
<PAGE>
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.
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 14.
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
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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 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;
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(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 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
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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 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
53
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relating to the transactions contemplated hereby and thereby, not including the
Joint Venture Agreement.
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 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
covenant, whether express or implied, contained herein, all such liability, if
any, being expressly waived by each of the other parties
54
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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 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
55
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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.
56
<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 EQUIPMENT FINANCE COMPANY INC.
By:_____________________________
Name:
Title:
OWNER PARTICIPANT: QM TANKER CO. LLC
By:_____________________________
Name:
Title:
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:_____________________________
Name:
Title:
OWNER TRUST: QM TANKER 1178 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:_________________________
Name:
Title:
[PARTICIPATION AGREEMENT - 1178]
<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:_____________________________
Name:
Title:
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:_____________________________
Name:
Title:
[PARTICIPATION AGREEMENT - 1178]
<PAGE>
APPENDIX A
DEFINITIONS
<PAGE>
SCHEDULE 1
to
Participation Agreement
-----------------------
ADDRESSES FOR NOTICES AND PAYMENTS
----------------------------------
<PAGE>
SCHEDULE 2
to
Participation Agreement
-----------------------
INVESTMENT
----------
<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 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.
<PAGE>
SCHEDULE 4
<PAGE>
Exhibit A-1
<PAGE>
Exhibit A-2
<PAGE>
Exhibit A-3
<PAGE>
Exhibit A-4
<PAGE>
Exhibit A-5
<PAGE>
Exhibit A-6
<PAGE>
Exhibit A-7
<PAGE>
Exhibit A-8
<PAGE>
Exhibit A-9
<PAGE>
Exhibit A-10
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
SECTION 1. DEFINITIONS; INTERPRETATION................................................. 2
SECTION 2. COMMITMENTS OF PARTICIPANTS; CLOSING; FUNDING; TRANSACTION EXPENSES.......... 2
SECTION 3. CONDITIONS TO CLOSING BY THE CHARTERER....................................... 5
SECTION 4. CONDITIONS TO CLOSING BY THE PASS THROUGH TRUSTEE............................ 7
SECTION 5. CONDITIONS TO CLOSING BY OWNER............................................... 13
SECTION 6. REPRESENTATIONS AND WARRANTIES OF............................................ 18
SECTION 7. REPRESENTATIONS AND WARRANTIES OF THE OWNER
PARTICIPANT.................................................................. 22
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE PASS THROUGH TRUSTEE................... 24
SECTION 9. REPRESENTATIONS AND WARRANTIES OF THE TRUST
COMPANY AND OWNER TRUST...................................................... 25
SECTION 10. REPRESENTATIONS AND WARRANTIES OF INDENTURE
TRUSTEE..................................................................... 28
SECTION 11. CHARTERER COVENANT.......................................................... 30
SECTION 12. OTHER COVENANTS AND AGREEMENTS.............................................. 32
SECTION 13. INDEMNIFICATION............................................................. 38
SECTION 14. TRANSFER OF AN OWNER PARTICIPANT'S.......................................... 50
SECTION 15. MISCELLANEOUS............................................................... 52
</TABLE>
<PAGE>
EXHIBIT 4.14
MOBIL GUARANTY
among
MOBIL CORPORATION
and
DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED,
Managing Trustee
and
STATE STREET BANK AND TRUST COMPANY,
Indenture Trustee
and
STATE STREET BANK AND TRUST COMPANY,
Pass Through Trustee and Loan Participant
and
QM TANKER CO. L.L.C.,
Owner Participant
------------------------------
Dated as of December 5, 1997
------------------------------
- -------------------------------------------------------------------------------
Lease Financing of One LR1 Crude Oil Tank Vessel
Hull No. 1178
- -------------------------------------------------------------------------------
<PAGE>
MOBIL GUARANTY
THIS Guaranty, dated as of December 5, 1997 (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 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 Equipment Finance Company 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 5, 1997 (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):
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF GUARANTOR
Section 1.1. Representations and Warranties of Guarantor. The
-------------------------------------------
Guarantor hereby represents and warrants that:
(a) 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
<PAGE>
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 the financial
condition of the Guarantor and its subsidiaries on a consolidated basis or their
business or operations, or the Guarantor's ability to perform any of its
obligations under this Guaranty.
(b) 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.
(c) 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.
(d) 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 (except that no representation or warranty is made herein with respect to
the Securities Act, the Trust Indenture Act and the securities or Blue Sky laws
of the various states), (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.
(e) (e) No Governmental Action and no consent of any other Person (including,
without limitation, any stockholder or creditor of the Guarantor) is required in
connection with the execution, delivery or performance of this Guaranty, except
such as are required under the Securities Act, the Trust Indenture Act and the
securities or Blue Sky laws of the various states.
(f) 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, 1996 and the
consolidated financial statements of the Guarantor set forth in its Quarterly
Report on Form 10-Q for each of the three month periods ended March 31, 1997,
June 30, 1997 and September 30, 1997 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, 1997,
2
<PAGE>
there has been no material adverse change in such consolidated financial
position of the Guarantor and its Subsidiaries, taken as a whole.
(g) Except as disclosed in the Guarantor's Annual Report on Form 10-K for the
year ended December 31, 1996 or the Guarantor's Quarterly Report on Form 10-Q
for the three month periods ended March 31, 1997, June 30, 1997 and September
30, 1997, 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.
(h) The Guarantor owns, directly or indirectly, 100% of the equity interest
in the Charterer.
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, 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 Assigned Hire, perform or observe or cause to be performed or
observed each such Obligation and shall pay the amount of each such unpaid
Obligation 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
3
<PAGE>
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 hereunder shall remain in full force and effect until
the Obligations are finally, 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 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;
4
<PAGE>
(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 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
5
<PAGE>
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 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
6
<PAGE>
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. Section 3.3. Right to Proceed Against Guarantor. In the
----------------------------------
event of a default in any payment or performance of any Obligation owed to a
Beneficiary when and as the same shall become due, whether at the stated
maturity thereof, by acceleration or otherwise, such Beneficiary may proceed to
enforce its rights hereunder and such Beneficiary 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. The
provisions of Section 6.7 of the Pass Through Trust Agreement and Section 5.11
of the Indenture shall apply to actions proposed to be commenced hereunder
against the Guarantor by the Certificateholders or by the Pass Through Trustee
in its capacity as Loan Participant.
Section 3.4. Guarantor to Pay Costs of Enforcement. The Guarantor agrees to
--------------------------------------
pay all costs, expenses 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) 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.
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
7
<PAGE>
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 equity securities and all regular and
periodic reports filed by the Guarantor with the SEC except for reports on SEC
Forms 3, 4 or 5 or any comparable reports.
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. Benefited 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
8
<PAGE>
applicable law, the parties hereto hereby waive any provision thereof that
renders any term or provision hereof invalid or unenforceable in any respect.
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.
9
<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
By: ____________________
Name:
Title:
ACCEPTED:
DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED, in its
individual capacity
By: ____________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY, in its
individual capacity and as Indenture Trustee
By: ____________________
Name:
Title:
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
By: ____________________
Name:
Title:
<PAGE>
QM TANKER CO., LLC
By: ____________________
Name:
Title:
QM TANKER 1178 TRUST
By: Deutsche Morgan Grenfell (Cayman)
Limited, as Managing Trustee
By: ____________________
Name:
Title:
<PAGE>
EXHIBIT 4.15
APPENDIX A
HULL NO. 1178
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 Accrual Date:
<PAGE>
Accrual Date Accreted Value
----------------- --------------
January 2, 1998 $26,476,244.36
July 2, 1998 27,361,874.73
January 2, 1999 28,277,129.44
July 2, 1999 29,222,999.42
January 2, 2000 30,200,508.75
March 31, 2000 30,700,000.00
(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 mean the dates specified as such 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 officer of the Guarantor whose
responsibilities include administration of the transactions contemplated by
the Operative Documents.
"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",
-----------
2
<PAGE>
"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.
"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
3
<PAGE>
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 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.
"Bank Guarantee" shall mean the Lessor's Guaranty.
--------------
"Bareboat Hire" shall mean, for any Rate Period, the sum of the Base
-------------
Hire and the 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, 2000.
"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 Hyundai Heavy Industries, Co. LTD Inc., a
-------
Korean corporation, and Hyundai Corporation, a Korean corporation,
collectively.
"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
4
<PAGE>
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 LR1 Class Crude Oil Tank
------- -------------
Vessel Charter Party dated as of the Closing Date between the Owner Trust
and the Charterer relating to the Vessel.
"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 Party Termination 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 Equipment Finance Company 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,
5
<PAGE>
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 5, 1997.
------------
"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.
"Construction Contract" shall mean the Shipbuilding Contract dated
---------------------
November 24, 1997 between the Builder and the U.K. Lessor providing for the
construction and sale of the Vessel.
"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 March 31, 1998.
------------
"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
-------------
by the Builder to the U.K. Lessor, 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 of the Builder at Ulan,
-------------
Korea.
"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.
6
<PAGE>
"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 applicable 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 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.
7
<PAGE>
"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 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.
"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 sales price that would be obtained in an arm's-length
sale, respectively, between an informed and willing buyer (under no
compulsion to 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
----
8
<PAGE>
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 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 March 31, 2000.
-----------------
"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 Corporation 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.
"Head Lease" shall mean the Lease Agreement dated November 24, 1997
----------
between U.K. Lessor and the Owner Trust.
9
<PAGE>
"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.
"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 or Excess Hire or any
interest in any of the foregoing (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
10
<PAGE>
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 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 November 4, 1997 between MOSAT and QSC.
"Lessee Support Agreement" shall mean the agreement dated as of the
------------------------
Closing Date among the Charterer, the U.K. Lessor and the Owner Trust with
respect to certain obligations of the Owner Trust under the Head Lease.
11
<PAGE>
"Lessor's Guaranty" shall mean that certain Deed of Guarantee of
-----------------
Abbey National Treasury Services place , dated November 24, 1997,
guaranteeing certain obligations of the Head Lessor under the Head Lease.
"Lessor's Mortgage" shall mean the U.K. Lessor's Mortgage.
-----------------
"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 (or any similar law) 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.
"Make-Whole Amount" shall mean: with respect to any Series 1997 C
-----------------
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.
"MEFC" shall mean Mobil Equipment Finance Company 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.
-------
12
<PAGE>
"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.
"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 Construction Contract, the
-------------------
Supervisory Agreement, the Guarantee, the Indenture, each Indenture
Supplement, the Charter Party, the Participation Agreement, the Secured
Notes, the Ship Mortgage (if in effect at the relevant time) and the Trust
Agreement.
"Other Owner Trust" shall mean QM Tanker 1177 Trust, the Delaware
-----------------
Business Trust which is the lessee under a head lease from the U.K. Lessor
of the Other Vessel.
"Other Charter" or "Other Charter Party" shall mean the Bareboat
------------- -------------------
Charter Party dated as of the Closing Date between the other Owner Trust
and the Charterer, providing for the bareboat charter of the Other Vessel.
"Other Vessel" shall mean the crude oil tank vessel identified as
------------
Hull No. 1177 in the shipbuilding contract dated November 24, 1997 between
Builder and U.K. Lessor.
"Other Vessel Interest" shall mean the rights of the Other Owner
---------------------
Trust in the 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
13
<PAGE>
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
(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 or Excess Hire or any interest in
any of the foregoing (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, 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
14
<PAGE>
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 of the Owner Participant interest 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 or Excess Hire or any interest in
any of the foregoing (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.
----------------
"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.
15
<PAGE>
"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,
seven 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.
"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.
"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 180 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
16
<PAGE>
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 180 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 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 180 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 Vessel Interest, the Trust Estate or the Indenture
Estate, 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 Permitted Subcharter.
"Permitted Subcharterer" shall mean any subcharterer or sub-
----------------------
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.
"QSC" shall mean the Qatar Shipping Company, a corporation existing
---
under by laws of Qatar.
17
<PAGE>
"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.
"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, 3.05 or 3.06 of
the Indenture.
"Redemption Price" shall have the meaning specified in Section 3.10
----------------
of the Indenture.
"Related Indemnitee Group" shall mean, with respect to any
------------------------
Indemnitee, his or its respective Affiliates, servants, officers,
employees, directors, shareholders and agents.
"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.
18
<PAGE>
"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 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 1997 C Secured Notes" shall mean the Secured Note issued
---------------------------
under Section 2.01(b) of the Indenture and any Series 1997 C 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 Preferred Ship Mortgage
-------------
covering the Vessel executed and delivered in accordance with Section 3.04
of the Indenture.
"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.
"Subsidiary" of any Person shall mean any corporation, association
----------
or other business entity of which more than fifty percent (50%) of the
total voting
19
<PAGE>
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
---------------------
November 24, 1997 between MOSAT, the Owner Trust, the U.K. Lessor and the
Builder, providing for supervising the construction of the Vessel and the
transfer by the U.K. Lessor of certain rights under the Construction
Contract.
"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.
"Termination Election" shall mean an election by the Charterer to
--------------------
terminate the Charter pursuant to Article 18(a) thereof.
20
<PAGE>
"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 the Underwriter 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 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
21
<PAGE>
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 Declaration and Agreement of Trust
---------------
dated as of November 19, 1997 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.
"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 Head Lease, the Lessor's Guaranty,
--------------
the U.K. Lessor's Mortgage, the U.K. 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.
22
<PAGE>
"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 First Ship Mortgage, dated
----------------------
on or about the Delivery Date and covering the Vessel, from the U.K. Lessor
to the Owner Trust, securing certain obligations of the U.K. Lessor under
the Head Lease.
"U.K. Lessor's Security Assignment" shall mean the Lessor's Security
---------------------------------
Assignment between the U.K. Lessor and the Owner Trust delivered on or
about the Delivery Date pursuant to the Head Lease.
"U.K. Obligations" shall have the meaning set forth in Section 13.3
----------------
of the Participation Agreement.
"Underwriter" shall mean Salomon Brothers, Inc, a Delaware
-----------
corporation.
"Underwriting Agreement" shall mean the Underwriting Agreement among
----------------------
the Guarantor, the Charterer and the Underwriter relating to the purchase
and sale of the Pass Through Certificates.
"Vessel" shall mean the LR1 Class crude oil tank vessel known as
------
Hull No. 1178 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 U.K. Lessor pursuant to the Head Lease.
"Vessel Interest" means all of the right, title and interest of the
---------------
Owner in the Vessel, comprising the Owner's rights under the Head Lease,
together with certain ancillary rights thereto, and including the rights in
such Vessel of the Owner under the Charter, Trust Agreement, Participation
Agreement and the Operative Documents (other than the right to receive
Excepted Payments) and the related U.K. Documents, and prior to the
delivery of the Vessel under the Construction Contract, the Owner's rights
under the Supervisory Agreement.
23
<PAGE>
EXHIBIT 4.16
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Issuer or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch the registered owner hereof,
Cede & Co., has an interest herein.
MOBIL CORPORATION 1997-C PASS THROUGH TRUST
Pass Through Certificate, Series 1997-C
Final Distribution Date: January 2, 2018
evidencing a fractional undivided interest in a trust, the property of
which includes certain secured notes each issued in respect of a Vessel
chartered to Mobil Equipment Finance Company Inc., all of whose
obligations are guaranteed by Mobil Corporation.
Certificate CUSIP No.
No. 01 6070GUAC8
$61,400,000 Fractional Undivided Interest representing
.00163% of the Trust per $1,000 Reference Principal Amount
THIS CERTIFIES THAT CEDE & CO., as nominee of the Depository Trust
Company, for value received, is the registered owner of a Fractional Undivided
Interest in the amount of SIXTY-ONE MILLION FOUR HUNDRED THOUSAND DOLLARS
($61,400,000) (the "Reference Principal Amount") in the Mobil Corporation 1997-C
Pass Through Trust (the "Trust") created by State Street Bank and Trust Company,
as trustee (the "Trustee"), pursuant to a Pass Through Trust Agreement, dated as
of October 4, 1996 (the "Basic Agreement"), as supplemented by the Pass Through
Trust Supplement No. 1997-C thereto dated as of December 5, 1997 (collectively,
the "Agreement"), among the Trustee, Mobil Corporation, a Delaware corporation
(the "Guarantor") and Mobil Equipment Finance Company Inc., a Delaware
corporation (the "Company"), a summary of certain of the pertinent provisions of
which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the
Agreement. This Certificate is one of the duly authorized Certificates
designated as "Pass Through Certificates, Series 1997-C" (herein called the
"Certificates"). This Certificate is issued under and is subject to the terms,
provisions, and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Certificateholder is bound. The property of the Trust includes certain Secured
Notes (the "Trust Property"). Each issue of the Secured Notes is issued in
respect of a Vessel leased to the Company all of whose obligations are
guaranteed by the Guarantor.
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The Certificates represent fractional undivided interests in the Trust
and the Trust Property, and have no rights, benefits or interest in respect of
any other separate trust established pursuant to the terms of the Basic
Agreement for any other series of certificates issued pursuant thereto.
Subject to and in accordance with the terms of the Agreement, from
funds then available to the Trustee, there will be distributed on each January 2
and July 2 (a "Regular Distribution Date"), commencing on July 2, 2000, to the
Person in whose name this Certificate is registered at the close of business on
the 15th day preceding the applicable Regular Distribution Date, an amount in
respect of the Scheduled Payments on the Secured Notes due on such Regular
Distribution Date, the receipt of which has been confirmed by the Trustee, equal
to the product of the percentage interest in the Trust evidenced by this
Certificate and an amount equal to the sum of such Scheduled Payments. Subject
to and in accordance with the terms of the Agreement, in the event that Special
Payments on the Secured Notes are received by the Trustee, from funds then
available to the Trustee, there shall be distributed on the applicable Special
Distribution Date, to the Person in whose name this Certificate is registered at
the close of business on the 15th day preceding such Special Distribution Date,
an amount in respect of such Special Payments on the Secured Notes, the receipt
of which has been confirmed by the Trustee, equal to the product of the
percentage interest in the Trust evidenced by this Certificate and an amount
equal to the sum of such Special Payments so received. If a Regular
Distribution Date or Special Distribution Date is not a Business Day,
distribution shall be made on the immediately following Business Day with the
same force and effect as if made on such Regular Distribution Date or Special
Distribution Date and no interest shall accrue during the intervening period.
The Trustee shall mail notice of each Special Payment and the Special
Distribution Date therefor to the Certificateholder of this Certificate.
Distributions on this Certificate will be made by the Trustee by check
mailed to the Person entitled thereto, without the presentation or surrender of
this Certificate or the making of any notation hereon. Except as otherwise
provided in the Agreement and notwithstanding the above, the final distribution
on this Certificate will be made after notice mailed by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency of the Trustee specified in such notice.
The Certificates do not represent an obligation of, or an obligation
guaranteed by, or an interest in, the Guarantor, the Company or the Trustee or
any affiliate thereof. The Certificates are limited in right of payment, all as
more specifically set forth herein on the face hereof and in the Agreement. All
payments or distributions made to Certificateholders under the Agreement shall
be made only from the Trust Property and only to the extent that the Trustee
shall have sufficient income or proceeds from the Trust Property to make such
payments in accordance with the terms of the Agreement. Each Holder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to
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3
summarize the Agreement and reference is made to the Agreement for information
with respect to the interests, rights, benefits, obligations, proceeds and
duties evidenced hereby. A copy of the Agreement may be examined during normal
business hours at the principal office of the Trustee, and at such other places,
if any, designated by the Trustee, by any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Guarantor, the Company and the rights of the Certificateholders under the
Agreement at any time with the consent of the Holders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the Trust. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Certificateholder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the
Certificateholders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in its capacity as Registrar, or
by any successor Registrar, duly endorsed or accompanied by a written instrument
of transfer in form satisfactory to the Trustee and the Registrar duly executed
by the Holder hereof or such Certificateholder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate Fractional Undivided Interest in the Trust will be
issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in minimum denominations of $1,000 Fractional Undivided Interest and
integral multiples thereof except that one Certificate may be in a denomination
of less than $1,000. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
Fractional Undivided Interest in the Trust, as requested by the
Certificateholder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee shall require payment of a sum sufficient to cover
any tax or governmental charge payable in connection therewith.
The Guarantor, the Company, the Trustee, the Registrar and any agent
of the Trustee or the Registrar may treat the person in whose name this
Certificate is registered on the Register as the owner hereof for all purposes,
and neither the Guarantor, the Company, the Trustee, the Registrar nor any such
agent shall be affected by any notice to the contrary.
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The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
the Agreement and the disposition of all property held as part of the Trust
Property.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
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IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
MOBIL CORPORATION 1997-C
PASS THROUGH TRUST
By: STATE STREET BANK AND
TRUST COMPANY,
as Trustee
By:
-----------------------
Title:
Dated: December 5, 1997
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred
to in the within-mentioned Agreement.
STATE STREET BANK AND
TRUST COMPANY,
as Trustee
By:
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Authorized Officer
