_____________________________________________________________________________
_____________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 8, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________
Commission File Number 1-8544
AMERICAN PRESIDENT COMPANIES, LTD.
(Exact name of registrant as specified in its charter)
Delaware 94-2911022
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1111 Broadway
Oakland, California 94607
(Address of principal executive offices)
Registrant's telephone number: (510) 272-8000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days. Yes (X) No ( ).
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at May 6, 1994
___________________________ __________________________
Common Stock, $.01 par value 27,245,262
_____________________________________________________________________________
_____________________________________________________________________________
<PAGE>
AMERICAN PRESIDENT COMPANIES, LTD.
INDEX
PART I. FINANCIAL INFORMATION Page
_____________________
Item 1. Consolidated Financial Statements
Statement of Income 3
Balance Sheet 4
Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6-12
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 13-20
Part II. OTHER INFORMATION
_________________
Item 1. Legal Proceedings 21-22
Item 6. Exhibits and Reports on Form 8-K 22-23
SIGNATURES 24
The consolidated financial statements presented herein include the
accounts of American President Companies, Ltd. and its wholly-owned
subsidiaries (the "company") and have been prepared by the company, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. The company believes that the disclosures are adequate to make
the information presented not misleading, although certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations. In the opinion of
management, the consolidated financial statements reflect all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the company's results of operations, financial position and
cash flows. The consolidated financial statements should be read in
conjunction with the consolidated financial statements and the notes thereto
included in the company's Annual Report on Form 10-K for the year ended
December 31, 1993 (Commission File No. 1-8544).
<PAGE>
American President Companies, Ltd. and Subsidiaries
<TABLE>
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
_______________________________________________________________________________________________
<CAPTION>
(In thousands, except per share amounts) 14 Weeks Ended
April 8, 1994 April 2, 1993
_______________________________________________________________________________________________
<S> <C> <C>
REVENUES $ 703,128 $ 630,892
_______________________________________________________________________________________________
EXPENSES
Operating, Net of Operating-
Differential Subsidy 636,064 563,785
General and Administrative 19,369 14,053
Depreciation and Amortization 28,440 29,397
_______________________________________________________________________________________________
Total Expenses 683,873 607,235
_______________________________________________________________________________________________
OPERATING INCOME 19,255 23,657
_______________________________________________________________________________________________
Interest Income 3,269 1,059
_______________________________________________________________________________________________
Interest Expense (7,211) (5,460)
_______________________________________________________________________________________________
Income Before Taxes 15,313 19,256
Federal, State and Foreign Tax Expense 5,145 7,125
_______________________________________________________________________________________________
NET INCOME $ 10,168 $ 12,131
_______________________________________________________________________________________________
Less Dividends on Preferred Stock 1,688 1,688
NET INCOME APPLICABLE TO COMMON STOCK $ 8,480 $ 10,443
_______________________________________________________________________________________________
_______________________________________________________________________________________________
EARNINGS PER COMMON SHARE
_______________________________________________________________________________________________
Primary Earnings Common Per Share $ 0.30 $ 0.39
_______________________________________________________________________________________________
Fully Diluted Earnings Common Per Share $ 0.30 $ 0.38
_______________________________________________________________________________________________
DIVIDENDS PER COMMON SHARE $ 0.10 $ 0.075
_______________________________________________________________________________________________
_______________________________________________________________________________________________
</TABLE>
See notes to consolidated financial statements.
<PAGE>
American President Companies, Ltd. and Subsidiaries
<TABLE>
CONSOLIDATED BALANCE SHEET (Unaudited)
_______________________________________________________________________________________________
<CAPTION>
(In thousands, except share amounts) April 8 December 31
1994 1993
_______________________________________________________________________________________________
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash and Cash Equivalents $ 175,301 $ 84,053
Short-Term Investments 51,717
Trade and Other Receivables 288,062 271,053
Fuel and Operating Supplies 38,631 35,354
Prepaid Expenses and Other 50,349 48,378
_______________________________________________________________________________________________
Total Current Assets 604,060 438,838
_______________________________________________________________________________________________
PROPERTY AND EQUIPMENT
Ships 677,117 676,854
Containers, Chassis and Rail Cars 752,998 750,557
Leasehold Improvements and Other 248,291 249,636
Construction in Progress 80,273 74,138
_______________________________________________________________________________________________
1,758,679 1,751,185
Accumulated Depreciation and Amortization (842,215) (825,003)
_______________________________________________________________________________________________
Property and Equipment, Net 916,464 926,182
_______________________________________________________________________________________________
INVESTMENTS AND OTHER ASSETS 90,519 89,357
_______________________________________________________________________________________________
Total Assets $ 1,611,043 $ 1,454,377
_______________________________________________________________________________________________
_______________________________________________________________________________________________
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current Portion of Long-Term Debt
and Capital Leases $ 4,552 $ 4,395
Accounts Payable and Accrued Liabilities 389,190 383,029
_______________________________________________________________________________________________
Total Current Liabilities 393,742 387,424
_______________________________________________________________________________________________
DEFERRED INCOME TAXES 134,991 130,228
_______________________________________________________________________________________________
OTHER LIABILITIES 118,190 118,966
_______________________________________________________________________________________________
LONG-TERM DEBT 387,944 250,610
CAPITAL LEASE OBLIGATIONS 15,128 16,696
_______________________________________________________________________________________________
Total Long-Term Debt and Capital Lease Obligations 403,072 267,306
_______________________________________________________________________________________________
COMMITMENTS AND CONTINGENCIES
_______________________________________________________________________________________________
REDEEMABLE PREFERRED STOCK, $.01 Par Value,
Stated at $50.00, Authorized-2,000,000
Shares Series C, Shares Issued and Outstanding-
1,500,000 in 1994 and 1993 75,000 75,000
_______________________________________________________________________________________________
STOCKHOLDERS' EQUITY
Common Stock $.01 Par Value, Stated at $1.00
Authorized-60,000,000 Shares
Shares Issued and Outstanding-
27,242,000 in 1994 and 26,837,000 in 1993 27,242 26,837
Additional Paid-In Capital 66,157 61,656
Retained Earnings 392,649 386,960
_______________________________________________________________________________________________
Total Stockholders' Equity 486,048 475,453
_______________________________________________________________________________________________
Total Liabilities, Redeemable Preferred Stock
and Stockholders' Equity $ 1,611,043 $ 1,454,377
_______________________________________________________________________________________________
_______________________________________________________________________________________________
</TABLE>
See notes to consolidated financial statements.
<PAGE>
American President Companies, Ltd. and Subsidiaries
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
_______________________________________________________________________________________________
<CAPTION>
(In thousands) 14 Weeks Ended
April 8, 1994 April 2, 1993
_______________________________________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Income $ 10,168 $ 12,131
Adjustments to Reconcile Net Income to Net
Cash Provided by (Used in) Operating Activities:
Depreciation and Amortization 28,440 29,397
Deferred Income Taxes 2,808 825
Change in Receivables (15,839) (12,678)
Issuance of Notes Receivable on
Sales of Real Estate (1,170)
Change in Fuel and Operating Supplies (3,277) (2,718)
Change in Prepaid Expenses and Other Current Assets (16) 7,569
Gain on Sale of Property and Equipment (650) (929)
Change in Accounts Payable and Accrued Liabilities 6,161 (20,459)
Other 2,271 1,762
________________________________________________________________________________________________
Net Cash Provided by Operating Activities 28,896 14,900
________________________________________________________________________________________________
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (20,355) (36,771)
Proceeds from Sales of Property and Equipment 1,794 1,330
Purchase of Short-Term Investments (51,717)
Proceeds from Sales of Short-Term Investments 38,846
Transfers from Capital Construction Fund 5,573
Deposits to Capital Construction Fund (2,870)
Other (3,329) (1,449)
________________________________________________________________________________________________
Net Cash Provided by (Used in)
Investing Activities (73,607) 4,659
________________________________________________________________________________________________
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Debt 147,348 268,592
Repayments of Capital Lease Obligations (1,456) (111,314)
Repayments of Debt (10,014) (265,373)
Dividends Paid (4,403) (3,661)
Other 4,830 4,425
________________________________________________________________________________________________
Net Cash Provided by (Used in)
Financing Activities 136,305 (107,331)
________________________________________________________________________________________________
Effect of Exchange Rate Changes on Cash (346) (768)
________________________________________________________________________________________________
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 91,248 (88,540)
________________________________________________________________________________________________
Cash and Cash Equivalents at Beginning of Period 84,053 92,835
________________________________________________________________________________________________
Cash and Cash Equivalents at End of Period $ 175,301 $ 4,295
________________________________________________________________________________________________
SUPPLEMENTAL DATA:
________________________________________________________________________________________________
CASH PAID FOR:
Interest $ 1,812 $ 15,094
Income Taxes (Net of Refunds) $ (344) $ 682
________________________________________________________________________________________________
</TABLE>
See notes to consolidated financial statements.
<PAGE>
American President Companies, Ltd. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1. Significant Accounting Policies
Capitalized Interest
For the first quarter of 1994, the company capitalized interest of
$1.6 million related to cash expenditures for the construction of the C11-
class and K10-class vessels. No interest costs were capitalized in the
first quarter of 1993.
Income Taxes
The provision for income taxes has been calculated using the
effective tax rate estimated for the respective years. The tax rates were
34% and 37% for the first quarters of 1994 and 1993, respectively. The 1994
estimated effective tax rate includes the effect of revisions of prior
years' estimated tax liabilities.
Reclassifications
Certain 1993 amounts have been reclassified to conform with the 1994
presentation.
Note 2. Operating-Differential Subsidy Agreement
The company and the United States Maritime Administration ("MarAd")
are parties to an Operating-Differential Subsidy ("ODS") agreement expiring
December 31, 1997, which provides for payment by the U.S. government to
partially compensate the company for the relatively greater expense of
vessel operation under United States registry and requires the company to
replace the capacity of its existing vessels as they reach the end of their
statutory lives if a construction differential subsidy, provided by the U.S.
government, is made available. This subsidy has not been made available
since 1981. The ODS amounts for the quarters ended April 8, 1994 and April
2, 1993 were $16.4 million and $16.7 million, respectively, and have been
included as a reduction of operating expenses.
ODS payments to the company, which totaled $64.7 million in 1993,
are expected to terminate at the end of 1997. The Clinton Administration
and Congress are actively reviewing U.S. maritime policy. On November 4,
1993, the U.S. House of Representatives passed the "Maritime Security and
Competitiveness Act of 1993," H.R. 2151, which would extend the U.S.
government's maritime support program for up to ten years for a U.S.-flag
fleet of up to 52 vessels, but would substantially reduce the amount of
support payments to $2 million per participating vessel. Additionally, this
bill restricts worldwide acquisition of new and used vessels. On March 10,
1994, the Clinton Administration sent its maritime proposal, "The Maritime
Security Program", to Congress, which would provide for $1 billion over a
ten year period to fund a program for a U.S.-flag fleet of up to 52 vessels.
This program would provide support payments of up to $2.5 million per vessel
for three years and up to $2 million per vessel for the next seven years and
would not restrict worldwide acquisition of new and used vessels. Although
the Administration's proposal lacks specific details of the program, it was
introduced in the U.S. House of Representatives as H.R. 4003 and in the
Senate as S. 1945. Both the House and Senate have held hearings on this
legislation, and it is anticipated that Congress will amend the
<PAGE>
American President Companies, Ltd. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 2. Operating-Differential Subsidy Agreement (continued)
Administration's proposal to include many of the missing details. The
company is not able to predict whether maritime reform legislation will be
enacted or whether enacted legislation, if any, will have terms similar to
H.R. 2151 or H.R. 4003/S. 1945.
While the company continues to support efforts to enact new maritime
support legislation, prospects for passage of a program acceptable to the
company are unclear. Accordingly, on July 16, 1993, the company filed
applications with MarAd to operate under foreign flag its six C11-class
containerships and to transfer to foreign flag seven of the 15 U.S.-flag
containerships in its trans-Pacific fleet. Enactment of maritime reform
legislation, if any, may influence the company's decision whether to operate
these ships under foreign flag, should its applications be approved.
Management of the company believes that, in the absence of ODS or an
equivalent government support program, it is generally no longer
commercially viable to own or operate containerships in foreign trade under
the U.S. flag because of the higher labor costs and the more restrictive
design, maintenance and operating standards applicable to U.S.-flag liner
carriers. The company continues to evaluate its strategic alternatives in
light of the expiration of its ODS agreement and the uncertainties as to
whether a new U.S. government maritime support program acceptable to the
company will be enacted, whether sufficient labor efficiencies can be
achieved through the collective bargaining process, and whether the
company's applications to flag its vessels under foreign registry will be
approved. While no assurances can be given, management of the company
believes that it will be able to structure its operations to enable it to
continue to operate on a competitive basis without direct U.S. government
support.
Note 3. Accounts Payable and Accrued Liabilities
Accounts Payable and Accrued Liabilities at April 8, 1994 and
December 31, 1993 were as follows:
<TABLE>
________________________________________________________________________________________________
<CAPTION>
(In thousands) April 8 December 31
1994 1993
________________________________________________________________________________________________
<S> <C> <C>
Accounts Payable $ 45,147 $ 39,101
Accrued Liabilities 275,587 268,342
Current Portion of Accrued Claims 11,500 11,500
Accrued Restructuring Charge 2,410 3,135
Income Taxes 4,232 1,551
Unearned Revenue 50,314 59,400
________________________________________________________________________________________________
Total Accounts Payable and Accrued Liabilities $ 389,190 $ 383,029
________________________________________________________________________________________________
________________________________________________________________________________________________
</TABLE>
<PAGE>
American President Companies, Ltd. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 4. Long-Term Debt
Long-Term Debt at April 8, 1994 and December 31, 1993 consisted of
the following:
<TABLE>
________________________________________________________________________________________________
<CAPTION>
(In thousands) April 8 December 31
1994 1993
________________________________________________________________________________________________
8% Senior Debentures $150 million Face Amount
<S> <C> <C>
Due on January 15, 2024 (1) $ 147,127
7 1/8% Senior Notes $150 million Face Amount
Due on November 15, 2003 (1) 147,954 $ 147,915
Series I 8% Vessel Mortgage Bonds
Due Through 1997 (2) 71,471 81,000
8% Refunding Revenue Bonds Due on November 1, 2009 12,000 12,000
Refunding Revenue Bonds, at Various Rates Not to
Exceed 12%, Due on November 1, 2009 6,495 6,495
Note Payable at 9% Due Through 1997 3,092 3,577
Notes Payable at Prime plus 1% 616 616
Note Payable at 10% Due Through 1998 227
________________________________________________________________________________________________
Total Debt 388,982 251,603
Current Portion (1,038) (993)
________________________________________________________________________________________________
Long-Term Debt $ 387,944 $ 250,610
________________________________________________________________________________________________
________________________________________________________________________________________________
</TABLE>
(1) In November 1993, the company filed a shelf registration statement
covering the issuance from time to time of up to $400 million of debt
securities of varying terms and amounts. Pursuant to this
registration statement, in November 1993, the company issued 7 1/8%
Senior Notes with a face amount of $150 million. The unamortized
discount was $2.0 million and $2.1 million at April 8, 1994 and
December 31, 1993, respectively. The effective interest rate of this
debt is 7.325%, and interest payments are due semiannually. Also
pursuant to this registration statement, in January 1994, the company
issued 8% Senior Debentures with a face amount of $150 million. These
senior debentures have an unamortized discount of $2.9 million at
April 8, 1994. The effective interest rate on this debt is 8.172%,
and interest payments are due semiannually.
(2) Principal payments are due in equal semiannual installments. The
company has the option to issue Series II Bonds due sequentially in
semiannual payments at the end of the term of the Series I Bonds in
lieu of up to five cash payments, which it has not exercised.
Principal payments are classified as long-term debt on the basis that
the company issues Series II Bonds totaling $23.8 million per year in
lieu of the next five semiannual cash payments.
On March 25, 1994, the company entered into a credit agreement with
a group of banks that provides for an aggregate commitment of up to $200
million for a five-year period. The credit agreement contains various
financial covenants that require the company to meet certain levels of
interest coverage, leverage and net worth. The borrowings bear interest at
rates based upon various indices as elected by the company. The annual
commitment fee is a maximum of one-half of one percent of the available
amount. Any outstanding borrowings under this agreement would be classified
as long-term. The company had no outstanding borrowings under this
agreement at April 8, 1994.
<PAGE>
American President Companies, Ltd. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 4. Long-Term Debt (continued)
As an alternative to borrowing under its credit agreement, the
company has an option under that agreement to sell up to $150 million of
certain accounts receivable to the banks. This alternative is subject to
less restrictive financial covenants than the borrowing option.
Note 5. Stockholders' Equity
Earnings Per Common Share
For the quarters ended April 8, 1994 and April 2, 1993, primary and
fully diluted earnings per common share were computed by dividing net
income, reduced by the amount of the dividends on the Series C Cumulative
Convertible Preferred Stock, by the weighted average number of common shares
and common equivalent shares outstanding. The number of shares used in
these computations were as follows:
<TABLE>
________________________________________________________________________________________________
<CAPTION>
Weighted Average Number of Common Shares Outstanding
________________________________________________________________________________________________
(In millions) 14 Weeks Ended
April 8, 1994 April 2, 1993
________________________________________________________________________________________________
<S> <C> <C>
Primary 28.6 27.2
Fully Diluted 28.6 27.4
________________________________________________________________________________________________
________________________________________________________________________________________________
</TABLE>
Cash Dividends
On April 28, 1994, the Board of Directors declared a quarterly cash
dividend of $0.10 per share of common stock, payable on May 31, 1994 to
common stockholders of record on May 15, 1994. The Board of Directors also
declared a cash dividend of $1.125 on the 9% Series C Cumulative Convertible
Preferred Stock, payable on June 15, 1994 to preferred stockholders of
record on June 1, 1994.
Stock Incentive Plans
At the 1994 Annual Meeting of Stockholders on April 28, 1994, the
company received stockholder approval to increase the number of shares of
common stock reserved for issuance under the 1989 Stock Incentive Plan by
2,000,000 shares. Pursuant to the 1989 Stock Incentive Plan, the company
granted options to acquire 1,238,908 shares to 380 key employees of the
company on April 28, 1994. The options have an exercise price of $22.38,
vest between 1995 and 2002 based upon the achievement of stock price
appreciation targets, and expire in July 2003.
<PAGE>
American President Companies, Ltd. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 6. Commitments and Contingencies
Commitments
In May 1993, the company entered into contracts for the construction
and purchase of six new C11-class containerships from Howaldtswerke-Deutsche
Werft AG, of Germany ("HDW") (three ships) and Daewoo Shipbuilding and Heavy
Machinery, Ltd., of Korea ("Daewoo") (three ships). The total estimated
project cost for the construction of these vessels is $537 million. A $52
million progress payment was made in 1993 upon contract effectiveness,
approximately half of which was paid to HDW and half to Daewoo, and a
progress payment of $4 million was made to HDW in the first quarter of 1994.
The remaining progress payments are due in installments of $27 million and
$20 million in 1994 and 1995, respectively, and the final 80% is due upon
delivery of the vessels. In March 1994, the company entered into a loan
agreement with European banks to finance approximately $400 million of the
purchase price of the six C11-class vessels. Principal payments on any draw-
downs would be due in semiannual installments over a 12 year period
commencing six months after the delivery of each vessel. Interest rates
would be based upon various margins over LIBOR or the banks' cost of funds
as elected by the company. The remaining costs of these vessels are
expected to be financed with a portion of the net proceeds from the
company's public debt offerings and cash from operations.
In connection with the construction and purchase of the ships from
HDW, the company entered into foreign currency contracts to buy Deutsche
marks in the future to lock in the U.S. dollar cost of the Deutsche-mark
denominated price of the vessels. Any gains or losses on these contracts
will be deferred and recognized as an adjustment to the cost basis of the
ships when the related payments are made. At April 8, 1994, the company had
net contracts to purchase $237 million in Deutsche marks.
In December 1993, the company entered into contracts with Daewoo for
the construction and purchase of three diesel-powered K10-class
containerships to be delivered in 1996. The total estimated project cost
for construction of these vessels is $195 million. A progress payment of
$18 million was made to Daewoo in 1993. The remaining progress payments are
due in two $18 million installments in 1995 and 70% upon delivery of the
vessels. The remaining costs of these vessels are expected to be financed
with a portion of the net proceeds from the company's public debt offerings
and cash from operations.
At April 8, 1994, the company had outstanding purchase commitments
to acquire facilities, equipment and services totaling $52.7 million. In
addition, the company has commitments to purchase terminal services for its
major Asian operations. These commitments range from one to ten years, and
the amounts of the commitments under these contracts are based upon the
actual services performed. At April 8, 1994, the company had outstanding
letters of credit totaling $10.5 million which guarantee the company's
performance under certain of its commitments.
<PAGE>
American President Companies, Ltd. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 6. Commitments and Contingencies (continued)
Commitments
In 1993, the company entered into a 30-year lease with the Port of
Los Angeles for a new terminal facility. In connection with that lease, the
company has agreed to provide at least six gantry cranes and certain
intermodal handling equipment by the inception of the lease in 1997, the
estimated minimum cost of which, if purchased, is approximately $70 million.
Additionally, the company is continuing to negotiate with the Port of
Seattle for improvement and expansion of its existing terminal facility.
The company and Orient Overseas Container Line, a Hong Kong shipping
company ("OOCL"), have been parties to agreements enabling them to exchange
vessel space and coordinate vessel sailings through 2005. Currently, each
party is guaranteed vessel space and buys extra space as needed. Beginning
in December 1993, the company is required to purchase additional vessel
space from OOCL and will compensate OOCL for this space at a rate currently
calculated at $6.6 million per year, accrued ratably. This commitment
reduces as the company increases the capacity it can exchange with OOCL,
which is expected to begin with the delivery of the company's C11-class
vessels in 1995.
On April 26, 1994, the company and Transportacion Maritima Mexicana
("TMM"), a Mexican transportation company, entered into an agreement
enabling them to reciprocally charter vessel space for a period of three
years. Under the agreement, cargo will be transported between major Asian
ports and certain ports on the Pacific Coast of the U.S. and Mexico. Each
party is committed to purchase a minimum amount of vessel space at contract
rates and may buy available extra space as needed. The company's minimum
space purchase commitment exceeds that of TMM by approximately $5.3 million
per year.
The company has entered into employment agreements with certain of
its executive officers. The agreements provide for certain payments to each
officer upon termination of employment, other than as a result of death,
disability in most cases, or justified cause, as defined. The aggregate
estimated commitment under these agreements was $16.6 million at April 8,
1994.
Contingencies
On May 2, 1994, one of the company's C9-class vessels, the President
Washington, which is deployed in the trans-Pacific service with a capacity
of 2,750 twenty-foot equivalent units, was involved in a collision off Busan
harbor in Korea. Initial reports indicate that substantial damage to the
vessel and its cargo and cargo containers was sustained. The vessel
proceeded to Busan harbor to discharge the cargo and commence repairs when a
fire erupted in containers stowed on deck on May 6. The fire was contained
on May 9, but additional cargo and cargo container damages were sustained.
The causes and responsibility for the collision and fire are under
investigation. Current estimates by the shipyard indicate that the vessel
is expected to be back in service in July. The extent of the costs to the
company, which will include vessel, cargo and container damages as well as
loss of revenue and increased operating expenses, are yet undetermined.
They are expected to be substantial, but the company anticipates they will
<PAGE>
American President Companies, Ltd. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 6. Commitments and Contingencies (continued)
be partially offset by insurance and/or recoveries from parties determined
to be responsible for the incidents.
The company is a party to various legal proceedings, claims and
assessments arising in the course of its business activities. Based upon
information presently available, and in light of legal and other defenses
and insurance coverage and other sources of payment available to the
company, management does not expect these legal proceedings, claims and
assessments, individually or in the aggregate, to have a material adverse
impact on the company's consolidated financial position or operations.
Note 7. Business Segment Information
<TABLE>
________________________________________________________________________________________________
<CAPTION>
(In millions) 14 Weeks Ended
April 8, 1994 April 2, 1993
________________________________________________________________________________________________
Revenues
<S> <C> <C>
Transportation $ 698.2 $ 630.5
Real Estate 4.9 0.5
________________________________________________________________________________________________
Total Revenues $ 703.1 $ 631.0
________________________________________________________________________________________________
________________________________________________________________________________________________
Operating Income
Transportation $ 16.6 $ 23.7
Real Estate 2.6 0.0
________________________________________________________________________________________________
Total Operating Income $ 19.2 $ 23.7
________________________________________________________________________________________________
________________________________________________________________________________________________
</TABLE>
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
<TABLE>
RESULTS OF OPERATIONS
<CAPTION>
First Quarter First Quarter
(In millions) 1994 Change 1993
_______________________________________________________________________________________________
Revenues
<S> <C> <C> <C>
International Transportation $ 508 7% $ 475
North America Transportation 190 23% 155
Real Estate 5 N/A 1
________________________________________________________________________________________________
Operating Income
Transportation $ 16 (30%) $ 24
Real Estate 3 N/A
_______________________________________________________________________________________________
_______________________________________________________________________________________________
</TABLE>
Operating income for the first quarter of 1994 was $19 million,
including $8 million resulting from the collection of Desert Storm detention
charges and a $3 million contribution from real estate sales, compared with
operating income of $24 million in the first quarter of 1993. There was no
collection of Desert Storm detention charges or contribution from real
estate sales in the first quarter of 1993. The decrease in operating income
from last year's first quarter is attributable to depressed rates in the
company's U.S. export market, a lower proportion of higher-rated import
cargo and approximately $7 million of expenditures on corporate initiatives
to improve the company's financial and order cycle processes.
While no assurances can be given, the company expects to complete
sales of its remaining real estate in the second quarter of 1994, after
which there will be no further contributions to the company's results from
real estate operations. Additionally, all detention claims have been
settled and additional payments of $1.6 million are expected to be received
during the remainder of 1994.
<TABLE>
INTERNATIONAL TRANSPORTATION (1)
<CAPTION>
First Quarter First Quarter
(Volumes in thousands of FEUs) 1994 Change 1993
________________________________________________________________________________________________
Import
<S> <C> <C> <C>
Volumes 49.8 (5%) 52.2
Average Revenue per FEU $ 4,048 0% $ 4,039
________________________________________________________________________________________________
Export
Volumes 42.5 11% 38.4
Average Revenue per FEU $ 3,090 (10%) $ 3,442
________________________________________________________________________________________________
Intra-Asia
Volumes 50.1 19% 41.9
Average Revenue per FEU $ 1,879 (1%) $ 1,904
________________________________________________________________________________________________
________________________________________________________________________________________________
</TABLE>
(1) Volumes and revenue per forty-foot equivalent unit ("FEU") data are
based upon shipments originating during the period, which differs from
the percentage-of-completion method which is used for financial
reporting purposes.
The company's U.S. import volumes decreased in the first quarter of
1994 compared with the same period last year due to weakness in the
company's U.S. import market as well as increased competition. In the first
quarter of 1994, there were fewer shipments by the company of higher-rated
cargo such as textiles, auto parts, electronics and refrigerated cargo than
in the first quarter of 1993. Volumes of the company's U.S. export
shipments increased in the first quarter of 1994 compared with the first
quarter of 1993, primarily due to increased shipments of U.S. military
cargo. The company became the preferred carrier of U.S. military cargo for
a one year period beginning June 1, 1993. The company's intra-Asia volumes
<PAGE>
increased in the first quarter of 1994 compared with last year's first
quarter as a result of the company's expanded service to and from the
People's Republic of China and the growing economies in Southeast and West
Asia since the first quarter of 1993.
Average revenue per FEU for the company's U.S. import shipments were
relatively unchanged in the first quarter of 1994 compared with the first
quarter of 1993. The general rate increase effective on May 1, 1993, set by
the Asia-North America Eastbound Rate Agreement conference, of which the
company is a member, was offset by subsequent rate deterioration caused by
increased competition from non-conference shippers, and a lower proportion
of higher-rated cargo carried by the company. Average revenue per FEU in
the company's U.S. export market decreased in the first quarter of 1994 from
last year's first quarter due to lower rates in this market resulting from
weak market conditions and increased competition. Average revenue per FEU
in the company's intra-Asia market declined in the first quarter of 1994
compared with the first quarter of 1993, attributable to lower rates caused
by competitive pressures and a greater proportion of shipments of a shorter
distance, which are lower-rated.
Utilization of the company's containership capacity in the first
quarter of 1994 was 77% and 94% for import and export shipments,
respectively, compared with 82% and 87%, respectively, in 1993. The decline
in import utilization in the first quarter of 1994, compared with the first
quarter of 1993, was due to weakened demand in the company's import market
combined with increased capacity from additional vessel space purchased from
Orient Overseas Container Line ("OOCL") since December 1993. The increase
in export utilization in the first quarter of 1994 resulted from the
increase in volumes of export cargo shipped by the company compared with the
first quarter of 1993.
For the remainder of 1994, the company expects continued competitive
pressures from non-conference carriers on its import rates and volumes.
While no assurances can be given, the comparisons of 1994 export rates to
1993 export rates are not expected to be as severe for the balance of 1994
as they were in the first quarter. However, beginning June 1, 1994, the
company will no longer be the preferred carrier for military dry cargo as it
has been since June 1, 1993, but the company will retain its position as
preferred carrier for military refrigerated cargo for the 12-month period
beginning June 1, 1994. The company expects to be able to substantially
replace the military cargo it will no longer have with commercial cargo,
although at lower margins, but no assurances can be given to that effect.
In the first quarter of 1994, military dry cargo represented 14% of export
volumes, compared with 8% in the first quarter of 1993, when the company was
not in the primary position to carry such cargo.
The company and OOCL, a Hong Kong shipping company, are parties to
agreements enabling them to exchange vessel space and coordinate vessel
sailings through 2005. The agreements permit both companies to offer faster
transit times, more frequent sailings between key markets in Asia and the
U.S. West Coast, and sharing of terminals and several feeder operations
within Asia. Under the slot-sharing agreement, the company and OOCL have
designated a combined total of approximately 7,000 FEUs per week in the
eastbound direction and 5,400 FEUs per week in the westbound direction to be
allocated to each company based upon proportions specified in the agreement.
Additionally, beginning in December 1993, the company is required to
purchase additional vessel space from OOCL and will compensate OOCL
approximately $7 million annually for this space. This commitment reduces
as the company increases the capacity it can exchange with OOCL, which is
expected to begin with the delivery of the company's C11-class vessels in
1995.
<PAGE>
On April 26, 1994, the company and Transportacion Maritima Mexicana
("TMM"), a Mexican transportation company, entered into an agreement
enabling them to reciprocally charter vessel space for a period of three
years. Under the agreement, cargo will be transported between major Asian
ports and certain ports on the Pacific Coast of the U.S. and Mexico. The
company will charter from TMM between 200 and 240 FEUs per week in the
eastbound direction, and 115 FEUs per week in the westbound direction. Each
party is committed to purchase a minimum amount of vessel space at contract
rates and may buy available extra space as needed. The company's minimum
space purchase commitment exceeds that of TMM by approximately $5 million
per year.
The company has entered into letters of understanding to pursue
negotiations with Mitsui OSK Lines, Ltd. ("MOL"), Nedlloyd Linjen B.V.
("NLL") and OOCL to form an alliance for ocean transportation services in
the Asia-Europe and Asia-North America trade lanes. Additionally, the
carriers are discussing the possibility of a joint all-water service via the
Panama Canal from Asia to the U.S. East Coast. In the trans-Pacific trade,
the company and OOCL are negotiating to include MOL in the agreement under
which the company and OOCL presently exchange vessel space, coordinate
sailings and share terminals. The company is also negotiating to enter the
Asia-Europe market by using a small amount of vessel space provided by the
other carriers in the alliance, including NLL's current partners in the
trade, and intends to grow in that market by adding vessel capacity only
when demand warrants. No assurances can be given as to whether any of these
negotiations will be successful, and any agreements reached would be subject
to government approvals.
The company is party to an Operating-Differential Subsidy ("ODS")
agreement with the U.S. government, expiring on December 31, 1997, which
provides for payment by the U.S. government to partially compensate the
company for the relatively greater expense of vessel operation under U.S.
registry. ODS payments to the company were approximately $16 million and
$17 million in the first quarters of 1994 and 1993, respectively.
ODS payments to the company, which totaled $65 million in 1993, are
expected to terminate at the end of 1997. The Clinton Administration and
Congress are actively reviewing U.S. maritime policy. On November 4, 1993,
the U.S. House of Representatives passed the "Maritime Security and
Competitiveness Act of 1993," H.R. 2151, which would extend the U.S.
government's maritime support program for up to ten years for a U.S.-flag
fleet of up to 52 vessels, but would substantially reduce the amount of
support payments to $2 million per participating vessel. Additionally, this
bill restricts worldwide acquisition of new and used vessels. On March 10,
1994, the Clinton Administration sent its maritime proposal, "The Maritime
Security Program", to Congress, which would provide for $1 billion over a
ten year period to fund a program for a U.S.-flag fleet of up to 52 vessels.
This program would provide support payments of up to $2.5 million per vessel
for three years and up to $2 million per vessel for the next seven years and
would not restrict worldwide acquisition of new and used vessels. Although
the Administration proposal lacks some specific details of the program, it
was introduced in the U.S. House of Representatives as H.R. 4003 and in the
Senate as S. 1945. Both the House and Senate have held hearings on this
legislation, and it is anticipated that Congress will amend the
Administration's proposal to include many of the missing details. The
company is not able to predict whether maritime reform legislation will be
enacted or whether enacted legislation, if any, will have terms similar to
H.R. 2151 or H.R. 4003/S. 1945.
<PAGE>
While the company continues to support efforts to enact new maritime
support legislation, prospects for passage of a program acceptable to the
company are unclear. Accordingly, on July 16, 1993, the company filed
applications with MarAd to operate under foreign flag its six C11-class
containerships and to transfer to foreign flag seven of the 15 U.S.-flag
containerships in its trans-Pacific fleet. Enactment of maritime reform
legislation, if any, may influence the company's decision whether to operate
these ships under foreign flag, should its applications be approved.
Management of the company believes that, in the absence of ODS or an
equivalent government support program, it is generally no longer
commercially viable to own or operate containerships in foreign trade under
the U.S. flag because of the higher labor costs and the more restrictive
design, maintenance and operating standards applicable to U.S.-flag liner
carriers. The company continues to evaluate its strategic alternatives in
light of the expiration of its ODS agreement and the uncertainties as to
whether a new U.S. government maritime support program acceptable to the
company will be enacted, whether sufficient labor efficiencies can be
achieved through the collective bargaining process, and whether the
company's applications to flag its vessels under foreign registry will be
approved. While no assurances can be given, management of the company
believes that it will be able to structure its operations to enable it to
continue to operate on a competitive basis without direct U.S. government
support.
<TABLE>
NORTH AMERICA TRANSPORTATION (1)
<CAPTION>
First Quarter First Quarter
(Volumes in thousands of FEUs) 1994 Change 1993
________________________________________________________________________________________________
Revenues (2) (In millions)
<S> <C> <C> <C>
Stacktrain $ 133 25% $ 106
Non-Stacktrain 57 17% 49
________________________________________________________________________________________________
Stacktrain Volumes
North America 99.7 24% 80.4
International 48.4 1% 48.2
________________________________________________________________________________________________
Stacktrain Average
Revenue per FEU (2) $ 1,335 1% $ 1,321
________________________________________________________________________________________________
________________________________________________________________________________________________
</TABLE>
(1) Volumes and revenue per FEU data are based upon shipments originating
during the period, which differs from the percentage-of-completion
method which is used for financial reporting purposes.
(2) In addition to domestic third party business, the transportation of
containers for the company's international customers is a significant
component of the company's stacktrain operations. The effect of these
shipments on domestic operations is eliminated in consolidation and
therefore excluded above in Revenues and Stacktrain Average Revenue per
FEU.
Revenues from the company's North American transportation operations
increased in the first quarter of 1994 compared with first quarter of 1993,
primarily as the result of higher volumes. The increase in stacktrain
volumes was due to the improvement in the U.S. economy since the first
quarter of 1993, increases in Mexican and Canadian shipments, particularly
automotive shipments between the U.S. and Mexico, and competitor equipment
shortages. Stacktrain average revenue per FEU increased marginally in the
first quarter of 1994 compared with the first quarter of 1993 due to an
improvement in cargo mix. The company's non-stacktrain revenues also
improved in the first quarter of 1994 compared with the same period in 1993,
primarily due to increased volumes.
<PAGE>
During the remainder of 1994, the company intends to continue to add
to its fleet of containers, chassis and rail cars via short- and long-term
operating leases in anticipation of expected growth in demand in the North
American stacktrain market. There can be no assurances, however, that such
demand will materialize.
<TABLE>
TRANSPORTATION OPERATING EXPENSES
<CAPTION>
(In millions, except First Quarter First Quarter
Operating Cost per FEU) 1994 Change 1993
________________________________________________________________________________________________
<S> <C> <C> <C>
Land Transportation $ 257 14% $ 225
Cargo Handling 139 10% 126
Vessel, Net 86 15% 75
Transportation Equipment 52 10% 47
Information Systems 14 14% 12
Other 86 11% 78
________________________________________________________________________________________________
Total $ 634 12% $ 563
________________________________________________________________________________________________
Operating Cost per FEU $ 2,619 (1%) $ 2,647
________________________________________________________________________________________________
Percentage of Transportation Revenue 91% 89%
________________________________________________________________________________________________
________________________________________________________________________________________________
</TABLE>
Land transportation expenses increased in the first quarter of 1994
from the first quarter of 1993, primarily due to an increase in North
American stacktrain volumes and higher intermodal costs in Asia. The
increase in cargo handling expenses in the first quarter of 1994 compared
with 1993 is attributable to a significant increase in stevedoring volumes,
including increased relays of China and West Asia cargo, contract rate
increases in Hong Kong, the People's Republic of China, West Asia and the
U.S. and increased stevedoring services to third parties. Vessel expenses
increased in the first quarter of 1994 compared with last year's first
quarter due to increased charter hire activity resulting from expanded
service to China and the Philippines, an increase in Latin American activity
and additional vessel space purchased from OOCL. These factors were
partially offset by a decrease in fuel cost. Transportation equipment costs
increased in the first quarter of 1994 compared with the first quarter of
1993 due to the addition of 1,000 leased containers during the quarter for
use in North American stacktrain operations, and increased repair and
maintenance costs. The quarter to quarter increase in information systems
costs was due to significant software purchases in the first quarter of
1994. Other operating expenses increased in the first quarter of 1994
compared with the first quarter of 1993 primarily due to higher employee
costs, particularly in Asia. Certain of the company's collective bargaining
agreements covering shipboard and shoreside employees in the U.S. expire in
June 1994. Negotiations with the respective unions are underway. The
company is unable to predict the outcome of those negotiations.
General and administrative expenses increased 38% in the first
quarter of 1994 compared with the first quarter of 1993, primarily due to
expenditures of approximately $7 million on corporate initiatives to improve
the company's financial and order cycle processes. Spending on corporate
initiatives is expected to be approximately $27 million in 1994.
Depreciation and amortization expense decreased 3% in the first quarter of
1994 compared with the first quarter of 1993, primarily due to certain
equipment reaching the end of its depreciable life during 1993. Net
interest expense decreased from $4.4 million in the first quarter of 1993 to
$3.9 million in the first quarter of 1994, as increased interest income in
1994 due to higher cash balances and slightly higher interest rates more
than offset the increase in interest expense.
<PAGE>
The company's estimated income tax rate for 1994 is 34%, compared
with 37% in 1993. The 1994 income tax rate includes the effect of revisions
of prior years' estimated tax liabilities.
On May 2, 1994, one of the company's C9-class vessels, the President
Washington, which is deployed in the trans-Pacific service with a capacity
of 2,750 twenty-foot equivalent units, was involved in a collision off Busan
harbor in Korea. Initial reports indicate that substantial damage to the
vessel and its cargo and cargo containers was sustained. The vessel
proceeded to Busan harbor to discharge the cargo and commence repairs when a
fire erupted in containers stowed on deck on May 6. The fire was contained
on May 9, but additional cargo and cargo container damages were sustained.
The causes and responsibility for the collision and fire are under
investigation. Current estimates by the shipyard indicate that the vessel
is expected to be back in service in July. The extent of the costs to the
company, which will include vessel, cargo and container damages as well as
loss of revenue and increased operating expenses, are yet undetermined.
They are expected to be substantial, but the company anticipates they will
be partially offset by insurance and/or recoveries from parties determined
to be responsible for the incidents.
<TABLE>
LIQUIDITY AND CAPITAL RESOURCES
<CAPTION>
(In millions)
April 8 December 31
As of: 1994 1993
________________________________________________________________________________________________
Cash, Cash Equivalents and
<S> <C> <C>
Short-Term Investments $ 227 $ 84
Working Capital 210 51
Total Assets 1,611 1,454
Long-Term Debt and Capital
Lease Obligations (1) 408 272
________________________________________________________________________________________________
April 8 April 2
For the quarter ending: 1994 1993
________________________________________________________________________________________________
Cash Provided by Operations $ 29 $ 15
________________________________________________________________________________________________
Net Capital Expenditures
Ships $ 6 $ 20
Containers, Chassis and Rail Cars 6 13
Leasehold Improvements and Other 8 4
________________________________________________________________________________________________
Total $ 20 $ 37
________________________________________________________________________________________________
Financing Activities
Borrowings $ 147 $ 269
Repayment of Debt and Capital Leases (11) (377)
Dividend Payments (4) (4)
________________________________________________________________________________________________
________________________________________________________________________________________________
</TABLE>
(1) Includes current and long-term portions.
In January 1994, the company issued $150 million 30-year Senior
Debentures at an effective interest rate of 8.2%, the net proceeds from
which were $147 million. The net proceeds from the issuance of this debt,
combined with a portion of the net proceeds from the 10-year Senior Note
offering of $150 million in November 1993, will be used to finance vessel
purchases and other capital expenditures.
<PAGE>
In the first quarter of 1993, the company used $131 million cash and
borrowings under its previous revolving credit agreement to purchase leased
ships, repay the related capital lease obligations and to retire $95 million
of 11% public notes.
In 1993, the company began a fleet modernization program pursuant to
which it has placed orders for the construction of six new C11-class
containerships ("C11") and three new Kl0-class containerships ("K10") for an
aggregate cost of approximately $732 million. OOCL has placed orders to
purchase six vessels similar in size and speed to the company's C11s. The
company and OOCL have agreed to deploy these new vessels upon their delivery
in 1995 and 1996, respectively, in their coordinated trans-Pacific service
under their slot-sharing agreement. The deployment of the 12 new C11-type
vessels by the company and OOCL, replacing 16 older vessels, will increase
the combined trans-Pacific capacity of the company and OOCL by approximately
15%. The company expects growth in demand in the trans-Pacific market and
believes that the increase in combined capacity will be sufficient to permit
the company and OOCL to maintain their combined relative market share in
that market. However, no assurances can be given with respect to
anticipated growth in demand or the utilization or impact of the increase in
capacity. The company's K10s, in combination with capacity from its six
C11s, are expected to replace four L9-class vessels chartered by the company
and used in its West Asia/Middle East service. Delivery of the K10s is
scheduled for 1996, which is when the charters of the L9s will expire.
Deployment of the company's C11s and K10s is subject to U.S. government
approval.
The C11 vessels are being constructed by Howaldtswerke-Deutsche
Werft AG, of Germany ("HDW") (three ships) and Daewoo Shipbuilding and Heavy
Machinery, Ltd., of Korea ("Daewoo") (three ships). The total estimated
project cost for the construction of these vessels is $537 million. A $52
million progress payment was made in 1993 upon contract effectiveness,
approximately half of which was paid to HDW and half to Daewoo, and a
progress payment of $4 million was made to HDW in the first quarter of 1994.
The remaining progress payments are due in installments of $27 million and
$20 million in 1994 and 1995, respectively, and the final 80% is due upon
delivery of the vessels. In March 1994, the company entered into a loan
agreement with European banks to finance approximately $400 million of the
purchase price of the six C11-class vessels. Principal payments on any draw-
downs would be due in semiannual installments over a 12 year period
commencing six months after the delivery of each vessel. Interest rates
would be based upon various margins over LIBOR or the banks' cost of funds
as elected by the company. The remaining costs of these vessels are
expected to be financed with a portion of the net proceeds from the
company's public debt offerings and cash from operations.
The K10s are being constructed by Daewoo. The total estimated
project cost for construction of these vessels is $195 million. A progress
payment of $18 million was made to Daewoo in 1993. The remaining progress
payments are due in two $18 million installments in 1995 and 70% upon
delivery of the vessels. The costs of these vessels are expected to be
financed with a portion of the net proceeds from the company's public debt
offerings and cash from operations.
Other than vessel progress payments, the company's capital
expenditures in the first quarter of 1994 were primarily for purchases of
chassis, leasehold improvements and an office in Mexico. In the first
quarter of 1993, capital expenditures were for the buy-out of certain vessel
capital leases and purchases of refrigerated containers.
<PAGE>
Capital expenditures in 1994 are expected to total approximately
$200 million, including $31 million for vessel progress payments. The
remaining planned 1994 capital expenditures are for purchases of
refrigerated containers, chassis, terminal improvements in North America and
Asia, and computer systems, and will be financed with net proceeds from the
company's public debt offerings, cash from operations and financing
arrangements. At April 8, 1994, the company had outstanding purchase
commitments to acquire facilities, equipment and services totaling $53
million.
In 1993, the company entered into a 30-year lease with the Port of
Los Angeles for a new terminal facility. In connection with that lease, the
company has agreed to provide at least six gantry cranes and certain
intermodal handling equipment by the inception of the lease in 1997, the
estimated minimum cost of which, if purchased, is approximately $70 million.
Additionally, the company is continuing to negotiate with the Port of
Seattle for improvement and expansion of its existing terminal facility.
On March 25, 1994, the company entered into a credit agreement with
a group of banks that provides for an aggregate commitment of up to $200
million for a five-year period. The credit agreement contains various
financial covenants that require the company to meet certain levels of
interest coverage, leverage and net worth. The borrowings bear interest at
rates based upon various indices as elected by the company. The annual
commitment fee is a maximum of one-half of one percent of the available
amount. Any outstanding borrowings under this agreement would be classified
as long-term. The company had no outstanding borrowings under this
agreement at April 8, 1994.
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The company is a party to various pending legal proceedings, claims
and assessments arising in the course of its business activities, including
actions relating to trade practices, personal injury or property damage,
alleged breaches of contracts, torts, labor matters, employment practices,
tax matters and miscellaneous other matters. Some of these proceedings
involve claims for punitive damages, in addition to other specific relief.
Among these actions are approximately 1,100 cases pending against
the company, together with numerous other ship owners and equipment
manufacturers, involving injuries or illnesses allegedly caused by exposure
to asbestos or other toxic substances on ships. In one case, Miller,
Administrator of Estate of Moline vs. American Mail Line, et. al., U.S.
District Court, Northern District of Ohio, C86-821, a judgment was entered
in May 1991 awarding punitive damages of $50,000 per named defendant, along
with compensatory damages aggregating $166,000. In March 1993, the U.S.
Court of Appeals for the Sixth Circuit vacated the punitive damages award,
holding that punitive damages are not available in a general maritime
unseaworthiness action for wrongful death of a seaman, remanded the case for
consideration of defendants' claims for indemnity and contribution, and
otherwise affirmed the judgment of the District Court. The plaintiff filed
a petition for certiorari with the U.S. Supreme Court in August 1993. The
court refused review of the case without comment on October 12, 1993.
The company insures its potential liability for bodily injury to
seamen through mutual insurance associations. Industry-wide resolution of
asbestos-related claims at significantly higher than expected amounts could
result in additional contributions to those associations.
In December 1989, the government of Guam filed a complaint with the
Federal Maritime Commission ("FMC") alleging that American President Lines,
Ltd. and an unrelated company charged excessive rates for carrying cargo
between the U.S. and Guam, in violation of the Shipping Act, 1916 and the
Intercoastal Shipping Act of 1933, and seeking an undetermined amount of
reparations. Three private shippers are also complainants in this
proceeding. Evidentiary hearings are continuing and a decision by the FMC
is not expected until 1995.
In March 1992, in connection with the same matter, the government of
Guam and four private shippers filed a class action complaint in the United
States District Court, District of Columbia, based on the same allegations,
seeking an undetermined amount of damages on behalf of all shippers of cargo
to and from Guam on the company's vessels and the vessels of the other named
defendant. In January 1993, the class action complaint was dismissed. An
appeal of the dismissal was filed in the U.S. Court of Appeals for the
Circuit of the District of Columbia in February 1993.
On April 28, 1994, a lawsuit, Hockert Pressman & Flohr Money
Purchase Plan, Lorance Hockert and Alan Pressman, Trustees, On Behalf of
Themselves and All Others Similarly Situated vs. American President
Companies, Ltd., John M. Lillie, Joji Hayashi, Timothy J. Rhein, Will M.
Storey, James S. Marston, and William J. Stuebgen, was filed against the
company and certain of its officers in United States District Court for the
Northern District of California. The suit alleges that the company and
those officers made false and misleading statements about the company's
operating and financial performance in violation of federal securities laws,
and seeks unspecified damages on behalf of a purported class of stockholders
who purchased shares of the company's common stock during the period October
7, 1993 through
<PAGE>
March 30, 1994. The company believes that it has meritorious defenses and
intends to defend itself vigorously against this lawsuit.
Based upon information presently available, and in light of legal
and other defenses and insurance coverage and other potential sources of
payment available to the company, management does not expect the legal
proceedings described, individually or in the aggregate, to have a material
adverse impact on the company's consolidated financial position or
operations.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K
The following documents are exhibits to this Form 10-Q:
Exhibit No. Description of Document
_____________________________________________________________________________
10.1 Credit Agreement, dated March 25, 1994 among American President
Companies, Ltd., borrower, and Morgan Guaranty Trust Company of
New York, J.P. Morgan Delaware, Bank of America National Trust and
Savings Association, The First National Bank of Boston, Barclays
Bank PLC, ABN AMRO Bank N.V., The First National Bank of Chicago
and Morgan Guaranty Trust Company of New York, as agent.
10.2 Amendment No. 3 dated March 25, 1994 to the APD Receivables
Purchase Agreement dated August 29, 1991 among APL Land Transport
Services, Inc., seller, J.P. Morgan Delaware, as administrative
agent, and Morgan Guaranty Trust Company of New York, as co-agent.
10.3 Amendment No. 3 dated March 25, 1994 to the APL Receivables
Purchase Agreement dated August 29, 1991 among American President
Lines, Ltd., seller, J.P. Morgan Delaware, as administrative
agent, and Morgan Guaranty Trust Company of New York, as co-agent.
10.4 Loan Agreement dated March 14, 1994 by and among Kreditanstalt fur
Wiederaufbau (as Agent and Lender); Commerzbank AG, Hamburg (as
Syndicate Agent); Commerzbank AG (Kiel Branch), Dresdner Bank AG
in Hamburg, Vereins-und Westbank AG, Deutsche Schiffsbank AG,
Norddeutsche Landesbank-Girozentrale, Deutsche Verkehrs-Bank AG,
Banque Internationale a Luxembourg S.A. (as the Syndicate); and
American President Lines, Ltd. (as Borrower); including Appendices
and Schedules thereto.**
10.5 Guarantee dated as of March 14, 1994 by American President
Companies, Ltd. (as Guarantor); in favor of Kreditanstalt fur
Wiederaufbau (as Agent and Lender); and Commerzbank AG Hamburg (as
Syndicate Agent); Commerzbank AG (Kiel Branch), Dresdner Bank AG
in Hamburg, Vereins-und Westbank AG, Deutsche Schiffsbank AG,
Norddeutsche Landesbank-Girozentrale, Deutsche Verkehrs-Bank AG,
Banque Internationale a Luxembourg S.A. (as the Syndicate),
including Schedule 1 thereto.
10.6 Agreement to Acquire and Charter by and among American President
Lines, Ltd., Transferor, APL Newbuildings, Ltd., Transferee,
Kreditanstalt fur Wiederaufbau (as Agent and Lender), Commerzbank
AG, Hamburg (as Syndicate Agent), Commerzbank AG (Kiel Branch),
Dresdner Bank AG (Hamburg), Vereins-und Westbank AG, Deutsche
Schiffsbank AG, Norddeutsche Landesbank-Girozentrale and Deutsche
Verkehrs-Bank AG, Banque Internationale a Luxembourg S.A. (as the
Syndicate), including Exhibits and Schedule 1 thereto.**
<PAGE>
10.7 U.S. - Mexico Slot Charter Agreement made as of April 26, 1994 by
and between American President Lines, Ltd. and Transportacion
Maritima Mexicana, S.A. de C.V., to implement in part Federal
Maritime Commission Agreement No. 203-011435, a space charter
agreement filed with the FMC on the 10th day of November, 1993,
excluding Appendices.
10.8 Federal Maritime Commission Agreement No. 203-011435, a space
charter agreement filed with the FMC on the 10th day of November
1993 and effective on December 25, 1993.
10.9 Amendment No. 1 to APL/TMM Space Charter Agreement dated November
9, 1993 (Exhibit 10.8 above) entered into April 26, 1994 by and
between American President Lines, Ltd. and Transportation Maritima
Mexicana, S.A. de C.V.
10.10 Employment Agreement between the company and Maryellen B. Cattani
dated April 28, 1994.
10.11 Employment Agreement between the company and Will M. Storey dated
March 4, 1994.
10.12* 1989 Stock Incentive Plan of the company, as amended and restated
effective April 28, 1994, filed with the company's Proxy Statement
(File No. 1-8544) for the Annual Meeting of Shareholders held on
April 28, 1994.
* Incorporated by Reference
** Application to be filed with the Securities and Exchange Commission,
pursuant to Exchange Act Rule 24b-2, for confidential treatment of
certain portions of this exhibit.
(b) Reports on Form 8-K
No current report on Form 8-K was filed during the quarter for
which this report on Form 10-Q is filed.
<PAGE>
American President Companies, Ltd. and Subsidiaries
SIGNATURES
Pursuant to the requirements 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.
AMERICAN PRESIDENT COMPANIES, LTD.
Dated: May 20, 1994 By /s/ William J. Stuebgen
_______________________________
William J. Stuebgen
Vice President,
Controller and
Chief Accounting Officer
[CONFORMED COPY]
$200,000,000
CREDIT AGREEMENT
dated as of
March 25, 1994
among
American President Companies, Ltd.,
The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Agent
<TABLE>
TABLE OF CONTENTS 1
<CAPTION>
Page
ARTICLE I
DEFINITIONS
<S> <C> <C>
SECTION 1.01 Definitions 1
1.02 Accounting Terms and Determinations 17
1.03 Types of Borrowings 17
1.04 Basis for Ratings 18
ARTICLE II
THE CREDITS
SECTION 2.01 Commitments to Lend 18
2.02 Notice of Committed Borrowings 18
2.03 Money Market Borrowings 19
2.04 Notice to Banks; Funding of Loans 23
2.05 Notes 24
2.06 Maturity of Loans 25
2.07 Interest Rates 25
2.08 Fees 29
2.09 Optional Termination or
Reduction of Commitments 30
2.10 Termination of Commitments 30
2.11 Optional Prepayments 30
2.12 General Provisions as to Payments 31
2.13 Funding Losses 31
2.14 Computation of Interest and Fees 32
2.15 Withholding Tax Exemption 32
2.16 Regulation D Compensation 33
2.17 Termination of Commitments Under
Existing Agreement; Amendment of
Receivables Purchase Agreements 33
ARTICLE III
CONDITIONS
SECTION 3.01 Effectiveness 33
3.02 Borrowings 35
1The Table of Contents is not a part of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Corporate Existence and Power 36
4.02 Corporate and Governmental
Authorization; No Contravention 36
4.03 Binding Effect 36
4.04 Financial Information 36
4.05 Litigation 37
4.06 Compliance with ERISA 37
4.07 Environmental Matters 37
4.08 Taxes 38
4.09 Subsidiaries 38
4.10 Not an Investment Company 38
4.11 MarAd Requirements 38
4.12 Full Disclosure 39
ARTICLE V
COVENANTS
SECTION 5.01 Information 39
5.02 Payment of Obligations 43
5.03 Maintenance of Property; Insurance 43
5.04 Conduct of Business, Maintenance of
Existence and Compliance with
Laws 44
5.05 Inspection of Property,
Books and Records 44
5.06 Minimum Consolidated Tangible
Net Worth 45
5.07 Negative Pledge 45
5.08 Consolidations, Mergers and
Sales of Assets 47
5.09 Use of Proceeds 47
5.10 Consolidated Interest Coverage
Ratio 47
5.1 Consolidated Leverage Ratio 48
5.12 Restrictions on Subsidiary
and Secured Debt 48
5.13 Capital Contributions to
Subsidiaries 49
5.14 No New Restrictions on Subsidiary
Dividends 49
5.15 Investments; Acquisitions 49
ARTICLE VI
DEFAULTS AND EVENTS OF TERMINATION
SECTION 6.01 Events of Default 50
6.02 Notice of Default 53
6.03 Events of Termination 53
ARTICLE VII
THE AGENT
SECTION 7.01 Appointment and Authorization 53
7.02 Agent and Affiliates 53
7.03 Action by Agent 53
7.04 Consultation with Experts 54
7.05 Liability of Agent 54
7.06 Indemnification 54
7.07 Credit Decision 54
7.08 Successor Agent 55
7.09 Agent's Fee 55
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01 Basis for Determining Interest
Rate Inadequate or Unfair 55
8.02 Illegality 56
8.03 Increased Cost and Reduced Return 57
8.04 Base Rate Loans Substituted for
Affected Fixed Rate Loans 59
8.05 Substitution of Bank 59
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Notices 60
9.02 No Waivers 60
9.03 Expenses; Documentary Taxes 60
9.04 Indemnification 61
9.05 Sharing of Set-Offs 61
9.06 Amendments and Waivers 62
9.07 Successors and Assigns 62
9.08 Collateral 64
9.09 Confidentiality 65
9.10 Governing Law; Submission to Juris-
diction 65
9.11 Counterparts; Integration 66
9.12 WAIVER OF JURY TRIAL 66
</TABLE>
Schedule I - Certain Existing Liens
Exhibit A - Note
Exhibit B - Money Market Quote Request
Exhibit C - Invitation for Money Market Quotes
Exhibit D - Money Market Quote
Exhibit E - Opinion of Counsel for the Borrower
Exhibit F - Opinion of Special Counsel for the
Agent
Exhibit G - Assignment and Assumption Agreement
CREDIT AGREEMENT
AGREEMENT dated as of March 25, 1994, among AMERICAN PRESIDENT
COMPANIES, LTD., the BANKS listed on the signature pages hereof and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Agent.
WITNESSETH:
WHEREAS, the Borrower is a party to an Amended and Restated
Credit Agreement dated as of March 17, 1992 among the Borrower, American
President Lines, Ltd., the banks listed therein and Morgan Guaranty Trust
Company of New York as Agent, as heretofore amended (the "Existing Agreement");
and
WHEREAS the Borrower wishes to enter into this Agreement and,
concurrently with the effectiveness of this Agreement, wishes to terminate the
commitments of the banks under the Existing Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein,
have the following meanings:
"Absolute Rate Auction" means a solicitation of Money Market
Quotes setting forth Money Market Absolute Rates pursuant to Section 2.03.
"Adjusted CD Rate" has the meaning set forth in Section 2.07(b).
"Administrative Questionnaire" means, with respect to each Bank,
an administrative questionnaire in the form prepared by the Agent and submitted
to the Agent (with a copy to the Borrower) duly completed by such Bank.
"Affiliate" means any Subsidiary (except a Consolidated
Subsidiary) and any other Person in which the Borrower or any of its
Consolidated Subsidiaries has an equity investment as to which it uses the
equity method of accounting.
"Agent" means Morgan Guaranty Trust Company of New York in its
capacity as agent for the Banks hereunder, and its successors in such capacity.
"APD" means APL Land Transport Services, Inc., a Tennessee
corporation, and its successors.
"APL" means American President Lines, Ltd., a Delaware
corporation, and its successors.
"Applicable Lending Office" means, with respect to any Bank, (i)
in the case of its Domestic Loans, its Domestic Lending Office, (ii) in the case
of its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case
of its Money Market Loans, its Money Market Lending Office.
"Assessment Rate" has the meaning set forth in Section 2.07(b).
"Assignee" has the meaning set forth in Section 9.07(c).
"Authorized Officer" means any of the following officers of the
Borrower: the chairman of the board of directors, chief executive officer, chief
operating officer, chief financial officer, president, treasurer, vice
president-treasury, vice president-controller, any executive vice president and
any assistant treasurer.
"Bank" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 9.07(c), and their respective
successors.
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the
Federal Funds Rate for such day.
"Base Rate Loan" means a Committed Loan to be made by a Bank as a
Base Rate Loan in accordance with the applicable Notice of Committed Borrowing
or pursuant to Article VIII.
"Beneficial Owner" means, with respect to any securities, a
Person who would be deemed to be a beneficial owner thereof under Rule 13d-3 of
the Exchange Act as in effect on the date hereof.
"Benefit Arrangement" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Borrower" means American President Companies, Ltd., a Delaware
corporation, and its successors.
"Borrower's 1993 Form 10-K" means the Borrower's annual report on
Form 10-K for 1993, as filed with the Securities and Exchange Commission
pursuant to the Exchange Act.
"Borrowing" has the meaning set forth in Section 1.03.
"CD Base Rate" has the meaning set forth in Section 2.07(b).
"CD Loan" means a Committed Loan to be made by a Bank as a CD
Loan in accordance with the applicable Notice of Committed Borrowing.
"CD Margin" has the meaning set forth in Section 2.07(b).
"CD Reference Banks" means Bank of America National Trust and
Savings Association and Morgan Guaranty Trust Company of New York.
"Change in Control" means any of the following events or
conditions: (i) any Interested Stockholder is or becomes a Beneficial Owner,
directly or indirectly, of 30% or more of the outstanding shares of the Borrower
entitled to vote in the election of directors, unless the acquisition of 30% or
more of such shares by such Interested Stockholder shall have been approved or
ratified by a majority of the Continuing Directors, (ii) any Interested
Stockholder is or becomes a Beneficial Owner, directly or indirectly, of 50% or
more of the outstanding shares of the Borrower entitled to vote in the election
of directors, (iii) Continuing Directors no longer constitute a majority of the
Borrower's board of directors, or (iv) a "Triggering Event" occurs as specified
in the Amended and Restated Rights Agreement dated as of October 22, 1991
between the Borrower and the First National Bank of Boston, as Rights Agent
(including any further addendum, amendment, extension, modification, replacement
or supplement thereto or thereof).
"Commitment" means, with respect to each Bank, the amount set
forth opposite the name of such Bank on the signature pages hereof, as such
amount may be reduced from time to time pursuant to Section 2.09.
"Committed Loan" means a loan made by a Bank pursuant to Section
2.01.
"Consolidated Assets" means, at any date of determination, the
amount that would, in accordance with generally accepted accounting principles,
be shown as the total amount of assets under the caption "Assets" on a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries at
such date.
"Consolidated Guaranteed Debt" means at any date the aggregate
amount of Debt which is Guaranteed by the Borrower or any of its Consolidated
Subsidiaries and is outstanding at such date, determined on a consolidated
basis.
"Consolidated Interest Coverage Ratio" has the meaning set forth
in Section 5.10.
"Consolidated Leverage Ratio" has the meaning set forth in
Section 5.11.
"Consolidated Net Income After Tax" means, for any period, the
aggregate amount that would, in accordance with generally accepted accounting
principles, be included under the caption "Net Income" on a consolidated
statement of income of the Borrower and its Consolidated Subsidiaries for such
period.
"Consolidated Net Property and Equipment" means, at any date of
determination, the amount that would, in accordance with generally accepted
accounting principles, be shown as the total amount of assets under the caption
"Property and Equipment, Net" or any similar caption on a consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries at such date.
"Consolidated Pretax Earnings" means, for any period, the
consolidated income (loss) of the Borrower and its Consolidated Subsidiaries for
such period, before provisions for income taxes but after interest expense, (a)
less (to the extent included therein) (i) the amount, if any, by which their
equity in earnings of Persons other than Consolidated Subsidiaries for such
period exceeded the aggregate amount of dividends or other distributions
received from such Persons during such period and (ii) any nonrecurring or
extraordinary gains (or plus any nonrecurring or extraordinary losses) for such
period and (b) plus (i) (to the extent not otherwise included therein) the
amount, if any, by which the aggregate amount of cash dividends or other
distributions received from Persons other than Consolidated Subsidiaries during
such period exceeded their equity in earnings of such Persons for such period or
(ii) (to the extent included therein) the amount of their share of losses of
such Persons for such period, all determined in accordance with generally
accepted accounting principles.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Borrower in its consolidated financial statements prepared in accordance with
generally accepted accounting principles if such statements were prepared at
such date.
"Consolidated Tangible Net Worth" means at any date an amount
equal to the sum of (A) the amount that would, in accordance with generally
accepted accounting principles, be reflected as 9% Series C Cumulative
Convertible Preferred Stock and/or 9% Series D Convertible Preferred Stock of
the Borrower on a balance sheet of the Borrower at such date plus (B) the
consolidated stockholders' equity of the Borrower and its Consolidated
Subsidiaries less their consolidated Intangible Assets, all determined as of
such date. For purposes of this definition "Intangible Assets" means the amount
(to the extent reflected in determining such consolidated stockholders' equity)
of (i) all write-ups (other than write-ups resulting from foreign currency
translations and write-ups of assets of a going concern business made within
twelve months after the acquisition of such business) subsequent to December 31,
1993 in the book value of any asset owned by the Borrower or any of its
Consolidated Subsidiaries, (ii) all Investments in unconsolidated Subsidiaries
and other Affiliates and (iii) all unamortized debt discount and expense,
unamortized deferred charges, goodwill, patents, trademarks, service marks,
trade names, anticipated future benefit of tax loss carry-forwards, copyrights,
organization or developmental expenses including research and developmental
expenses and other intangible assets.
"Continuing Director" means a member of the Borrower's board of
directors who (i) was a member of such board immediately prior to the time that
any Interested Stockholder became an Interested Stockholder or (ii) was
nominated by a majority of the directors who were Continuing Directors at the
time of such nomination.
"Debt" of any Person means at any date, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee which are capitalized in
accordance with generally accepted accounting principles, (v) all non-contingent
obligations of such Person to reimburse any bank or other Person in respect of
amounts paid under a letter of credit or similar instrument, (vi) all Debt of
others secured by a Lien on any asset of such Person, whether or not such Debt
is assumed by such Person, and (vii) all Debt of others Guaranteed by such
Person; provided that
(x) if Debt referred to in clause (vi) above is without
recourse to the Borrower or any Subsidiary, the amount of such
Debt shall be calculated at the lesser of (A) the aggregate
outstanding principal amount of such Debt or (B) the aggregate
fair realizable value of the assets securing such Debt, and
(y) when calculating the amount of Debt of the Borrower
and its Consolidated Subsidiaries on a consolidated basis,
obligations of the Borrower or any Consolidated Subsidiary that
are eliminated in consolidation pursuant to generally accepted
accounting principles shall be eliminated.
"Default" means any condition or event which constitutes an Event
of Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Depreciation" means, for any period, the aggregate amount that
would, in accordance with generally accepted accounting principles, be included
as depreciation expense under the caption "Depreciation and Amortization" on a
consolidated statement of income of the Borrower and its Consolidated
Subsidiaries for such period.
"Domestic Business Day" means any day except a Saturday, Sunday
or other day on which commercial banks in New York City or San Francisco are
authorized by law to close.
"Domestic Lending Office" means, as to each Bank, its office
located at its address set forth in its Administrative Questionnaire (or
identified in its Administrative Questionnaire as its Domestic Lending Office)
or such other office as such Bank may hereafter designate as its Domestic
Lending Office by notice to the Borrower and the Agent; provided that any Bank
may so designate separate Domestic Lending Offices for its Base Rate Loans, on
the one hand, and its CD Loans, on the other hand, in which case all references
herein to the Domestic Lending Office of such Bank shall be deemed to refer to
either or both of such offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" has the meaning set forth in
Section 2.07(b).
"Effective Date" has the meaning set forth in Section 3.01.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary and all members
of a controlled group of corporations and all trades or businesses (whether or
not incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including dealings
in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office,
branch or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Agent.
"Euro-Dollar Loan" means a Committed Loan to be made by a Bank as
a Euro-Dollar Loan in accordance with the applicable Notice of Committed
Borrowing.
"Euro-Dollar Margin" has the meaning set forth in Section
2.07(c).
"Euro-Dollar Reference Banks" means the principal London offices
of Barclays Bank PLC, ABN AMRO Bank N.V. and Morgan Guaranty Trust Company of
New York.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank of
the Federal Reserve System in New York City with deposits exceeding five billion
dollars in respect of "Eurocurrency liabilities" (or in respect of any other
category of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of extensions
of credit or other assets which includes loans by a non-United States office of
any Bank to United States residents).
"Event of Default" has the meaning set forth in Section 6.01.
"Event of Termination" has the meaning set forth in Section 6.03.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"Existing Agreement" has the meaning set forth in the first
WHEREAS clause at the beginning of this Agreement.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Domestic Business Day as so published on
the next succeeding Domestic Business Day, and (ii) if no such rate is so
published on such next succeeding Domestic Business Day, the Federal Funds Rate
for such day shall be the average rate quoted to Morgan Guaranty Trust Company
of New York on such day on such transactions as determined by the Agent.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or Money
Market Loans (excluding Money Market LIBOR Loans bearing interest at the Base
Rate pursuant to Section 8.01(a)) or any combination of the foregoing.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt (whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Debt of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part), provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Interest Expense" means, for any period, the aggregate amount
that would, in accordance with generally accepted accounting principles, be
included as interest expense under the caption "Interest" on a consolidated
statement of income of the Borrower and its Consolidated Subsidiaries for such
period.
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and ending one,
two, three or six months thereafter, as the Borrower may elect in the applicable
Notice of Borrowing; provided that:
(a) any Interest Period which would otherwise end on a
day which is not a Euro-Dollar Business Day shall be extended to
the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in
which case such Interest Period shall end on the next preceding
Euro-Dollar Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall, subject to
clause (c) below, end on the last Euro-Dollar Business Day of a
calendar month; and
(c) any Interest Period which would otherwise end after
the Termination Date shall end on the Termination Date.
(2) with respect to each CD Borrowing, the period commencing on the date of
such Borrowing and ending 30, 60, 90 or 180 days thereafter, as the Borrower may
elect in the applicable Notice of Borrowing; provided that:
(a) any Interest Period which would otherwise end on a
day which is not a Euro-Dollar Business Day shall be extended to
the next succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after
the Termination Date shall end on the Termination Date.
(3) with respect to each Base Rate Borrowing, the period
commencing on the date of such Borrowing and ending 30 days
thereafter; provided that:
(a) any Interest Period which would otherwise end on a
day which is not a Euro-Dollar Business Day shall be extended to
the next succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after
the Termination Date shall end on the Termination Date.
(4) with respect to each Money Market LIBOR Borrowing, the period commencing on
the date of such Borrowing and ending such whole number of months thereafter as
the Borrower may elect in accordance with Section 2.03; provided that:
(a) any Interest Period which would otherwise end on a
day which is not a Euro-Dollar Business Day shall be extended to
the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in
which case such Interest Period shall end on the next preceding
Euro-Dollar Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall, subject to
clause (c) below, end on the last Euro-Dollar Business Day of a
calendar month; and
(c) any Interest Period which would otherwise end after
the Termination Date shall end on the Termination Date.
(5) with respect to each Money Market Absolute Rate Borrowing, the period
commencing on the date of such Borrowing and ending such number of days
thereafter (but not less than 30 days) as the Borrower may elect in accordance
with Section 2.03; provided that:
(a) any Interest Period which would otherwise end on a
day which is not a Euro-Dollar Business Day shall be extended to
the next succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after
the Termination Date shall end on the Termination Date.
"Interested Stockholder" means (i) any Person which is or becomes
the Beneficial Owner, directly or indirectly, of 5% or more of the outstanding
shares of the Borrower entitled to vote or (ii) any two or more Persons which
"act as a partnership, limited partnership, syndicate or other group for the
purpose of acquiring, holding or disposing of securities" of the Borrower and
which are or become the Beneficial Owners, directly or indirectly, of 5% or more
of the outstanding shares of the Borrower entitled to vote.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended, or any successor statute.
"Investment" means any investment in any Person, whether by means
of share purchase, capital contribution, loan, time deposit or otherwise.
"Level I Period" means a period during which the Borrower's
senior long-term public debt is rated BBB+ or higher by S&P and Baa1 or higher
by Moody's.
"Level II Period" means a period (i) during which the Borrower's
senior long-term public debt is rated BBB or higher by S&P and Baa2 or higher by
Moody's and (ii) which is not a Level I Period.
"Level III Period" means a period (i) during which the Borrower's
senior long-term public debt is rated BBB- or higher by S&P and Baa3 or higher
by Moody's and (ii) which is not a Level I Period or a Level II Period.
"Level IV Period" means a period (i) during which the Borrower's
senior long-term public debt is rated BB+ or higher by S&P and Ba1 or higher by
Moody's and (ii) which is not a Level I Period, a Level II Period or a Level III
Period.
"Level V Period" means any period which is not a Level I Period,
a Level II Period, a Level III Period or a Level IV Period. A period during
which either S&P or Moody's does not rate the Borrower's senior long-term public
debt shall constitute a Level V Period.
"LIBOR Auction" means a solicitation of Money Market Quotes
setting forth Money Market Margins based on the London Interbank Offered Rate
pursuant to Section 2.03.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset. For the purposes of this Agreement, the Borrower or any Subsidiary shall
be deemed to own subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset.
"Loan" means a Domestic Loan or a Euro-Dollar Loan or a Money
Market Loan and "Loans" means Domestic Loans or Euro-Dollar Loans or Money
Market Loans or any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.07(c).
"MarAd" means the United States Maritime Administration, or any
entity succeeding to any or all of the rights and obligations of MarAd under any
agreement with the Borrower or any Subsidiary.
"Material Plan" means at any time a Plan or Plans having
aggregate Unfunded Liabilities in excess of $15,000,000.
"Material Subsidiary" means at any time a Subsidiary which is not
a Nonmaterial Subsidiary. For purposes of this definition, "Nonmaterial
Subsidiary" means at any time any Subsidiary (other than APL) which at such time
has been designated by the Borrower, by notice to the Agent, as a Nonmaterial
Subsidiary and has not been redesignated as a Material Subsidiary in any
subsequent notice from the Borrower to the Agent; provided that all Nonmaterial
Subsidiaries, if aggregated and considered as a single subsidiary, would not as
of such time meet the definition of a "significant subsidiary" contained as of
the date hereof in Regulation S-X of the Securities and Exchange Commission.
"Minimum Adjusted Net Worth" has the meaning set forth in Section
5.06.
"Money Market Absolute Rate" has the meaning set forth in Section
2.03(d).
"Money Market Absolute Rate Loan" means a loan to be made by a
Bank pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank, its
Domestic Lending Office or such other office, branch or affiliate of such Bank
as it may hereafter designate as its Money Market Lending Office by notice to
the Borrower and the Agent; provided that any Bank may from time to time by
notice to the Borrower and the Agent designate separate Money Market Lending
Offices for its Money Market LIBOR Loans, on the one hand, and its Money Market
Absolute Rate Loans, on the other hand, in which case all references herein to
the Money Market Lending Office of such Bank shall be deemed to refer to either
or both of such offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made by a Bank
pursuant to a LIBOR Auction (including such a loan bearing interest at the Base
Rate pursuant to Section 8.01(a)).
"Money Market Loan" means a Money Market LIBOR Loan or a Money
Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in Section
2.03(d).
"Money Market Quote" means an offer by a Bank to make a Money
Market Loan in accordance with Section 2.03.
"Moody's" means Moody's Investors Service, Inc., a Delaware
corporation, and its successors and its assigns, and if such corporation shall
be dissolved or liquidated or shall no longer perform the functions of a
securities rating agency, "Moody's" shall be deemed to refer to any other
nationally recognized securities rating agency (other than S&P) designated by
the Required Banks and not disapproved by the Borrower if such an agency shall
exist.
"Multiemployer Plan" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the ERISA
Group during such five year period.
"Notes" means promissory notes of the Borrower, substantially in
the form of Exhibit A hereto, evidencing the obligation of the Borrower to repay
the Loans, and "Note" means any one of such promissory notes issued hereunder.
"Notice of Borrowing" means a Notice of Committed Borrowing (as
defined in Section 2.02) or a Notice of Money Market Borrowing (as defined in
Section 2.03(f)).
"Off-Site Real Estate Improvement Lien" means a Lien on real
estate securing obligations pertaining to assessments or bonded indebtedness for
off-site improvements for the benefit of such real estate.
"Parent" means, with respect to any Bank, any Person controlling
such Bank.
"Participant" has the meaning set forth in Section 10.07(b).
"Payment Date" has, with respect to each Receivables Purchase
Agreement, the meaning set forth in Section 1.01 thereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other
than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to
the minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Potential Event of Termination" means any condition or event
which with the giving of notice or lapse of time or both would, unless cured or
waived, become an Event of Termination.
"Pricing Period" means a Level I Period, a Level II Period, a
Level III Period, a Level IV Period or a Level V Period.
"Prime Rate" means the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York in New York City from time to time as
its Prime Rate.
"Purchase Money Lien" has the meaning set forth in Section
5.07(e).
"Receivables Purchase Agreements" means, collectively, (i) the
Receivables Purchase Agreement dated as of August 29, 1991 among APL, the Banks,
J.P. Morgan Delaware, as Administrative Agent, and Morgan Guaranty Trust Company
of New York, as Co-Agent, and (ii) the Receivables Purchase Agreement dated as
of August 29, 1991 among APD, the Banks, J.P. Morgan Delaware, as Administrative
Agent, and Morgan Guaranty Trust Company of New York, as Co-Agent, as each such
agreement may be amended from time to time.
"Reference Banks" means the CD Reference Banks or the Euro-Dollar
Reference Banks, as the context may require, and "Reference Bank" means any one
of such Reference Banks.
"Refunding Borrowing" means a Committed Borrowing which, after
application of the proceeds thereof, results in no net increase in the
outstanding principal amount of Committed Loans made by any Bank.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Required Banks" means at any time Banks having at least 66 2/3%
of the aggregate amount of the Commitments or, if the Commitments shall have
been terminated, holding Notes evidencing at least 66 2/3% of the aggregate
unpaid principal amount of the Loans.
"Revolving Credit Period" means the period from and including the
Effective Date to but excluding the Termination Date.
"S&P" means Standard & Poor's Corporation, a New York
corporation, and its successors and its assigns, and if such corporation shall
be dissolved or liquidated or shall no longer perform the functions of a
securities rating agency, "S&P" shall be deemed to refer to any other nationally
recognized securities rating agency (other than Moody's) designated by the
Required Banks and not disapproved by the Borrower if such an agency shall
exist.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by the Borrower (or, if such term
is used with reference to any other Person, by such other Person).
"Termination Date" means March 25, 1999, or, if such date is not
a Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
"Total Borrowed Funds" means, as of any date of determination,
the aggregate amount of all Debt which would be reflected, in accordance with
generally accepted accounting principles, on a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries at such date including, without
limitation, the current and long-term portions of capital lease obligations,
current and long-term portions of long-term debt, commercial paper obligations
and other short-term borrowings.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all benefits under
such Plan exceeds (ii) the fair market value of all Plan assets allocable to
such benefits (excluding any accrued but unpaid contributions), all determined
as of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the ERISA Group
to the PBGC or any other Person under Title IV of ERISA.
"Wholly-Owned Subsidiary" means any Subsidiary all of the shares
of capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from time
to time, applied on a basis consistent (except for changes concurred in by the
Borrower's independent public accountants) with the most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Banks; provided that, if the Borrower notifies the
Agent that the Borrower wishes to amend any covenant in Article V to eliminate
the effect of any change in generally accepted accounting principles on the
operation of such covenant (or if the Agent notifies the Borrower that the
Required Banks wish to amend Article V for such purpose), then the Borrower's
compliance with such covenant shall be determined on the basis of generally
accepted accounting principles in effect immediately before the relevant change
in generally accepted accounting principles became effective, until either such
notice is withdrawn or such covenant is amended in a manner satisfactory to the
Borrower and the Required Banks.
SECTION 1.03. Types of Borrowing. The term "Borrowing" denotes
the aggregation of Loans of one or more Banks to be made to the Borrower
pursuant to Article II on a single date and for a single Interest Period.
Borrowing are classified for purposes of this Agreement either by reference to
the pricing of Loans comprising such Borrowing (e.g., a "Euro-Dollar Borrowing"
is a Borrowing comprised of Euro-Dollar Loans) or by reference to the provisions
of Article II under which participation therein is determined (i.e., a
"Committed Borrowing" is a Borrowing under Section 2.01 in which all Banks
participate in proportion to their Commitments, while a "Money Market Borrowing"
is a Borrowing under Section 2.03 in which the Bank participants are determined
on the basis of their bids in accordance therewith).
SECTION 1.04 Basis for Ratings. The credit ratings to be
utilized in the determination of a Pricing Period are the ratings assigned to
unsecured obligations of the Borrower without third party credit support.
Ratings assigned to any obligation which is secured or which has the benefit of
third party credit support shall be disregarded.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. Each Bank severally agrees,
on the terms and conditions set forth in this Agreement, to make loans to the
Borrower pursuant to this Section from time to time during the Revolving Credit
Period in amounts such that the aggregate principal amount of Committed Loans by
such Bank at any one time outstanding shall not exceed the amount of its
Commitment. Each Borrowing under this Section 2.01 shall be in an aggregate
principal amount of $5,000,000 or any larger multiple of $1,000,000 (except that
any such Borrowing may be in the aggregate amount available in accordance with
Section 3.02(b)) and shall be made from the several Banks ratably in proportion
to their respective Commitments. Within the foregoing limits, the Borrower may
borrow under this Section 2.01, repay, or to the extent permitted by Section
2.11, prepay Loans and reborrow at any time prior to the Termination Date under
this Section 2.01.
SECTION 2.02. Notice of Committed Borrowings. The Borrower shall
give the Agent notice (a "Notice of Committed Borrowing") not later than 12:00
Noon (New York City time) on (x) the date of each Base Rate Borrowing, (y) the
second Domestic Business Day before each CD Borrowing and (z) the third
Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying:
(a) the date of such Borrowing, which shall be a
Domestic Business Day in the case of a Domestic Borrowing or a
Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing,
(b) the aggregate amount of such Borrowing,
(c) whether the Loans comprising such Borrowing are to
be CD Loans, Base Rate Loans or Euro-Dollar Loans, and
(d) in the case of a Fixed Rate Borrowing, the duration
of the Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period.
SECTION 2.03. Money Market Borrowings.
(a) The Money Market Option. In addition to Committed
Borrowings pursuant to Section 2.01, the Borrower may, as set forth in this
Section, request the Banks during the Revolving Credit Period to make offers to
make Money Market Loans; provided that the Borrower may not make any such
request or borrow any Money Market Loan during a Level IV Period or a Level V
Period. The Banks may, but shall have no obligation to, make such offers and
the Borrower may, but shall have no obligation to, accept any such offers in the
manner set forth in this Section.
(b) Money Market Quote Request. When the Borrower wishes to
request offers to make Money Market Loans under this Section, it shall transmit
to the Agent by telex or facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit B hereto so as to be received no later than
12:00 Noon (New York City time) on (x) the fifth Euro-Dollar Business Day prior
to the date of Borrowing proposed therein, in the case of a LIBOR Auction or (y)
the Domestic Business Day next preceding the date of Borrowing proposed therein,
in the case of an Absolute Rate Auction (or, in either case, such other time or
date as the Borrower and the Agent shall have mutually agreed and shall have
notified to the Banks not later than the date of the Money Market Quote Request
for the first LIBOR Auction or Absolute Rate Auction for which such change is to
be effective) specifying:
(i) the proposed date of Borrowing, which shall be a
Euro-Dollar Business Day in the case of a LIBOR Auction or a
Domestic Business Day in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be
$5,000,000 or a larger multiple of $1,000,000,
(iii) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period,
and
(iv) whether the Money Market Quotes requested are to set
forth a Money Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market Quote
Request shall be given within five Euro-Dollar Business Days (or such other
number of days as the Borrower and the Agent may agree) of any other Money
Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt
of a Money Market Quote Request, the Agent shall send to the Banks by telex or
facsimile transmission an Invitation for Money Market Quotes substantially in
the form of Exhibit C hereto, which shall constitute an invitation by the
Borrower to each Bank to submit Money Market Quotes offering to make the Money
Market Loans to which such Money Market Quote Request relates in accordance with
this Section.
(d) Submission and Contents of Money Market Quotes. (i) Each
Bank may submit a Money Market Quote containing an offer or offers to make Money
Market Loans in response to any Invitation for Money Market Quotes. Each Money
Market Quote must comply with the requirements of this subsection (d) and must
be submitted to the Agent by telex or facsimile transmission at its offices
specified in or pursuant to Section 9.01 not later than (x) 2:00 P.M. (New York
City time) on the fourth Euro-Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or (y) 9:30 A.M. (New York City time)
on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or,
in either case, such other time or date as the Borrower and the Agent shall have
mutually agreed and shall have notified to the Banks not later than the date of
the Money Market Quote Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective); provided that Money Market
Quotes submitted by the Agent (or any affiliate of the Agent) in the capacity of
a Bank may be submitted, and may only be submitted, if the Agent or such
affiliate notifies the Borrower of the terms of the offer or offers contained
therein not later than (x) one hour prior to the deadline for the other Banks,
in the case of a LIBOR Auction or (y) 15 minutes prior to the deadline for the
other Banks, in the case of an Absolute Rate Auction. Subject to Articles III
and VI, any Money Market Quote so made shall be irrevocable except with the
written consent of the Agent given on the instructions of the Borrower.
(ii) Each Money Market Quote shall be in substantially the form of
Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan for
which each such offer is being made, which principal amount (w)
may be equal to, greater than or less than the Commitment of the
quoting Bank, (x) must be $1,000,000 or a larger multiple
thereof, (y) may not exceed the principal amount of Money Market
Loans for which offers were requested and (z) may be subject to
an aggregate limitation as to the principal amount of Money
Market Loans for which offers being made by such quoting Bank may
be accepted,
(C) in the case of a LIBOR Auction, the margin above or
below the applicable London Interbank Offered Rate (the "Money
Market Margin") offered for each such Money Market Loan,
expressed as a percentage (specified to the nearest 1/10,000th of
1%) to be added to or subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the rate of
interest per annum (specified to the nearest 1/10,000th of 1%)
(the "Money Market Absolute Rate") offered for each such Money
Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D
hereto or does not specify all of the information required by
subsection (d)(ii);
(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to those
set forth in the applicable Invitation for Money Market Quotes;
or
(D) arrives after the time set forth in subsection
(d)(i).
(e) Notice to Borrower. The Agent shall promptly notify the
Borrower of the terms (x) of any Money Market Quote submitted by a Bank that is
in accordance with subsection (d) and (y) of any Money Market Quote that amends,
modifies or is otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Money Market Quote Request. Any
such subsequent Money Market Quote shall be disregarded by the Agent unless such
subsequent Money Market Quote is submitted solely to correct a manifest error in
such former Money Market Quote. The Agent's notice to the Borrower shall
specify (A) the aggregate principal amount of Money Market Loans for which
offers have been received for each Interest Period specified in the related
Money Market Quote Request, (B) the respective principal amounts and Money
Market Margins or Money Market Absolute Rates, as the case may be, so offered
and (C) if applicable, limitations on the aggregate principal amount of Money
Market Loans for which offers in any single Money Market Quote may be accepted.
(f) Acceptance and Notice by Borrower. Not later than 10:30
A.M. (New York City time) on (x) the third Euro-Dollar Business Day prior to the
proposed date of Borrowing, in the case of a LIBOR Auction or (y) the proposed
date of Borrowing, in the case of an Absolute Rate Auction (or, in either case,
such other time or date as the Borrower and the Agent shall have mutually agreed
and shall have notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate Auction for which
such change is to be effective), the Borrower shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it pursuant to
subsection (e). In the case of acceptance, such notice (a "Notice of Money
Market Borrowing") shall specify the aggregate principal amount of offers for
each Interest Period that are accepted. The Borrower may accept any Money
Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the
related Money Market Quote Request,
(ii) the principal amount of each Money Market Borrowing
must be $5,000,000 or a larger multiple of $1,000,000,
(iii) acceptance of offers may only be made on the basis of
ascending Money Market Margins or Money Market Absolute Rates, as
the case may be, and
(iv) the Borrower may not accept any offer that is described
in subsection (d)(iii) or that otherwise fails to comply with the
requirements of this Agreement.
(g) Allocation by Agent. If offers are made by two or more
Banks with the same Money Market Margins or Money Market Absolute Rates, as the
case may be, for a greater aggregate principal amount than the amount in respect
of which such offers are accepted for the related Interest Period, the principal
amount of Money Market Loans in respect of which such offers are accepted shall
be allocated by the Agent among such Banks as nearly as possible (in such
multiples, not greater than $1,000,000, as the Agent may deem appropriate) in
proportion to the aggregate principal amounts of such offers. Determinations by
the Agent of the amounts of Money Market Loans shall be conclusive in the
absence of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Agent shall
promptly notify each Bank of the contents thereof and of such Bank's share (if
any) of such Borrowing and such Notice of Borrowing shall not thereafter be
revocable by the Borrower.
(b) The provisions of Section 2.02 and 2.03 above
notwithstanding, if by 12:00 Noon (New York City time) on the last day of the
Interest Period applicable to an outstanding Borrowing the Borrower shall have
neither (i) given timely notice of a Borrowing on the last day of such Interest
Period nor (ii) notified the Agent that it does not intend to borrow hereunder
on the last day of such Interest Period, then the Agent shall be deemed to have
received a Notice of Committed Borrowing specifying that (x) the date of the
proposed Borrowing shall be the last day of such Interest Period, (y) the
aggregate amount of the proposed Borrowing shall be the amount of such
outstanding Borrowing and (z) the Loans comprising the proposed Borrowing are to
be Base Rate Loans.
(c) Not later than 2:00 P.M. (New York City time) on the date of
each Borrowing, each Bank participating therein shall (except as provided in
subsection (d) of this Section) make available its share of such Borrowing, in
Federal or other funds immediately available in New York City, to the Agent at
its address specified in or pursuant to Section 10.01. Unless the Agent
determines that any applicable condition specified in Article III has not been
satisfied, the Agent will make the funds so received from the Banks available to
the Borrower at the Agent's aforesaid address.
(d) If any Bank makes a new Loan hereunder on a day on which the
Borrower is to repay all or any part of an outstanding Loan from such Bank, such
Bank shall apply the proceeds of its new Loan to make such repayment and only an
amount equal to the difference (if any) between the amount being borrowed and
the amount being repaid shall be made available by such Bank to the Agent as
provided in subsection (c), or remitted by the Borrower to the Agent as provided
in Section 2.12, as the case may be.
(e) Unless the Agent shall have received notice from a Bank
prior to the date of any Borrowing that such Bank will not make available to the
Agent such Bank's share of such Borrowing, the Agent may assume that such Bank
has made such share available to the Agent on the date of such Borrowing in
accordance with subsections (c) and (d) of this Section 2.04 and the Agent may,
in reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so
made such share available to the Agent, such Bank and the Borrower severally
agree to repay to the Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the Agent, at
(i) in the case of the Borrower, a rate per annum equal to the higher of the
Federal Funds Rate and the interest rate applicable thereto pursuant to Section
2.07 and (ii) in the case of such Bank, the Federal Funds Rate. If such Bank
shall repay to the Agent such corresponding amount, such amount so repaid shall
constitute such Bank's Loan included in such Borrowing for purposes of this
Agreement.
SECTION 2.05. Notes. (a) The Loans of each Bank shall be
evidenced by a single Note payable to the order of such Bank for the account of
its Applicable Lending Office in an amount equal to the aggregate unpaid
principal amount of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the Agent (to
be given not later than two Domestic Business Days prior to the first
Borrowing), request that its Loans of a particular type be evidenced by a
separate Note in an amount equal to the aggregate unpaid principal amount of
such Loans. Each such Note shall be in substantially the form of Exhibit A
hereto with appropriate modifications to reflect the fact that it evidences
solely Loans of the relevant type. Each reference in this Agreement to the
"Note" of such Bank shall be deemed to refer to and include any or all of such
Notes, as the context may require.
(c) Upon receipt of each Bank's Note pursuant to Section
3.01(c), the Agent shall deliver such Note to such Bank by hand, courier or
other similar means. Each Bank shall record the date, amount, type and maturity
of each Loan made by it and the date and amount of each payment of principal
made by the Borrower with respect thereto, and prior to any transfer of its Note
shall endorse on the schedule forming a part thereof appropriate notations to
evidence the foregoing information with respect to each such Loan then
outstanding; provided that the failure of any Bank to make any such recordation
or endorsement shall not affect the obligations of the Borrower hereunder or
under the Notes. Each Bank is hereby irrevocably authorized by the Borrower so
to endorse its Note and to attach to and make a part of such Note a continuation
of any such schedule as and when required.
SECTION 2.06. Maturity of Loans. Each Loan included in any
Borrowing shall mature, and the principal amount thereof shall be due and
payable, on the last day of the Interest Period applicable to such Borrowing.
SECTION 2.07. Interest Rates. (a) Each Base Rate Loan shall
bear interest on the outstanding principal amount thereof, for each day from the
date such Loan is made until it becomes due, at a rate per annum equal to the
sum of the Base Rate for such day plus, if such day falls in a Level V Period,
0.50%. Such interest shall be payable for each Interest Period on the last day
thereof. Any overdue principal of or interest on any Base Rate Loan shall bear
interest, payable on demand, for each day until paid at a rate per annum equal
to the sum of 2% plus the rate otherwise applicable to Base Rate Loans for such
day.
(b) Each CD Loan shall bear interest on the outstanding
principal amount thereof, for each day during the Interest Period applicable
thereto, at a rate per annum equal to the sum of the CD Margin for such day plus
the applicable Adjusted CD Rate; provided that if any CD Loan or any portion
thereof shall, as a result of clause (2)(b) of the definition of Interest
Period, have an Interest Period of less than 30 days, such portion shall bear
interest during such Interest Period at the rate applicable to Base Rate Loans
during such period. Such interest shall be payable for each Interest Period on
the last day thereof and, if such Interest Period is longer than 90 days, 90
days after the first day thereof. Any overdue principal of or interest on any
CD Loan shall bear interest, payable on demand, for each day until paid at a
rate per annum equal to the sum of 2% plus the higher of (i) the sum of the CD
Margin for such day plus the Adjusted CD Rate applicable to such Loan and (ii)
the rate applicable to Base Rate Loans for such day.
"CD Margin" means for any day the percentage set forth below
opposite the Pricing Period during which such day falls:
Level I Period .4875%
Level II Period .5800%
Level III Period .6750%
Level IV Period .8000%
Level V Period 1.1750%
The "Adjusted CD Rate" applicable to any Interest Period means a
rate per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upward, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is the rate
of interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum bid
at 10:00 A.M. (New York City time) (or as soon thereafter as practicable) on the
first day of such Interest Period by two or more New York certificate of deposit
dealers of recognized standing for the purchase at face value from each CD
Reference Bank of its certificates of deposit in an amount comparable to the
principal amount of the CD Loan of such CD Reference Bank to which such Interest
Period applies and having a maturity comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including without limitation any
basic, supplemental or emergency reserves) for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of new non-personal time deposits in dollars in New York City having a
maturity comparable to the related Interest Period and in an amount of $100,000
or more. The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve Percentage.
"Assessment Rate" means for any Interest Period the net annual
assessment rate (rounded upward, if necessary, to the next higher 1/100 of 1%)
which is payable by a member of the Bank Insurance Fund classified as adequately
capitalized and within supervisory subgroup "A" (or a comparable successor
assessment risk classification) within the meaning of 12 C.F.R. 327.3(d) (or
any successor provision) to the Federal Deposit Insurance Corporation (or any
successor) for such Corporation's (or such successor's) insuring time deposits
at offices of such institution in the United States. The Adjusted CD Rate shall
be adjusted automatically on and as of the effective date of any change in the
Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during the Interest Period applicable
thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin for such
day plus the applicable London Interbank Offered Rate. Such interest shall be
payable for each Interest Period on the last day thereof and, if such Interest
Period is longer than three months, three months after the first day thereof.
"Euro-Dollar Margin" means for any day the percentage set forth
below opposite the Pricing Period during which such day falls:
Level I Period .3625%
Level II Period .4550%
Level III Period .5500%
Level IV Period .6750%
Level V Period 1.0500%
The "London Interbank Offered Rate" applicable to any Interest
Period means the average (rounded upward, if necessary, to the next higher 1/100
of 1%) of the respective rates per annum at which deposits in dollars are
offered to each of the Euro-Dollar Reference Banks in the London interbank
market at approximately 11:00 A.M. (London time) two Euro-Dollar Business Days
before the first day of such Interest Period in an amount approximately equal to
the principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference Bank
to which such Interest Period is to apply and for a period of time comparable to
such Interest Period.
(d) Any overdue principal of or interest on any Euro-Dollar Loan
shall bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 2% plus the higher of (i) the sum of the
Euro-Dollar Margin plus the London Interbank Offered Rate applicable to such
Loan and (ii) the Euro-Dollar Margin plus the quotient obtained (rounded upward,
if necessary, to the next higher 1/100 of 1%) by dividing (x) the average
(rounded upward, if necessary, to the next higher 1/100 of 1%) of the respective
rates per annum at which one day (or, if such amount due remains unpaid more
than three Euro-Dollar Business Days, then for such other period of time not
longer than six months as the Agent may select) deposits in dollars in an amount
approximately equal to such overdue payment due to each of the Euro-Dollar
Reference Banks are offered to such Euro-Dollar Reference Bank in the London
interbank market for the applicable period determined as provided above by (y)
1.00 minus the Euro-Dollar Reserve Percentage (or, if the circumstances
described in clause (a) or (b) of Section 8.01 shall exist, at a rate per annum
equal to the sum of 2% plus the rate applicable to Base Rate Loans for such
day).
(e) Subject to Section 8.01(a), each Money Market LIBOR Loan
shall bear interest on the outstanding principal amount thereof, for the
Interest Period applicable thereto, at a rate per annum equal to the sum of the
London Interbank Offered Rate for such Interest Period (determined in accordance
with Section 2.07(c) as if the related Money Market LIBOR Borrowing were a
Committed Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted
by the Bank making such Loan in accordance with Section 2.03. Each Money Market
Absolute Rate Loan shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate per annum equal
to the Money Market Absolute Rate quoted by the Bank making such Loan in
accordance with Section 2.03. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than three
months, at intervals of three months after the first day thereof. Any overdue
principal of or interest on any Money Market Loan shall bear interest, payable
on demand, for each day until paid at a rate per annum equal to the sum of 2%
plus the Base Rate for such day.
(f) The Agent shall determine each interest rate applicable to
the Loans hereunder. The Agent shall give prompt notice to the Borrower and the
participating Banks by telex, facsimile transmission or cable of each rate of
interest so determined, and its determination thereof shall be conclusive in the
absence of manifest error.
(g) Each Reference Bank agrees to use its best efforts to
furnish quotations to the Agent as contemplated by this Section. If any
Reference Bank does not furnish a timely quotation, the Agent shall determine
the relevant interest rate on the basis of the quotation or quotations furnished
by the remaining Reference Bank or Banks or, if none of such quotations is
available on a timely basis, the provisions of Section 8.01 shall apply.
SECTION 2.08. Fees.
(a) Commitment Fee. The Borrower shall pay to the Agent, for
the account of the Banks ratably in proportion to their Commitments, a
commitment fee at the rate of .05% per annum on the amount by which the
aggregate amount of the Commitments exceeds the aggregate outstanding principal
amount of the Loans. Such commitment fee shall accrue from and including the
Effective Date to but excluding the Termination Date (or earlier date of
termination of the Commitments in their entirety).
(b) Facility Fee. The Borrower shall pay to the Agent, for the
account of each Bank, a facility fee calculated for each day: (i) during a
Level I Period at the rate of .1375% per annum, (ii) during a Level II Period at
the rate of .17% per annum, (iii) during a Level III Period at the rate of .20%
per annum, (iv) during a Level IV Period at the rate of .325% per annum and (v)
during a Level V Period at the rate of .45% per annum. Such facility fee shall
accrue (i) from and including the Effective Date to but excluding the
Termination Date (or earlier date of termination of the Commitments in their
entirety), on the amount by which such Bank's Commitment (whether used or
unused) exceeds the aggregate outstanding principal amount of its Base Rate
Loans and (ii) from and including the Termination Date (or such earlier date of
termination) to but excluding the date on which such Bank's Loans shall be
repaid in their entirety, on the aggregate outstanding principal amount of such
Bank's Loans other than Base Rate Loans.
(c) Payments. Accrued fees under this Section shall be payable
quarterly in arrears on the last day of each September, December, March and June
and upon the date of termination of the Commitments in their entirety (and, if
later, the date the Loans shall be repaid in their entirety).
SECTION 2.09. Optional Termination or Reduction of Commitments.
The Borrower may, upon at least three Domestic Business Days' notice to the
Agent, (i) terminate the Commitments at any time, if no Loans are outstanding at
such time, or (ii) ratably reduce from time to time by an aggregate amount of
$25,000,000 or any larger multiple of $1,000,000, the aggregate amount of the
Commitments in excess of the aggregate outstanding principal amount of the
Loans.
SECTION 2.10. Termination of Commitments. The Commitments shall
terminate on the earlier of (i) the first Payment Date to occur under any of the
Receivables Purchase Agreements and (ii) the Termination Date, and any Loans
then outstanding (together with accrued interest thereon) shall be due and
payable on such date.
SECTION 2.11. Optional Prepayments. (a) The Borrower may, upon
one Domestic Business Day's notice to the Agent, prepay any Base Rate Borrowing
(or any Money Market Borrowing bearing interest at the Base Rate pursuant to
Section 8.01(a)) in whole at any time, or from time to time in part in amounts
aggregating $5,000,000 or any larger multiple of $1,000,000, by paying the
principal amount to be prepaid together with accrued interest thereon to the
date of prepayment. Each such optional prepayment shall be applied to prepay
ratably the Loans of the several Banks included in such Borrowing.
(b) Except as provided in Section 8.02, the Borrower may not
voluntarily prepay all or any portion of the principal amount of any Fixed Rate
Loan prior to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this
Section, the Agent shall promptly notify each Bank of the contents thereof and
of such Bank's ratable share (if any) of such prepayment and such notice shall
not thereafter be revocable by the Borrower.
SECTION 2.12. General Provisions as to Payments. (a) The
Borrower shall make each payment of principal of, and interest on, the Loans and
of fees hereunder, not later than 2:00 P.M. (New York City time) on the date
when due, in Federal or other funds immediately available in New York City, to
the Agent at its address referred to in Section 9.01. The Agent will promptly
distribute to each Bank its ratable share of each such payment received by the
Agent for the account of the Banks. Whenever any payment of principal of, or
interest on, the Domestic Loans or of fees shall be due on a day which is not a
Domestic Business Day, the date for payment thereof shall be extended to the
next succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. Whenever any payment of
principal of, or interest on, the Money Market Loans shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the
Borrower prior to the date on which any payment is due from the Borrower to the
Banks hereunder that the Borrower will not make such payment in full, the Agent
may assume that the Borrower has made such payment in full to the Agent on such
date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then due
such Bank. If and to the extent that the Borrower shall not have so made such
payment, each Bank shall repay to the Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for each day from the
date such amount is distributed to such Bank until the date such Bank repays
such amount to the Agent, at the Federal Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower makes any payment
of principal with respect to any Fixed Rate Loan (pursuant to Article VI or VIII
or otherwise) on any day other than the last day of the Interest Period
applicable thereto, or the end of an applicable period fixed pursuant to Section
2.07(d), or if the Borrower fails to borrow any Fixed Rate Loans after notice
has been given to any Bank in accordance with Section 2.04(a), the Borrower
shall reimburse each Bank within 15 days after demand for any resulting loss or
expense incurred by it (or by an existing or prospective Participant in the
related Loan), including (without limitation) any loss incurred in obtaining,
liquidating or employing deposits from third parties, but excluding loss of
margin for the period after any such payment or failure to borrow, provided that
such Bank shall have delivered to the Borrower a certificate as to the amount of
such loss or expense, which certificate shall be conclusive in the absence of
manifest error.
SECTION 2.14. Computation of Interest and Fees. Interest based
on the Prime Rate hereunder shall be computed on the basis of a year of 365 days
(or 366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
SECTION 2.15. Withholding Tax Exemption. At least five Domestic
Business Days prior to the first date on which interest or fees are payable
hereunder for the account of any Bank, each Bank that is not incorporated under
the laws of the United States of America or a state thereof agrees that it will
deliver to the Borrower and the Agent two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, certifying in either case that such
Bank is entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes. Each Bank
which so delivers a Form 1001 or 4224 further undertakes to deliver to the
Borrower and the Agent two additional copies of such form (or a successor form)
on or before the date that such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form so delivered
by it, and such amendments thereto or extensions or renewals thereof as may be
reasonably requested by the Borrower or the Agent, in each case certifying that
such Bank is entitled to receive payments under this Agreement and the Notes
without deduction or withholding of any United States federal income taxes,
unless an event (including without limitation any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Bank from duly completing and delivering any such form with respect
to it and such Bank advises the Borrower and the Agent that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax.
SECTION 2.16. Regulation D Compensation. Each Bank may require
the Borrower to pay, contemporaneously with each payment of interest onits Euro-
Dollar Loans, additional interest on the related Euro-Dollar Loan of such Bank
at a rate per annum determined by such Bank up to but not exceeding the excess
of (i)(A) the applicable London Interbank Offered Rate divided by (B) one minus
the Euro-Dollar Reserve Percentage over (ii) the applicable London Interbank
Offered Rate. Any Bank wishing to require payment of such additional interest
(x) shall so notify the Borrower and the Agent, in which case such additional
interest on the Euro-Dollar Loans of such Bank to the Borrower shall be payable
to such Bank at the place indicated in such notice with respect to each Interest
Period commencing at least four Euro-Dollar Business Days after the giving of
such notice and (y) shall notify the Borrower at least five Euro-Dollar Business
Days prior to each date on which interest is payable on its Euro-Dollar Loans of
the amount then due to such Bank under this Section.
SECTION 2.17. Termination of Commitments Under Existing
Agreement; Amendment of Receivables Purchase Agreements. (a) Each of the
parties to this Agreement that is also a party to the Existing Agreement agrees
that the commitments of the banks under the Existing Agreement shall terminate
on the Effective Date concurrently with the effectiveness of this Agreement
without notice to, or any further action by, any party thereunder.
(b) The Borrower, in its capacity as guarantor of the obligations of APL
and APD under the Receivables Purchase Agreements, consents to the amendment of
each of the Receivables Purchase Agreements as provided in Amendment
No. 3 thereto dated as of the date hereof.
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall become
effective on the date (the "Effective Date") that each of the following
conditions shall have been satisfied (or waived in accordance with Section
9.06):
(a) receipt by the Agent of counterparts hereof signed
by each of the parties hereto (or, in the case of any party as to
which an executed counterpart shall not have been received,
receipt by the Agent in form satisfactory to it of telegraphic,
telex, facsimile transmission or other written confirmation from
such party of execution of a counterpart hereof by such party);
(b) receipt by the Agent of a certificate signed by an
Authorized Officer and dated the Effective Date, to the effect
that on such date (i) no Default or Potential Event of
Termination shall have occurred and be continuing and (ii) the
representations and warranties of the Borrower contained in this
Agreement shall be true;
(c) receipt by the Agent for the account of each Bank of
a duly executed Note dated on or before the Effective Date
complying with the provisions of Section 2.05;
(d) receipt by the Agent of an opinion of Peter A.V.
Huegel, Esq., Senior Counsel of the Borrower, substantially in
the form of Exhibit E hereto and covering such additional matters
relating to the transactions contemplated hereby as the Required
Banks may reasonably request, and any other opinion of other
counsel referred to therein in form and scope satisfactory to the
Agent;
(e) receipt by the Agent of an opinion of Davis Polk &
Wardwell, special counsel for the Agent, substantially in the
form of Exhibit F hereto and covering such additional matters
relating to the transactions contemplated hereby as the Required
Banks may reasonably request;
(f) receipt by the Agent of a copy of any consent or
approval of any Person which may be required in connection with
the transactions contemplated by this Agreement and the Notes;
(g) receipt by the Agent of a written waiver from each
party to the Existing Agreement that is not a party to this
Agreement, evidencing such party's waiver of any notice
requirement under Section 2.09 of the Existing Agreement in
connection with the termination of such party's commitment
thereunder;
(h) payment by the Borrower of all fees accrued to but
excluding the Effective Date under Section 2.08(d) of the
Existing Agreement;
(i) each of the Receivables Purchase Agreements shall
have been amended by an Amendment No. 3 thereto substantially in
the form of the draft thereof dated 3/22/94 heretofore delivered
to the Banks; and
(j) receipt by the Agent of all documents it may
reasonably request relating to the existence of the Borrower, the
corporate authority for and the validity of this Agreement and
the Notes, and any other matters relevant hereto, all in form and
substance satisfactory to the Agent;
provided that this Agreement shall not become effective or be binding on any
party hereto unless all of the foregoing conditions are satisfied not later than
April 8, 1994. The Agent shall promptly notify the Borrower and the Banks of
the Effective Date, and such notice shall be conclusive and binding on all
parties hereto.
SECTION 3.02. Borrowings. The obligation of any Bank to make a
Loan on the occasion of any Borrowing is subject to the satisfaction of the
following conditions:
(a) receipt (or deemed receipt) by the Agent of a Notice
of Borrowing as required by Section 2.02 or 2.03, as the case may
be;
(b) the fact that, immediately after such Borrowing, the
aggregate outstanding principal amount of the Loans will not
exceed the aggregate amount of the Commitments;
(c) the fact that, immediately before and after such
Borrowing, no Default or Potential Event of Termination shall
have occurred and be continuing; and
(d) the fact that the representations and warranties of
the Borrower contained in this Agreement (except, in the case of
a Refunding Borrowing, the representations and warranties set
forth in Sections 4.04(b) and 4.05 as to any matter which has
theretofore been disclosed in writing by the Borrower to the
Banks) shall be true on and as of the date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the facts specified in clauses
(b), (c) and (d) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement and the execution, delivery and performance by the Borrower of the
Notes, including the borrowing of the full amount of the Commitments hereunder,
are within the corporate powers of the Borrower, have been duly authorized by
all necessary corporate action, require no action by or in respect of, or filing
with, any governmental body, agency or official (including, without limitation,
MarAd) and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of incorporation or by-laws
of the Borrower or of any agreement, judgment, injunction, order, decree or
other instrument binding upon the Borrower or any of its Subsidiaries or result
in the creation or imposition of any Lien on any asset of the Borrower or any of
its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a
valid and binding agreement of the Borrower, and the Notes, when executed and
delivered in accordance with this Agreement, will constitute valid and binding
obligations of the Borrower.
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of December 31, 1993 and the related consolidated
statements of income, cash flows and changes in redeemable preferred stock and
stockholders' equity for the fiscal year then ended, reported on by Arthur
Andersen & Co. and set forth in the Borrower's 1993 Form 10-K, a copy of which
has been delivered to each of the Banks, fairly present, in conformity with
generally accepted accounting principles, the consolidated financial position of
the Borrower and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such fiscal year.
(b) Since December 31, 1993 there has been no material adverse
change in the business, financial position, results of operations or prospects
of the Borrower and its Consolidated Subsidiaries, considered as a whole.
SECTION 4.05. Litigation. There is no action, suit or
proceeding pending against, or to the knowledge of the Borrower threatened
against or affecting, the Borrower or any of its Subsidiaries before any court
or arbitrator or any governmental body, agency or official in which there is a
significant possibility of an adverse decision which could materially adversely
affect the business, financial position, results of operations or prospects of
the Borrower and its Consolidated Subsidiaries considered as a whole or which in
any manner draws into question the validity of this Agreement or the Notes.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA
Group has fulfilled its obligations under the minimum funding standards of ERISA
and the Internal Revenue Code with respect to each Plan and is in compliance in
all material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Internal Revenue Code or (iii)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.
SECTION 4.07. Environmental Matters. In the ordinary course of
its business, the Borrower conducts an ongoing review of the effect of
Environmental Laws on the business, operations and properties of the Borrower
and its Subsidiaries, in the course of which it identifies and evaluates
associated liabilities and costs (including, without limitation, any capital or
operating expenditures required for clean-up or closure of properties presently
or previously owned, any capital or operating expenditures required to achieve
or maintain compliance with environmental protection standards imposed by law or
as a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat and any actual or potential liabilities to third parties,
including employees, and any related costs and expenses). On the basis of this
review, the Borrower has reasonably concluded that Environmental Laws are
unlikely to have a material adverse effect on the business, financial condition,
results of operations or prospects of the Borrower and its Consolidated
Subsidiaries, considered as a whole.
SECTION 4.08. Taxes. The Borrower and its Subsidiaries have
filed all United States Federal income tax returns and all other material tax
returns which are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by the Borrower
or any Subsidiary, other than taxes contested in good faith by the Borrower or
such Subsidiary. The charges, accruals and reserves on the books of the Borrower
and its Subsidiaries in respect of taxes or other governmental charges are, in
the opinion of the Borrower, adequate.
SECTION 4.09. Subsidiaries. Each of the Borrower's corporate
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted, the
absence of which good standing and governmental licenses, authorizations,
consents and approvals would have a material adverse effect on the business,
financial position, results of operations or prospects of the Borrower and its
Consolidated Subsidiaries, considered as a whole.
SECTION 4.10. Not an Investment Company. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.11. MarAd Requirements. The Borrower and its
Subsidiaries are in compliance in all material respects with the terms of all
agreements currently in effect between the Borrower or any Subsidiary and MarAd,
and with all applicable regulations of MarAd with respect to which agreements
and regulations noncompliance would have a material adverse effect on the
business, financial position, results of operations or prospects of the Borrower
and its Consolidated Subsidiaries taken as a whole, including without limitation
all agreements and regulations relating to construction-differential subsidy and
operating-differential subsidy, as such terms are defined by MarAd.
SECTION 4.12. Full Disclosure. All information heretofore
furnished by the Borrower to the Agent or any Bank for purposes of or in
connection with this Agreement or any transaction contemplated hereby is, and
all such information hereafter furnished by the Borrower to the Agent or any
Bank will be, true and accurate in all material respects on the date as of which
such information is stated or certified; it being understood that (i) any
projections included in such information represent, at the time such projections
are furnished by the Borrower, the Borrower's best good faith estimate of the
information shown and do not constitute a representation that the results
portrayed in such projections will in fact be achieved and (ii) any business
plan included in such information represents the Borrower's good faith
intention, at the time such business plan is furnished by the Borrower, and does
not constitute a representation that such plan will in fact be implemented. The
Borrower has disclosed to the Banks in writing any and all facts which
materially and adversely affect or may affect (to the extent the Borrower can
now reasonably foresee), the business, financial position or results of
operations of the Borrower and its Consolidated Subsidiaries, taken as a whole,
or the ability of the Borrower to perform its obligations under this Agreement
or the Notes.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to each of
the Banks:
(i) as soon as available and in any event within 105
days after the end of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such fiscal year and the related
consolidated statements of income, cash flows and changes in
redeemable preferred stock and stockholders' equity for such
fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on in a manner
acceptable to the Securities and Exchange Commission by Arthur
Andersen & Co. or other independent public accountants of
nationally recognized standing; provided that, so long as the
Borrower is subject to the reporting requirements of the Exchange
Act, the requirements of this clause (i) may be satisfied by
delivering to each Bank a copy of the Borrower's report on Form
10-K for such fiscal year, together with a copy of the Borrower's
annual report to shareholders for such fiscal year;
(ii) as soon as available and in any event within 53 days
after the end of each of the first three quarters of each fiscal
year of the Borrower, a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such
quarter and the related consolidated statements of income, cash
flows and changes in redeemable preferred stock and stockholders'
equity for such quarter and for the portion of the Borrower's
fiscal year ended at the end of such quarter, setting forth in
each case in comparative form the figures for the corresponding
quarter and the corresponding portion of the Borrower's previous
fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, generally accepted
accounting principles and consistency by an Authorized Officer;
provided that, so long as the Borrower is subject to the
reporting requirements of the Exchange Act, the requirements of
this clause (ii) may be satisfied by delivering to each Bank a
copy of the Borrower's report on Form 10-Q for such quarter,
together with a copy of the Borrower's report (if any) to
shareholders for such quarter;
(iii) simultaneously with the delivery of each set of
financial statements referred to in clauses (i) and (ii) above, a
certificate of an Authorized Officer (x) setting forth in
reasonable detail the calculations required to establish whether
the Borrower was in compliance with the requirements of Sections
5.06, 5.10, 5.11 and 5.12(b) on the date of such financial
statements and (y) stating whether any Default, Event of
Termination or Potential Event of Termination exists on the date
of such certificate and, if any Default, Event of Termination or
Potential Event of Termination then exists, setting forth the
details thereof and the action which the Borrower is taking or
proposes to take with respect thereto;
(iv) simultaneously with the delivery of each set of
financial statements referred to in clause (i) above, a statement
of the firm of independent public accountants which reported on
such statements (x) as to whether anything has come to their
attention to cause them to believe that any Default, Event of
Termination or Potential Event of Termination existed on the date
of such statements and (y) confirming the calculations set forth
in the officers' certificate delivered simultaneously therewith
pursuant to clause (iii) above;
(v) promptly upon the mailing thereof to the
shareholders of the Borrower generally, copies of all financial
statements, reports and proxy statements so mailed;
(vi) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and
reports on Forms 10-K, 10-Q and 8-K (or their equivalents) which
the Borrower shall have filed with the Securities and Exchange
Commission;
(vii) promptly after an Authorized Officer obtains knowledge
of any change in the rating by either S&P or Moody's of the
Borrower's senior unsecured long-term public debt, or of any
public announcement by such rating agency that such debt has been
placed under surveillance with possible negative implications or
review for possible downgrade, written notice of such change or
such placement under surveillance or review, setting forth the
details thereof; and
(viii) if and when any member of the ERISA Group (A) gives or
is required to give notice to the PBGC of any "reportable event"
(as defined in Section 4043 of ERISA) with respect to any Plan
which might constitute grounds for a termination of such Plan
under Title IV of ERISA, or knows that the plan administrator of
any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event
given or required to be given to the PBGC; (B) receives notice of
complete or partial withdrawal liability under Title IV of ERISA
or notice that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such notice; (C)
receives notice from the PBGC under Title IV of ERISA of an
intent to terminate, impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or appoint a trustee
to administer any Plan, a copy of such notice; (D) applies for a
waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code, a copy of such application; (E) gives
notice of intent to terminate any Plan under Section 4041(c) of
ERISA, a copy of such notice and other information filed with the
PBGC; (F) gives notice of withdrawal from any Plan pursuant to
Section 4063 of ERISA, a copy of such notice; or (G) fails to
make any payment or contribution to any Plan or Multiemployer
Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted
or could result in the imposition of a Lien or the posting of a
bond or other security, a certificate of an Authorized Officer
setting forth details as to such occurrence and action, if any,
which the Borrower or the applicable member of the ERISA Group is
required or proposes to take.
(b) The Borrower will deliver to each of the Banks:
(i) forthwith upon the occurrence of any Default, Event
of Termination or Potential Event of Termination, a certificate
of an Authorized Officer setting forth the details thereof and
the action which the Borrower is taking or proposes to take with
respect thereto;
(ii) promptly upon the occurrence thereof, notice and copies
of any amendment or modification of, or any waiver given by MarAd
with respect to, any agreement to which MarAd and the Borrower or
any Subsidiary are parties, other than amendments, modifications
and waivers that relate solely to the ordinary operational
aspects of the business of the Borrower or such Subsidiary; and
(iii) from time to time such additional information regarding
the financial position or business of the Borrower and its
Subsidiaries as the Agent, at the request of any Bank, may
reasonably request.
SECTION 5.02. Payment of Obligations. The Borrower (i) will pay
and discharge, and will cause each Material Subsidiary to pay and discharge, at
or before maturity, all their respective material obligations and liabilities,
including, without limitation, tax liabilities, except where the same may be
contested in good faith by appropriate proceedings, and (ii) will maintain, and
will cause each Material Subsidiary to maintain, in accordance with generally
accepted accounting principles, appropriate reserves for the accrual of any of
the same.
SECTION 5.03. Maintenance of Property; Insurance. (a) The
Borrower will keep, and will cause each Material Subsidiary to keep, all
property useful and necessary in its business in good working order and
condition, ordinary wear and tear, lay-up and obsolescence excepted.
(b) The Borrower (i) will maintain, and will cause each Material
Subsidiary to maintain (in the case of property other than vessels chartered to
it, either in the name of the Borrower or in such Material Subsidiary's own
name), with financially sound and reputable insurance companies, insurance on
all their property in at least such amounts and against at least such risks as
are usually insured against in the same general area and by companies engaged in
the same or a similar business and (ii) will furnish to the Banks, upon written
request from any Bank, full information as to the insurance carried. In
addition, within 90 days after the annual renewal of any insurance covering any
vessel owned or chartered by APL, the Borrower or any other Subsidiary required
under any agreement between APL, the Borrower or such Subsidiary and MarAd, the
Borrower shall cause a letter from an independent marine insurance broker to be
delivered to the Banks describing such renewed insurance coverage, confirming
that such insurance coverage complies with the requirements of the applicable
MarAd agreement and identifying each underwriter and each protection and
indemnity club. The Required Banks may, at any time after receipt of any such
letter, object in a written notice to the Borrower to the underwriter or any
underwriter providing such insurance, whereupon the Borrower shall within 60
days after such objection, provided there is a reasonable basis for such
objection, cause such underwriter to be replaced with an underwriter
satisfactory to the Required Banks or provide substitute insurance on a basis
satisfactory to the Required Banks.
SECTION 5.04. Conduct of Business, Maintenance of Existence and
Compliance with Laws. (a) The Borrower (i) will continue, and will cause each
Material Subsidiary to continue, to engage in business in the fields of surface
transportation and cargo distribution as now conducted by the Borrower and the
Material Subsidiaries, and (ii) will preserve, renew and keep in full force and
effect, and will cause each Material Subsidiary to preserve, renew and keep in
full force and effect, their respective corporate existence and their respective
rights, privileges and franchises necessary or desirable in the normal conduct
of business, except as permitted by Section 5.08.
(b) The Borrower will make all good faith efforts to comply, and
will cause each Material Subsidiary to make all good faith efforts to comply, in
all material respects with all material applicable laws, ordinances, rules,
regulations and requirements of governmental authorities (including, without
limitation, regulations of MarAd, Environmental Laws and ERISA and the rules and
regulations thereunder), except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings.
(c) The Borrower will comply, and will cause each Material
Subsidiary to comply, in all material respects with the terms of all agreements
from time to time in effect between the Borrower or such Material Subsidiary and
MarAd, and with all applicable regulations of MarAd with respect to which
agreements and regulations non-compliance would have a material adverse effect
upon the business, financial position, results of operations or prospects of the
Borrower and its Consolidated Subsidiaries taken as a whole, including without
limitation all agreements and regulations relating to construction-differential
subsidy and operating-differential subsidy, as such terms may be defined by
MarAd.
SECTION 5.05. Inspection of Property, Books and Records. The
Borrower will keep, and will cause each Material Subsidiary to keep, proper
books of record and account in which full, true and correct entries shall be
made of all dealings and transactions in relation to its business and
activities; and the Borrower will permit, and will cause each Material
Subsidiary to permit, representatives of any Bank at such Bank's expense to
visit and inspect any of their respective properties, to examine and make
abstracts from any of their respective books and records and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and independent public accountants, all at such reasonable times and
as often as may reasonably be desired.
SECTION 5.06. Minimum Consolidated Tangible Net Worth.
Consolidated Tangible Net Worth will at no time be less than Minimum Adjusted
Net Worth. "Minimum Adjusted Net Worth" means, at any date, the amount of
$438,300,000 adjusted from time to time as follows: at the end of each of the
Borrower's fiscal years ending after December 31, 1993, Minimum Adjusted Net
Worth shall be increased (but not decreased) by 50% of the positive Consolidated
Net Income After Tax (if any) for such fiscal year.
SECTION 5.07. Negative Pledge. The Borrower will not, and will
not permit any of its Subsidiaries to, create, assume or suffer to exist any
Lien on any asset (including the capital stock of any Subsidiary) now owned or
hereafter acquired by it, without making effective provisions whereby the
Commitments and the Notes shall be equally and ratably secured thereby, provided
that the foregoing shall not be applicable to:
(a) Liens existing on December 31, 1993 and described in
Schedule I hereto;
(b) other Liens existing on December 31, 1993 on assets
having a value not in excess of $500,000 individually or
$10,000,000 in the aggregate;
(c) Liens imposed by operation of maritime law arising
in the ordinary course of its business;
(d) any Lien existing on any asset of any corporation at
the time such corporation becomes a Subsidiary and not created in
contemplation of such event;
(e) any Lien on any asset securing Debt incurred or
assumed for the purpose of financing all or any part of the cost
of acquiring such asset, provided that such Lien attaches to such
asset before the later of (i) 180 days after the acquisition
thereof or (ii) the end of the tax year of the Borrower or the
acquiring Subsidiary, as the case may be, during which it
acquired such asset (a "Purchase Money Lien");
(f) any Lien on any asset of any corporation existing at
the time such corporation is merged or consolidated with or into
the Borrower or any Subsidiary and not created in contemplation
of such event;
(g) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or any Subsidiary and not
created in contemplation of such acquisition;
(h) any Lien granted or imposed in connection with any
writ of execution being contested in good faith and securing
amounts not in excess of $5,000,000 individually or $25,000,000
in the aggregate; provided that execution of such writ is stayed
during the pendency of such contest;
(i) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien permitted by
any of the foregoing clauses of this Section, provided that such
Debt is not increased and is not secured by any additional
assets;
(j) any Lien created pursuant to the Receivables
Purchase Agreements (or any other receivables purchase agreement
entered into by APL or APD and all the Banks);
(k) any Off-Site Real Estate Improvement Lien on real
estate securing non-recourse Debt or other obligations in an
aggregate principal amount not exceeding 75% of the pro forma
appraised value of such real estate and pertaining to off-site
improvements which result in an equal or greater increase in the
value of such real estate;
(l) mechanics' liens, suppliers' liens and materialmens'
liens arising in the ordinary course of business; and
(m) other Liens arising in the ordinary course of its
business which (i) do not secure Debt, (ii) do not secure any
single obligation, or any series of related obligations,
exceeding $75,000,000 in amount and (iii) do not in the aggregate
materially detract from the value of its assets or materially
impair the use thereof in the operation of its business.
SECTION 5.08. Consolidations, Mergers and Sales of Assets. (a)
The Borrower will not consolidate or merge with any other Person; provided that
the Borrower may merge with another Person if (i) the Borrower is the
corporation surviving such merger and (ii) immediately after giving effect to
such merger, no Default, Event of Termination or Potential Event of Termination
shall have occurred and be continuing.
(b) Except for sales of inventory in the ordinary course of
business, sales of "margin stock" within the meaning of Regulation U for fair
value as determined in good faith by the board of directors of the Borrower or
transfers of assets to the Borrower or any Wholly-Owned Subsidiary, neither the
Borrower nor any Subsidiary will sell, lease or otherwise transfer any asset
after the Effective Date without the consent of the Required Banks unless the
aggregate value at cost of the remaining assets being used at the time in lines
of business in which the Borrower and its Subsidiaries were engaged at December
31, 1993 is at least 66 2/3% of Consolidated Assets as of December 31, 1993.
Any transfer of assets by any Subsidiary to the Borrower and any transfer of
assets by the Borrower to any Subsidiary shall be on terms and conditions at
least as favorable to the Borrower as the terms and conditions that would apply
in a similar transaction with a party which is not affiliated with the Borrower.
(c) The Borrower will not permit any of its Subsidiaries to
consolidate or merge with any other Person unless the Person surviving such
consolidation or merger is the Borrower or a Wholly-Owned Subsidiary.
(d) Notwithstanding anything to the contrary in this Section,
the Borrower will at all times own, either directly or indirectly, all of the
outstanding shares of capital stock or other ownership interests of each of APL
and APD (exclusive of directors' qualifying shares).
SECTION 5.09. Use of Proceeds. (a) The proceeds of the Loans
made under this Agreement will be used by the Borrower for general corporate
purposes.
(b) None of such proceeds will be used in violation of any
applicable law or regulation.
SECTION 5.10. Consolidated Interest Coverage Ratio. At the end
of each fiscal quarter of the Borrower, the Consolidated Interest Coverage Ratio
for the four consecutive fiscal quarters of the Borrower then ended shall not be
less than 3.0 to 1.
The "Consolidated Interest Coverage Ratio" means the ratio
determined pursuant to the following formula:
CICR = CPE + IE + DP
IE
CICR = Consolidated Interest Coverage Ratio
CPE = Consolidated Pretax Earnings
IE = Interest Expense
DP = Depreciation
SECTION 5.11. Consolidated Leverage Ratio. The Consolidated
Leverage Ratio at any time during each period specified below will not be
greater than the ratio set forth opposite such period.
Period Ratio
Effective Date through 12/31/1996 1.4 to 1
1/1/1997 through 12/31/1997 1.3 to 1
1/1/1998 and thereafter 1.2 to 1
The "Consolidated Leverage Ratio" applicable at any time means
the ratio determined pursuant to the following formula:
CLR = TBF + CGD
CTNW
CLR = Consolidated Leverage Ratio
TBF = Total Borrowed Funds
CGD = Consolidated Guaranteed Debt
CTNW = Consolidated Tangible Net Worth
SECTION 5.12. Restrictions on Subsidiary and Secured Debt. (a)
The Borrower will not at any time permit any of its Subsidiaries to create,
incur or assume any Debt except (i) Debt secured by Liens permitted by
Section 5.07, (ii) unsecured Debt incurred in the ordinary course of business,
consistent with past practice, in an aggregate outstanding principal amount not
exceeding $10,000,000 at any time and (iii) Debt of any Subsidiary owing to the
Borrower or to any other Subsidiary.
(b) The aggregate outstanding principal amount of all secured Debt of the
Borrower and all Debt of its Subsidiaries (except Debt owed by any Subsidiary to
the Borrower or to any other Subsidiary) will not at any time exceed 40% of
Consolidated Net Property and Equipment.
SECTION 5.13. Capital Contributions to Subsidiaries. The
Borrower will not make any contribution (other than contributions of the capital
stock of another Subsidiary) to the capital of APL or APD if, after giving
effect thereto, the aggregate amount of such contributions made after December
31, 1993 would exceed $10,000,000.
SECTION 5.14. No New Restrictions on Subsidiary Dividends, Etc.
Except as required by applicable law, Borrower will not agree, or permit any of
its Subsidiaries to agree, to restrict or otherwise limit the payment of
dividends or any other transfer of funds or assets from any Subsidiary directly,
or indirectly through one or more other Subsidiaries, to the Borrower.
SECTION 5.15. Investments; Acquisitions. Neither the Borrower
nor any Subsidiary will make or acquire any Investment in any Person or acquire
all or substantially all of the business or assets of any Person other than:
(a) Investments existing on December 31, 1993 in their
respective Subsidiaries;
(b) capital contributions permitted by Section 5.13;
(c) loans (i) from any Subsidiary to the Borrower or
(ii) from the Borrower or any Subsidiary to its respective
Subsidiaries;
(d) Investments made by the Borrower or any Subsidiary
in connection with its cash management policies and practices
conducted in the ordinary course of business, consistent with
reasonable business practice, provided that, in each case, such
Investment matures within three years from the date of
acquisition thereof by the Borrower or such Subsidiary; and
(e) any Investments not otherwise permitted by the
foregoing clauses of this Section and any acquisition of all or
substantially all of the business or assets of any Person if,
after giving effect thereto, the aggregate amount of all
Investments and acquisitions made after December 31, 1993 as
permitted by this clause (e) does not exceed $100,000,000.
For purposes of clause (e) above, the amount of any Investment or acquisition at
any date shall be the original cost thereof less any return of capital with
respect thereto.
ARTICLE VI
DEFAULTS AND EVENTS OF TERMINATION
SECTION 6.01. Events of Default. If one or more of the
following events shall have occurred and shall, at a time when one or more Loans
is outstanding under this Agreement, be continuing (any such event which is
continuing at such a time being herein called an "Event of Default"):
(a) default in the payment when due of any principal of
or interest on any Loan, any fee or any other amount payable
hereunder;
(b) the Borrower shall fail to observe or perform any
covenant contained in Sections 5.06, 5.07, 5.08 (other than
Section 5.08(b)) or 5.10 through 5.15, inclusive;
(c) the Borrower shall fail to observe or perform any
covenant or agreement contained in this Agreement (other than
those covered by clause (a) or (b) above) for 10 days after
written notice thereof has been given to the Borrower by the
Agent at the request of any Bank;
(d) any representation, warranty, certification or
statement made by the Borrower in this Agreement or in any
certificate, financial statement or other document delivered
pursuant to this Agreement shall prove to have been incorrect in
any material respect when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to make
any payment in respect of any Debt (other than (i) Debt the
aggregate principal amount of which does not exceed $15,000,000
and (ii) the Loans) when due or within any applicable grace
period;
(f) any event or condition shall occur which results in
the acceleration of the maturity of any Debt of the Borrower or
any Subsidiary (other than (i) Debt the aggregate principal
amount of which does not exceed $15,000,000 and (ii) the Loans)
or enables (or, with the giving of notice or lapse of time or
both, would enable) the holder of such Debt or any Person acting
on such holder's behalf to accelerate the maturity thereof;
(g) MarAd shall give notice of its intent to terminate
(by reason of APL's failure to comply therewith) the
Operating-Differential Subsidy Agreement, Contract No.
MA/MSB-417, dated December 30, 1977, between APL and MarAd, as
amended from time to time, entered into in accordance with Title
VI of the Merchant Marine Act of 1936, as amended from time to
time;
(h) the Borrower or any Material Subsidiary 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 of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail generally
to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing;
(i) an involuntary case or other proceeding shall be
commenced against the Borrower or any Material Subsidiary 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 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 60 days; or an order for relief shall be
entered against the Borrower or any Material Subsidiary under the
federal bankruptcy laws as now or hereafter in effect;
(j) any member of the ERISA Group shall fail to pay when
due an amount or amounts aggregating in excess of $15,000,000
which it shall have become liable to pay under Title IV of ERISA;
or notice of intent to terminate a Material Plan shall be filed
under Title IV of ERISA by any member of the ERISA Group, any
plan administrator or any combination of the foregoing; or the
PBGC shall institute proceedings under Title IV of ERISA to
terminate, to impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer any Material Plan; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated; or
there shall occur a complete or partial withdrawal from, or a
default, within the meaning of Section 4219(c)(5) of ERISA, with
respect to, one or more Multiemployer Plans which could cause one
or more members of the ERISA Group to incur a current payment
obligation in excess of $10,000,000;
(k) a judgment or order for the payment of money in
excess of 5% of Consolidated Tangible Net Worth as shown on the
then most recent balance sheet of the Borrower delivered to the
Banks under Section 4.04 or 5.01 shall be rendered against the
Borrower or any Material Subsidiary and such judgment or order
shall continue unsatisfied and unstayed for a period of 10 days;
or
(l) a Change in Control shall occur;
then, and in every such event, the Agent shall (i) if requested by Banks having
more than 50% in aggregate amount of the Commitments, by notice to the Borrower
terminate the Commitments and they shall thereupon terminate, and (ii) if
requested by Banks holding Notes evidencing more than 50% in aggregate principal
amount of the Loans, by notice to the Borrower declare the Notes (together with
accrued interest thereon) to be, and the Notes shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower; provided that if
any of the Events of Default specified in clause (h) or (i) above occurs with
respect to the Borrower, then without any notice to the Borrower or any other
act by the Agent or the Banks, the Commitments shall thereupon terminate and the
Notes (together with accrued interest thereon) shall become immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower.
SECTION 6.02. Notice of Default. The Agent shall give notice to
the Borrower under Section 6.01(c) promptly upon being requested to do so by any
Bank and shall thereupon notify all the Banks thereof.
SECTION 6.03. Events of Termination. If one or more of the
events listed in Section 6.01 shall have occurred and, at a time when no Loans
are outstanding under this Agreement, shall be continuing (any such event which
is continuing at such a time being herein called an "Event of Termination"),
then the Agent shall, if requested by Banks having more than 50% in aggregate
amount of the Commitments, by notice to the Borrower terminate the Commitments
and they shall thereupon terminate; provided that, if any of the events
specified in Section 6.01(h) or (i) occurs with respect to the Borrower, then
without any notice to the Borrower or any other act by the Agent or the Banks,
the Commitments shall thereupon terminate.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank
irrevocably appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement or any Note as are
delegated to the Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan Guaranty Trust
Company of New York shall have the same rights and powers under this Agreement
and its Note as any other Bank and may exercise or refrain from exercising the
same as though it were not the Agent, and Morgan Guaranty Trust Company of New
York and its affiliates may accept deposits from, lend money to, and generally
engage in any kind of business with the Borrower or any Subsidiary or affiliate
of the Borrower as if it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent
under this Agreement or any Note are only those expressly set forth therein.
Without limiting the generality of the foregoing, the Agent shall not be
required to take any action with respect to any Default, Event of Termination or
Potential Event of Termination except as expressly provided in Article VI.
SECTION 7.04. Consultation with Experts. The Agent may consult
with legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agent. Neither the Agent nor any of
its directors, officers, agents, or employees shall be liable for any action
taken or not taken by it in connection herewith (i) with the consent or at the
request of the Required Banks or (ii) in the absence of its own gross negligence
or willful misconduct. Neither the Agent nor any of its directors, officers,
agents or employees shall be responsible for or have any duty to ascertain,
inquire into or verify (i) any statement, warranty or representation made in
connection with this Agreement, any Note or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or agreements of the Borrower;
(iii) the satisfaction of any condition specified in Article III, except receipt
of items required to be delivered to the Agent; or (iv) the validity,
effectiveness or genuineness of this Agreement or any Note or any other
instrument or writing furnished in connection therewith. The Agent shall not
incur any liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex, facsimile
transmission or similar writing) believed by it to be genuine or to be signed by
the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent (to the extent not
reimbursed by the Borrower) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from the Agent's gross negligence or willful misconduct) that the Agent
may suffer or incur in connection with this Agreement or any Note or any action
taken or omitted by the Agent thereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon the Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any time
by giving written notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Agent subject to the consent of the Borrower. If no successor Agent shall have
been so appointed by the Required Banks with the consent of the Borrower, and
shall have accepted such appointment, within 30 days after the retiring Agent
gives notice of resignation, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent, which shall be a commercial bank organized or
licensed under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $100,000,000. Upon the
acceptance of its appointment as Agent under this Agreement and the Notes by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement
and the Notes. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent.
SECTION 7.09. Agent's Fee. The Borrower shall pay to the Agent
for its own account fees in the amounts and at the times previously agreed upon
between the Borrower and the Agent.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period for any Fixed
Rate Borrowing:
(a) the Agent is advised by the Reference Banks that
deposits in dollars (in the applicable amounts) are not being
offered to the Reference Banks in the relevant market for such
Interest Period, or
(b) in the case of a Committed Borrowing, Banks having
50% or more of the aggregate amount of the Commitments advise the
Agent that the Adjusted CD Rate or the London Interbank Offered
Rate, as the case may be, as determined by the Agent will not
adequately and fairly reflect the cost to such Banks of funding
their CD Loans or Euro-Dollar Loans, as the case may be, for such
Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, the obligations of the Banks to make CD
Loans or Euro-Dollar Loans, as the case may be, shall be suspended. Unless the
Borrower notifies the Agent at least two Domestic Business Days before the date
of any Fixed Rate Borrowing for which a Notice of Borrowing has previously been
given that it elects not to borrow on such date, (i) if such Fixed Rate
Borrowing is a Committed Borrowing, such Borrowing shall instead be made as a
Base Rate Borrowing and (ii) if such Fixed Rate Borrowing is a Money Market
LIBOR Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall
bear interest for each day from and including the first day to but excluding the
last day of the Interest Period applicable thereto at the Base Rate for such
day.
SECTION 8.02. Illegality. If, on or after the date hereof, the
adoption of any applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Euro-Dollar Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for any Bank (or its Euro-Dollar Lending Office) to make, maintain
or fund its Euro-Dollar Loans and such Bank shall so notify the Agent, the Agent
shall forthwith give notice thereof to the other Banks and the Borrower,
whereupon until such Bank notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer exist, the obligation of
such Bank to make Euro-Dollar Loans shall be suspended. Before giving any
notice to the Agent pursuant to this Section, such Bank shall designate a
different Euro-Dollar Lending Office if such designation will avoid the need for
giving such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such Bank shall determine that it may not
lawfully continue to maintain and fund any of its outstanding Euro-Dollar Loans
to maturity and shall so specify in such notice, the Borrower shall immediately
prepay in full the then outstanding principal amount of each such Euro-Dollar
Loan, together with accrued interest thereon. Concurrently with prepaying each
such Euro-Dollar Loan, the Borrower shall borrow a Base Rate Loan in an equal
principal amount from such Bank (on which interest and principal shall be
payable contemporaneously with the related Euro-Dollar Loans of the other
Banks), and such Bank shall make such a Base Rate Loan.
SECTION 8.03. Increased Cost and Reduced Return. (a) If on or
after (x) the date hereof, in the case of any Committed Loan or any obligation
to make Committed Loans or (y) the date of the related Money Market Quote, in
the case of any Money Market Loan, the adoption of any applicable law, rule or
regulation, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank (or its Applicable Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency:
(i) shall subject any Bank (or its Applicable Lending
Office) to any tax, duty or other charge with respect to its
Fixed Rate Loans, its Note or its obligation to make Fixed Rate
Loans, or shall change the basis of taxation of payments to any
Bank (or its Applicable Lending Office) of the principal of or
interest on its Fixed Rate Loans or any other amounts due under
this Agreement in respect of its Fixed Rate Loans or its
obligation to make Fixed Rate Loans (except for changes in the
rate of tax on the overall net income of such Bank or its
Applicable Lending Office imposed by the jurisdiction in which
such Bank's principal executive office or Applicable Lending
Office is located); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any such requirement imposed by
the Board of Governors of the Federal Reserve System, but
excluding (A) with respect to any CD Loan any such requirement
included in an applicable Domestic Reserve Percentage and (B)
with respect to any Euro-Dollar Loan, any such requirement with
respect to which such Bank is entitled to compensation during the
relevant Interest Period under Section 2.16), special deposit,
insurance assessment (excluding, with respect to any CD Loan, any
such requirement reflected in an applicable Assessment Rate) or
similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Bank (or its Applicable
Lending Office) or shall impose on any Bank (or its Applicable
Lending Office) or on the United States market for certificates
of deposit or the London interbank market any other condition
affecting its Fixed Rate Loans, its Note or its obligation to
make Fixed Rate Loans;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making or maintaining any Fixed Rate Loan, or
to reduce the amount of any sum received or receivable by such Bank (or its
Applicable Lending Office) under this Agreement or under its Note with respect
thereto, by an amount deemed by such Bank to be material, then, within 15 days
after demand by such Bank (with a copy to the Agent), the Borrower shall pay to
such Bank such additional amount or amounts as will compensate such Bank for
such increased cost or reduction; provided that the Borrower shall not be
obligated to pay such compensation for any period that is more than 90 days
before such Bank notifies the Borrower pursuant to subsection (c) of this
Section of the event that entitles such Bank to such compensation.
(b) If any Bank shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or any request
or directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on capital of such Bank (or its Parent) as
a consequence of such Bank's obligations hereunder to a level below that which
such Bank (or its Parent) could have achieved but for such adoption, change,
request or directive (taking into consideration its policies with respect to
capital adequacy) by an amount deemed by such Bank to be material, then from
time to time, within 15 days after demand by such Bank (with a copy to the
Agent), the Borrower agrees to pay to such Bank such additional amount or
amounts as will compensate such Bank (or its Parent) for such reduction;
provided that the Borrower shall not be obligated to pay such compensation for
any period that is more than 90 days before such Bank notifies the Borrower
pursuant to subsection (c) of this Section of the event that entitles such Bank
to such compensation.
(c) Each Bank will promptly notify the Borrower and the Agent of
any event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
SECTION 8.04. Base Rate Loans Substituted for Affected Fixed
Rate Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans has
been suspended pursuant to Section 8.02 or (ii) any Bank has demanded
compensation from the Borrower under Section 8.03(a) and the Borrower shall, by
at least five Euro-Dollar Business Days' prior notice to such Bank through the
Agent, have elected that the provisions of this Section shall apply to such
Bank, then, unless and until such Bank notifies the Borrower that the
circumstances giving rise to such suspension or demand for compensation no
longer apply:
(a) all Loans which would otherwise be made by such Bank
as CD Loans or Euro-Dollar Loans, as the case may be, shall be
made instead as Base Rate Loans (on which interest and principal
shall be payable contemporaneously with the related Fixed Rate
Loans of the other Banks), and
(b) after each of its CD Loans or Euro-Dollar Loans, as
the case may be, has been repaid, all payments of principal which
would otherwise be applied to repay such Fixed Rate Loans shall
be applied to repay its Base Rate Loans instead.
SECTION 8.05. Substitution of Bank. If (i) the obligation of
any Bank to make Euro-Dollar Loans has been suspended pursuant to Section 8.02
or (ii) any Bank has demanded compensation under Section 8.03, the Borrower
shall have the right, with the assistance of the Agent, to seek a mutually
satisfactory substitute bank or banks (which may be one or more of the Banks) to
purchase the Note and assume the Commitment of such Bank (and its obligations
under each of the Receivables Purchase Agreements then in effect) substantially
as contemplated by Section 9.07(c).
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission or similar writing) and shall be given to such
party: (x) in the case of the Borrower or the Agent, at its address, telex
number or facsimile number set forth on the signature pages hereof, (y) in the
case of any Bank, at its address or telex number set forth in its Administrative
Questionnaire or (z) in the case of any party, such other address, telex number
or facsimile number as such party may hereafter specify for the purpose by
notice to the Agent and the Borrower. Each such notice, request or other
communication shall be effective (i) if given by telex, when such telex is
transmitted to the telex number specified in this Section and the appropriate
answerback is received, (ii) if given by mail, 72 hours after such communication
is deposited in the mails with first class postage prepaid, addressed as
aforesaid or (iii) if given by any other means, when delivered at the address
specified in this Section; provided that notices to the Agent under Article II
or Article VIII shall not be effective until received.
SECTION 9.02. No Waivers. No failure or delay by the Agent or
any Bank in exercising any right, power or privilege under this Agreement or any
Note shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies therein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 9.03. Expenses; Documentary Taxes. The Borrower shall
pay (i) all reasonable out-of-pocket expenses of the Agent, including all fees
and disbursements of Davis Polk & Wardwell, special counsel for the Agent, in
connection with the preparation of this Agreement, any waiver or consent
hereunder or any amendment hereof or any actual or alleged Default, Potential
Event of Termination or Event of Termination hereunder and (ii) if an Event of
Default or an Event of Termination occurs, all out-of-pocket expenses incurred
by the Agent and each Bank, including expenses of investigation and fees and
disbursements of counsel (which counsel may be an employee of such Bank, in
which case such expenses may include allocated direct costs of such internal
counsel), in connection with such Event of Default or such Event of Termination
and any collection, bankruptcy, insolvency and other enforcement proceedings
resulting therefrom. The Borrower shall indemnify each Bank against any
transfer taxes, documentary taxes, assessments or charges made by any
governmental authority by reason of the execution and delivery of this Agreement
or the Notes. To the extent permitted by law, all unpaid fees and expenses shall
bear interest, payable on demand, for each day from and after the tenth Domestic
Business Day following the date an invoice therefor is delivered to the Borrower
to but excluding the date of payment at a rate per annum equal to the sum of 2%
plus the Base Rate for such day.
SECTION 9.04. Indemnification. The Borrower agrees to indemnify
each Bank and hold each Bank harmless from and against any and all liabilities,
losses, damages, costs and expenses of any kind, including, without limitation,
settlement costs and the reasonable fees and disbursements of counsel (which
counsel may be an employee of any Bank), which may be incurred by any Bank (or
by the Agent in connection with its actions as Agent hereunder) in connection
with any investigative, administrative or judicial proceeding (whether or not
such Bank shall be designated a party thereto) relating to or arising out of
this Agreement or any actual or proposed use of proceeds of Loans hereunder;
provided that no Bank shall have the right to be indemnified hereunder for its
own gross negligence or willful misconduct as determined by a court of competent
jurisdiction.
SECTION 9.05. Sharing of Set-Offs. Each Bank agrees that if it
shall, by exercising any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of principal and interest due
with respect to any Note held by it which is greater than the proportion
received by any other Bank in respect of the aggregate amount of principal and
interest due with respect to any Note held by such other Bank, the Bank
receiving such proportionately greater payment shall purchase such
participations in the Notes held by the other Banks, and such other adjustments
shall be made, as may be required so that all such payments of principal and
interest with respect to the Notes held by the Banks shall be shared by the
Banks pro rata; provided that nothing in this Section shall impair the right of
any Bank to exercise any right of set-off or counterclaim it may have and to
apply the amount subject to such exercise to the payment of indebtedness of the
Borrower other than its indebtedness under the Notes. The Borrower agrees, to
the fullest extent it may effectively do so under applicable law, that any
holder of a participation in a Note, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of set-off or counterclaim and other
rights with respect to such participation as fully as if such holder of a
participation were a direct creditor of the Borrower in the amount of such
participation.
SECTION 9.06. Amendments and Waivers. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the Agent are affected thereby, by the Agent);
provided that no such amendment, waiver or modification shall, unless signed by
all the Banks, (i) increase or decrease the Commitment of any Bank (except for a
ratable decrease in the Commitments of all Banks) or subject any Bank to any
additional obligation, (ii) reduce the principal of or rate of interest on any
Loan or any fees hereunder, (iii) postpone the date fixed for any payment of
principal of or interest on any Loan or any fees hereunder or for any
termination of any Commitment or (iv) change the percentage of the Commitments
or of the aggregate unpaid principal amount of the Notes, or the number of
Banks, which shall be required for the Banks or any of them to take any action
under this Section or any other provision of this Agreement.
SECTION 9.07. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that the Borrower may
not assign or otherwise transfer any of its rights under this Agreement without
the prior written consent of all the Banks, which consent will be in the Banks'
sole discretion.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
any or all of its Loans; provided that contemporaneously with the grant of any
such participating interest, such Bank shall grant to such Participant an
equivalent proportionate participating interest in such Bank's "Commitment
Percentage" of the "Combined Commitment" and "Participating Interests" under and
as defined in each of the Receivables Purchase Agreements then in effect. In
the event of any such grant by a Bank of a participating interest to a
Participant, whether or not upon notice to the Borrower and the Agent, such Bank
shall remain responsible for the performance of its obligations hereunder, and
the Borrower and the Agent shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under this Agreement.
Any agreement pursuant to which any Bank may grant such a participating interest
shall provide that such Bank shall retain the sole right and responsibility to
enforce the obligations of the Borrower hereunder including, without limitation,
the right to approve any amendment, modification or waiver of any provision of
this Agreement; provided that such participation agreement may provide that such
Bank will not agree to any modification, amendment or waiver of this Agreement
described in clause (i), (ii) or (iii) of Section 9.06 without the consent of
the Participant. The Borrower agrees that each Participant shall, to the extent
provided in its participation agreement, be entitled to the benefits of
Article VIII with respect to its participating interest. An assignment or other
transfer which is not permitted by subsection (c) or (d) below shall be given
effect for purposes of this Agreement only to the extent of a participating
interest granted in accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or
other institutions (each an "Assignee") all, or a proportionate part of all, of
its rights and obligations under this Agreement and the Notes, and such Assignee
shall assume such rights and obligations, pursuant to an Assignment and
Assumption Agreement in substantially the form of Exhibit G hereto executed by
such Assignee and such transferor Bank, with (and subject to) the subscribed
consent of the Borrower, APL (if its Receivables Purchase Agreement is then in
effect) and APD (if its Receivables Purchase Agreement is then in effect) which
consent, in each case, will not be unreasonably withheld (with a copy of such
Assignment and Assumption Agreement delivered to the Agent and, if either of the
Receivables Purchase Agreements is then in effect, J.P. Morgan Delaware, as
Administrative Agent thereunder); provided that (i) the amount so assigned to
any Assignee that was not a Bank for purposes hereof immediately prior to such
assignment shall be not less than $5,000,000, (ii) if an Assignee is a Person
which controls, is controlled by, or is under common control with, or is
otherwise substantially affiliated with, the transferor Bank, no such consent
shall be required, (iii) such assignment may, but need not, include rights of
the transferor Bank in respect of outstanding Money Market Loans, and (iv)
contemporaneously with such assignment, such Bank shall assign to such Assignee
an equivalent proportionate part of such Bank's rights and obligations under
each of the Receivables Purchase Agreements then in effect. Upon execution and
delivery of such instrument and payment by such Assignee to such transferor Bank
of an amount equal to the purchase price agreed between such transferor Bank and
such Assignee, such Assignee shall be a Bank party to this Agreement and a
"Purchaser" under and as defined in each of the Receivables Purchase Agreements
then in effect and shall have all the rights and obligations of a Bank with a
Commitment hereunder and a "Purchaser" with a "Commitment Percentage" of the
"Combined Commitment" under and as defined in each of the Receivables Purchase
Agreements then in effect as set forth in such instrument of assumption, and the
transferor Bank shall be released from its obligations hereunder and under such
Receivables Purchase Agreement to a corresponding extent, and no further consent
or action by any party shall be required. Upon the consummation of any
assignment pursuant to this subsection (c), the transferor Bank, the Agent and
the Borrower shall make appropriate arrangements so that, if required, a new
Note is issued to the Assignee. In connection with any such assignment, the
transferor Bank shall pay to the Agent an administrative fee for processing such
assignment in accordance with the Agent's standard schedule for such charges in
effect at the time of such assignment. If the Assignee is not incorporated
under the laws of the United States of America or a state thereof, it shall,
prior to the first date on which interest or fees are payable hereunder for its
account, deliver to the Borrower and the Agent certification as to exemption
from deduction or withholding of any United States federal income taxes in
accordance with Section 2.15.
(d) Any Bank may at any time assign all or any portion of its
rights under this Agreement and its Notes to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's
rights shall be entitled to receive any greater payment under Section 8.03 than
such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.02 or 8.03 requiring such
Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist and were not reasonably foreseeable by such Bank.
(f) The Borrower may at any time with the consent of the
Required Banks remove any Reference Bank and/or appoint another bank as a
Reference Bank; provided that there shall at no time be less than two Reference
Banks acting hereunder.
SECTION 9.08. Collateral. Each of the Banks represents to the
Agent and each of the other Banks that it in good faith is not relying upon any
"margin stock" (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 9.09. Confidentiality. Each Bank agrees that all
documentation and other information made available by the Borrower to such Bank
under the terms of this Agreement shall (except to the extent that such
documentation and other information is publicly available or hereafter becomes
publicly available other than by action of such Bank, or was theretofore known
to such Bank independent of any disclosure thereto by the Borrower) be held in
the strictest confidence by such Bank and used solely in connection with
administration of Loans from time to time outstanding from such Bank to the
Borrower; provided that (i) such Bank may disclose such documentation and other
information to any bank or other institution to which such Bank proposes to
assign all or a portion of its Commitment and its Loans hereunder or sells or
proposes to sell a participation in its Loans hereunder, if (x) such Bank has
notified the Borrower in writing of the identity of such other bank or other
institution and the Borrower has not, by the fifth Domestic Business Day
following such notification, notified such Bank of its reasonable disapproval of
such other bank or other institution and (y) such other bank or other
institution, prior to such disclosure, agrees for the benefit of the Borrower to
comply with the provisions of this Section 9.09, (ii) such Bank may disclose the
provisions of this Agreement and the Notes and the amounts, maturities and
interest rates of its Loans to any purchaser or potential purchaser of such
Bank's interest in any Loan and (iii) such Bank may disclose documentation and
information that is permitted to be disclosed under any other agreement between
such Bank and the Borrower in accordance with such other agreement. It is
understood that any Bank may be required to disclose such documentation or other
information or portions thereof, (1) at the request of a bank regulatory agency
or in connection with an examination of such Bank by bank examiners, (2)
pursuant to subpoena or other court process, (3) at the express direction of any
other authorized government agency, (4) to the independent auditors of such Bank
or (5) as otherwise required by law.
SECTION 9.10. Governing Law; Submission to Jurisdiction. This
Agreement and each Note shall be governed by and construed in accordance with
the laws of the State of New York. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Borrower irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
SECTION 9.11. Counterparts; Integration. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof.
SECTION 9.12. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
AMERICAN PRESIDENT COMPANIES, LTD.
By /s/ Randall K. Gausman
Title: Assistant Treasurer
1111 Broadway
Oakland, California 94607
Telex number: 335478
Facsimile number: (510) 272-8931
Commitments:
$22,500,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Diana H. Imhof
Title: Associate
$20,000,000 J.P. MORGAN DELAWARE
By /s/ Philip S. Detjens
Title: Vice President
$42,500,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ Michael J. Dasher
Title: Vice President
$35,000,000 THE FIRST NATIONAL BANK OF BOSTON
By /s/ Daniel O'Connor
Title: Director
$30,000,000 BARCLAYS BANK PLC
By /s/ Keith Mackie
Title: Associate Director
$25,000,000 ABN AMRO BANK N.V.
By /s/ Carol A. Levine
Title: Vice President
By /s/ Robert N. Hartinger
Title: Group Vice President
$25,000,000 THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Gerald F. Mackin
Title: Vice President
Total Commitments
$200,000,000
=================
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ Diana H. Imhof
Title: Associate
60 Wall Street
New York, New York 10260-0060
Attention: Diana H. Imhof
Telex number: 177615
Facsimile number: (212) 648-5014
SCHEDULE I
CERTAIN EXISTING LIENS
12/31/93
BALANC AGREEMENT
LESSOR (OR LIENHOLDER) ASSET ($000) DATE
CAPITAL LEASE OBLIGATIONS:
Port of Oakland Alliance Crane 1,315 02/04/77
American Fletcher Chassis 4,999 12/16/85
(BancOne)
Metlife Capital Chassis 8,150 12/16/85
Mitsubishi International Chassis 1,158 03/06/86
Wells Fargo Chassis 1,137 04/29/86
(Norwest)
U. S. West Financial Chassis 2,644 05/15/86
REAL ESTATE ASSESSMENT OBLIGATIONS:
City of Folsom Assessment Folsom Property 112 06/84
District Bonds
OTHER SECURED DEBT:
Mitsui & Co. Chassis 3,577 03/12/86
Kreditanstalt M/V Pres. Truman 14,294 04/22/88
fuer Wiederaufbau
Kreditanstalt M/V Pres. Kennedy 16,677 07/14/88
fuer Wiederaufbau
Kreditanstalt M/V Pres. Polk 16,677 07/17/88
fuer Wiederaufbau
Kreditanstalt M/V Pres. Jackson 16,677 09/08/88
fuer Wiederaufbau
Kreditanstalt M/V Pres. Adams 16,677 09/30/88
fuer Wiederaufbau
EXHIBIT A
NOTE
New York, New York
[Effective Date]
For value received, AMERICAN PRESIDENT COMPANIES, LTD., a
Delaware corporation (the "Borrower"), promises to pay to the order of
____________ (the "Bank"), for the account of its Applicable Lending Office, the
unpaid principal amount of each Loan made by the Bank to the Borrower pursuant
to the Credit Agreement referred to below on the last day of the Interest Period
relating to such Loan. The Borrower promises to pay interest on the unpaid
principal amount of each such Loan on the dates and at the rate or rates
provided for in the Credit Agreement. All such payments of principal and
interest shall be made in lawful money of the United States in Federal or other
immediately available funds at the office of Morgan Guaranty Trust Company of
New York, 60 Wall Street, New York, New York.
All Loans made by the Bank, the respective types and maturities
thereof and all repayments of the principal thereof shall be recorded by the
Bank and, prior to any transfer hereof, appropriate notations to evidence the
foregoing information with respect to each such Loan then outstanding shall be
endorsed by the Bank on the schedule attached hereto, or on a continuation of
such schedule attached to and made a part hereof; provided that the failure of
the Bank to make any such recordation or endorsement shall not affect the
obligations of the Borrower hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement
dated as of March 25, 1994 among American President Companies, Ltd., the banks
listed on the signature pages thereof and Morgan Guaranty Trust Company of New
York, as Agent (as the same may be amended from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein with the
same meanings. Reference is made to the Credit Agreement for provisions for the
prepayment hereof and the acceleration of the maturity hereof.
AMERICAN PRESIDENT COMPANIES, LTD.
By________________________
Title:
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
__________________________________________________________________
Amount of
Amount of Type of Principal Maturity Notation
Date Loan Loan Repaid Date Made By
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
EXHIBIT B
Form of Money Market Quote Request
[Date]
To: Morgan Guaranty Trust Company of New York
(the "Agent")
From: American President Companies, Ltd. (the "Borrower")
Re: Credit Agreement (the "Credit Agreement") dated as of March 25, 1994
among American President Companies, Ltd., the Banks listed on the signature
pages thereof and the Agent
We hereby give notice pursuant to Section 2.03 of the Credit
Agreement that we request Money Market Quotes for the following proposed Money
Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount2 Interest Period3
$
Such Money Market Quotes should offer a Money Market [Margin]
[Absolute Rate]. [The applicable base rate is the London Interbank Offered
Rate.]
Terms used herein have the meanings assigned to them in the
Credit Agreement.
2 Amount must be $5,000,000 or a larger multiple of $1,000,000.
3 Not less than one month (LIBOR Auction) or not less than 30 days (Absolute
Rate Auction), subject to the provisions of the definition of Interest Period.
AMERICAN PRESIDENT COMPANIES, LTD.
By________________________
Title:
EXHIBIT C
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes
to American President Companies, Ltd.
(the "Borrower")
Pursuant to Section 2.03 of the Credit Agreement dated as of
March 25, 1994 among American President Companies, Ltd., the Banks parties
thereto and the undersigned, as Agent (as the same may be amended from time to
time, the "Credit Agreement"), we are pleased on behalf of the Borrower to
invite you to submit Money Market Quotes to the Borrower for the following
proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money Market [Margin]
[Absolute Rate]. [The applicable base rate is the London Interbank Offered
Rate.]
Please respond to this invitation by no later than [2:00 P.M.]
[9:00 A.M.] (New York City time) on [date].
Terms used herein have the meanings assigned to them in the
Credit Agreement.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By______________________
Authorized Officer
EXHIBIT D
Form of Money Market Quote
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
60 Wall Street
New York, New York 10260
Attention:
Re: Money Market Quote to American President Companies, Ltd. (the
"Borrower")
In response to your invitation on behalf of the Borrower dated
_____________, 19__, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: _______________________________________
2. Person to contact at Quoting Bank: ___________________
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the following principal
amounts, for the following Interest Periods and at the following rates:
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
$
$
[Provided, that the aggregate principal amount of Money
Market Loans for which the above offers may be accepted shall not exceed
$____________.]**
__________
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may not exceed principal amount
requested. Specify aggregate limitation if the sum of the individual offers
exceeds the amount the Bank is willing to lend. Bids must be made for
$5,000,000 or a larger multiple of $1,000,000.
(notes continued on following page)
We understand and agree that the offer(s) set forth above,
subject to the satisfaction of the applicable conditions set forth in the Credit
Agreement dated as of March 25, 1994 among American President Companies, Ltd.,
the Banks listed on the signature pages thereof and yourselves, as Agent,
irrevocably obligates us to make the Money Market Loan(s) for which any offer(s)
are accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
___________
*** Not less than one month or not less than 30 days, as specified in the
related Invitation. No more than five bids are permitted for each Interest
Period.
**** Margin over or under the London Interbank Offered Rate determined for the
applicable Interest Period. Specify percentage (to the nearest 1/10,000 of 1%)
and specify whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (to the nearest 1/10,000th of 1%).
EXHIBIT E
OPINION OF
COUNSEL FOR THE BORROWER
[Effective Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
I am the Senior Counsel of American President Companies, Ltd.
(the "Borrower") and have acted as counsel for the Borrower in connection with
the Credit Agreement (the "Credit Agreement") dated as of March 25, 1994. Terms
defined in the Credit Agreement are used herein as therein defined. This
opinion is being rendered to you at the request of my client pursuant to Section
3.01(d) of the Credit Agreement.
I have examined originals or copies, certified or otherwise
identified to my satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as I have deemed necessary or advisable for
purposes of this opinion. As to various questions of fact material to my
opinion relating to financial matters, I have relied upon representations made
to me by other officers of the Borrower.
Upon the basis of the foregoing, I am of the opinion that:
1. The Borrower and each of its corporate Subsidiaries is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and has all corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted, the absence of which good standing
and governmental licenses, authorizations, consents and approvals would have a
material adverse effect on the business, financial position, results of
operations or prospects of the Borrower and its Consolidated Subsidiaries,
considered as a whole.
2. The execution, delivery and performance by the Borrower of
the Credit Agreement and the Notes are within the corporate powers of the
Borrower, have been duly authorized by all necessary corporate action, require
no action by or in respect of, or filing with, any governmental body, agency or
official and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of incorporation or by-laws
of the Borrower or of any agreement, judgment, injunction, order, decree or
other instrument binding upon the Borrower or result in the creation or
imposition of any Lien on any asset of the Borrower or any Subsidiary.
3. The Credit Agreement constitutes a valid and binding
agreement of the Borrower, assuming the valid execution and delivery thereof by
the other parties thereto, and each of the Notes constitutes a valid and binding
obligation of the Borrower, in each case enforceable in accordance with its
terms except as the enforceability thereof may be limited by bankruptcy,
insolvency and similar laws affecting the creditors' rights generally and by
general principles of equity.
4. There is no action, suit or proceeding pending against, or to
the best of my knowledge after due inquiry threatened against or affecting, the
Borrower or any Subsidiary before any court or arbitrator or any governmental
body, agency or official, in which there is a significant possibility of an
adverse decision which could materially adversely affect the business, financial
position, results of operations or prospects of the Borrower and its
Consolidated Subsidiaries, considered as a whole, or which in any manner draws
into question the validity of the Credit Agreement or the Notes.
5. The Borrower and its Subsidiaries are in compliance in all
material respects with the terms of all agreements currently in effect between
the Borrower or any such Subsidiary and MarAd, and with all applicable
regulations of MarAd with respect to which noncompliance would have a material
adverse effect on the business, financial position, results of operations or
prospects of the Borrower and its Consolidated Subsidiaries taken as a whole,
including without limitation all agreements and regulations relating to
construction-differential subsidy, operating-differential subsidy, capital
construction fund or U.S. Government-guaranteed obligations under Title XI of
the Merchant Marine Act of 1936, as amended, and the execution, delivery and
performance by the Borrower of the Credit Agreement and the Notes will not cause
or result in a violation of any provision of any such agreement or regulation.
I note that the "governing law" provision in the Credit Agreement
provides that the laws of the State of New York are to govern the Credit
Agreement and the Notes. In my opinion a court applying California conflict of
laws rules would give effect to such choice of New York law; however, I express
no opinion as to what law a court applying any other State's conflict of laws
rules would apply.
For purposes of my opinion in paragraph (3) above, I have with
your consent (i) assumed that a court would apply the substantive laws of either
California or New York and (ii) assumed (without examining the laws of New York)
that the substantive laws of New York governing the interpretation and
enforcement of each provision of the Credit Agreement and the Notes do not
differ in any material respect from the substantive laws of California.
For purposes of my opinion in paragraph (5) above with respect to
the agreements between the Borrower or any Subsidiary of the Borrower and MarAd,
I have with your consent relied on the opinion of General Counsel of APL, dated
the date hereof, a copy of which has been delivered to each of you.
I am a member of the Bar of the State of California and the
foregoing opinion is limited to the laws of the State of California, the federal
laws of the United States of America and the General Corporation Law of the
State of Delaware.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other purpose
or relied upon by any other person without my written consent.
Very truly yours,
EXHIBIT F
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
[Effective Date]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the Credit Agreement
(the "Credit Agreement") dated as of March 25, 1994, among American President
Companies, Ltd., a Delaware corporation (the "Borrower"), the banks listed on
the signature pages thereof (the "Banks") and Morgan Guaranty Trust Company of
New York, as Agent (the "Agent"), and have acted as special counsel for the
Agent for the purpose of rendering this opinion pursuant to Section 3.01(e) of
the Credit Agreement. Terms defined in the Credit Agreement are used herein as
therein defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Borrower of
the Credit Agreement and the Notes are within the corporate powers of the
Borrower and have been duly authorized by all necessary corporate action.
2. The Credit Agreement constitutes a valid and binding
agreement of the Borrower and the Notes constitute valid and binding obligations
of the Borrower.
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York, the federal
laws of the United States of America and the General Corporation Law of the
State of Delaware. In giving the foregoing opinion, we express no opinion as to
the effect (if any) of any law of any jurisdiction (except the State of New
York) in which any Bank is located which limits the rate of interest that such
Bank may charge or collect.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other purpose
or relied upon by any other person without our written consent.
Very truly yours,
EXHIBIT G
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), AMERICAN PRESIDENT COMPANIES, LTD.
("the Borrower", the "Borrower") [, AMERICAN PRESIDENT LINES, LTD. ("APL") and
APL LAND TRANSPORT SERVICES, INC. ("APD")].4
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to [(i)] the Credit Agreement dated as of March 25, 1994
among the Borrower, the Assignor and the other Banks party thereto, as Banks,
and Morgan Guaranty Trust Company of New York ("MGT"), as Agent (as the same may
be amended from time to time, the "Credit Agreement") [(ii) the Receivables
Purchase Agreement dated as of August 29, 1991 among APL, the Assignor and the
other banks party thereto, as Purchasers, J.P. Morgan Delaware ("JPMD"), as
Administrative Agent, and MGT, as Co-Agent (as the same may be amended from time
to time, the "APL Receivables Purchase Agreement") and (iii) the Receivables
Purchase Agreement dated as of August 29, 1991 among APD, the Assignor and the
other banks party thereto, as Purchasers, JPMD, as Administrative Agent, and
MGT, as Co-Agent (as the same may be amended from time to time, the "APD
Receivables Purchase Agreement", and, together with the APL Receivables Purchase
Agreement, the "Receivables Purchase Agreements")];
WHEREAS, as provided under the Credit Agreement, the Assignor has
a Commitment to make Loans to the Borrower in an aggregate principal amount at
any time outstanding not to exceed $__________;
WHEREAS, Committed Loans made by the Assignor under the Credit
Agreement in the aggregate principal amount of $__________ are outstanding at
the date hereof;
4Include APL and or APD and references to APL and or APD and J.P. Morgan
Delaware and Receivables Purchase Agreements if the Receivables Purchase
Agreements are then in effect. Modify accordingly if only the APL Receivables
Purchase Agreement is then in effect.
[WHEREAS, the Assignor has a commitment (the "Receivables
Committed Amount") under each of the Receivables Purchase Agreements to purchase
undivided interests in certain accounts receivable owned by APL and APD for an
aggregate purchase price not to exceed $___________ at any time;] and
WHEREAS, the Assignor proposes to assign to the Assignee all of
the rights of the Assignor under the Credit Agreement in respect of a portion of
its Commitment thereunder in an amount equal to $___________ (the "Assigned
Amount"), together with a corresponding portion of each of its outstanding
Committed Loans, [and all of the rights of the Assignor under each of the
Receivables Purchase Agreements in respect of a portion of its Receivables
Committed Amount in an amount equal to $___________ (the "Receivables Assigned
Amount"),] and the Assignee proposes to accept assignment of such rights and
assume the corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise
defined herein shall have the respective meanings set forth in the Credit
Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells to
the Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount [and under the Receivables Purchase Agreements to
the extent of the Receivables Assigned Amount], and the Assignee hereby accepts
such assignment from the Assignor and assumes all of the obligations of the
Assignor under the Credit Agreement to the extent of the Assigned Amount [and
under the Receivables Purchase Agreements to the extent of the Receivables
Assigned Amount], including the purchase from the Assignor of the corresponding
portion of the principal amount of each of the Committed Loans made by the
Assignor outstanding at the date hereof. Upon the execution and delivery hereof
by the Assignor, the Assignee, the Borrower, [APL and APD] (with a copy hereof
delivered to MGT, as Agent [, and JPMD, as Administrative Agent]) and the
payment of the amounts specified in Section 3 required to be paid on the date
hereof (i) the Assignee shall, as of the date hereof, succeed to the rights and
be obligated to perform the obligations of [(x)] a Bank under the Credit
Agreement with a Commitment in an amount equal to the Assigned Amount [and (y) a
"Purchaser" under each of the Receivables Purchase Agreements with a Receivables
Committed Amount in an amount equal to the Receivables Assigned Amount,] and
(ii) as of the date hereof, the Commitment of the Assignor shall be reduced by
the Assigned Amount [and the Receivables Committed Amount of the Assignor shall
be reduced by the Receivables Assigned Amount], and the Assignor shall be
released from its obligations under the Credit Agreement [and under the
Receivables Purchase Agreements] to the extent such obligations have been
assumed by the Assignee. The assignment provided for herein shall be without
recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and
sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on
the date hereof in Federal funds an amount equal to $_________.5 It is
understood that commitment and/or facility fees accrued with respect to the
Assigned Amount to the date hereof are for the account of the Assignor and such
fees accruing from and including the date hereof are for the account of the
Assignee. Each of the Assignor and the Assignee hereby agrees that, if it
receives any amount under the Credit Agreement [or any of the Receivables
Purchase Agreements] which is for the account of the other party hereto, it
shall receive the same for the account of such other party to the extent of such
other party's interest therein and shall promptly pay the same to such other
party.
SECTION 4. Consent of the Borrower [, APL and APD]. This
Agreement is conditioned upon the consent of the Borrower [, APL and APD]
pursuant to Section 9.07(c) of the Credit Agreement [and Section 10.08(c) of
each of the Receivables Purchase Agreements]. The execution of this Agreement
by the Borrower [, APL and APD] is evidence of this consent. Pursuant to
Section 9.07(c) of the Credit Agreement the Borrower agrees to execute and
deliver a Note payable to the order of the Assignee to evidence the assignment
and assumption under the Credit Agreement provided for herein, and the Assignor
agrees to make appropriate notations on its Note to reflect the assignment
hereunder6.
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of the
Borrower [, APL or APD], or the validity and enforceability of the obligations
of the Borrower in respect of the Credit Agreement or any Note [or the validity
and enforceability of the obligations of APL or APD, as the case may be, in
respect of the Receivables Purchase Agreement to which it is a party or any
"Assignment" relating thereto]. The Assignee acknowledges that it has,
independently and without reliance on the Assignor, and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and will continue to be responsible for
making its own independent appraisal of the business, affairs and financial
condition of the Borrower[, APL and APD].
5Amount should combine principal together with accrued interest and breakage
compensation, if any, to be paid by the Assignee. It may be preferable in an
appropriate case to specify these amounts generically or by formula rather than
as a fixed sum.
6If the Borrower's consert is not required pursuant to Section 9.07(c) of the
Credit Agreement, Section 4 of this Agreement should be deleted and this
Agreement does not need to be signed by the Borrower.
SECTION 6. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By_________________________
Title:
[ASSIGNEE]
By__________________________
Title:
AMERICAN PRESIDENT COMPANIES,
LTD.
By__________________________
Title:
[AMERICAN PRESIDENT LINES,
LTD.
By__________________________
Title:]
[APL LAND TRANSPORT
SERVICES, INC.
By__________________________]
Title:]
[CONFORMED COPY]
AMENDMENT NO. 3 TO APD RECEIVABLES PURCHASE AGREEMENT
AMENDMENT dated as of March 25, 1994 to the Receivables Purchase
Agreement dated as of August 29, 1991, as heretofore amended (the "Agreement")
among APL LAND TRANSPORT SERVICES, INC. (the "Seller"), the PURCHASERS listed on
the signature pages thereof, J.P. MORGAN DELAWARE, as Administrative Agent (the
"Administrative Agent") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Co-
Agent.
WITNESSETH:
WHEREAS, American President Companies, Ltd. (the "Parent") is
entering into a Credit Agreement dated as of the date hereof with the banks
listed on the signature pages thereof and Morgan Guaranty Trust Company of New
York, as Agent (the "Credit Agreement");
WHEREAS, the Seller wishes to reduce the fees and margins
provided for in the Agreement and modify certain other provisions of the
Agreement to conform to the comparable provisions of the Credit Agreement; and
WHEREAS, after the Amendment No. 3 Effective Date (as defined
below) Citibank, N.A. will no longer be a Purchaser under the Agreement and ABN
AMRO Bank N.V. will be a Purchaser thereunder;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise
specifically defined herein, each term used herein which is defined in the
Agreement has the meaning assigned to such term in the Agreement. Each
reference to "hereof", "hereunder", "herein" and "hereby" and each other similar
reference and each reference to "this Agreement" and each other similar
reference contained in the Agreement shall from and after the Amendment No. 3
Effective Date refer to the Agreement as amended hereby.
SECTION 2. Amendment of Section 1.01. Section 1.01 of the
Agreement is amended as follows:
(a) The definition of "Applicable Base Rate Margin" is amended
to read as follows:
"Applicable Base Rate Margin" means (i) for any day during
a Level I Period, a Level II Period, a Level III Period or a
Level IV Period, 0% and (ii) for any day during a Level V Period,
.500%.
(b) The definition of "Credit Agreement" is amended to read as
follows:
"Credit Agreement" means the Credit Agreement dated as of
March 25, 1994 among the Parent, the banks listed on the
signature pages thereof and Morgan Guaranty Trust Company of New
York, as agent for such banks, as amended from time to time.
(c) The definitions of "Level I Period", "Level II Period", "Level
III Period" and "Level IV Period" are deleted and replaced by the
following new definitions:
"Level I Period" means a period during which the Parent's
senior long-term public debt is rated BBB+ or higher by S&P and
Baa1 or higher by Moody's.
"Level II Period" means a period (i) during which the
Parent's senior long-term public debt is rated BBB or higher by
S&P and Baa2 or higher by Moody's and (ii) which is not a Level I
Period.
"Level III Period" means a period (i) during which the
Parent's senior long-term public debt is rated BBB- or higher by
S&P and Baa3 or higher by Moody's and (ii) which is not a Level I
Period or a Level II Period.
"Level IV Period" means a period (i) during which the
Parent's senior long-term public debt is rated BB+ or higher by
S&P and Ba1 or higher by Moody's and (ii) which is not a Level I
Period, a Level II Period or a Level III Period.
"Level V Period" means any period which is not a Level I
Period, a Level II Period, a Level III Period or a Level IV
Period. A period during which the Parent's senior long-term
public debt is not rated by both S&P and Moody's shall constitute
a Level V Period.
(d) The definition of "Material Plan" is amended by changing the
dollar amount therein from "$5,000,000" to "$15,000,000".
(e) The definition of "Pricing Period" is amended to read as
follows:
"Pricing Period" means a Level I Period, a Level II
Period, a Level III Period, a Level IV Period or a Level V
Period.
(f) The definition of "Termination Date" is amended by changing
the date therein from "December 31, 1996" to "March 25, 1999".
SECTION 3. New Section 1.04. The following new Section 1.04 is
added at the end of Article I of the Agreement:
SECTION. 1.04 Basis for Ratings. The credit ratings to be
utilized in the determination of a Pricing Period are the ratings
assigned to unsecured obligations of the Seller without third party
credit support. Ratings assigned to any obligation which is secured or
which has the benefit of third party credit support shall be
disregarded.
SECTION 4. Amendment of Section 2.04. The definition of
"Applicable Margin" in Section 2.04(a) of the Agreement is amended to read as
follows:
The "Applicable Margin" for any Discount Period means for any day
the percentage set forth below opposite the Pricing Period during which
such day falls:
Level I Period .50%
Level II Period .625%
Level III Period .75%
Level IV Period 1.00%
Level V Period 1.50%
SECTION 5. Amendment of Section 2.07. The second sentence of
Section 2.07(a) of the Agreement is amended to read as follows:
Such commitment fees shall accrue for each day from and including the
Amendment No. 3 Effective Date to but excluding the Termination Date on
the Unused Combined Commitment (i) at the rate of .1875% per annum for
any day during a Level I Period, (ii) at the rate of .22% per annum for
any day during a Level II Period, (iii) at the rate of .25% per annum
for any day during a Level III Period, (iv) at the rate of .375% per
annum for any day during a Level IV Period and (v) at the rate of .50%
per annum for any day during a Level V Period; provided that (i) any
amounts paid on any date by or on behalf of the Parent pursuant to
Section 2.08 of the Credit Agreement (to the extent such amounts accrue
prior to the termination of the Commitments thereunder) or by or on
behalf of APL pursuant to Section 2.07(a) of the Other Receivables
Agreement shall be credited to (and reduce) the amounts payable by the
Seller under this Section on such date and (ii) to the extent (if any)
that facility fees payable by the Parent on any date pursuant to Section
2.08 of the Credit Agreement are reduced because Base Rate Loans were
outstanding thereunder, the amount by which such fees are so reduced
shall also be credited to (and reduce) the amounts payable by the Seller
under this Section on such date.
SECTION 6. Amendment of Section 3.02. Section 3.02(c) of the
Agreement is amended by replacing the reference to "all amounts payable by APD"
with "all amounts payable by the Parent".
SECTION 7. Amendment of Section 6.01. Section 6.01 of the
Agreement is amended by:
(a) changing the dollar amount in clause (e) from "$5,000,000"
to "$15,000,000";
(b) changing the dollar amount in clause (f) from "$5,000,000"
to "$15,000,000";
(c) changing the first dollar amount in clause (l) from
"$10,000,000" to "$15,000,000" and changing the second dollar amount
therein from "$5,000,000" to "$10,000,000"; and
(d) changing the dollar amount in clause (m) from "$10,000,000"
to "$15,000,000".
SECTION 8. Amendment of Section 8.03. Sections 8.03(a) and (b)
of the Agreement are each amended by deleting the final period and adding the
following proviso:
; provided that the Seller shall not be obligated to pay such
compensation for any period that is more than 90 days before such
Purchaser notifies the Seller pursuant to Section 8.04 of the event that
entitles such Purchaser to such compensation.
SECTION 9. Adjustment of Committed Amounts. The signature pages
of the Agreement are amended by changing the Committed Amount set forth thereon
for each Purchaser (except Citibank, N.A.) to be the same as the Committed
Amount set forth on the signature pages hereof for such Purchaser.
SECTION 10. Substitution of Purchaser. (a) After the Amendment
No. 3 Effective Date, Citibank, N.A. will no longer be a Purchaser for purposes
of the Agreement and will have no further rights or obligations of any kind
thereunder; provided that Citibank, N.A.'s rights and obligations with respect
to the period prior to the Amendment No. 3 Effective Date will continue to be
governed by the provisions of the Agreement as then in effect.
(b) On the Amendment No. 3 Effective Date, ABN AMRO Bank N.V.
will for all purposes of the Agreement become a Purchaser party to the Agreement
and will thereafter have all the rights and obligations of a Purchaser under the
Agreement to the same extent as if it were an original party thereto with a
Committed Amount of $18,750,000; provided that ABN AMRO Bank N.V. will have no
such rights or obligations with respect to the period prior to the Amendment No.
3 Effective Date.
(c) On the Amendment No. 3 Effective Date the signature pages of
the Agreement will be amended by deleting the signature block for Citibank N.A.
and its Committed Amount of $24,000,000 and substituting the signature block for
ABN AMRO Bank N.V. as set forth on the signature pages hereof and its Committed
Amount of $18,750,000.
SECTION 11. Governing Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 12. Counterparts; Effectiveness. This Amendment may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Amendment shall become effective on the date (the "Amendment
No. 3 Effective Date") when each of the following conditions shall have been
satisfied (or waived in accordance with Section 10.05 of the Agreement):
(a) the Administrative Agent shall have received counterparts
hereof signed by each of the parties hereto (or, in the case of any
party as to which an executed counterpart shall not have been received,
telegraphic, telex, facsimile or other written confirmation from such
party of execution of a counterpart hereof by such party);
(b) all conditions set forth in Section 3.01 of the Credit
Agreement shall have been satisfied;
(c) each of (i) Amendment No. 3 dated as of March 25, 1994 to
the Other Receivables Agreement and (ii) the Credit Agreement shall
become effective concurrently with the effectiveness hereof; and
(d) the Administrative Agent shall have received from Citibank,
N.A., a written waiver of any requirement in Section 10.05 of the
Agreement that this Amendment must be signed by it to become effective;
provided that this Amendment shall not become effective or be binding on any
party hereto unless all of the foregoing conditions are satisfied not later than
April 8, 1994. The Administrative Agent shall promptly notify the Seller, the
Purchasers, Citibank N.A. and the Co-Agent of the Amendment No. 3 Effective
Date, and such notice shall, in the absence of manifest error, be conclusive and
binding on all parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed as of the date first above written.
APL LAND TRANSPORT SERVICES, INC.
By /s/ Randall K. Gausman
Title: Assistant Treasurer
1111 Broadway
Oakland, California 94607
Telex number: 335478
Facsimile number: (510) 272-8931
PURCHASERS:
Committed
Amount
$16,875,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Diana H. Imhof
Title: Associate
$15,000,000 J.P. MORGAN DELAWARE
By /s/ Philip S. Detjens
Title: Vice President
Committed
Amount
$31,875,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ Michael J. Dasher
Title: Vice President
$26,250,000 THE FIRST NATIONAL BANK OF BOSTON
By /s/ Daniel O'Connor
Title: Director
$22,500,000 BARCLAYS BANK PLC
By /s/ Keith Mackie
Title: Associate Director
Committed
Amount
$18,750,000 ABN AMRO BANK N.V.
By /s/ Carol A. Levine
Title: Vice President
By /s/ Robert N. Hartinger
Title: Group Vice President
555 California Street
Suite 2750
San Francisco, CA 94104
Telex number: 278137 ABSF UR
Facsimile number: (415) 362-3524
Attention: Carol A. Levine, VP
$18,750,000 THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Gerald F. Mackin
Title: Vice President
____________
$150,000,000
ADMINISTRATIVE AGENT:
J.P. MORGAN DELAWARE,
as Administrative Agent
By /s/ Philip S. Detjens
Title: Vice President
CO-AGENT:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Co-Agent
By /s/ Diana H. Imhof
Title: Associate
[CONFORMED COPY]
AMENDMENT NO. 3 TO APL RECEIVABLES PURCHASE AGREEMENT
AMENDMENT dated as of March 25, 1994 to the Receivables Purchase
Agreement dated as of August 29, 1991, as heretofore amended (the "Agreement")
among AMERICAN PRESIDENT LINES, LTD. (the "Seller"), the PURCHASERS listed on
the signature pages thereof, J.P. MORGAN DELAWARE, as Administrative Agent (the
"Administrative Agent") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Co-
Agent.
WITNESSETH:
WHEREAS, American President Companies, Ltd. (the "Parent") is
entering into a Credit Agreement dated as of the date hereof with the banks
listed on the signature pages thereof and Morgan Guaranty Trust Company of New
York, as Agent (the "Credit Agreement");
WHEREAS, the Seller wishes to reduce the fees and margins
provided for in the Agreement and modify certain other provisions of the
Agreement to conform to the comparable provisions of the Credit Agreement; and
WHEREAS, after the Amendment No. 3 Effective Date (as defined
below) Citibank, N.A. will no longer be a Purchaser under the Agreement and ABN
AMRO Bank N.V. will be a Purchaser thereunder;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise
specifically defined herein, each term used herein which is defined in the
Agreement has the meaning assigned to such term in the Agreement. Each
reference to "hereof", "hereunder", "herein" and "hereby" and each other similar
reference and each reference to "this Agreement" and each other similar
reference contained in the Agreement shall from and after the Amendment No. 3
Effective Date refer to the Agreement as amended hereby.
SECTION 2. Amendment of Section 1.01. Section 1.01 of the
Agreement is amended as follows:
(a) The definition of "Applicable Base Rate Margin" is amended
to read as follows:
"Applicable Base Rate Margin" means (i) for any day during
a Level I Period, a Level II Period, a Level III Period or a
Level IV Period, 0% and (ii) for any day during a Level V Period,
.500%.
(b) The definition of "Credit Agreement" is amended to read as
follows:
"Credit Agreement" means the Credit Agreement dated as of
March 25, 1994 among the Parent, the banks listed on the
signature pages thereof and Morgan Guaranty Trust Company of New
York, as agent for such banks, as amended from time to time.
(c) The definitions of "Level I Period", "Level II Period", "Level
III Period" and "Level IV Period" are deleted and replaced by the
following new definitions:
"Level I Period" means a period during which the Parent's
senior long-term public debt is rated BBB+ or higher by S&P and
Baa1 or higher by Moody's.
"Level II Period" means a period (i) during which the
Parent's senior long-term public debt is rated BBB or higher by
S&P and Baa2 or higher by Moody's and (ii) which is not a Level I
Period.
"Level III Period" means a period (i) during which the
Parent's senior long-term public debt is rated BBB- or higher by
S&P and Baa3 or higher by Moody's and (ii) which is not a Level I
Period or a Level II Period.
"Level IV Period" means a period (i) during which the
Parent's senior long-term public debt is rated BB+ or higher by
S&P and Ba1 or higher by Moody's and (ii) which is not a Level I
Period, a Level II Period or a Level III Period.
"Level V Period" means any period which is not a Level I
Period, a Level II Period, a Level III Period or a Level IV
Period. A period during which the Parent's senior long-term
public debt is not rated by both S&P and Moody's shall constitute
a Level V Period.
(d) The definition of "Material Plan" is amended by changing the
dollar amount therein from "$5,000,000" to "$15,000,000".
(e) The definition of "Pricing Period" is amended to read as
follows:
"Pricing Period" means a Level I Period, a Level II
Period, a Level III Period, a Level IV Period or a Level V
Period.
(f) The definition of "Termination Date" is amended by changing
the date therein from "December 31, 1996" to "March 25, 1999".
SECTION 3. New Section 1.04. The following new Section 1.04 is
added at the end of Article I of the Agreement:
SECTION. 1.04 Basis for Ratings. The credit ratings to be
utilized in the determination of a Pricing Period are the ratings
assigned to unsecured obligations of the Seller without third party
credit support. Ratings assigned to any obligation which is secured or
which has the benefit of third party credit support shall be
disregarded.
SECTION 4. Amendment of Section 2.04. The definition of
"Applicable Margin" in Section 2.04(a) of the Agreement is amended to read as
follows:
The "Applicable Margin" for any Discount Period means for any day
the percentage set forth below opposite the Pricing Period during which
such day falls:
Level I Period .50%
Level II Period .625%
Level III Period .75%
Level IV Period 1.00%
Level V Period 1.50%
SECTION 5. Amendment of Section 2.07. The second sentence of
Section 2.07(a) of the Agreement is amended to read as follows:
Such commitment fees shall accrue for each day from and including the
Amendment No. 3 Effective Date to but excluding the Termination Date on
the Unused Combined Commitment (i) at the rate of .1875% per annum for
any day during a Level I Period, (ii) at the rate of .22% per annum for
any day during a Level II Period, (iii) at the rate of .25% per annum
for any day during a Level III Period, (iv) at the rate of .375% per
annum for any day during a Level IV Period and (v) at the rate of .50%
per annum for any day during a Level V Period; provided that (i) any
amounts paid on any date by or on behalf of the Parent pursuant to
Section 2.08 of the Credit Agreement (to the extent such amounts accrue
prior to the termination of the Commitments thereunder) or by or on
behalf of APD pursuant to Section 2.07(a) of the Other Receivables
Agreement shall be credited to (and reduce) the amounts payable by the
Seller under this Section on such date and (ii) to the extent (if any)
that facility fees payable by the Parent on any date pursuant to Section
2.08 of the Credit Agreement are reduced because Base Rate Loans were
outstanding thereunder, the amount by which such fees are so reduced
shall also be credited to (and reduce) the amounts payable by the Seller
under this Section on such date.
SECTION 6. Amendment of Section 3.02. Section 3.02(c) of the
Agreement is amended by replacing the reference to "all amounts payable by APL"
with "all amounts payable by the Parent".
SECTION 7. Amendment of Section 4.02. Section 4.02 of the
Agreement is amended by deleting, from the first parenthetical therein, the
words "the approval of MarAd, which shall have been obtained on or prior to the
Cut-off Date for the first Payment Date, and".
SECTION 8. Amendment of Section 6.01. Section 6.01 of the
Agreement is amended by:
(a) changing the dollar amount in clause (e) from "$5,000,000"
to "$15,000,000";
(b) changing the dollar amount in clause (f) from "$5,000,000"
to "$15,000,000";
(c) changing the first dollar amount in clause (l) from
"$10,000,000" to "$15,000,000" and changing the second dollar amount
therein from "$5,000,000" to "$10,000,000"; and
(d) changing the dollar amount in clause (m) from "$10,000,000"
to "$15,000,000".
SECTION 9. Amendment of Section 8.03. Sections 8.03(a) and (b)
of the Agreement are each amended by deleting the final period and adding the
following proviso:
; provided that the Seller shall not be obligated to pay such
compensation for any period that is more than 90 days before such
Purchaser notifies the Seller pursuant to Section 8.04 of the event that
entitles such Purchaser to such compensation.
SECTION 10. Adjustment of Committed Amounts. The signature
pages of the Agreement are amended by changing the Committed Amount set forth
thereon for each Purchaser (except Citibank, N.A.) to be the same as the
Committed Amount set forth on the signature pages hereof for such Purchaser.
SECTION 11. Substitution of Purchaser. (a) After the Amendment
No. 3 Effective Date, Citibank, N.A. will no longer be a Purchaser for purposes
of the Agreement and will have no further rights or obligations of any kind
thereunder; provided that Citibank, N.A.'s rights and obligations with respect
to the period prior to the Amendment No. 3 Effective Date will continue to be
governed by the provisions of the Agreement as then in effect.
(b) On the Amendment No. 3 Effective Date, ABN AMRO Bank N.V.
will for all purposes of the Agreement become a Purchaser party to the Agreement
and will thereafter have all the rights and obligations of a Purchaser under the
Agreement to the same extent as if it were an original party thereto with a
Committed Amount of $18,750,000; provided that ABN AMRO Bank N.V. will have no
such rights or obligations with respect to the period prior to the Amendment No.
3 Effective Date.
(c) On the Amendment No. 3 Effective Date the signature pages of
the Agreement will be amended by deleting the signature block for Citibank N.A.
and its Committed Amount of $24,000,000 and substituting the signature block for
ABN AMRO Bank N.V. as set forth on the signature pages hereof and its Committed
Amount of $18,750,000.
SECTION 12. Amendment of Exhibit C-4. Exhibit C-4 of the
Agreement is amended by deleting, from the third paragraph therein, the
parenthetical "(except the approval of MarAd, which has been obtained on or
prior to the Cut-off Date for the first Payment Date)".
SECTION 13. Governing Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 14. Counterparts; Effectiveness. This Amendment may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Amendment shall become effective on the date (the "Amendment
No. 3 Effective Date") when each of the following conditions shall have been
satisfied (or waived in accordance with Section 10.05 of the Agreement):
(a) the Administrative Agent shall have received counterparts
hereof signed by each of the parties hereto (or, in the case of any
party as to which an executed counterpart shall not have been received,
telegraphic, telex, facsimile or other written confirmation from such
party of execution of a counterpart hereof by such party);
(b) all conditions set forth in Section 3.01 of the Credit
Agreement shall have been satisfied;
(c) each of (i) Amendment No. 3 dated as of March 25, 1994 to
the Other Receivables Agreement and (ii) the Credit Agreement shall
become effective concurrently with the effectiveness hereof; and
(d) the Administrative Agent shall have received from Citibank,
N.A., a written waiver of any requirement in Section 10.05 of the
Agreement that this Amendment must be signed by it to become effective;
provided that this Amendment shall not become effective or be binding on any
party hereto unless all of the foregoing conditions are satisfied not later than
April 8, 1994. The Administrative Agent shall promptly notify the Seller, the
Purchasers, Citibank N.A. and the Co-Agent of the Amendment No. 3 Effective
Date, and such notice shall, in the absence of manifest error, be conclusive and
binding on all parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed as of the date first above written.
AMERICAN PRESIDENT LINES, LTD.
By /s/ Randall K Gausman
Title: Assistant Treasurer
1111 Broadway
Oakland, California 94607
Telex number: 335478
Facsimile number: (510) 272-8931
PURCHASERS:
Committed
Amount
$16,875,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Diana H. Imhof
Title: Associate
$15,000,000 J.P. MORGAN DELAWARE
By /s/ Philip S. Detjens
Title: Vice President
Committed
Amount
$31,875,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ Michael J. Dasher
Title: Vice President
$26,250,000 THE FIRST NATIONAL BANK OF BOSTON
By /s/ Daniel O'Connor
Title: Director
$22,500,000 BARCLAYS BANK PLC
By /s/ Keith Mackie
Title: Associate Director
Committed
Amount
$18,750,000 ABN AMRO BANK N.V.
By /s/ Carol A. Levine
Title: Vice President
By /s/ Robert N. Hartinger
Title: Group Vice President
555 California Street
Suite 2750
San Francisco, CA 94104
Telex number: 278137 ABSF UR
Facsimile number: (415) 362-3524
Attention: Carol A. Levine, VP
$18,750,000 THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Gerald F. Mackin
Title: Vice President
____________
$150,000,000
ADMINISTRATIVE AGENT:
J.P. MORGAN DELAWARE,
as Administrative Agent
By /s/ Philip S. Detjens
Title: Vice President
CO-AGENT:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Co-Agent
By /s/ Diana H. Imhof
Title: Associate
* Application to be filed with the Securities and Exchange
Commission, pursuant to Exchange Act Rule 24b-2, for confidential
treatment of certain portions of this exhibit.
LOAN AGREEMENT
DATED MARCH 14, 1994
BY AND AMONG
KREDITANSTALT FUR WIEDERAUFBAU
(as Agent
and Lender)
COMMERZBANK AG, HAMBURG
(as
Syndicate Agent)
COMMERZBANK AG (KIEL BRANCH)
DRESDNER BANK AG in HAMBURG
VEREINS- und WESTBANK AG
DEUTSCHE SCHIFFSBANK AG
NORDDEUTSCHE LANDESBANK-GIROZENTRALE
DEUTSCHE VERKEHRS-BANK AG
BANQUE INTERNATIONALE A LUXEMBOURG S.A.
(as the
Syndicate)
and
AMERICAN PRESIDENT LINES, LTD.
(as
Borrower)
_____________________________________________
Loan Facility
-in respect of the purchase financing-
six (6) container vessels
three (3) contracted with Howaldtswerke-Deutsche Werft AG
three (3) contracted with Daewoo Shipbuilding
& Heavy Machinery, Ltd.
______________________________________________
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C>
RECITALS 1
SECTION 1. DEFINITIONS 2
SECTION 2. THE TRANCHES 14
SECTION 3. INTEREST AND INTEREST PERIODS 18
SECTION 4. THE NOTES 22
SECTION 5. REPAYMENT 26
SECTION 6. SUBSTITUTE BASIS, ILLEGALITY, INCREASED COSTS 34
SECTION 7. CONDITIONS PRECEDENT TO ADVANCE 39
SECTION 8. REPRESENTATIONS AND WARRANTIES 42
SECTION 9. COVENANTS 46
SECTION 10. GRANTING OF PARTICIPATIONS 49
SECTION 11. INDEMNITY 53
SECTION 12. EVENTS OF DEFAULT 58
SECTION 13. FEES 61
SECTION 14. RELATION OF SYNDICATE MEMBERS 63
SECTION 15. MISCELLANEOUS 67
</TABLE>
APPENDIX A FORMS OF NOTES
APPENDIX A-1A - KfW FIXED RATE NOTE
APPENDIX A-1B - KfW LIBO RATE NOTE
APPENDIX A-2A - SYNDICATE FIXED RATE NOTE
APPENDIX A-2B - SYNDICATE LIBO RATE NOTE
APPENDIX B FORM OF MORTGAGES
APPENDIX B-1 - FIRST PRIORITY MORTGAGE
APPENDIX B-2 - SECOND PRIORITY MORTGAGE (FOR THE
DAEWOO VESSELS)
APPENDIX C FORM OF ASSIGNMENTS OF INSURANCES
APPENDIX C-1 ASSIGNMENT OF INSURANCES FOR HDW
VESSELS
APPENDIX C-2 ASSIGNMENT OF INSURANCES FOR DAEWOO VESSELS
APPENDIX C-3 SECOND ASSIGNMENT OF INSURANCES FOR
DAEWOO VESSELS
APPENDIX D *
APPENDIX E FORM OF GUARANTEE
APPENDIX F FORM OF ASSIGNMENT AND ACCEPTANCE
APPENDIX G FORM OF ASSIGNMENT AND AGREEMENT AND CONSENT
APPENDIX H AGREEMENT OF APC
APPENDIX I FORM OF AGREEMENT TO ACQUIRE AND CHARTER
SCHEDULE 1 - SYNDICATE MEMBERS
SCHEDULE 2 - FORMS OF NOTICE OF DRAWDOWN
SCHEDULE 2-A - FORM OF NOTICE OF DRAWDOWN FOR ANY HDW
SUBPORTION
SCHEDULE 2-B - FORM OF NOTICE OF DRAWDOWN FOR ANY DAEWOO
SUBPORTION
SCHEDULE 3 - AGGREGATE AMOUNTS AND PERCENTAGE INTERESTS
OF SYNDICATE MEMBERS AS TO EACH DAEWOO
SUBPORTION
SCHEDULE 4 - OPINIONS
SCHEDULE 5 - FORMS OF CONFIRMATION
SCHEDULE 5-A - FORM OF CONFIRMATION FROM HDW TO KFW OF
READINESS TO DELIVER ANY HDW VESSEL
SCHEDULE 5-B - FORM OF CONFIRMATION FROM DAEWOO TO THE
SYNDICATE OF READINESS TO DELIVER ANY
DAEWOO VESSEL
SCHEDULE 5-C - FORM OF CONFIRMATION FROM THE BORROWER TO KFW
OF ITS READINESS TO TAKE DELIVERY OF ANY HDW
VESSEL
SCHEDULE 5-D - FORM OF CONFIRMATION FROM THE BORROWER TO
DAEWOO OF ITS READINESS TO TAKE DELIVERY OF
ANY DAEWOO VESSEL
SCHEDULE 6 - PRINCIPAL INSTALLMENTS OF THE SUBPORTIONS
SCHEDULE 6-A - PRINCIPAL INSTALLMENTS AS TO HDW SUBPORTIONS
SCHEDULE 6-B - PRINCIPAL INSTALLMENTS AS TO DAEWOO
SUBPORTIONS
SCHEDULE 7 - AGENTS FOR SERVICE OF PROCESS
THIS LOAN AGREEMENT is made this 14th day of March, 1994
by and among KREDITANSTALT FUR WIEDERAUFBAU, a public law corporation
incorporated in the Federal Republic of Germany, whose address is
Palmengartenstrasse 5-9, D-60325 Frankfurt am Main ("KfW"); COMMERZBANK
AG, Hamburg, a banking corporation incorporated in the Federal Republic
of Germany whose address is Ness 7-9, D-20457 Hamburg (the "Syndicate
Agent"); the banks listed in Schedule 1 which is attached hereto (each a
"Syndicate Member" and, collectively, the "Syndicate"); and AMERICAN
PRESIDENT LINES, LTD., a Delaware corporation, whose address is 1111
Broadway, Oakland, California 94607 ("APL").
W I T N E S S E T H:
WHEREAS, the Borrower has ordered three (3) container
vessels (the "HDW Vessels") from Howaldtswerke-Deutsche Werft AG
("HDW"), Werftstrasse 112-114, D-24124 Kiel, Federal Republic of Germany
as is more specifically set forth in a certain Shipbuilding Agreement
dated May 10, 1993 (the "HDW Shipbuilding Agreement") between the
Borrower and HDW;
WHEREAS, the Borrower has also ordered three (3)
container vessels (the "Daewoo Vessels") from Daewoo Shipbuilding &
Heavy Machinery, Ltd. ("Daewoo") as is more specifically set forth in a
certain Shipbuilding Agreement dated May 10, 1993 (the "Daewoo
Shipbuilding Agreement") between the Borrower and Daewoo;
WHEREAS, the Borrower wishes to borrow from KfW up to *
Dollars (USD * ) (the "HDW Tranche") for the purchase of the
HDW Vessels;
WHEREAS, the Borrower also wishes to borrow from the
Syndicate up to *
Dollars (USD *) (the "Daewoo Tranche", together with the HDW Ship
Tranche, the "Tranches") for the purchase of the Daewoo Vessels;
WHEREAS, in order to induce KfW and the Syndicate to make
available to the Borrower the HDW Tranche and the Daewoo Tranche
respectively, American President Companies, Ltd. (the "Guarantor") has
agreed to guarantee the obligations of the Borrower under this Agreement
and the Security Documents pursuant to a guarantee attached hereto in
the form of Exhibit E;
WHEREAS, upon the sale of any Vessel to the Transferee on
such Vessel's Delivery Date as contemplated by this Agreement and that
certain Agreement to Acquire and Charter among the Transferee and the
parties hereto, dated the date hereof and attached hereto as Appendix I
(the "Agreement to Acquire and Charter"), (i) the Transferee and not APL
shall be liable for all Vessel Indebtedness relating to that Vessel, the
obligations of the Borrower hereunder with respect to such Vessel
Indebtedness and the obligations of the Borrower under the related
Security Documents and Charter Documents and (ii) such obligations shall
be guaranteed by the Guarantor pursuant to the Guarantee, and (iii) the
Transferee will execute and deliver the other related Daewoo Security
Documents and the Second Security Documents, or the HDW Security
Documents, as the case may be, and shall charter the Vessel to APL under
a Daewoo Charter or an HDW Charter, as applicable.
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:
1. DEFINITIONS
Words and expressions defined hereinabove shall, when
used in this Agreement and in the Schedules and Appendices hereto, have
the meanings therein set out and in addition the following terms shall
have the following meanings:
"*" means HDW * and Daewoo * ,
collectively.
"Additional Amounts" shall have the meaning set forth in
Section 11.02(a).
"Agent" means KfW or any successor agent under this
Agreement.
"Aggregate Amount" means such amounts as set forth in
Schedule 3.
"Agreement to Acquire and Charter" means the Agreement
dated the date hereof among the Borrower, the Lenders and the Transferee
respecting the Transferee's liability for the Vessel Indebtedness for
any of the Vessels delivered to the Transferee and APL's obligation to
charter any such Vessel from the Transferee, together with all Exhibits
thereto.
"Agreement" means this agreement as it may from time to
time be amended, supplemented or otherwise modified.
"* Installment" means:
(i) in respect of each HDW Subportion each of the *
principal installments of that HDW Subportion (calculated on a
basis consistent with that reflected in Schedule 6A hereto as to
an assumed rate of interest of * % per annum) payable on the
Repayment Dates in respect of that HDW Subportion and in the
principal amounts provided in Section 5.01; and
(ii) in respect of each Daewoo Subportion each of the *
principal installments of that Daewoo Subportion (calculated on a
basis consistent with that reflected in Schedule 6B hereto as to
an assumed rate of interest of * % per annum) payable on the
Repayment Dates in respect of that Daewoo Subportion and in the
principal amounts provided in Section 5.02.
"Assignment and Acceptance" shall mean the agreement to
be entered into between any Syndicate Assignee and Assignor pursuant to
Section 10.02(a) and in the form set forth under Appendix F.
"Assignment and Agreement and Consent" shall mean the
assignment of monies payable to KfW or the Syndicate Agent under a
charter by APL to a third party consented and agreed to by a charterer
pursuant to Section 9.02(b) and in the form set forth in Appendix G.
"Assignor" shall have the meaning set forth in Section 10.02(a).
"Borrower" shall have the following meanings:
(i) Prior to any transfer of the Vessels pursuant to the
Agreement to Acquire and Charter, APL shall be the Borrower; and
(ii) From and after the transfer of any Vessel pursuant
to the Agreement to Acquire and Charter, the Transferee shall be
the Borrower with respect to all payment and performance
obligations relating to Vessel Indebtedness of that Vessel
(including but not limited to, Sections 2.02(d), 3, 4, 5, 6, 10,
11, 12, 13.03 and 15.09 of this Agreement) and APL shall be the
Borrower with respect to all other provisions of this Agreement
(including but not limited to, Sections 7, 8 and 9).
"Builder" means, in respect of each Vessel, HDW or
Daewoo, as the case may be.
"Business Day" means a day on which banks are open for
business in London, England, the City of New York, Frankfurt, Germany
and Luxembourg City, Luxembourg.
"Charter Documents" has the meaning set forth in the
Agreement to Acquire and Charter with respect to any Vessel.
"Charters" means the HDW Charters and the Daewoo
Charters.
"Classification Society" means The American Bureau of
Shipping.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated thereunder.
"Commitment" shall mean the portion of the Facility to be
made available to the Borrower by each Lender.
"Contract Price" means, in respect of each HDW Vessel, *
* in respect of each Daewoo
Vessel,
(USD * ) payable by the Borrower to HDW or Daewoo, as the
case may be, under the relevant Shipbuilding Agreement less any
reductions as of the Delivery Date, which in the case of reductions in
the Deutsche Mark price for any HDW Vessel shall for purposes of
calculating such reduced Contract Price be converted to Dollars using
the USD Equivalent but, for purposes of this Agreement, excluding any
increases in the said price over the original Contract Price set forth
above made in accordance with the provisions of the relevant
Shipbuilding Agreement.
"Daewoo * " shall have the meaning set forth in
Section 5.03.
"Daewoo * Installment" shall have the meaning set
forth in Section 5.02.
"Daewoo Charters" shall mean, collectively, each of the bareboat charter
parties to be entered into on or before the Delivery Date of a Daewoo
Vessel between APL and the Transferee which shall provide, among other
things, for (i) periodic basic hire payments in an amount at least
sufficient to pay installments of principal and interest when due in
respect of the Daewoo Notes, on a "hell and high water" basis, (ii)
supplemental hire payments in an amount sufficient to pay all other
monies due under Sections 11 and 13 and (iii) the complete subordination
of rights and claims of APL under said bareboat charter to the relevant
Daewoo Mortgages, which shall be substantially in the form attached as
Exhibit A to the Agreement to Acquire and Charter.
"Daewoo Charter Assignment" means each and "Daewoo
Charter Assignments" means every first priority assignment of a Daewoo
Charter of a Daewoo Vessel owned by the Transferee to the Syndicate
Agent as security for the Transferee's obligations under the Loan
Documents to which it is a party with respect to the corresponding
Vessel Indebtedness, which shall be substantially in the form attached
as Exhibit C to the Agreement to Acquire and Charter.
"Daewoo Fixed Rate" shall have the meaning set forth in
Section 3.06.
"Daewoo Fixed Rate Notes" means the Notes issued to each
Syndicate Member on the Fixed Rate Conversion Date and "Daewoo Fixed
Rate Note" means any one of them.
"Daewoo Floating Rate" shall have the meaning set forth
in Section 3.06.
"Daewoo LIBO Rate Notes" means the Notes issued by the
Borrower using the Daewoo Floating Rate.
"Daewoo Notes" means the Notes evidencing the Daewoo
Tranche as used pursuant to Section 4.
"Daewoo Notice of Drawdown" shall have the meaning set
forth in Section 2.02(b) and shall be substantially in the form attached
in Schedule 2-B.
"Daewoo Security Documents" shall have the following
meanings:
(i) With respect to any Daewoo Vessel not transferred to
the Transferee pursuant to the Agreement to Acquire and Charter,
the "Daewoo Security Documents" shall mean the Guarantee, the
First Mortgage, the First Assignments of Insurance and the
Assignments and Agreements and Consents in favor of the Syndicate
Agent and/or the Syndicate Members, their successors and assigns;
and
(ii) With respect to any Daewoo Vessel transferred to
the Transferee pursuant to the Agreement to Acquire and Charter,
the "Daewoo Security Documents" shall mean the Guarantee, the
First Mortgage, the First Assignments of Insurance, the
Assignments and Agreements and Consents, and the Charter
Assignments in favor of the Syndicate Agent and/or the Syndicate
Members, their successors and assigns.
"Daewoo Subportion" means, in respect of each Daewoo
Vessel, that portion of the Daewoo Tranche that relates to its purchase
financing and "Daewoo Subportions A-C" shall have the meaning set forth
in Section 2.02.
"Daewoo Tranche" shall have the meaning set forth in
Section 2.02.
"Default Interest Rate" shall means the interest rate set
forth in Section 3.08.
"Delivery Date" means, in respect of each Vessel, the
date on which that Vessel is delivered to and accepted by the Borrower
pursuant to the relevant Shipbuilding Agreement.
"Deutsche Marks" or "DM" means the lawful currency for
the time being of the Federal Republic of Germany.
"Dollars" and "USD" means (i) the lawful currency for the
time being of the United States of America and (ii) in immediately
available and transferable funds or such other funds as are customary
for same day settlement of international Dollar transactions.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated
and rulings issued thereunder.
"ERISA Affiliate" means with respect to any Person, any
trade or business (whether or not incorporated) which is a member of a
group of which such Person is a member and which is under common control
with such Person within the meaning of Section 414 of the Code, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"Event of Default" means any of the events described in
Section 12.02.
"Event of Loss" means (i) an actual, constructive,
agreed, arranged, or compromised total loss of the Vessel, or (ii)
requisition of title to the Vessel by the United States of America
(whether by voluntary contract of commitment or otherwise) or its flag
state, or (iii) seizure or forfeiture of the Vessel of any kind or
nature whatsoever not released pursuant to Section 16 of the relevant
Mortgage, or (iv) requisition of use, confiscation, seizure or
forfeiture of the Vessel of any kind or nature whatsoever by any
government other than the United States of America (so long as war risk
insurance satisfactory in form, substance and amount to the mortgagee of
such Vessel is in place for the period of such registration) or its flag
state for more than one hundred eighty (180) days. An Event of Loss
shall be deemed to have occurred (a) in the event of an actual total
loss of the Vessel, on the date of such loss, (b) in the event of damage
to the Vessel which results in a constructive, agreed, arranged, or
compromised total loss of the Vessel, on the date of the occurrence of
the event giving rise to such damage, or (c) in the case of any event
referred to in clause (ii), (iii) or (iv) above, on the date of the
occurrence of such event.
"Exchange Bank" means each, and "Exchange Banks" means
every, financial institution with whom the Borrower has a forward
exchange contract or the contracts on the Delivery Date of the HDW
Vessel for amounts to be paid in Deutsche Marks under the HDW
Shipbuilding Agreement.
"Facility" means the loan facility granted by KfW and the
Syndicate to Borrower in the amount of all the Loans.
"Financial Indebtedness" means, in relation to each
Obligor, (a) any indebtedness (whether long or short term) owed to any
bank or financial institution; (b) any liability under any financial
lease or bareboat charter and (c) any guarantee, indemnity or other
assurance against financial loss given by that Obligor in respect of any
of the foregoing.
"First Assignment of Insurances" means, in respect of
each Vessel, the Assignment of its Insurances in the form and upon the
terms and conditions of the draft set out in Appendices C-1 or C-2.
"First Mortgage" means, in respect of each HDW Vessel,
the first priority mortgage on that Vessel securing the whole HDW
Tranche, and in respect of each Daewoo Vessel, the first priority
mortgage on that Vessel securing the whole Daewoo Tranche, in the form
and upon the terms and conditions of the draft set out in Appendix B-1.
"First Mortgagee" means, in respect of a First Mortgage
securing the HDW Tranche, KfW and its successors and assigns pursuant to
that Mortgage and, in respect of a First Mortgage securing the Daewoo
Tranche, the Syndicate Agent and/or the Syndicate Members and their
respective successors and assigns pursuant to that Mortgage.
"Fixed Rate" means, in respect of each Note, the Interest
Rate as determined by either Section 3.05 or 3.06, as the case may be.
"Fixed Rate Conversion Date" means the first day of the
Interest Period immediately succeeding the date on which the Borrower
elects by written notice the Fixed Rate under the relevant HDW
Subportion pursuant to Section 3.05 or a Fixed Rate under the relevant
Daewoo Subportion pursuant to Section 3.06.
"Fixed Rate Notes" means the HDW Fixed Rate Notes and the
Daewoo Fixed Rate Notes and "Fixed Rate Note" means any of them.
"Frankfurt Banking Day" means a day on which banks are
open for business in Frankfurt, Germany.
"Governmental Instrumentality" shall mean and include (i)
any national, provincial, or state government, political subdivision
thereof, or local jurisdiction therein; (ii) any board, commission,
department, division, organ, instrumentality, court, or agency of any
entity specified in clause (i), however constituted; and (iii) any
association, organization, or institution of which any entity specified
in clause (i) is a member or to whose jurisdiction any entity specified
in clause (i) is subject or in whose activities any entity specified in
clause (i) is a participant.
"Guarantee" and "Guarantees" shall have the following
meanings:
(i) Prior to any transfer of the Vessels pursuant to the
Agreement to Acquire and Charter, the "Guarantee" shall mean the
Guarantee dated the date hereof by the Guarantor guaranteeing
APL's obligations under the Loan Agreement and the Security
Documents to which it shall become a party substantially in the
form of Appendix E; and
(ii) From and after the transfer of any Vessel pursuant
to the Agreement to Acquire and Charter, "Guarantees" shall mean,
collectively, the Guarantee described in clause (i) above and the
Guarantee dated the first Delivery Date on which the Transferee
shall acquire a Vessel by the Guarantor guaranteeing the
Transferee's obligations under the Loan Agreement and the
Security Documents to which it shall become a party substantially
in the form of Appendix E.
"Guarantor" means American President Companies, Ltd.
*
"HDW * Installment" shall have the meaning set forth in
Section 5.01.
"HDW Charters" shall mean, collectively, each of the
bareboat charter parties to be entered into on or before the Delivery
Date of an HDW Vessel between APL and the Transferee which shall
provide, among other things for (i) periodic basic hire payments in an
amount at least sufficient to pay installments of principal and interest
when due in respect of the HDW Notes, on a "hell and high water" basis,
(ii) supplemental hire payments in an amount sufficient to pay all other
monies due under Sections 11 and 13 and (iii) the complete subordination
of rights and claims of APL under said bareboat charter to the relevant
HDW Mortgages, which shall be substantially in the form attached as
Exhibit A to the Agreement to Acquire and Charter.
"HDW Charter Assignment" means each and "Charter
Assignments" means every first priority assignment of an HDW Charter of
a given HDW Vessel by the Transferee to the Agent as security for the
Transferee's obligations under the Loan Documents to which it is a party
with respect to the corresponding Vessel Indebtedness, which shall be
substantially in the form attached as Exhibit C to the Agreement to
Acquire and Charter.
"HDW Fixed Rate" shall have the meaning set forth in
Section 3.05.
"HDW Fixed Rate Notes" means the Notes issued to KfW on
the Fixed Rate Conversion Date and "HDW Fixed Rate Note" means any one
of them.
"HDW Floating Rate" shall have the meaning set forth in
Section 3.05.
"HDW LIBO Rate Notes" means the Notes issued by the
Borrower using the HDW Floating Rate.
"HDW Notes" means the Notes evidencing the HDW Tranche as
used pursuant to Section 4.
"HDW Notice of Drawdown" shall have the meaning set forth
in Section 2.01(b) and shall be substantially in the form attached
hereto as Schedule 2-A.
"HDW Security Documents" shall have the following
meanings:
(i) With respect to any HDW Vessel not transferred
pursuant to the Agreement to Acquire and Charter, the "HDW
Security Documents" shall mean the Guarantee, the First Mortgage,
the First Assignment of Insurance and the Assignments and
Agreements and Consents in favor of KfW, its successors and
assigns; and
(ii) With respect to any HDW Vessel transferred pursuant
to the Agreement to Acquire and Charter, the "HDW Security
Documents" shall mean the Guarantee, the First Mortgage, the
First Assignment of Insurance, the Assignments and Agreements and
Consents and the HDW Charter Assignment in favor of KfW, its
successors and assigns.
"HDW Subportion" means, in respect of each HDW Vessel,
that portion of the HDW Tranche that concerns its purchase financing and
"HDW Subportions A-C" shall have the meaning set forth in Section 2.01.
"HDW Tranche" shall have the meaning set forth in Section
2.01.
"Holder" means, in respect of each Note, the Lender which
is registered as the holder of such Note in the relevant Register.
"Incipient Default" shall mean any state of facts, any
event, or any condition of which the Borrower has actual notice which
would constitute an Event of Default but for the requirement that notice
be given or time elapse or both.
"Indemnified Party" shall have the meaning set forth in
Section 11.01.
"Insufficiency" means, with respect to any Plan, the
amount, if any, as determined on an on-going basis by which the present
value of the vested benefits under such Plan exceeds the fair market
value of the assets of such Plan allocable to such benefits.
"Insurances" means, in respect of each Vessel, each and
every policy or contract of insurance or entry into a war risks or
protection and indemnity association (which are now or may hereafter be)
taken out or entered into in respect of that Vessel, her increased value
or disbursements or otherwise howsoever in connection with that Vessel
in order to comply with Borrower's obligations under the First Mortgage
or (if a Daewoo Vessel) the Second Mortgage thereon.
"Interbank Market" means the London Interbank Euro-
Currency Market.
"Interest Determination Date" means two (2) New
York/Frankfurt/London Banking Days prior to the commencement of the
relevant Interest Period on which the Agent or the Syndicate Agent, as
the case may be, will make an interest determination.
*
"Interest Payment Date" means in respect of any HDW
Subportion A-C or any Daewoo Subportion A-C and any * thereof, the
last day of any Interest Period in respect thereof determined in
accordance with Section 3 hereof.
"Interest Period" means each of the successive interest
periods for the HDW and Daewoo Subportions determined in accordance with
Sections 3.01 and 3.02, respectively, and 3.03 of this Agreement.
"Interest Rate" means the rate of interest applicable to
the Loan calculated in accordance with Sections 3.04-3.06, as the case
may be.
"Lenders" means KfW and any assignees of KfW pursuant to
Section 10.01(b) and each member of the Syndicate, including any
Syndicate Assignee and "Lender" means any of them.
"LIBO Rate" shall have the meaning set forth in Section
3.04.
"LIBO Rate Conversion Date" means the first day of the
Interest Period immediately succeeding the last date of the Interest
Period to which a Fixed Rate applies under a Daewoo Subportion pursuant
to Section 3.06.
"LIBO Rate Notes" means both the HDW LIBO Rate Notes or
the Daewoo LIBO Rate Notes and "LIBO Rate Note" means any one of them.
"Loan Documents" means this Agreement, the Agreement to
Acquire and Charter, the HDW Security Documents and the Daewoo Security
Documents.
"Loans" means the loans made by the Lenders under any
Subportion of the HDW Tranche and the Daewoo Tranche, as the case may
be, and "Loan" means any such loan.
"London Banking Day" means a day on which banks are open
for business in London.
"Maximum Daewoo Tranche Amount" means
* United States Dollars
(USD *
"Maximum HDW Tranche Amount" means *
"Mortgages" shall mean, collectively, the First Mortgages
and the Second Mortgages.
"Multiemployer Plan" means a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA to which a Person or any ERISA
Affiliate is making or accruing an obligation to make contributions, or
has within any of the preceding three (3) plan years made or accrued an
obligation to make contributions.
"Multiple Employer Plan" means an employee benefit plan,
other than a Multiemployer Plan, subject to Title IV of ERISA to which a
Person or any ERISA Affiliate, and more than one employer other than
such Person or ERISA Affiliate, is making or accruing an obligation to
make contributions or, in the event that any such plan has been
terminated, to which the Person or any ERISA Affiliate made or accrued
an obligation to make contributions during any of the five (5) plan
years preceding the date of termination of such plan.
"New York Banking Day" means a day on which banks are
open for business in the City of New York.
"Notes" means the HDW Notes and the Daewoo Notes.
"Obligors" means APL, the Transferee and the Guarantor
and "Obligor" means any of them.
"Original Contract Delivery Date" means, in respect of
each Vessel, the date set against its hull number as set forth below,
being the date on which it is scheduled to be delivered under the
Shipbuilding Agreement relating thereto:
Vessel Delivery Date
HDW Hull No. 297 April 12, 1995
HDW Hull No. 298 July 10, 1995
HDW Hull No. 299 November 30, 1995
Daewoo Hull No. 4028 May 30, 1995
Daewoo Hull No. 4029 June 21, 1995
Daewoo Hull No. 4033 October 17, 1995
as each such date may be extended by up to twenty five (25) calendar
days by HDW or Daewoo, as the case may be, under Article 1(e) of the HDW
Shipbuilding Agreement or the Daewoo Shipbuilding Agreement, as the case
may be, but excluding any other extensions thereto which may be
permitted under Article 7 (force majeure) or any other provisions of the
HDW Shipbuilding Agreement or the Daewoo Shipbuilding Agreement, as the
case may be.
"Original Principal Amount" means the aggregate principal
amount of the HDW Notes and the Daewoo Notes, as the case may be.
"Outstanding Indebtedness" means the aggregate principal
amount of the Tranches outstanding together with accrued interest
thereon and all other monies of whatever nature due or to become due and
payable to KfW and the Syndicate in accordance with the terms of this
Agreement and the other Loan Documents.
"Paying Agent" shall have the meaning set forth in
Section 4.04.
"PBGC" means the Pension Benefit Guaranty Corporation, or
any entity or entities succeeding to any or all its functions under
ERISA.
"Percentage Interest" shall mean the interests set forth
in Schedule 3 in respect of the Syndicate Members.
*
"Person" means any individual, corporation, partnership,
business trust, joint venture, association, joint stock company, trust
or other unincorporated organization, whether or not a legal entity, or
any government or agency or political subdivision thereof.
"Plan" means, at any time, any employee pension benefit
plan maintained or contributed to or at any time during the five
calendar years preceding the date of this Agreement was maintained or
contributed to, by APL, the Guarantor, any of its Subsidiaries, or any
ERISA Affiliate of APL, the Guarantor, or its Subsidiaries, which
employee pension benefit plan is covered by Title IV of ERISA or is
subject to the minimum funding standards of the Code.
"Process Agent" shall have the meaning set forth in
Section 15.08.
"Quarter Day" means in each year 31st March, 30th June,
30th September and 31st December.
"Recoveries" means any amounts collected by the Agent or
the Syndicate Agent, as the case may be, subsequent to an Event of
Default.
"Redemption Date" shall have the meaning set forth in
Section 5.04(b).
"Register" shall have the meaning set forth in Section
4.04.
"Registrars" shall have the meaning set forth in Section
4.04.
"Repayment Date" means each date falling six (6) months
after the Delivery Date of each Vessel and each six (6) months
thereafter; provided, however, if such Delivery Date shall occur on the
last Business Day in a calendar month and if there is no numerically
corresponding day in such later month then such later Repayment Date
shall be the last Business Day of such later month, which Repayment Date
shall always be an Interest Payment Date.
"Replacement Mortgage" has the meaning set forth in
Section 20(b) or (c) of each First Mortgage, as applicable, and in
Section 20(b) or (c) of the Second Mortgage, as applicable.
"Second Assignment of Insurances" means, in respect of
each Daewoo Vessel, the second assignment of insurances in favor of the
Agent substantially in the form set out in Appendix C-3.
"Second Charter Assignment" means the second priority
assignment of the Daewoo Charter by the Transferee to KfW substantially
in the form set forth in Exhibit C to the Agreement to Acquire and
Charter.
"Second Mortgage" means, in respect of each Daewoo
Vessel, the second priority mortgage on that Daewoo Vessel in favor of
the Agent securing the whole HDW Tranche in the form and upon the terms
and conditions of the draft set out in Appendix B-2.
"Second Mortgagee" means KfW and its respective
successors and assigns pursuant to the provisions of the Second
Mortgage.
"Second Security Documents" means the Guarantee, the
Second Mortgages, the Second Assignments of Insurances and upon the
transfer of a Daewoo Vessel pursuant to the Agreement to Acquire and
Charter, the Second Charter Assignments.
"Security Documents" means the HDW Security Documents,
the Daewoo Security Documents, the Second Security Documents and
"Security Document" means any of them.
"Shipbuilding Agreements" means the HDW Shipbuilding
Agreement and the Daewoo Shipbuilding Agreement and "Shipbuilding
Agreement" means either of them.
"Subportions" means the HDW Subportions and the Daewoo
Subportions and "Subportion" means any one of them.
"Subsidiary" means a body corporate from time to time of
which another (a) has direct or indirect control or (b) owns directly or
indirectly more than fifty per centum (50%) of the share capital or
similar right of ownership (and in this definition "control" means the
power to direct the management and the policies of a body corporate,
whether through the ownership of voting capital, by contract or
otherwise).
"Substitute Basis" shall have the meaning set forth in
Section 6.01(c).
"Suspension Notice" shall mean the notice given by the
Agent or the Syndicate Agent to the Borrower pursuant to Section
6.01(a).
"Syndicate Agent" shall mean Commerzbank AG, Hamburg, or
any successor syndicate agent under this Agreement.
"Syndicate Assignee" shall have the meaning set forth in
Section 10.02(a).
"Tangible Net Worth" means, with respect to the
Guarantor, the aggregate of all assets of the Guarantor which would, in
accordance with generally accepted United States accounting principles,
appear as assets on the consolidated balance sheet of the Guarantor,
less the sum of (i) all liabilities and indebtedness on such balance
sheet and (ii) all intangible assets such as goodwill, patents,
trademarks, franchises, licenses and other like intangibles.
"Tax" shall be construed so as to include, by reference
to any applicable jurisdiction, any present or future tax, levy, impost,
deduction, duty or other charge or withholding of a similar nature
imposed by a Governmental Instrumentality (including, without
limitation, any interest or penalty payable in connection with any
failure to pay or any delay in paying any of the same) and "taxation"
shall be interpreted accordingly.
"Termination Event" means (i) a "reportable event," as
such term is described in Section 4043 of ERISA (other than a
"reportable event" not subject to the provision for thirty (30) day
notice to the PBGC), or an event described in Section 4068 of ERISA, or
(ii) the withdrawal of APL, the Guarantor or any ERISA Affiliate from a
Multiple Employer Plan during a plan year in which it was a "substantial
employer", as such term is defined in Section 4001(a)(2) of ERISA, or
the incurrence of liability by APL, the Guarantor or any ERISA Affiliate
under Section 4064 of ERISA upon the termination of a Multiple Employer
Plan, or (iii) the filing of a notice of intent to terminate a Plan or
the treatment of a Plan amendment as a termination under Section 4041A
of ERISA, or (iv) the institution of proceedings to terminate a Plan by
the PBGC under Section 4042 of ERISA, or (v) any other event or
condition which might constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any
Plan.
*
"Transferee" shall mean APL Newbuildings, Ltd.
"USD Equivalent" shall mean the Dollar amount calculated
under the USD Exchange Rate.
"USD Exchange Rate" shall mean 1 Dollar per * Deutsche
Mark, which is based on average rates of exchange for such currencies
obtained by the Borrower under forward exchange contracts submitted to
Haight, Gardner, Poor & Havens by letter of the Guarantor dated August
20, 1993.
"Value Test" shall have the meaning set forth in Section
5.03(c).
"Vessel Indebtedness" means, in respect of each Vessel,
all sums owing, actually or contingently, by the Borrower to the
relevant Lender(s) in respect of that Subportion which relates to that
Vessel under this Agreement (whether by way of repayment of principal,
payment of commitment commission, payment of interest or default
interest, payment upon any indemnity, reimbursement for costs or
otherwise howsoever).
"Vessels" means the HDW Vessels and the Daewoo Vessels
and "Vessel" means any of them.
"Withdrawal Liability" shall have the meaning given such
term under Part I of Subtitle E of Title IV of ERISA.
2. THE TRANCHES
2.01 The HDW Tranche. (a) The HDW Subportions. Upon the
terms and subject to the conditions set forth in this
Agreement, KfW agrees to make available to the Borrower
as its Commitment up to three (3) advances in the
aggregate principal amount of up to the lesser of (i) *
or (ii) * of the Total Contract Price *
of the three (3) HDW Vessels based on the
Contract Price of each such Vessel calculated as of each
Vessel's Delivery Date using the USD Exchange Rate (the
"HDW Tranche"). Such maximum loan amounts may be reduced
from time to time to take into account any reductions in
the Contract Price of any HDW Vessel calculated using the
USD Equivalent at the request of APL, but any reductions
made in loan amounts shall not thereafter be eligible for
borrowing. The obligation of the Borrower to repay each
of the three (3) advances (the "HDW Subportions A-C")
under the HDW Tranche shall be evidenced by the HDW
Notes. It is expressly understood and agreed that the
Borrower shall have no right to receive, and KfW shall
have no obligation to disburse, any amount in respect of
any HDW Subportion greater than the lesser of (i)
* or (ii)
* of the * Contract Price of a
Vessel calculated as of such Vessel's Delivery Date.
(b) Disbursement of the HDW Subportion. Each
HDW Subportion shall be disbursed on at least five (5)
Business Days' written notice (the "HDW Notice of
Drawdown") from APL (and the Transferee if it is to be
the owner of the related Vessel) to the Agent specifying
the Delivery Date, which shall be a Business Day. If
after the giving of an HDW Notice of Drawdown it becomes
apparent that the Delivery Date will not occur on the
date specified as the Delivery Date in such notice, APL
(and the Transferee if it is to be the owner of the
related Vessel) shall immediately give notice to the
Agent specifying a new Delivery Date (if known to APL)
and requesting the Agent either to (i) reemploy the
deposits acquired for the purpose of funding such HDW
Subportion until the new Delivery Date, or (ii) liquidate
such deposits. If the deposits acquired for the purpose
of funding such HDW Subportion are liquidated, the Agent
shall not have the obligation to disburse such HDW
Subportion until it shall have received a new HDW Notice
of Drawdown in accordance with the provisions set forth
herein.
Not later than 11:00 a.m. (New York City time) on
the Delivery Date, and upon fulfillment of the conditions
in Section 7 hereof, the Agent will make such HDW
Subportion available to (i) the Exchange Banks the
amounts owed to the Exchange Banks under the relevant
forward exchange contracts on the Delivery Date
simultaneously with irrevocable confirmation from each of
the Exchange Banks of release of the respective Deutsche
Marks to an account designated by HDW in fulfillment of
APL's payment obligations to HDW on the Delivery Date
under the HDW Shipbuilding Agreement and (ii) any
remaining balance to APL in same day funds at the account
specified in the HDW Notice of Drawdown.
If for any reason (other than solely by default of
the Agent) an HDW Subportion is not drawn down on the
Delivery Date specified in the HDW Notice Drawdown, APL
shall reimburse the Agent on demand for its losses and
expenses in accordance with Section 11.01(a).
(c) Expiration of the Commitment. The
commitment by KfW to provide funds for any HDW Subportion
shall expire if the relevant HDW Vessel has not been
delivered within two hundred seventy (270) days after its
Original Contract Delivery Date. KfW may determine in
its sole discretion (but without obligation on its part)
whether and on what conditions, which will include
payment of the indemnity pursuant to Section 11, any
Delivery Date may be extended beyond such two hundred
seventy (270) day period.
2.02 The Daewoo Tranche. (a) The Daewoo Subportions.
Upon the terms and subject to the conditions set forth in
this Agreement, each Syndicate Member agrees, severally
but not jointly, to make available to the Borrower as its
Commitment up to three (3) advances, which together with
the advances made by the other Syndicate Members, shall
be the lesser of (i) an aggregate principal amount of up
to
*
or (ii) * of the Total Contract Price of the three
Daewoo Vessels based on the Contract Price of each such
Vessel (the "Daewoo Tranche"); provided, however, that
the maximum Subportion in each case shall not exceed the
sum of * of the Contract Price of each Daewoo Vessel as
of its Delivery Date. Such maximum loan amounts may be
reduced from time to time to take into account any
reductions in such Contract Price at the request of APL,
but any reductions made in loan amounts shall not
thereafter be eligible for borrowing. The total amount
of each Loan to be made available by each Syndicate
Member in respect of a Daewoo Subportion shall not exceed
at any time the Aggregate Amount for such Syndicate
Member and shall be equal to such Member's Percentage
Interest of the Daewoo Tranche. The obligation of the
Borrower to repay each of the three advances (the "Daewoo
Subportions A-C") under the Daewoo Tranche shall be
evidenced by the Daewoo Notes. It is expressly
understood and agreed that the Borrower shall have no
right to receive, and no Syndicate Member shall have any
obligation to disburse, any amount in respect of any
Daewoo Subportion greater than such Member's Percentage
Interest of the Contract Price for each Daewoo Vessel.
The failure of any Syndicate Member to advance any amount
which it is obligated to advance hereunder in respect of
any Daewoo Subportion shall not relieve it or any other
Syndicate Member of the obligation to make such advances,
but no Syndicate Member or the Syndicate Agent shall be
responsible for the failure of any other Syndicate Member
to advance its Aggregate Amount to the Borrower in
respect of any Daewoo Subportion.
(b) Disbursement of the Daewoo Subportion.
Each Daewoo Subportion shall be disbursed on at least
five (5) Business Days' written notice (the "Daewoo
Notice of Drawdown") from APL (and the Transferee if it
is to be the owner of the related Vessel) to the
Syndicate Agent specifying the Delivery Date, which shall
be a Business Day. APL (and the Transferee if it is to
be the owner of the related Vessel) may request in such
Daewoo Notice of Drawdown that, as a condition of the
drawdown by the Borrower, the Syndicate Members make
their respective portions of the Daewoo Subportion
available to the Syndicate Agent one Business Day prior
to the Delivery Date specified in such Daewoo Notice of
Drawdown and confirmation to APL (and the Transferee if
it is to be the owner of the related Vessel) by the
Syndicate Agent that all of the Commitment has been made
available on such date. If the Syndicate Members are
requested to make their Commitment available before the
Delivery Date as set forth herein, for purposes of
determining the first Repayment Date and the Interest
Period, the Delivery Date shall be deemed to be the date
that the Syndicate was requested to make its Commitment
available.
Not later than 10:00 a.m. (New York City time) on
such Delivery Date or on the Business Day immediately
preceding the Delivery Date if so requested by APL (and
the Transferee if it is to be the owner of the related
Vessel), each Syndicate Member shall make the portion of
the Daewoo Subportion which it is obligated to make under
Section 2.02(a) available to the Syndicate Agent in same-
day funds at their account set forth in Section 5.07, and
upon fulfillment of the conditions in Section 7 hereof,
for disbursement to the Borrower on the Delivery Date in
same-day funds at the location to be specified by APL
(and the Transferee if it is to be the owner of the
related Vessel) in the relevant Daewoo Notice of
Drawdown.
If after the giving of a Daewoo Notice of Drawdown
it becomes apparent that the Delivery Date will not occur
on the date specified as the Delivery Date in such
notice, APL (and the Transferee if it is to be the owner
of the related Vessel) shall immediately give notice to
the Syndicate Agent specifying a new Delivery Date (if
known to APL) and requesting the Syndicate Agent either
to (i) reemploy the deposits acquired for the purpose of
funding such Daewoo Subportion until the new Delivery
Date, or (ii) liquidate such deposits. If the deposits
acquired for the purpose of funding such Daewoo
Subportion are liquidated, the Syndicate Agent shall not
have the obligation to disburse such Daewoo Subportion
until it shall have received a new Daewoo Notice of
Drawdown in accordance with the provisions set forth
herein.
If APL (and the Transferee if it is to be the
owner of the related Vessel) shall have requested in a
Daewoo Notice of Drawdown that the Syndicate Members'
Commitment be made available to the Syndicate Agent one
Business Day prior to the Delivery Date, the Syndicate
Agent shall confirm to APL (and the Transferee if it is
to be the owner of the related Vessel) by telefax no
later than 6:00 p.m. (Frankfurt time) on such date
whether or not the total Commitment has been made
available. If the Syndicate Agent shall have informed
APL (and the Transferee if it is to be the owner of the
related Vessel) that the total Commitment is not
available and APL does not respond in writing to the
contrary by 10:00 a.m. (New York time) on the following
Business Day, the Syndicate Agent may assume that APL has
given notice to delay the Delivery Date and shall
reemploy the deposits acquired on an overnight basis
unless otherwise instructed in writing by APL.
If for any reason (other than solely by default of
the Syndicate Agent) a Daewoo Subportion is not drawn
down on the Delivery Date specified in the Daewoo Notice
of Drawdown, APL shall reimburse the Syndicate Agent
and/or the Syndicate Members on demand for its losses and
expenses in accordance with Section 11.01(a).
(c) Expiration of the Commitment. The
Commitment by each Syndicate Member to provide funds for
any Daewoo Subportion shall expire if the relevant Daewoo
Vessel has not been delivered within two hundred seventy
(270) days after its Original Contract Delivery Date.
The Syndicate Members may determine in their sole
discretion (but without obligation on their part) whether
and on what conditions, which will include payment of the
indemnity pursuant to Section 11, any Delivery Date may
be extended beyond such 270-day period.
(d) Syndicate Member Commitment Assumed. Unless
(i) the Syndicate Agent shall have received notice from a
Syndicate Member prior to any Delivery Date that such
Syndicate Member will not make available to the Syndicate
Agent such Member's ratable portion of the related Daewoo
Subportion, or (ii) APL shall not have requested in its
relevant Notice of Drawdown that the Syndicate Agent
request that each Syndicate Member's Commitment be
available in the Syndicate Agent's account one (1)
Business Day prior to any Delivery Date, the Syndicate
Agent may assume that such Member has made such portion
available to the Syndicate Agent on such Delivery Date in
accordance with subsection (b) of this Section 2.02 and
the Syndicate Agent may, in reliance upon such
assumption, make available to the Borrower thereof on
such date a corresponding amount. If the Syndicate Agent
makes such corresponding amount available, and to the
extent that such Member shall not have so made such
ratable portion of the Daewoo Subportion available to the
Syndicate Agent, such Syndicate Member and the Borrower
severally agree to repay to the Syndicate Agent forthwith
on demand such corresponding amount together with
interest thereon, for each day from the date such amount
is made available to the Borrower until the date such
amount is repaid to the Syndicate Agent, at (i) in the
case of the Borrower, the interest rate applicable at the
time to the related Daewoo Subportion and (ii) in the
case of such Member at an interest rate specified by the
Syndicate Agent. If such Syndicate Member shall repay to
the Syndicate Agent such corresponding amount, such
amount so repaid shall constitute such Member's portion
of that Daewoo Subportion for purposes of this Agreement,
and to the extent of any such repayment, the Borrower
shall be reimbursed in the amount of any payment made by
it not necessary to fund such Syndicate Member's portion.
Nothing in this Section 2.02(d) shall be deemed to
relieve any Syndicate Member from its obligation to
fulfill its Commitment hereunder or to prejudice any
rights which APL or the Transferee, as the case may be,
may have against any Syndicate Member as a result of any
default by such Syndicate Member in funding its
Commitment hereunder.
3. INTEREST AND INTEREST PERIODS
3.01 HDW Interest. In respect of each HDW Subportion, each
Interest Period by reference to which the LIBO Rate is to
be determined by the Agent in respect of that Subportion,
and each Interest Period with respect to which the
Borrower elects to have fixed rate funding under Section
3.05 with respect to such Subportion, shall be of *
3.02 Daewoo Interest. In respect of each Daewoo Subportion,
each Interest Period by reference to which the LIBO Rate
is to be determined by the Syndicate Agent in respect of
that Subportion, and each Interest Period with respect to
which the Borrower elects to have fixed rate funding
under Section 3.06 with respect to such Subportion, shall
be of *
3.03 Interest Periods. Notwithstanding the provisions of
Sections 3.01 and 3.02 above:
(a) the first Interest Period in respect of each
Subportion will commence on the Delivery Date of the
Vessel relating thereto and each subsequent Interest
Period will commence forthwith upon the expiry of the
previous Interest Period in respect of that Subportion;
(b) if any Interest Period would otherwise end on
a day which is not a Business Day, that Interest Period
shall be extended to the next succeeding day which is a
Business Day;
(c) if any Interest Period commences on the last
Business Day in a calendar month and if there is no
numerically corresponding day in the month in which such
Interest Period ends, such Interest Period shall end on
the last Business Day in that later month; and
(d) the parties hereto may make any necessary
adjustments to the duration of any Interest Period in
respect of any Subportion so as to ensure that it ends on
a Repayment Date relative to that Subportion.
3.04 *
3.05 HDW Tranche Interest. (a) *
(b) *
(c) *
(d) *
3.06 Daewoo Tranche Interest. (a) *
(b) *
(c) *
3.07 Determination of Interest Rates. Each determination of a
rate of interest by the Agent or the Syndicate Agent, as
the case may be, in respect of any Subportion under this
Agreement shall, save in the case of manifest error, be
final and binding upon the Borrower and shall be promptly
notified by the Agent or the Syndicate Agent, as the case
may be, to the Borrower.
3.08 Default Interest. (a) If the Borrower fails to pay any
sum on the due date for payment owing to KfW hereunder
(and irrespective of whether KfW has given the Borrower
any notice in respect of such failure), the Borrower
shall become liable to pay default interest which shall
accrue on the amount of any such overdue sum from such
due date until the date of payment in the manner provided
in Section 5.06 to the Agent of the full amount of such
overdue sum at the rate per annum *
* and such default interest shall be payable by the
Borrower on demand of the Agent and shall be compounded
monthly.
(b) If the Borrower fails to pay any sum on the
due date for payment hereunder owing to the Syndicate
Agent or any Syndicate Member (and irrespective of
whether the Syndicate Agent has given the Borrower any
notice in respect of such failure), the Borrower shall
become liable to pay default interest which shall accrue
on the amount of any such overdue sum from such due date
until the date of payment in the manner provided in
Section 5.07 to the Syndicate Agent of the full amount of
such overdue sum at the rate per annum *
* and such default interest shall
be payable by the Borrower on demand of the Syndicate
Agent and shall be compounded monthly.
4. THE NOTES
4.01 Notes: Title and Terms. (a) The HDW Notes. The Notes
issued hereunder evidencing the HDW Tranche shall be
designated as HDW Notes. The HDW Notes shall be
substantially in the form set forth in Appendix *
The HDW Notes shall be dated the date of
issuance thereof and shall bear interest in accordance
with Section 3.05 hereto. If an HDW Vessel is to be
transferred to a Transferee pursuant to the Agreement to
Acquire and Charter on the Delivery Date of such Vessel,
the HDW Notes relating to such Vessel shall be issued by
the Transferee, as Borrower, upon execution and delivery
of the related Charter Documents.
(b) The Daewoo Notes. The Notes issued hereunder
evidencing the Daewoo Tranche shall be designated as
Daewoo Notes. The Daewoo Notes shall be substantially in
the form set forth in Appendix A-2 if a Daewoo Fixed Rate
Note, and Appendix A-2B if a Daewoo LIBO Rate Note. The
Daewoo Notes shall be dated the date of issuance thereof
and shall bear interest in accordance with Section 3.06
hereto. If a Daewoo Vessel is to be transferred to a
Transferee pursuant to the Agreement to Acquire and
Charter on the Delivery Date of such Vessel, the Daewoo
Notes relating to such Vessel shall be issued by the
Transferee, as Borrower, upon execution and delivery of
the related Charter Documents.
4.02 Issuance and Terms of Notes. The Notes shall be issued
to the relevant Lender against payment therefor in
accordance with the following: (a) The Notes shall be
issued to the relevant Lender on the Delivery Date of the
related Vessel; (b) each Note (including the Fixed Rate
Notes when issued on a Fixed Rate Conversion Date)
shall be dated the date of issuance; (c) the aggregate
principal amount of Notes shall be the Original Principal
Amount; (d) the principal amount of the Notes shall be
payable in accordance with Section 5; (e) each Note shall
be payable as to principal and interest therein to the
Holder thereof or its registered assigns in accordance
with Section 5.06 or 5.07, as applicable; and (f) no
Notes may be issued in a denomination of less than *
.
The principal and interest payable on the HDW or
Daewoo Fixed Rate Notes shall be payable in accordance
with the amortization schedule attached thereto unless
otherwise provided herein or therein.
Each Note shall bear interest as provided in
Section 3.04, 3.05 or 3.06 of this Agreement on the
unpaid principal amount thereof from time to time
outstanding from the date thereof and shall be payable in
accordance with the provisions set forth in Sections 5.01
and 5.02.
The Notes shall be executed on behalf of the
Borrower by its President or one of its Vice Presidents
or its Treasurer or one of its Assistant Treasurers or
another of its duly authorized officers. Notes bearing
the signatures of individuals who were at any time the
proper officers of the Borrower shall bind the Borrower,
notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the delivery of such
Notes.
4.03 Exchange of Notes After Interest Conversion. On a Fixed
Rate Conversion Date or a LIBO Rate Conversion Date (in
the case of the Daewoo Notes), the Interest Rate on the
Notes relating to a particular Subportion shall be
converted to a Fixed Rate or a LIBO Rate, as the case may
be. Upon such conversion, the relevant Holders shall
tender the related LIBO Rate Notes or the Fixed Rate
Notes then outstanding to the relevant Registrar for
exchange in accordance with Section 4.05 for the new
Fixed Rate Notes or LIBO Rate Notes having the same
aggregate principal amount, which Fixed Rate Notes or
LIBO Rate Notes shall be entitled to the benefits of the
relevant Guarantee and the security interests granted
under the related Security Documents. Upon request of
the relevant Registrar in accordance with Section 4.05,
the Borrower shall execute and deliver a Fixed Rate Note
or LIBO Rate Note in accordance with Section 4.02 hereof.
4.04 Registrar and Paying Agent. The Agent and the Syndicate
Agent shall maintain an office or agency where the
related Notes may be presented for registration of
transfer or for exchange (the "Registrars") and an office
or agency where such Notes may be presented for payment
or for exchange (the "Paying Agent"). Each Registrar
shall keep a register (the "Register") with respect to
the Notes issued under its Tranche and to their transfer
and exchange.
4.05 Transfer and Exchange. As required by Section 4.03 and
at the option of any Holder thereof, Notes may be
exchanged for an equal aggregate principal amount of
other Notes of the same maturity and type (except as to
exchanges pursuant to Section 4.03) and of any
denominations of *
or more or transferred in accordance with
the provisions of Section 10.01(b) in the case of the HDW
Notes and Section 10.02(a) in the case of the Daewoo
Notes upon surrender of the Notes to be exchanged at the
principal office of the relevant Registrar, or at any
office or agency maintained for such purpose pursuant to
Section 4.04. Whenever any Note or Notes are so
surrendered, the relevant Registrar shall deliver to the
Borrower a written request for a replacement Note or
Notes which request shall include instruction as to
completion of the form of the Notes and Schedule 1
thereto. Upon receipt of such request, the Borrower
shall execute and deliver to the relevant Registrar the
replacement Note or Notes which the Holder or the
transferee, as the case may be, is entitled to receive;
provided that the Borrower shall not be obligated to
execute and deliver any replacement Note upon transfer
until it shall have received the notice required by
Section 10.01(b) in the case of the HDW Notes or until
the Syndicate Agent has complied with Section 10.01(d) in
the case of the Daewoo Notes. Such replacement Note or
Notes shall indicate any * exercised by the
Borrower and the adjustments thereto on Schedule 1 to any
Note or Notes. Nothing in this Section 4.05 shall be
construed to establish any obligation or liability of the
Borrower to any Person with respect to any transfer or
exchange other than its responsibility to promptly
execute and deliver replacement Notes upon the request of
the relevant Registrar.
All Notes issued upon any registration of transfer
or exchange of Notes, as provided in, and subject to,
this Section 4.05 shall be the valid obligations of the
Borrower, evidencing the same obligations, and entitled
to the same security and benefits under this Agreement,
as the Notes surrendered upon such registration of
transfer or exchange.
Every Note presented or surrendered for
registration of transfer or exchange shall (if so
required by the Registrar) be duly endorsed by, or be
accompanied by a written instrument of transfer in form
satisfactory to the Registrar duly executed by, the
Holder thereof or such Holder's attorney duly authorized
in writing.
No service charge shall be made to a Holder for
any registration of transfer or exchange of Notes, but
each Registrar may require payment of a sum sufficient to
cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer
or exchange of Notes, other than exchanges pursuant to
Section 4.03 not involving any transfer.
Each Registrar shall not be required (i) to
register the transfer of or to exchange any Note during a
period beginning at the opening of business fifteen (15)
Business Days before the day of the mailing of a notice
of redemption of Notes pursuant to Section 5.04 and
ending at the close of business on the day of such
mailing, or (ii) to register the transfer of or to
exchange any Note called for redemption pursuant to such
Section 5.04.
4.06 Holder Lists; Ownership of Notes. (a) The Agent and the
Syndicate Agent shall preserve in as current a form as is
reasonably practicable the most recent list available to
it of the names and addresses of Holders of the HDW and
the Daewoo Notes, respectively.
(b) Ownership of the Notes shall be proved by the
Register kept by the relevant Registrar. Prior to due
presentment for registration of transfer of any Note, the
Agent, the Syndicate Agent, the Paying Agent and the
Registrars may deem and treat the Person in whose name
any Note is registered as the absolute owner of such Note
for the purpose of receiving payment of principal,
premium, if any, and (subject to the provision herein
regarding the applicable record dates) interest on such
Note and for all other purposes whatsoever, whether or
not such Note is overdue, and none of the Agent, the
Syndicate Agent, the Lenders, the Paying Agent or the
Registrars shall be affected by notice to the contrary.
In addition, the Registrar for the Syndicate Agent shall
record the names and addresses as required by Section
10.02(c) hereof. The Holder lists referred to in Section
4.06(a) shall be made available to the Borrower upon its
written request delivered to the relevant Registrar or
the Agent or the Syndicate Agent, as the case may be.
4.07 Mutilated, Destroyed, Lost or Stolen. If any Note shall
become mutilated, destroyed, lost or stolen, the Borrower
shall issue, execute, and deliver, in replacement
thereof, as applicable, a new Note of the same type and
having the same maturity, payable to the same Holder in
the same principal amount and dated the same date as the
Note so mutilated, destroyed, lost or stolen pursuant to
a written request from the relevant Registrar with
instructions as to completion of the form of the
replacement Note and Schedule 1 thereto. If the Note
being replaced has become mutilated, such Note shall be
surrendered to the Agent or the Syndicate Agent, as the
case may be. If the Note being replaced has been
destroyed, lost or stolen, the Holder of such Note shall
furnish to the Borrower and the Agent or the Syndicate
Agent, as the case may be, (i) such security or indemnity
as may be required by it to save the Borrower and the
Agent or the Syndicate Agent, as the case may be,
harmless, and (ii) evidence satisfactory to the Borrower
and the Agent or the Syndicate Agent, as the case may be,
of the destruction, loss or theft of such Note and of the
ownership thereof. Nothing in this Section 4.07 shall be
construed to establish any obligation or liability of the
Borrower to any Person with respect to mutilated,
destroyed, lost or stolen Notes other than its
responsibility to promptly execute and deliver any
replacement Notes upon the request of the relevant
Registrar.
4.08 Cancellation. The Registrar and any Paying Agent shall
forward to the Agent or the Syndicate Agent, as the case
may be, all Notes surrendered to them for replacement,
redemption, registration of transfer, exchange or
payment. The Agent or the Syndicate Agent, as the case
may be, shall cancel all Notes surrendered for
replacement, redemption, registration of transfer,
exchange, payment or cancellation and shall return
promptly all cancelled Notes to the Borrower.
5. REPAYMENT
5.01 HDW Tranche. The Borrower shall repay each HDW
Subportion by payment of *
semiannual installments of principal (each *
Installment") in accordance with
Section 5.06. *
to the
Notes evidencing the indebtedness relating to that
Subportion and shall be payable on each Repayment Date.
Notwithstanding anything herein to the contrary, if any
Repayment Date shall occur on a date which is not a
Business Day, then such principal installment shall be
payable on the next succeeding Business Day; provided,
however, if such succeeding Business Day falls on the
next month, such principal installment shall be payable
on the preceding Business Day. The Borrower shall pay
interest on each HDW Subportion on each Interest Payment
Date for that Subportion in accordance with Section 5.06.
The final principal payment schedule will be provided by
the Agent for each HDW subportion upon disbursement of
such Subportion.
5.02 Daewoo Tranche. The Borrower shall repay each Daewoo
Subportion by payment of * semiannual installments
of principal (each *
Installment") in accordance with Section 5.07.
* to
the Notes evidencing the indebtedness relating to that
Subportion and shall be payable on each Repayment Date.
Notwithstanding anything herein to the contrary, if any
Repayment Date shall occur on a date which is not a
Business Day, then such principal installment shall be
payable on the next succeeding Business Day; provided,
however, if such succeeding Business Day falls on the
next month, such principal installment shall be payable
on the preceding Business Day. The Borrower shall pay
interest on each Daewoo Subportion on each Interest
Payment Date for that Subportion in accordance with
Section 5.07. The final principal payment schedule will
be provided by the Syndicate Agent for each Daewoo
Subportion upon disbursement of such Subportion.
5.03 *
*
*
5.04 Prepayment. (a) Voluntary Prepayment. Subject to no
Event of Default, or Incipient Default, having occurred
and being continuing, the Borrower may prepay at its
option the outstanding principal amount of any
Subportion, in accordance with Section 5.06 or 5.07, as
applicable, in whole or in part, but any partial
prepayment may be made only in inverse order of maturity;
*
on the
date set for such repayment set forth below, together
with (i) interest accrued thereon to such date; (ii) a
prepayment commission of * % of the principal amount of
each such Subportion so prepaid in respect of any
* Notes and/or * Notes during
the period running from the Delivery Date of the related
Vessel and ending on the sixth anniversary thereof with
no such commission to be charged thereafter; and (iii)
any amounts owed under Section 11 hereof, with respect to
the Subportion being prepaid; provided that, unless the
Agent or the Syndicate Agent, as the case may be, shall
otherwise agree, partial prepayments may only be made in
amounts aggregating not less than *
or integral multiples thereof. If
the Borrower shall elect to make any such optional
prepayment, the Borrower shall deliver a notice
conforming to the requirements of Section 15.04, at least
ten (10) Business Days prior to the date it selects for
such prepayment, to the Agent and the Syndicate Agent.
If prepayment is made in respect of any Daewoo
Subportion, the Commitment of each Syndicate Member shall
be reduced pro rata by the amount of such prepayment, and
each one of the Dollar amounts set forth in Schedule 3
hereto shall be reduced accordingly. Any notice of
prepayment given as aforesaid shall be irrevocable and
shall oblige the Borrower to make such prepayment on the
date specified in the notice. Any Note or part thereof
so prepaid may not be reissued.
(b) Mandatory Prepayment.
(i) If an Event of Loss shall occur with
respect to any Vessel after its delivery,
the Borrower shall give prompt written
notice thereof to the Agent or the
Syndicate Agent, as the case may be, and
as soon as practicable thereafter, the
Borrower shall give such parties written
notice of the date on which all of the
Notes pertaining to that Subportion shall
be redeemed (the "Redemption Date"), which
date shall be a Business Day and shall be
not earlier than ten (10) Business Days
after the date notice of the Redemption
Date is given and not later than the one
hundred eightieth (180th) day after the
date of such Event of Loss; provided,
however, that for purposes of a
requisition of use, confiscation, seizure
or forfeiture of such Vessel as set forth
in clause (iv) of the definition for
"Event of Loss," the Redemption Date shall
be no later than the sixtieth (60th) day
after the date of such Event of Loss.
(ii) On the Redemption Date, the Borrower shall
pay to the Agent or the Syndicate Agent,
as the case may be, funds equal to the (x)
principal amount outstanding under the
relevant Subportion plus interest accrued
thereon, and (y) any amounts owed under
Section 11 hereof, with respect to the
Subportion relating to the Vessel having
suffered an Event of Loss.
(iii) All monies received under this Section
5.04(b) prior to the Redemption Date by
the Agent, the Syndicate Agent or any
Lender shall be credited against the
payment obligations of the Borrower under
Section 5.04(b)(ii) hereof.
(iv) Subject to no Event of Default, or
Incipient Default, having occurred and
being continuing, if any of the Lenders
receive any proceeds from insurance or
compensation as to such Event of Loss, in
excess of the payment obligations to it of
the Borrower under Section 5.04(b)(ii)
hereof, the balance of such proceeds shall
be paid to the Borrower.
(c) Release of Mortgage After Prepayment. Upon
prepayment by the Borrower of any HDW or Daewoo
Subportion in full, the Agent and/or the Syndicate Agent,
as the case may be, shall release the Mortgage(s) on the
Vessel relating to such Subportion so long as no Event of
Default or Incipient Default shall have then occurred and
be continuing. All costs and expenses reasonably
incurred by the Agent, the Syndicate Agent and any Lender
(excluding any legal fees and expenses by any Lender
other than the Agent or the Syndicate Agent) in
connection with such release and discharge of such
Mortgage(s), including, but not limited to, any indemnity
payments set forth in Section 11 hereof then due and
payable, shall be for the account of, and payable by, the
Borrower.
(d) *
*
5.05 No Deduction or Set-off. All amounts payable by the
Borrower under this Agreement and/or under any of the
Loan Documents to which the Borrower is a party,
including amounts payable under this Section 5, shall be
paid in full without set-off or counterclaim or
retention. Nothing contained in this Section 5.05 shall
be construed to be a waiver, modification, alteration, or
release of any claims which the Borrower may have at any
time during the period any Subportion is outstanding or
subsequent thereto for damages for equitable relief, not
inconsistent with this Section 5.05, for breach by the
Agent, the Syndicate Agent or any Lender, or any other
Person of any provisions in any of the Loan Documents or
for any loss due to any acts taken by any of the parties
hereto or thereto.
5.06 Accounts for Payments under the HDW Tranche. All
payments to be made by the Borrower to the Agent
hereunder in USD shall be made not later than 2:00 p.m.
(New York time) on the date upon which the relevant
payment is due either (i) by transferring such amounts in
immediately available funds by wire for credit to *
, or to such other commercial bank in the
United States of America as shall be specified in a
written notice to the Borrower received by the Borrower
at least three (3) Business Days prior to any date of
payment (which notice shall be effective until rescinded
or changed by like notice) for credit to an account
maintained by the Agent with such bank, in either case,
under two (2) days' prior direct advice to the receiving
bank indicating the amount of the funds and the
transferring bank.
5.07 Accounts for Payments under the Daewoo Tranche. All
payments to be made by the Borrower to the Syndicate
Agent hereunder in USD shall be made not later than 2:00
p.m. (New York time) on the date upon which the relevant
payment is due by transferring such amounts in
immediately available funds by wire for credit to *
, under two (2)
days' prior direct advice to Commerzbank AG, Kiel Branch,
* , indicating the amount of the
funds and the transferring bank or to such other
commercial bank in the United States of America as shall
be specified in a written notice to the Borrower received
by the Borrower at least three (3) Business Days prior to
any date of payment (which notice shall be effective
until rescinded or changed by like notice) for credit to
an account maintained by the Syndicate Agent with such
bank.
5.08 Satisfaction of Borrower's Payment Obligations. Any
payment required hereunder and made in accordance with
Sections 5.06 or 5.07 shall be deemed for all purposes to
have been satisfied and duly made; provided, however,
that if any such payment to the Agent or the Syndicate
Agent, as the case may be, shall be recovered by the
Borrower's trustee in bankruptcy or any other Person
under any applicable bankruptcy law, such payment shall
be deemed not to have been made.
5.09 Application of Payments. (a) Any sums received or
recovered by the Agent in exercise of the Agent's rights
(i) upon or after the occurrence and continuance of an
Event of Default may be applied to the items set forth in
clauses FIRST, SECOND, THIRD and SEVENTH below (in that
order), or as otherwise provided in the Loan Documents if
such Event of Default shall have been cured or waived
prior to acceleration, and as set forth in clauses FIRST
through EIGHTH below if the HDW Notes have been
accelerated, or (ii) following an Incipient Default shall
be held until such Incipient Default has been cured or
waived, in which case the same shall be applied as
otherwise provided in the Loan Documents, or until such
Incipient Default becomes an Event of Default, in which
event the same shall be applied pursuant to subclause (i)
of this clause (a):
First: in payment to the Agent of any costs
(including legal costs and expenses) incurred by the
Agent in effecting such Recoveries and unpaid agency
fees;
Second: in payment to the Agent of commitment
commission due on the HDW Tranche;
Third: in payment to the Agent of any interest
due in respect of all HDW Subportions;
Fourth: *
Fifth: in payment to the Agent of any prepayment
compensation payable in accordance with this Agreement
(including, without limitation, any amounts payable under
Section 11) due in respect of any HDW Subportion;
Sixth: in payment to the Agent of the outstanding
principal balances of all HDW Subportions;
Seventh: in payment to the Agent of the balance,
if any, of the Outstanding Indebtedness then due;
Eighth: the balance, if any, in payment to the
Borrower or whomsoever else shall be entitled thereto.
(b) Any sums received or recovered by the
Syndicate Agent in the exercise of the Syndicate's rights
consequent (i) upon or after the occurrence and
continuance of an Event of Default may be applied to the
items set forth in clauses FIRST, SECOND, THIRD and
SEVENTH below (in that order), or as otherwise provided
in the Loan Documents if such Event of Default shall have
been cured or waived prior to acceleration, and as set
forth in clauses FIRST through EIGHTH below if the Daewoo
Notes have been accelerated, or (ii) following an
Incipient Default shall be held until such Incipient
Default has been cured or waived, in which case the same
shall be applied as otherwise provided in the Loan
Documents, or until such Incipient Default becomes an
Event of Default, in which event the same shall be
applied pursuant to subclause (i) of this clause (b):
First: in payment to the Syndicate Agent of any
costs (including legal costs and expenses) incurred by
the Syndicate Agent in effecting such Recoveries and
unpaid agency fees;
Second: in payment ratably to the Syndicate of
commitment commission due on the Daewoo Tranche;
Third: in payment ratably to the Syndicate of any
interest due in respect of all Daewoo Subportions;
Fourth: *
Fifth: in payment ratably to the Syndicate of any
prepayment compensation payable in accordance with this
Agreement (including, without limitation, any amounts
payable under Section 11) due in respect of all Daewoo
Subportions;
Sixth: in payment ratably to the Syndicate of the
outstanding principal balances of all Subportions;
Seventh: in payment ratably to the Syndicate of
the balance, if any, of the Outstanding Indebtedness,
then due;
Eighth: the balance, if any, in payment to the
Borrower.
5.10 Any prepayment required to be made or elected to be made
by the Borrower pursuant to this Section 5 or Section 6
shall not constitute acceleration of the affected Loan or
Subportion.
6. SUBSTITUTE BASIS, ILLEGALITY, INCREASED COSTS
6.01 Market Disturbance.
(a) Notwithstanding anything to the contrary in
this Agreement, if and each time that at any time prior
to the commencement of any Interest Period in respect of
any Subportion the Agent or the Syndicate Agent, as the
case may be, shall have determined in good faith (which
determination shall be conclusive and binding on the
parties hereto) that:
(i) by reason of changes arising after
the date of the Agreement affecting the Interbank
Market adequate and fair means do not exist for
ascertaining the rate of interest applicable to
such Subportion during the next succeeding
Interest Period pursuant to Section 3.04; or
(ii) deposits in Dollars of equal
duration to such Interest Period will not be
available to it in the Interbank Market in
sufficient amounts in the ordinary course of
business to fund the Subportion during the next
succeeding Interest Period; or
(iii) by reason of any material change in
applicable law or regulation or of any change in
national or international financial or economic
conditions the Agent or any Syndicate Member, as
the case may be, is unable to fund or to continue
to fund a Subportion during the next succeeding
Interest Period by deposits obtained in the
Interbank Market;
then the Agent or the relevant Syndicate Member, as the
case may be, shall promptly give a Suspension Notice for
that Interest Period, containing full particulars thereof
in reasonable detail to the Borrower.
(b) Suspension of Drawdown. If a Suspension
Notice is given by the Agent or any Syndicate Member, as
the case may be, before the advance of a Subportion in
accordance with Section 2.01 or 2.02, as the case may be,
then the Agent or the Syndicate Agent, as the case may
be, shall not be obliged to make the advance until notice
to the contrary is given by the Agent or the Syndicate
Agent, as the case may be. During the period of thirty
(30) days from the giving of such Suspension Notice, the
Agent or the Syndicate Agent, as the case may be, shall
consult in good faith with the Borrower with a view to
agreeing to an alternative basis for the advance of such
Subportion. If such alternative basis is agreed between
the Borrower and the Agent or the Syndicate Agent, as the
case may be, it shall apply in accordance with its terms.
(c) Substitute Basis.
(i) If a Subportion has been advanced
before a Suspension Notice is given by the Agent
or the Syndicate Agent, as the case may be, the
Agent or the Syndicate Agent, as the case may be,
shall, during a period of thirty (30) days from
the date of such Suspension Notice, negotiate in
good faith with a view to agreeing to an
alternative basis (the "Substitute Basis") for
maintaining the Loan during such Interest Period.
If at the expiry of such thirty-day period, a
Substitute Basis shall have been agreed between
the affected Lender, as the case may be, and the
Borrower, the Substitute Basis shall be effective
retroactively to the beginning of such Interest
Period. Each Substitute Basis so agreed shall be
binding on the Borrower and the affected Lender
and shall be treated as a part of this Agreement.
(ii) If at the expiry of such thirty (30)
day period, no Substitute Basis shall have been so
agreed, then, subject to sub-paragraph (d) below,
the interest rate basis to apply during such
Interest Period as to the commitment of each
affected Lender shall be determined in accordance
with Section 3.05(a)(i) or 3.06(b), as the case
may be, or the margin set forth in Section 3.05 or
3.06, as the case may be, plus such rate as such
affected Lender shall determine and certify to the
Agent or the Syndicate Agent, as the case may be,
(such certificate to set out the basis for
computation of such rate and to be conclusive in
the absence of manifest error). Such rates shall
be
* (in
good faith and using reasonable endeavors) to
minimize the interest cost to the Borrower of its
Loan for such Interest Period (and if such
affected Lender certifies that it is unable to
fund its Loan in the Interbank Market, such cost
may be based on the funding thereof in alternative
currencies and markets). The affected Lender, as
the case may be, shall give prompt notice to the
Borrower of such rate certified as aforesaid.
(d) So long as any Substitute Basis is in force,
the Agent or the Syndicate Agent, as the case may be, in
consultation with the Borrower, shall from time to time,
but not less often than monthly, review whether or not
the circumstances referred to in this Section 6.01 still
prevail with a view to returning to the normal provisions
of this Agreement.
(e) If the affected Lenders determine a
Substitute Basis in accordance with Section 6.01(c)(ii),
the Borrower shall notify the Agent or the Syndicate
Agent and the affected Lender, as the case may be, in
writing within five (5) Business Days of the receipt of
such demand from the Agent or the Syndicate Agent, as the
case may be, whether or not it rejects such Substitute
Basis. If the Borrower does not reject by telex or in
writing, such Substitute Basis shall apply in accordance
with its terms. If the Borrower notifies the Agent or
the Syndicate Agent, as the case may be, of its rejection
of such Substitute Basis as aforesaid, then the Borrower
shall forthwith prepay to the Agent or the Syndicate
Agent, as the case may be, the Loan of the affected
Lender together with interest accrued thereon at such
Substitute Basis.
6.02 Change of Circumstances. (a) If any law, regulation or
treaty which comes into force after the date of this
Agreement or official directive (whether or not having
the force of law) which is issued after the date of this
Agreement or the interpretation or application thereof by
any authority charged with the administration or
application thereof:
(i) imposes, modifies or deems applicable any reserve
and/or special deposit requirements against or in
respect of assets or liabilities of, or deposits
with or for the account of, or its loans or credit
extended by, the relevant Lender(s) or its
applicable lending office with respect to any
Subportion; or
(ii) imposes on the relevant Lender(s) or its
applicable lending office any other condition with
respect to this Agreement or any Subportion of the
Tranches or their funding; or
(iii) If the relevant Lender(s) or its applicable
lending office complies with any request,
requirement, law, regulation or directive (which
is made or comes into force after the date of this
Agreement) from any central bank or other
applicable fiscal monetary or other authority
(whether or not having the force of law)
and as a result of any of the foregoing clause (i), (ii)
or (iii):
(A) the cost to such Lender(s) of making, funding or
maintaining any Subportion is increased; or
(B) the amount of principal, interest or other amount
payable to such Lender(s) or the effective return
to such Lender(s) hereunder is reduced; or
(C) such Lender shall be subject to any change in
Taxes, with respect to advancing or maintaining
its share of a Subportion or shall change the
basis of taxation of payments to any Lender of the
principal or interest in respect of a Subportion
or its obligation to fund any Subportion (except
for (1) changes in the rate of tax on the overall
net income of a Lender or its applicable lending
office imposed by the jurisdiction in which the
Lender's principal office or applicable lending
office is located and (2) a tax referred to in
Section 11.02(a));
(iv) Then and in any such case:
(A) each Lender shall promptly notify the Borrower of
any event of which it has knowledge which will
entitle it to compensation pursuant to this
Section 6.02 and will verify whether it can
designate a different lending office or take such
other action which will avoid the need for or
reduce the amount of such compensation which will
not, in the sole judgment of such Lender, be
otherwise disadvantageous to such Lender;
(B) upon demand from time to time by such Lender the
Borrower shall pay to such Lender such amount
(which may be in the form of an increased rate or
a different method of calculating interest or
otherwise as such Lender shall reasonably
determine) as shall compensate such Lender for
such increased cost or reduction. Such Lender
shall promptly furnish to the Borrower in good
faith a certificate setting out in reasonable
detail the event giving rise to such compensation,
the amount thereof and the manner in which it has
been calculated and such certificate shall in the
absence of manifest error be conclusive; and
(C) the Borrower may, subject to giving to such Lender
not less than ten (10) Business Days' prior notice
of such prepayment, prepay each Loan so affected
together with all interest accrued thereon and all
fees and other amounts payable to such Lender
hereunder (including, without limitation, amounts
payable under Section 11 and any applicable
prepayment commission as set forth under Section
5.04(a)).
6.03 Illegality. Notwithstanding anything to the contrary
herein contained, if any change in law, regulation or
treaty or in the interpretation or application thereof by
any authority charged with the administration or
application thereof shall make it unlawful for any Lender
to make, fund or maintain its Loan in respect of any
Subportion thereof or to give effect to its obligations
as contemplated hereby, such Lender may, by written
notice thereof to the Agent or the Syndicate Agent, as
the case may be, who shall promptly give notice to the
Borrower and the other Lenders in respect of such
Subportion, declare that such Lender's obligations under
this Agreement in respect of the Subportion thereof has
or will become unlawful. The affected Lender shall
undertake its best efforts to maintain its Commitment
through any commercial means practicable which, in the
sole opinion of such Lender shall not be disadvantageous
to such Lender, including designating a different lending
office. If no such means is available in the sole
opinion of such Lender, or if the Borrower shall not
agree to such means, then the affected Lender's
obligations under this Agreement shall terminate
forthwith. Upon termination of any affected Lender's
obligations under the Agreement, the Borrower shall
prepay on the next following Repayment Date applicable to
each Loan advanced by such affected Lender, (or on such
earlier date, if any, as may be required as a result of
any such change) each such Loan so affected together with
all interest accrued thereon and all fees and other
amounts payable to such Lender hereunder (including,
without limitation, amounts payable under Section 11).
Such Lender's obligations hereunder to advance any
undisbursed amount of any such Subportion thereof so
affected shall be cancelled on the giving of such notice.
7. CONDITIONS PRECEDENT TO ADVANCE
Each Lender's obligation to make its part of the HDW and
the Daewoo Subportions available to the Borrower on each
Delivery Date is expressly conditioned upon the following
preconditions being satisfied and upon receipt by the
Agent or the Syndicate Agent, as the case may be, of the
following documents and evidence, as the case may be, on
or before a closing to be held on the Delivery Date at
the offices of Haight, Gardner, Poor & Havens, 195
Broadway, New York, New York 10007, or at such other
place as may be agreed upon by the Borrower, the Agent
and the Syndicate Agent:
(a) Each of the Borrower and the Guarantor shall
be a corporation duly organized and existing in good
standing under the laws of the jurisdiction of its
incorporation; each of the Borrower and the Guarantor
shall have full corporate power and authority to own its
assets, conduct its business as then being conducted, and
enter into and consummate the transactions contemplated
hereby and by the other Loan Documents to which it is a
party, and the Agent or the Syndicate Agent, as the case
may be, shall have received (i) a certified copy of the
certificate of incorporation of each of the Borrower and
the Guarantor, (ii) a certificate of the Secretary of
each of the Borrower and the Guarantor attaching the
minutes or resolutions of its Board of Directors
authorizing the transactions contemplated herein, (iii) a
certificate from the Secretary of each of the Borrower
and the Guarantor or evidencing the authority of the
persons executing the Loan Documents, to which it is a
party, to execute and deliver such Loan Documents and
such Obligor to perform under the Loan Documents to which
it is a party, and (iv) a certificate of good standing as
to each of the Borrower and the Guarantor, all in form
and substance reasonably satisfactory to the Agent or the
Syndicate Agent, as the case may be, and its special
counsel;
(b) not less than five (5) days (or such shorter
period as the Agent or the Syndicate Agent, as the case
may be, may agree) before the proposed date for the
making of each such Subportion, the Agent or the
Syndicate Agent, as the case may be, shall have received
an HDW or a Daewoo Notice of Drawdown, as the case may
be, from the Borrower;
(c) no Event of Default shall have occurred and
be continuing and no Incipient Default shall have
occurred and be continuing and the Borrower and the
Guarantor shall provide an officer's certificate to such
effect in form and substance reasonably satisfactory to
the Agent or the Syndicate Agent, as the case may be, and
its special counsel;
(d) there shall not have occurred any material
adverse change in the financial condition of either of
the Borrower or the Guarantor which in the reasonable
opinion of the Agent and/or the Syndicate Agent would
materially and adversely affect the ability of (x) the
Borrower to perform its obligations as to the repayment
of the Facility by the installments together with
interests thereon herein set out or to perform its
obligations under the Loan Agreement and the Security
Documents to which it is or will become a party, or (y)
the Guarantor to perform its obligations under the
Guarantee;
(e) all representations and warranties of each of
the Obligors contained in this Agreement and each of the
Loan Documents to which each of them is, respectively, a
party being true and correct in all material respects on
that Delivery Date, except insofar as they relate
exclusively to an earlier date, and each Obligor shall
provide officer's certificates confirming such matters;
(f) all governmental and other consents,
licenses, approvals and authorizations, if any, required
with respect to the performance of the Borrower and the
Guarantor under the Loan Documents to which it is a party
shall have been obtained and shall not have been revoked
and, if requested by the Agent or the Syndicate Agent or
its special counsel, true and complete copies of any of
the same shall be provided;
(g) all Uniform Commercial Code financing
statements or other document necessary, or reasonably
requested by the Agent or the Syndicate Agent, to perfect
its security interests under any of the Security
Documents in the United States of America, the Marshall
Islands or any other relevant jurisdiction;
(h) certificate of the Borrower that it has
delivered to each of the Agent and the Syndicate Agent a
complete copy of the relevant Shipbuilding Agreement to
the relevant Vessel including any subsequent amendments
or supplements thereto not previously furnished;
(i) copies of the Bill of Sale and the Builder's
Commercial Invoice and the Builder's Certificate to the
relevant Vessel from HDW or Daewoo, as the case may be,
to the Borrower;
(j) all fees under Section 13 hereof accrued and
due to the relevant Lenders have been paid in full and
confirmation from HDW or Daewoo, as the case may be, of
payment as to all amounts then due under the relevant
Shipbuilding Contract as to the Vessel being delivered;
(k) (x) if the Vessel is to be transferred to the
Transferee pursuant to the Agreement to Acquire and
Charter, then evidence that such Vessel is duly
registered in the name and ownership of the Transferee
under the law and flag of the Republic of The Marshall
Islands, free of registered liens except the relevant
Mortgage(s); and (y) if the Vessel is not to be
transferred to the Transferee, then evidence that such
Vessel is duly registered in the name and ownership of
the Borrower under the laws and flag of its registry,
free of registered liens except the relevant Mortgage(s);
provided that, notwithstanding anything to the contrary
in this Loan Agreement or any other Loan Document, any
Vessel may be initially documented upon its Delivery Date
under the laws and flag of the United States, if written
notice of the intention to so document such Vessel is
given to the Agent or the Syndicate Agent, as the case
may be, not less than sixty (60) days prior to such
Delivery Date, and the parties hereto shall make such
changes to the Loan Documents and take such actions
(including, but not limited to, the selection of an
approved trustee to act as mortgagee for the relevant
Lenders and appropriate modification of the Loan
Documents) which are consistent with the Loan Documents
and which such parties may reasonably deem necessary to
effectuate this proviso clause, and provided further
that, notwithstanding anything to the contrary in this
Loan Agreement or any other Loan Document, APL may
transfer any Vessel to the Transferee pursuant to, and
for all purposes of this Agreement and the Agreement to
Acquire and Charter prior to the Delivery Date of such
Vessel by assignment of the related HDW Shipbuilding
Agreement or Daewoo Shipbuilding Agreement, as the case
may be, to the extent the same relates to such Vessel, to
the Transferee, and the parties shall make such changes
to the Loan Documents which are consistent with the Loan
Documents and which such parties may reasonably deem
necessary to effectuate this provided further clause;
(l) each Loan Document, in respect of such Vessel
duly executed, delivered and, where appropriate,
registered or recorded (together with any documents to be
executed pursuant to the terms thereof, including without
limitation, notices of the Assignment(s) of Insurances);
(m) confirmation from HDW or Daewoo, as the case
may be, in the form set forth in Schedule 5-A or 5-B,
respectively;
(n) confirmation from the Borrower in the form
set forth in Schedules 5-C or 5-D, as the case may be;
(o) certificate of acceptance of the relevant
Vessel by an authorized representative of the Borrower as
to the Vessel;
(p) an independent broker's report, in form and
substance reasonably satisfactory to the Agent or the
Syndicate Agent, as the case may be, describing all
insurance then carried and maintained with respect to the
Vessel and the expiration date thereof, together with
certificates of insurance in accordance with Section
29(f)(i) of the Vessel's Mortgage(s), including a written
confirmation from such broker in a form and substance
reasonably satisfactory to the Agent or the Syndicate
Agent, as the case may be, that such insurance complies
with the terms of Section 29 of the Vessel's Mortgage(s);
(q) interim class certificate (dated not more
than ten (10) days prior to the relevant Delivery Date)
evidencing that such Vessel is in class and classed in
the highest classification for vessels of the same age
and type by the Classification Society;
(r) copies of all documents to be delivered by
HDW or Daewoo, as the case may be, under Article
17(a)(ii) of the relevant Shipbuilding Agreement;
(s) each of the Lenders shall have received
executed originals of the opinions set forth as Schedules
4A and 4B hereto as well as such other opinions from such
counsel as each Lender shall reasonably request and each
of the Lenders shall have received from its special
counsel, Haight, Gardner, Poor & Havens, a favorable
opinion, in form and substance satisfactory to the
Lenders, as to such matters incident to the transactions
contemplated hereby as any such Lender may reasonably
request; and
(t) if the Vessel is to be transferred to the
Transferee pursuant to the Agreement to Acquire and
Charter, then all conditions precedent to the
Transferee's obligations on the related Delivery Date set
forth in Section 3 of the Agreement to Acquire and
Charter shall have been satisfied.
8. REPRESENTATIONS AND WARRANTIES
APL represents and warrants to each of the Lenders that:
(a) APL is a corporation duly organized and
validly existing in good standing under the laws of its
jurisdiction of incorporation with full corporate power
and authority to conduct its business as the same is
presently conducted;
(b) APL has legal power and authority to enter
into and carry out the terms of this Agreement and each
of the Loan Documents to which the Borrower will be a
party;
(c) each of this Agreement and the other Loan
Documents to which APL will be a party has been duly
authorized by all necessary action, corporate or other,
on the part of APL, and this Agreement constitutes, and
upon due execution and delivery by APL, each of the other
Loan Documents will constitute, in accordance with their
respective terms, legal, valid and binding instruments
enforceable against APL, except to the extent limited by
applicable bankruptcy, reorganization, insolvency,
moratorium or other laws of general application relating
to or affecting the enforcement of creditors' rights from
time to time in effect;
(d) except as previously disclosed to the
Syndicate Agent and the Agent in writing, there are no
actions, suits or proceedings pending or, to APL's
knowledge, threatened against APL, any of its properties
affecting the Loan Documents or the transactions
contemplated thereby which would, if adversely
determined, materially and adversely affect the
performance of APL of its obligations (if any)
thereunder;
(e) the consummation of the transactions
contemplated by, and compliance by APL with all the terms
and provisions of, the Loan Documents to which APL is or
will be a party will not violate any provisions of the
Certificate of Incorporation or By-laws of APL and will
not result in a breach of the terms and provisions of, or
constitute a default under, any other agreement or
undertaking by APL or by which it or any of its property
is bound or any order of any court or administrative
agency entered in any proceedings binding on APL, or
violate any applicable statute, rule or regulation;
(f) APL is not in default and no condition exists
which with notice or lapse of time or both would
constitute a default by APL, in any respect which would
materially and adversely affect the ability of APL to
perform its obligations under this Agreement, any other
Loan Document, under any mortgage, loan agreement, deed
of trust, indenture or other agreement with respect
thereto or evidence of indebtedness to which it is a
party or by which it is bound, and is not in violation of
or in default, in any respect which would materially and
adversely affect the ability of APL to perform its
obligations under this Agreement or any other Loan
Document, under any order, writ, judgment or decree of
any court, arbitrator or governmental authority,
commission, board, agency or instrumentality, domestic or
foreign;
(g) APL has more than one place of business and
the present location of the place of business which is
its chief executive office is 1111 Broadway, Oakland,
California 94607;
(h) APL has no knowledge of any actual or
proposed deficiency or additional assessment in
connection with any Taxes which either in any case or in
the aggregate would be materially adverse to APL and
which would materially and adversely affect the ability
of APL to perform its obligations under any of the Loan
Documents;
(i) all Taxes (other than taxes based on or
measured by income and withholding taxes), liability for
the payment of which has been incurred by APL in
connection with the execution, delivery and performance
by it of each Loan Document to which it is or will be a
party, have been paid (or provided for in its accounts if
not payable on or prior to the Delivery Date of the
respective Vessel);
(j) all governmental consents, licenses,
permissions, approvals, registrations or authorizations
or declarations required (i) to enable it lawfully to
enter into and perform its respective obligations under
this Agreement and each of the other Loan Documents to
which it is or will be a party and (ii) to ensure that
its respective obligations hereunder and thereunder are
legal, valid and enforceable have been obtained or made
and are in full force and effect or will be obtained or
made and be in full force and effect on the date any such
document is executed and delivered; and (iii) in a case
when no transfer of a Vessel to the Transferee has
occurred on the Delivery Date of such Vessel pursuant to
the terms of the Agreement to Acquire and Charter to make
the Mortgages admissible in evidence in the Republic of
The Marshall Islands and the United States of America,
will be obtained or made and be in full force and effect
on the date any such Mortgage is executed and delivered;
(k) it has not taken any corporate action nor, to
its knowledge, have any other steps been taken or legal
proceedings been started or threatened against it for its
winding-up, dissolution or reorganization or for the
appointment of a receiver, administrative receiver,
administrator, trustee or similar officer of it or of any
or all of its respective assets and revenues;
(l) except as provided by applicable laws of
bankruptcy, insolvency, liquidation or similar laws of
general application, its obligations under this Agreement
and each of the other Loan Documents rank and will rank
at least pari passu in priority of payment, and as to
security having the priority contemplated by the Loan
Documents, and in all other respects with all its
respective other indebtedness;
(m) except for registration of the First Mortgage
on each Vessel and the Second Mortgage on each Daewoo
Vessel with the offices of Deputy Commissioner of
Maritime Affairs, the Republic of The Marshall Islands
(including any other Loan Document required by the laws
of the country of its registry to be filed with the
Mortgage), it is not necessary to ensure the legality,
validity, enforceability or admissibility in evidence of
this Agreement or any of the Security Documents to which
it is or will be a party in the United States of America
or, to the best of its knowledge, elsewhere, that it be
filed, recorded or enrolled with any governmental
authority or agency in the United States of America, the
Republic of The Marshall Islands or, to the best of its
knowledge, elsewhere, that it be stamped with any stamp,
registration or similar transaction tax in the United
States of America, the Republic of The Marshall Islands
or, to the best of its knowledge, elsewhere;
(n) each Shipbuilding Agreement is in full force
and effect and, to the best of the knowledge and belief
of APL, the relevant Builder is not in default
thereunder;
(o) APL is a wholly owned Subsidiary of the
Guarantor;
(p) as of each Delivery Date, (i) no written
representation, warranty or statement or other document
provided by APL in connection with the negotiation of
this Agreement or pursuant to any Loan Document at the
time when given is or was untrue or contains or contained
any misrepresentation of a material fact or omits or
omitted to state any material fact necessary to make any
such statement herein or therein not misleading and (ii)
all financial projections, if any, prepared by APL or the
Guarantor and made available to any Lender have been
prepared in good faith based upon reasonable assumptions
(it being understood that such projections are subject to
significant uncertainties and contingencies, many of
which are beyond APL's and the Guarantor's control, and
that no assurances can be given that any such projections
will be realized);
(q) to the best knowledge of APL (i) each Plan
maintained by APL and each ERISA Affiliate is in
substantial compliance in all material respects with
ERISA; (ii) no Plan maintained by APL or any ERISA
Affiliate is insolvent or in reorganization; (iii) no
Insufficiency or Termination Event has occurred or is
reasonably expected to occur, and no "accumulated funding
deficiency" exists and no "variance" from the "minimum
funding standard" has been granted (each such term as
defined in Part III, Subtitle B, of Title I of ERISA)
with respect to any Plan in which APL or any of its
Subsidiaries, or any ERISA Affiliate is a participant;
(iv) neither APL nor any ERISA Affiliate has incurred, or
is reasonably expected to incur, any Withdrawal Liability
to any Multiemployer Plan; (v) neither APL, its
Subsidiaries, nor any ERISA affiliate has received any
notification that any Multiemployer Plan in which it is a
participant is in reorganization or has been terminated,
within the meaning of Title IV of ERISA, and no such
Multiemployer Plan is reasonably expected to be in
reorganization or terminated within the meaning of Title
IV of ERISA; (vi) no lien imposed under the Code or ERISA
on the assets of APL or any Subsidiary or any ERISA
Affiliate exists or is likely to arise on account of any
Plan; (vii) no material liability will be incurred by
APL, its Subsidiaries, or any ERISA Affiliate if any of
them should terminate contributions to any other employee
benefit plan maintained by them;
(r) none of the proceeds of the Loan will be
used to purchase or carry margin stock within the
meanings of Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System. APL is not
engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock within the
meaning of Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System;
(s) it is not an "investment company" or a
company "controlled" by an "investment company" (as each
of such terms is defined or used in the Investment
Company Act of 1940, as amended);
(t) in the event that a Vessel is not
delivered to the Transferee, on its Delivery Date, such
Vessel delivered will be duly documented in the name of
APL under the flag of the country of its registry;
(u) in the event that a Vessel is not
delivered to the Transferee, on its Delivery Date, such
Vessel delivered will be in the absolute and unencumbered
ownership of APL except as contemplated by this Agreement
and the Security Documents; and
(v) on the Delivery Date of any Vessel under a
Charter, the representations and warranties contained in
Section 1 of such Charter shall be accurate and the
Lenders may rely on such representations and warranties
as if set forth herein in full.
9. COVENANTS
9.01 Affirmative Covenants. APL covenants with each of the
Lenders that it shall:
(a) do all that is necessary to maintain in full
force and effect its corporate existence in good standing
under the laws of its jurisdiction of incorporation and
use its best efforts to obtain, comply with the terms of
and do all that is necessary to maintain in full force
and effect all authorizations, approvals, licenses and
consents required in or by the laws of its jurisdiction
of incorporation and the United States of America and any
other relevant jurisdiction to enable APL to enter into
and perform its respective obligations under this
Agreement and the other Loan Documents and the Charter
Documents to which APL is or will become a party and to
ensure the legality, validity, enforceability or
admissibility in evidence in the United States of America
of this Agreement, the said Loan Documents and said
Charter Documents and to comply with the terms of and to
do all that is necessary to maintain in full force and
effect all authorizations, approvals, licenses and
consents required in or by the national laws of the
Republic of The Marshall Islands to enable APL (or the
Transferee in respect of any Vessel transferred to the
Transferee pursuant to the Agreement to Acquire and
Charter) to enter into and perform its obligations under
the Mortgages and to ensure the legality, validity,
enforceability and admissibility in evidence in such
country of each Mortgage;
(b) apply the advances in respect of each
Subportion made pursuant to this Agreement on each
Delivery Date in respect of the Vessel acquired or to be
acquired by APL only towards financing the Contract Price
of such Vessel to be acquired by APL on such Delivery
Date;
(c) on its respective Delivery Date ensure that
the Vessel to be acquired by APL is (i) delivered by the
relevant Builder to the Borrower free and clear of all
liens and encumbrances and (ii) classified by the
Classification Society with the highest classification
for vessels of the same age and type;
(d) from time to time on the request of the
Lenders, but at the expense of APL, do all such acts and
execute or procure the execution of all such assurances
and documents as the Agent or the Syndicate Agent may
reasonably consider necessary for giving full effect to
this Agreement or for more effectively subjecting the
security interests under the Security Documents and the
Charter Documents to which it is or will be a party to
the liens of such Security Documents and such Charter
Documents or more effectively subject such security
interests to the performance of the provisions thereof;
(e) promptly inform the Agent and the Syndicate
Agent of the occurrence of any Incipient Default or an
Event of Default and upon receipt of a written request
from the Agent or the Syndicate Agent to do so, confirm
to the Agent or the Syndicate Agent, as the case may be,
that save as previously notified to the Agent or the
Syndicate Agent, as the case may be, to the best of the
knowledge of APL, no Event of Default has occurred;
(f) if APL's agent for service of process
referred to in Section 15.08 shall for any reason cease
to be validly appointed, ensure that another such agent
is appointed (and ensure that such agent acknowledges
such appointment to the Agent or Syndicate Agent, as the
case may be) in a manner reasonably satisfactory to the
Agent or the Syndicate Agent, as the case may be;
(g) APL shall send to the Agent and the Syndicate
Agent as soon as possible, (i) but in no event later than
one hundred twenty (120) days after the end of each
fiscal year, its consolidated audited accounts of all
consolidated financial statements of APL, such financial
statements to be prepared in accordance with generally
accepted United States of America accounting principles
at such time consistently applied and a report thereon by
Arthur Andersen & Co. or other independent public
auditors of internationally recognized standing as may be
acceptable to the Agent and the Syndicate Agent, (ii)
copies of all quarterly reports filed with the Securities
and Exchange Commission and, within seventy-five (75)
days after the end of each of the first three (3)
quarters of its fiscal year, unaudited consolidated
statements of income and changes in financial position of
APL and related balance sheets for each such period, all
certified as true and correct by a senior financial
officer of the Borrower, (iii) as soon as the same is
instituted (or, to the knowledge of APL threatened),
details of any litigation, arbitration or administrative
proceedings against or involving it or the Vessels which
if adversely determined would have a material adverse
effect on APL, or construction of the Vessels, (iv)
together with the annual financial statements to be
provided in accordance with clause (i) above a
certificate of a financial officer of APL that no Event
of Default and Incipient Default has occurred and is
continuing, and (v) from time to time, and on demand,
such additional financial or other information relating
to APL and the Vessels as may be reasonably requested by
the Agent or the Syndicate Agent;
(h) the Borrower shall advise the Agent and the
Syndicate Agent promptly in writing of any proposed
amendments or supplements to any of the Shipbuilding
Agreements, which, individually or taken together with
any past amendments or supplements, would (i) cause the
original Contract Price stated in the Shipbuilding
Agreement of any Vessel to increase by more than five
percent (5%), (ii) change the terms and currency of
payment, or (iii) cause the TEU container slot capacity
of any of the Vessels not to be approximately *
, with each and every such amendment to be first approved
in writing by the Agent and the Syndicate Agent. Copies
of all amendments to the Shipbuilding Agreements shall be
promptly furnished to the Agent and the Syndicate Agent;
and
(i) APL hereby releases Howaldtswerke-Deutsche
Werft AG under the HDW Shipbuilding Agreement from any
obligations or responsibilities of Howaldtswerke-Deutsche
Werft AG pursuant to Section 4(g) of the HDW Shipbuilding
Agreement.
9.02 Negative Covenants. (a) APL shall not without the prior
consent of the Agent and the Syndicate Agent consolidate
or amalgamate with, or merge into, any other entity, or
sell, convey, transfer, lease, or otherwise dispose of
all or substantially all of its assets, including but not
limited to, by dividend (whether by one transaction or a
series of transactions and whether related or not);
provided, however, that it may consolidate or amalgamate
with, or merge into, any other entity, or sell, convey,
transfer, lease, or otherwise dispose of all or
substantially all of its assets if the buyer, assignee or
transferee corporation (the "Assignee") shall be a
solvent corporation organized and existing under the laws
of the United States of America or any state thereof
following such transaction and shall have executed and
delivered an agreement, in form and substance reasonably
satisfactory to the Agent and the Syndicate Agent,
containing an assumption by the Assignee of the due and
punctual performance and observance of all covenants and
obligations of APL hereunder and under any other Loan
Documents to which it is or shall be a party, and
confirming the accuracy of any representations and
warranties made herein and in each other such Loan
Document as of the dates herein or therein required with
respect to such Assignee; and provided further that
immediately following such transaction, no Incipient
Default or Event of Default shall have occurred and be
continuing.
(b) Except with respect to the HDW Charters and
the Daewoo Charters, APL shall not demise charter any HDW
Vessel or Daewoo Vessel without the prior written
approval of the Agent or the Syndicate Agent,
respectively. APL may time charter any of the Vessels if
the terms of such time charter do not violate applicable
law or regulations of the United States of America and
the jurisdiction of its registry; provided that (i) APL
remains fully liable for all its obligations under the
Security Documents and (ii) for time charters having a
duration of six (6) months or longer (and any demise
charters to which the Agent or the Syndicate Agent, as
the case may be, shall have given its written consent) a
first priority assignment in the form set forth in
Appendix G of all monies due under such charter shall be
accepted in favor of the Agent or the Syndicate Agent, as
the case may be. In the case of any time charter having
a time charter term in excess of one (1) year including
any permitted renewals or extensions, other than those
that become effective only upon mutual agreement of the
parties to such charters, APL will provide to the Agent
or the Syndicate Agent, as the case may be, five (5)
days' prior written notice of its intent to enter into
any such time charter and as soon thereafter as is
practicable APL shall give the Agent or the Syndicate
Agent, as the case may be, a copy of such time charter
and insurance certificates evidencing that insurance
complying with Section 29 of the relevant Mortgage will
be in force with respect to the subject Vessels during
such time charter. In addition, APL will include (or
require the inclusion) in such time charter of
appropriate provisions which provide that such time
charter is expressly subject and subordinate to all the
terms of the related Mortgage(s), as the case may be, and
the rights of the mortgagee(s) thereunder in the event of
a foreclosure or repossession.
10. GRANTING OF PARTICIPATIONS
10.01 KfW. (a) KfW may grant participations to one or more banks or
other entities in or to all or any part of its rights and
obligations under this Agreement and the Security
Documents to which it is a party (including, without
limitation, all or a portion of its contribution to the
HDW Tranche); provided, however, that, notwithstanding
the grant of any such participation by KfW, such
participation, the right to grant such a participation,
and any agreement pursuant to which KfW may grant a
participation shall be expressly subject to the following
conditions and limitations: (u) the prior written
approval of the Borrower, which approval shall not be
unreasonably withheld, (v) KfW's and the Borrower's
obligations and rights under this Agreement and such
Security Documents (including, without limitation, its
contribution to the HDW Tranche) shall remain unchanged,
(w) KfW shall remain the "Holder" of all of the HDW
Tranche, (x) KfW shall remain solely responsible to the
other parties hereto and thereto for the performance of
its obligations, (y) KfW shall remain the Agent for all
purposes of this Agreement and such Security Documents,
and (z) the Borrower and the Syndicate Agent shall
continue to deal solely and directly with KfW in
connection with KfW and the Borrower's rights and
obligations under this Loan Agreement and such Security
Documents.
(b) Upon an occurrence of an Event of Default,
KfW may assign all or a portion of its rights and
obligations under this Agreement and the Security
Documents to which it is a party to any existing
participants in the HDW Tranche and the consent of the
Borrower shall not be required for any such assignments.
Upon assignment of KfW to the assignee, KfW shall
promptly notify the Borrower in writing of the name and
lending office of the assignee and the amount of its
rights and obligations so assigned.
10.02 The Syndicate. (a) Each Syndicate Member may assign to
one or more banks or other entities all or a portion of
its rights and obligations under this Agreement and the
other Loan Documents (including, without limitation, all
or a portion of the Subportions owing to it); provided,
however, that each such assignment that is not to a then
existing Syndicate Member hereunder shall be subject to,
and shall not be effective until the effective date
specified in the Assignment and Acceptance (a form of
which is hereto attached as Appendix F, the "Assignment
and Acceptance") and satisfaction of the following
conditions: (i) each such assignment shall be
consummated only with prompt written notice by the
assigning Syndicate Member (the "Assignor") to the
Borrower, the Agent, the Syndicate Agent and the other
Syndicate Members, (ii) the prior written approval of the
Borrower and the Syndicate Agent, which approval shall
not be unreasonably withheld, (iii) each such assignment
may be a percentage of all of the Assignor's rights and
obligations under this Agreement, (iv) the amount of the
Commitment of the Assignor being assigned pursuant to
each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such
assignment) shall be governed by the following
restrictions: (w) for amounts to be assigned over *
, there are no restrictions as to assignment except for
those set forth herein; (x) for amounts between *
,the amount to be assigned by the Assignor shall
represent the total amount of the Commitment then held by
such Assignor; (y) for amounts less than *
, assignments may only be made to existing Syndicate
Members; and (z) in no event shall any amount assigned be
less than * and shall be an integral multiple of
* in excess thereof (unless such
assignment is for all of the Assignor's Aggregate
Amount), and (v) the parties to each such assignment
shall execute and deliver to the Syndicate Agent, for its
acceptance and recording in the Register and to the
Borrower, an Assignment and Acceptance, together with a
processing and recordation fee payable to the Syndicate
Agent as shall be agreed by the Syndicate Agent and such
Assignor. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in
each Assignment and Acceptance, which effective date
shall be at least five (5) Business Days after the
execution thereof, (x) the Syndicate Assignee shall,
without further act, be a party hereto, and, to the
extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender
hereunder and under the other Loan Documents, and (y) the
Assignor shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement and
the other Loan Documents. Any assignment or purported
assignment not in compliance with this Section shall be
void and of no effect. Each Syndicate Assignee shall, if
eligible to do so, prior to the first date on which
interest or fees are payable hereunder for its account,
deliver to the Borrower, promptly upon its request, the
forms in respect of reduction of or exemption from
withholding taxes described in subclause (iv) of Section
11.02(a).
(b) By executing and delivering an Assignment and
Acceptance, the Assignor thereunder and the Syndicate
Assignee thereunder confirm to and agree with each other
and the other parties hereto as follows: (i) other than
as provided in such Assignment and Acceptance, such
Assignor makes no representation or warranty and assumes
no responsibility with respect to any statements,
warranties, or representations made in connection with
this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this
Agreement or any other instrument or document furnished
pursuant hereto; (ii) such Assignor makes no
representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower
or the performance or observance by the Borrower of any
of its obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii)
such Syndicate Assignee confirms that it has received a
copy of this Agreement, together with copies of the
financial statements produced by the Borrower or the
Guarantor and the other Loan Documents, and such other
documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such Syndicate
Assignee will, independently and without reliance upon
the Syndicate Agent, the Assignor and any other Syndicate
Member, and based on such documents and information as it
shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under
this Agreement; (v) such Syndicate Assignee appoints and
authorizes the Syndicate Agent to take such action as
agent on its behalf and to exercise such powers under
this Agreement as are delegated to the Syndicate Agent by
the terms hereof, together with such powers as are
reasonably incidental thereto; and (vi) such Syndicate
Assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of
this Agreement are required to be performed by it as a
Lender.
(c) The Syndicate Agent shall maintain or shall
cause its Registrar to maintain at its address referred
to in Section 15.04 of this Agreement, in the Register a
record of the names and addresses of the Syndicate
Members as set forth under Section 4.06 hereof. The
entries in the Register shall be conclusive and binding
for all purposes, absent manifest error, on the Agent,
the Syndicate Agent and the Lenders and each of them may
treat each Person whose name is recorded in the Register
as a Syndicate Member hereunder for all purposes of this
Agreement. The Register shall be available for
inspection by any Syndicate Lender at any reasonable time
and from time to time upon reasonable prior notice and
each shall be entitled to make copies thereof at its
expense.
(d) Upon its receipt of an Assignment and
Acceptance executed by an Assignor and an Assignee, the
Syndicate Agent shall, if such Assignment and Acceptance
has been completed and is in substantially the form of
Appendix F hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein
in the Register (including the transfer of the Daewoo
Notes to such Syndicate Assignee by the Assignor), and
(iii) give prompt notice and an executed counterpart
thereto to the Borrower.
(e) Each Syndicate Member and the Syndicate
Agent may grant participations to one or more banks or
entities in or to all or any part of its rights and
obligations under this Agreement (including, without
limitation, all or a portion of the Subportions owing to
it) and Security Documents; provided, however, that,
notwithstanding the grant of any such participation by
any Syndicate Member, such participation, the right to
grant such a participation and any agreement pursuant to
which a Syndicate Member may grant a participation, shall
be expressly subject to the following conditions and
limitations: (i) such Lender's obligations and rights
under this Agreement and the other Loan Documents to
which the Syndicate Member is a party (including without
limitation, its Commitment to the Borrower hereunder)
shall remain unchanged, (ii) such Syndicate Member shall
remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) such Syndicate
Member shall remain the "Holder" of any such Subportion
for all purposes of this Agreement, (iv) the Borrower,
the Agent, the Syndicate Agent and the other Syndicate
Member shall continue to deal solely and directly with
such Syndicate Member in connection with such Syndicate
Member's rights and obligations under this Agreement, (v)
such Syndicate Member shall continue to be able to agree
to any modification or amendment of this Agreement or any
waiver hereunder without the consent, approval, or vote
of any such participant or group of participants, other
than modifications, amendments, and waivers which (A)
postpone any date fixed for any payment of, or reduce any
payment of, principal of or interest on such Syndicate
Member's Aggregate Amount or any fees or other amounts
payable under this Agreement, or (B) increase the amount
of such Syndicate Member's Commitment, or (C) change the
interest rates payable under this Agreement, or (D)
release all or substantially all of the security provided
that if a Syndicate Member agrees to any modification or
waiver relating to items (A) through (D), the Borrower,
the Syndicate Agent and each other Syndicate Member may
conclusively assume that such Syndicate Member duly
received any necessary consent of each of its
participants, and (vi) except as contemplated by the
immediately preceding clause (v), no participant shall be
deemed to be or to have any of the rights and obligations
of a Lender hereunder. The prior written approval of the
Borrower, which approval shall not be unreasonably
withheld, shall be required before any proposed
participant is given any information obtained from the
Borrower or the Guarantor.
11. INDEMNITY
11.01 General Indemnity. The Borrower undertakes to indemnify
and hold harmless each of the Lenders, the Syndicate
Agent and their successors and assigns (each hereinafter
referred to as an "Indemnified Party") on a full
indemnity basis:
(a) the Borrower shall reimburse the Agent, the
Syndicate Agent and/or the Syndicate Members, as the case
may be, on demand for all losses (excluding loss of
anticipated profits) or expenses incurred as a
consequence of the Borrower's failure to drawdown on the
Delivery Date specified in a Notice of Drawdown, *
(b) from and against all and any costs, loss
(excluding loss of anticipated profits) or other expense
including, without limitation, *
;
(c) from and against any loss (excluding loss of
anticipated profits) or expenses any Indemnified Party
may suffer or incur as a result of payment to the Agent
or the Syndicate Agent, as the case may be, as a
consequence of (i) receiving any *
Installment of any Subportion earlier or later than at
the times and in the amounts and the manner set out in
Section 5.01 or Section 5.02, as the case may be, or (ii)
prepayment of any Subportion under Sections 5.04(a),
5.04(b), 6.01, 6.02, 6.03 or 12.01(a), including, without
limitation, any losses suffered as a result of
reemploying deposits from third parties acquired for the
purpose of funding such Subportion or any portion
thereof, * ,
at a rate of return lower than the cost of acquiring the
deposits or any expense incurred in liquidating such
deposits, or (iii) any losses which may arise by interest
subsidies foregone; and
(d) from and against any losses or expenses
(including legal fees and any value added tax thereon)
incurred by any Indemnified Party in the preservation or
enforcement of any of the collateral or the rights of
such Indemnified Party thereto under this Agreement or
any of the Security Documents.
11.02 Tax Indemnity. (a) The Borrower shall pay to any Holder
who is a resident of a *
within the meaning of the provisions of an income tax
convention between the United States of America and such
country, as in effect on the date such Holder acquires
its Notes, such amounts ("Additional Amounts") as may be
necessary in order that every net payment of the
principal of and interest on a Note or any other
Outstanding Indebtedness, after withholding for or on
account of any present or future Tax, assessment or
governmental charge imposed by the United States of
America or any political subdivision or taxing authority
thereof or therein upon or as a result of such payment,
will not be less than the amount provided herein or in
the Notes; provided, however, that the foregoing
obligation to pay Additional Amounts shall not apply to
any one or more of the following:
(i) *
(ii) *
(iii) *
(iv) *
(v) *
nor will Additional Amounts be paid with respect to
payment of the principal of or interest on a Note to a
Person other than the sole beneficial owner of such
payment to the extent such beneficial owner would not
have been entitled to the Additional Amounts had such
beneficial owner been the Holder of a Note.
(b) Notwithstanding the foregoing, the Borrower
shall indemnify each Holder of a Note for any and all
franchise taxes and taxes based on gross or net income
imposed on such Holder by any taxing authority (i) by
reason of the incorporation or residence of the Borrower
in the jurisdiction of such taxing authority or (ii) by
reason of the presence of any property securing such
Holder's Note in the jurisdiction of such taxing
authority. The amount of the indemnity payable hereunder
shall be sufficient to restore the Holder to which it is
paid to the same position such Holder would have been in
had the Tax giving rise to such indemnity not been
incurred.
(c) The Borrower shall pay to the Agent or the
Syndicate Agent, as the case may be, all stamp or similar
taxes or duties required to be paid under any applicable
law of any jurisdiction in order to render any of the
Loan Documents or any of the Notes admissible in evidence
or enforceable therein. To the extent any amount paid
under this Section 11.02(c) gives rise to additional Tax
payable by any Holder, the Borrower shall pay such Holder
an amount sufficient to restore that Holder to the same
position that Holder would have been in had such amount
not been incurred.
(d) If the Borrower would become obligated to pay
any Additional Amounts on the Notes with respect to any
Holder in accordance with paragraph (a) of this Section,
then the Borrower may prepay the Notes of any such
Holder, at the option of the Borrower exercised at any
time when such obligation continues to exist, at a
prepayment price equal to the 100% of the principal
amount thereof, together with accrued interest to the
date fixed for redemption, in accordance with the
provisions of Section 5.04(a).
(e) Regardless of whether a Holder is entitled to
payment of any Additional Amount under Section 11.02(a),
the Borrower shall promptly notify any relevant Holder if
the Borrower is required by any Governmental
Instrumentality to make any deduction or withholding from
any amount payable by the Borrower under this Agreement.
The Borrower shall immediately provide any relevant
Holder with an official receipt of the relevant
Governmental Instrumentality or other evidence acceptable
to the relevant Holder of the amounts so deducted or
withheld.
(f) If any deduction or withholding is made
from any payment hereunder on account of a liability for
Tax of any Holder with respect to which the Borrower is
not required to pay any Additional Amount under Section
11.02(a), the Borrower shall be obliged to adopt any
alternative method of making such payment (including
making the payment to a Person other than such Holder) as
may be proposed by such Holder so as to avoid or reduce
any such deduction or withholding; provided, however,
that the Borrower shall be under no obligation to adopt
such alternative method of payment if the cost to the
Borrower of making such payment is increased.
(g) If, as a result of any indemnity paid by
Borrower, a Holder at any time realizes any tax savings
not previously taken into account in computing the amount
of the indemnity, that Holder shall promptly pay to the
Borrower the amount of such tax savings; provided,
however, that no Holder is required to make any payment
to Borrower pursuant to this Section 11.02(g) so long as
an Event of Default shall be continuing or if the
Borrower shall not have theretofore made all payments due
to all Holders under this Agreement. The relevant Holder
shall estimate the amount of such tax savings, refunds,
and other reductions in Taxes and shall furnish the
Borrower with a certificate showing, in reasonable
detail, the reasons and basis for such calculations,
which shall be furnished in good faith by such Holder,
and such amount calculated by such Holder shall, absent
manifest error, be conclusive. In determining the amount
of such tax savings due to the indemnity, all amounts
which give rise to a tax savings to the Holder shall be
deemed to be utilized in the order that taxes are paid or
deemed paid by the Holder (or in the case of any payments
hereunder, by the Borrower on behalf of the Holder). In
no event will any Person have any right to inspect the
books, records, tax returns, or other documents of any
Holder, and the positions to be taken by any Holder on or
with respect to its tax returns and in any tax
proceedings shall be within its sole control.
(h) In the event an income tax convention between
the United States of America * is
terminated or superseded by a new convention and the
Borrower becomes liable to pay Additional Amounts to one
or more Holders resident in * , such
Holders shall use their best efforts to designate
different lending offices to hold their Notes so as to
reduce, to the greatest extent possible, the Additional
Amounts payable by the Borrower; provided, however, that
any designation of a different lending office pursuant to
this Section 11.02(h) shall not be considered an
assignment, rebooking or transfer for purposes of Section
11.02(a)(i).
11.03 Transaction Costs. Whether or not the transactions
herein contemplated shall be consummated (unless such
failure to consummate shall be solely by reason of the
default of any Lender, in which case, the Borrower shall
not be obligated to pay expenses of such defaulting
Lender), the Borrower shall pay to the Agent and the
Syndicate Agent and/or the Syndicate Members all
reasonable expenses incurred by the Agent and the
Syndicate Agent and/or the Syndicate Members relating to
this Agreement and the other Loan Documents, including
but not limited to:
(a) the reasonable costs of preparation,
negotiation, execution, delivery, reproduction of the
Loan Documents;
(b) the reasonable fees and disbursements of
Lenders' special counsel, Haight, Gardner, Poor & Havens;
(c) all reasonable expenses including without
limitation, reasonable fees and expenses of Lenders'
special counsel, Haight, Gardner, Poor & Havens, related
to any amendments, waivers or consents with respect to
the Loan Documents;
(d) all reasonable expenses including, without
limitation, reasonable fees and expenses of Lenders'
special counsel, Haight, Gardner, Poor & Havens, related
to the execution of any additional security or
documentation which may at any time be required to be
granted or delivered to any Lender under Section 9.02(b)
and any other provision of this Agreement or required by
any of the Security Documents;
(e) the Borrower shall pay all stamp,
registration and other taxes to which this Agreement or
any of the other Loan Documents or any judgment or order
given or made in connection herewith or therewith is or
at any time may be subject and shall indemnify the
Lenders against any liabilities, costs, claims and
expenses resulting from any failure to pay or any delay
in paying any such tax; and
(f) the reasonable fees and expenses of any
counsel or appraiser for the purpose of issuing an
opinion or an appraisal required by any provision of this
Agreement and any other Loan Document.
The obligations of the Company under this Section
11.03 shall survive the payment or prepayment of the
Tranches and any transfer of the Notes.
11.04 Notice and Certification. Any Holder wishing to invoke
any of the indemnities provided in Sections 11.01 and
11.02 shall notify the Borrower as soon as practicable
(with a copy to the Agent and the Syndicate Agent). Such
notice shall include a certificate setting forth the
basis for the determination of the amount of any amount
payable. Such certificate shall show in reasonable
detail the reasons and the basis for the calculation
thereof, be submitted in good faith to the Borrower and
the Agent or the Syndicate Agent, as the case may be, by
the affected Lender. Such certificate shall, in the
absence of manifest error, be conclusive evidence of the
fact and amount of such indemnities and shall be final
and binding on the Borrower and such Holder.
12. EVENTS OF DEFAULT
12.01 Remedies. Notwithstanding anything herein to the
contrary, upon the occurrence and continuance of any of
the Events of Default stipulated in this Section 12 or at
any time thereafter and while such Event of Default shall
be continuing, each of the Agent and the Syndicate Agent
may take any one or more of the following actions:
(a) by written notice to the Borrower, declare
the outstanding principal amount of the Outstanding
Indebtedness relating to all or any Subportions of the
HDW Tranche and the Daewoo Tranche, respectively, to be
immediately due and payable by the Borrower (except that
no notice shall be required upon the occurrence of an
Event of Default under paragraphs (m) or (n) of Section
12.02), whereupon the same shall become so payable;
and/or
(b) by written notice to the Borrower, declare
that any undrawn Subportion of an HDW or Daewoo Tranche,
respectively, shall be cancelled, whereupon the same
shall be cancelled and any accrued commitment fees,
indemnities under Section 11, and all other amounts
payable to the extent the same relates to the cancelled
Tranche hereunder shall become immediately due and
payable by the Borrower; and/or
(c) exercise all or any of its rights and powers
under and in accordance with any one or more of the
relevant Security Documents.
Each Holder hereby appoints the Agent or the
Syndicate Agent, as the case may be, the attorney-in-fact
for such Holder for purposes of any bankruptcy or
reorganization proceeding, whether or not such Holder has
filed a separate claim in any such proceeding. Any
receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized by each Holder to
make such payments to the Agent or the Syndicate Agent,
as the case may be, (and each Holder shall be deemed by
its acceptance of his Note to waive hereby any right to
receive such payments except from the Agent or the
Syndicate Agent, as the case may be, and to pay to the
Agent or the Syndicate Agent, as the case may be, any
amount due under Section 12.
12.02 Event of Default. An Event of Default shall occur under
this Agreement if:
(a) any Obligor fails to pay to the Agent or the
Syndicate Agent, as the case may be, on the due date for
payment thereof in the currency and in the manner
specified herein or therein any sum of principal,
interest, commission or fees payable by the Borrower
under the terms of this Agreement and such default
remains unremedied for three (3) Business Days after the
due date; or
(b) any Obligor fails to pay to the Agent or the
Syndicate Agent, as the case may be, in the currency and
in the manner specified herein or therein any other
monies expressed to be payable by any of the Obligors
upon demand of the Agent or the Syndicate Agent, as the
case may be, under the terms of this Agreement and/or any
of the related Security Documents or Charter Documents to
which any of the Obligors is a party within fifteen (15)
Business Days following the date of such a demand; or
(c) the Insurances on any Vessel are cancelled
due to non-payment of premiums and otherwise not
immediately replaced or any Vessel otherwise ceases to be
insured in accordance with the provisions of this
Agreement and/or of the First Mortgage or the Second
Mortgage on that Vessel; or
(d) any of the Obligors is in breach in the
performance or observance of any other terms or
conditions of this Agreement or in any of the Loan
Documents, the Charter Documents or the Security
Documents (other than the Mortgages) to which any of them
is a party (not being a default which falls within
paragraphs (a), (b) or (c) of this Section) and if it is
capable of being remedied such breach is not remedied
within thirty (30) days after receipt by the Borrower of
notice of such breach from the Agent or the Syndicate
Agent, as the case may be; or
(e) there occurs any event which constitutes an
Event of Default under any Mortgage on any Vessel; or
(f) any Mortgage or Replacement Mortgage on
any Vessel ceases to be valid and enforceable and duly
registered on that Vessel having the priority of record
required under the terms of this Agreement or any
Security Document or the liens or security interests
created or intended to be created thereunder cease to be
in full force and effect; or
(g) any Obligor is in default in the payment
when due of any sum or sums which aggregate in excess of
Five Million Dollars (USD5,000,000) at any one time under
any documentation relating to any other Financial
Indebtedness whatsoever (excluding for this purpose the
HDW Tranche and the Daewoo Tranche), and such Financial
Indebtedness shall have been accelerated in accordance
with the terms thereof; or
(h) there is a final, unappealable and
enforceable judgment made against any Obligor greater
than 5% of the Tangible Net Worth of the Guarantor, which
is not covered by insurance and is not satisfied or
stayed within sixty (60) days after such judgment; or
(i) any Vessel shall suffer an Event of Loss
and the proceeds of the Insurances or relevant
requisition compensation, if any, are not paid to the
Agent or Syndicate Agent, as the case may be, within one
hundred and eighty (180) days of the occurrence of such
Event of Loss in an amount at least equal to the
aggregate of the outstanding balances of the relevant
Subportion(s) advanced by the relevant Lender(s) to
finance that Vessel together with all interest accrued
thereon, if that amount is not paid by or upon the order
of the Borrower to the Agent or the Syndicate Agent, as
the case may be, within the said period of one hundred
and eighty (180) days; or
(j) any representation or warranty made by or
on behalf of any Obligor in this Agreement or in any of
the Security Documents or in the Agreement to Acquire and
Charter or by the Borrower or the Guarantor in any
certificate, statement or other document issued by or on
behalf of any Obligor pursuant to this Agreement shall
prove to have been incorrect or misleading in any
material respect when made or deemed made; or
(k) without the prior written consent of the
Agent and the Syndicate Agent, there is a merger or
consolidation of any Obligor with any other corporation
or other entity other than otherwise permitted in this
Agreement, the Guarantee or in the Agreement to Acquire
and Charter; or
(l) any license, authorization, consent or
approval at any time necessary to enable any Obligor to
comply with its obligations under this Agreement and/or
any of the Security Documents is revoked or not granted
or fails to remain in full force and effect for a period
of thirty (30) days after notice thereof from the Agent
or the Syndicate Agent, as the case may be, with respect
to any Vessel; or
(m) any Obligor shall file, or consent by answer
or otherwise to the filing against it of a petition for
relief or reorganization or arrangement or any other
petition in bankruptcy, for liquidation or seek any
relief or forbearance under any bankruptcy or insolvency
or other similar law, (i) make an assignment for the
benefit of its creditors, or (ii) consent to the
appointment of a custodian, receiver, trustee or other
officer with similar powers of itself or any substantial
part of its property; or
(n) a court or governmental authority of
competent jurisdiction in an involuntary case under
applicable bankruptcy laws, as now or hereafter
constituted or any insolvency or similar law shall enter
an order appointing, without consent by APL, the
Transferee, or the Guarantor with respect thereto a
custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any
substantial part of its property, or constituting an
order for relief or approving a petition for relief or
reorganization or any other petition in bankruptcy or for
liquidation or to take advantage of any bankruptcy or
insolvency law or any jurisdiction, or ordering the
dissolution, winding-up or liquidation of APL, the
Transferee, or the Guarantor with respect thereto, as the
case may be, and any such order or petition is not
dismissed or stayed within sixty (60) days after the
earlier of the entering of any such order or the approval
of any such petition.
13. FEES
13.01 Commitment Commission. (a) APL shall pay to the Agent a
commitment commission at * .
Such commission shall accrue from day to day for the
duration of the period from October 1, 1993 and
continuing until final disbursement of the HDW Tranche
and to be paid by APL to the Agent quarterly in arrears
on each Quarter Day on the last Delivery Date of the HDW
Vessels or such earlier date as its commitment shall
expire in accordance with the terms of this Agreement or
the Shipbuilding Agreement shall be cancelled or
terminated in respect of a Vessel or Vessels not yet
delivered.
(b) APL shall pay to the Syndicate Agent for the
account of the Syndicate a commitment commission at * .
Such commission shall accrue from day to day for the
duration of the period from October 1, 1993 and
continuing until final disbursement of the Daewoo Tranche
and to be paid by APL to the Syndicate Agent in arrears
for the account of the Syndicate Members on each Quarter
Day and on the last Delivery Date of the Daewoo Vessels
or such earlier date as its commitment shall expire in
accordance with the terms of this Agreement or the
Shipbuilding Agreement shall be cancelled or terminated
in respect of a Vessel or Vessels not yet delivered.
13.02 Participation Fees. (a) APL shall pay to the Agent, a
participation fee in the amount of *.
The remaining participation fee shall be payable
on a pro rata basis on the Delivery Date of each HDW
Vessel, but, in the event of cancellation of the
Commitment of the Agent to fund any Subportion, the
remaining participation fee shall be payable on a pro
rata basis, no later than the cancellation date in
respect to such Subportion.
If the HDW Tranche is reduced in accordance with
the terms of this Agreement, then APL shall pay to the
Agent, *.
APL hereby accepts that these fees shall not be
refunded by the Agent irrespective of whether or not any
Subportion in respect of the HDW Tranche is made by the
Agent under this Agreement or the Commitment on the part
of the Agent to make the Loans or any of them is
cancelled in accordance with the provisions of this
Agreement.
(b) APL shall pay to the Syndicate Agent for
the account of the Syndicate (for sharing among the
Syndicate Members in proportions to be agreed upon by
them), a participation fee in the amount of * .
The remaining participation fee shall be payable
on a pro rata basis on the Delivery Date of each Daewoo
Vessel, but, in the event of cancellation of the
Commitment of the Syndicate to fund any Subportion, the
remaining participation fee shall be payable on a pro
rata basis, no later than the cancellation date in
respect to such Subportion.
If the Daewoo Tranche is reduced in accordance
with the terms of this Agreement, then APL shall pay to
the Syndicate, * .
APL hereby accepts that these fees shall not be
refunded by the Syndicate irrespective of whether or not
any Subportion in respect of the Daewoo Tranche is made
by the Syndicate under this Agreement or the Commitment
on the part of the Syndicate to make the Loans or any of
them is cancelled in accordance with the provisions of
this Agreement.
13.03 Agency Fees.
The Borrower shall pay to the Agent a non-refundable
fixed agency fee of *
such fee to be paid within three (3) Frankfurt/New York
Business Days following the date of execution of this
Agreement by the Borrower and annually on the anniversary
of such date thereafter so long as any part of the HDW
Tranche remains outstanding.
The Agent agrees to pay from such agency fee paid
to the Syndicate Agent its agency fee in the amount of *
, such amount to be due and payable upon receipt by the
Agent of the agency fee from the Borrower.
14. RELATION OF SYNDICATE MEMBERS
14.01 Syndicate Members and Syndicate Agent.
*
14.02 Pro Rata Sharing.
*
*
14.03 Setoff.
*
14.04 Approvals.
*
*
14.05 Exculpation.
*
14.06 Indemnification.
*
14.07 Syndicate Agent as Syndicate Member.
*
14.08 Notice of Transfer; Resignation.
*
*
14.09 Credit Decision; Not Trustee.
*
15. MISCELLANEOUS
15.01 Calculations and Evidence of Debt. (a) Commitment
commission, interest on each Subportion, interest on
overdue payments, if any, and any compensation for
prepayments under this Agreement shall be calculated on
the basis of the actual number of days elapsed over a
year of three hundred sixty (360) days.
(b) If any payment expressed in USD falls due under this
Agreement on a day which is not a Business Day in the
City of New York, the Borrower may effect payment on the
next New York Business Day. This provision does not
affect the Borrower's obligation under Section 5 to pay
interest up to the date of actual payment in accordance
with Section 5.08.
(c) In any legal action or proceedings arising
out of or in connection with this Agreement, the entries
made in the accounts maintained by the Agent or the
Syndicate Agent pursuant to Section 4.06 shall, in the
absence of manifest error, be prima facie evidence of the
existence and extent of the obligations of the Borrower
therein recorded.
15.02. Currency of Account. (a) The Dollar is the currency of account
of each and every sum due from the Borrower to KfW and
the Syndicate under this Agreement in respect of any
Subportion.
(b) If after the occurrence of any Event of
Default, any sum is due from the Borrower under this
Agreement or if any order or judgment given or made in
relation hereto has to be converted from the currency
("the first currency") in which the same is payable
hereunder or under such order or judgment into another
currency ("the second currency") for the purpose of:
(i) making or filing a claim or proof against
the Borrower;
(ii) obtaining an order or judgment in any
court or tribunal; or
(iii) enforcing any order or judgment given or
made in relation hereto; then
the Borrower shall indemnify and hold harmless the
Lenders from and against any damages or losses suffered
as a result of any discrepancy between (A) the rate of
exchange used for such purpose to convert the sum in
question from the first currency into the second currency
and (B) the rate or rates of exchange at which any Lender
may in the ordinary course of business purchase the first
currency with the second currency in the Frankfurt
foreign exchange market upon receipt of a sum paid to it
in satisfaction, in whole or in part, of any such order,
judgment, claim or proof. The above indemnity shall
constitute a separate and independent obligation of the
Borrower from its other obligations and shall apply
irrespective of any indulgence granted by such Lender.
15.03 Partial Invalidity. If at any time any provision hereof
is or becomes illegal, invalid or unenforceable in any
respect under the law of any jurisdiction, neither the
legality, validity or enforceability of the remaining
provisions hereof nor the legality, validity or
enforceability of such provision under the laws of any
other jurisdiction shall in any way be affected or
impaired thereby.
15.04 Notices. (a) Each notice, demand or other communication
to be made hereunder shall be made in writing but, unless
otherwise stated, may be made by telex.
(b) Any notice, demand or other communication to
be made or delivered by any party to another party
pursuant to this Agreement shall (unless that other
Person has by fifteen (15) days' notice to the other
parties specified another address) be made or delivered
to that party at its address mentioned below and shall be
deemed to have been made or delivered when (in the case
of telex) the addressee's answerback shall have been
received at the end of the transmission thereof or (in
the case of any letter) when delivered to that address by
telecopy or personally or when actually received by the
relevant party after being deposited in the post first-
class postage prepaid in an envelope addressed to it at
that address:
(i) if to the Borrower or to the Guarantor to
it at 1111 Broadway, Oakland, California
94607, Telefax No. (510) 272-8931, Telex
No. 671 4840, Answerback "APL OAK",
Attention: Treasurer;
(ii) if to KfW to it at Palmengartenstrasse 5-
9, D-60325 Frankfurt am Main, Federal
Republic of Germany, Telefax No. 49-7431-
2944 or 7431-2198, Telex No. 415256-0
Answerback "KWD", Attention: Mr. Andreas
Uibeleisen or Mr. Wolfgang Pfisterer;
(iii) if to the Syndicate Agent, to it at Ness 7-
9, D-20457 Hamburg, Federal Republic of
Germany, Telefax No. 49-40-3683-4068,
Telex No.
212391, Answerback "CBKD", Attention: Mr.
Stefan E. Kuch;
(iv) if to the Syndicate, to the addresses of
each member as set forth in Schedule 1.
(c) Each notice, demand or other communication
made or delivered by one party to another pursuant to
this Agreement or any of the Security Documents shall be
in the English language or accompanied by a certified
English translation.
15.05 Benefit of the Agreement. (a) This Agreement shall be
binding upon and inure to the benefit of each party
hereto and its successors and permitted assigns.
(b) APL may not without the Lenders' consent
assign or transfer all or any of its rights, benefits and
obligations hereunder including, without limitation, its
claim for disbursement of any Subportion of any of the
Tranches other than to the Transferee in accordance with
the terms of the Agreement to Acquire and Charter.
15.06 Remedies and Waivers. No failure to exercise nor any
delay in exercising on the part of the Lenders of any
right, power, privilege or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial
exercise of any right, power, privilege or remedy prevent
any further or other exercise thereof or the exercise of
any other right, power, privilege or remedy. The rights
and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law.
15.07 Law. This Agreement shall be governed by and construed
in accordance with laws of the State of New York (other
than the law of the State of New York governing choice of
law).
15.08 Jurisdiction. Each party hereto, namely APL, the
Borrower, the Agent, the Syndicate Agent and the
Syndicate Members each (a) hereby irrevocably submits
itself to the jurisdiction of the Supreme Court of the
State of New York, New York County and to the
jurisdiction of the United States District Court for the
Southern District of New York for the purposes of any
suit, action or other proceeding arising out of this
Agreement or any other Loan Document, Security Document
or Charter Document referred to therein, or the subject
matter hereof or thereof or any of the transactions
contemplated hereby or thereby, brought by any of the
parties or their respective successors, subrogees or
assigns, (b) hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and
determined, in such New York State or Federal court, and
(c) to the extent that it has or hereafter may acquire
any immunity from jurisdiction of any court or from any
legal process, hereby waives such immunity, and agrees
not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, (i)
any claim that it is not personally subject to the
jurisdiction of the above-named New York State or Federal
courts, (ii) that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper, or (iii) that
this Agreement or the subject matter hereof may not be
enforced in or by such courts or under any applicable
law. Each party hereby consents to service of process in
any suit, action or other proceeding arising out of this
Agreement or the subject matter hereof or any of the
transactions contemplated hereby and hereby appoints the
Persons set forth in Schedule 7 (each a "Process Agent")
as its attorneys-in-fact to receive service of process in
such action, suit or proceeding, it being agreed that
service upon its Process Agent shall constitute valid
service upon such party and its successors and assigns.
Each party agrees that (x) the sole responsibilities of
its Process Agent shall be (i) to receive such process,
(ii) to send a copy of any such process so received to
the party naming it as Process Agent, by registered
airmail, return receipt requested, at its address set
forth in Section 15.04(b) hereof, or at the last address
filed in writing by it with the Process Agent and (iii)
to give prompt telegraphic notice of receipt thereof to
the party at such address and (y) the Process Agent shall
have no responsibility for the receipt or nonreceipt by
the party of such process, nor for any performance or
nonperformance by it or its respective successors or
assigns. Each party hereby agrees to pay to its Process
Agent such compensation as shall be agreed upon from time
to time by it and the Process Agent for the Process
Agent's services hereunder. Each party hereby agrees
that its submission to jurisdiction and its designation
of the Process Agent set forth above is made for the
express benefit of each of the other parties hereto and
their respective successors, subrogees and assigns. Each
party agrees that it will at all times continuously
maintain a Process Agent to receive service of process in
the City of New York or San Francisco, California, on
behalf of itself and its properties with respect to this
Agreement, and in the event that, for any reason, the
Process Agent named by a party pursuant to this Section
15.08 shall no longer serve as Process Agent to receive
service of process on such party's behalf, such party
shall promptly appoint a successor Process Agent. Each
party further agrees that a final judgment against it in
any such action or proceeding shall be conclusive, and
may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law, a
certified or true copy of which final judgment shall be
conclusive evidence of the fact and of the amount of any
indebtedness or liability of the party therein described;
provided, that nothing in this Section 15.08 shall affect
the right of the above parties hereto or their respective
successors, subrogees or assigns to serve legal process
in any other manner permitted by law or affect the right
of said parties or their respective successors, subrogees
or assigns to bring any action or proceeding against any
other such party or its property in the courts of other
jurisdictions. In the event of the transfer of all or
substantially all the assets and business of the Process
Agent to any other corporation, by consolidation, merger,
sale of assets or otherwise, such other corporation shall
be substituted hereunder for such Process Agent with the
same effect as if named herein in place of such Process
Agent. THE BORROWER, APL AND EACH LENDER HEREBY WAIVES
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH IT IS A
PARTY INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT, ANY SECURITY DOCUMENT
OR ANY CHARTER DOCUMENT REFERRED TO THEREIN, OR THE
RELATIONSHIP ESTABLISHED HEREUNDER AND WHETHER ARISING OR
ASSERTED BEFORE OR AFTER THE DATE HEREOF OR BEFORE OR
AFTER THE PAYMENT, OBSERVANCE AND PERFORMANCE IN FULL OF
THE BORROWER'S, APL'S OR SUCH LENDER'S OBLIGATIONS UNDER
THIS AGREEMENT.
15.09 Confidentiality. Each of the Borrower, APL, the Agent
and the Syndicate Members agree to maintain the
confidentiality of all information provided by any of the
parties hereto to any of the other parties hereto or any
participant or assign contemplated pursuant to this
Agreement, the Guarantee, any Security Document or any
Charter Document and will not use such information for
purpose other than for the extension and acceptance of
credit under such documents, and will not disclose the
same to third parties other than such participants and
assignees. Notwithstanding the foregoing, following the
execution of this Agreement (a) each party may make
public disclosure of the existence and amount of the
Facility hereunder and of the identity of the parties
hereto, (b) each party may file a copy of this Agreement,
the Guarantee, any Security Document or any Charter
Document in any public record in which it is required by
law to be filed, and (c) each party may make such other
public disclosure of the terms and conditions hereof and
of this Agreement or any Security Document to create or
perfect any security interest contemplated hereby or as
it may be required by law, in the opinion of its counsel,
to make or at the request of and required by any
regulatory or supervisory authority having jurisdiction
over it.
15.10 No Recourse. No recourse shall be had for the payment of
the principal of, or the premium, if any, or interest on
any Note, or for any claim based thereon, or otherwise in
respect thereof or of the Outstanding Indebtedness
represented thereby, or against any incorporator,
stockholder, officer or director, as such past, present
or future, of any Obligor or of any successor
corporation, either directly or through any Obligor or
any successor corporation, whether by virtue of any
constitutional provision, statute or rule of law, or by
the enforcement of any assessment or penalty otherwise;
it being expressly agreed and understood that this
Agreement and the Notes are solely corporate obligations,
and that no personal liability whatsoever shall attach
to, or be incurred by, any incorporator, stockholder,
officer or director, as such past, present or future of
the Borrower or of any successor corporation, either
directly or through an Obligor or any successor
corporation, because of the incurring of the indebtedness
hereby authorized or under or by reason of any of the
obligations, covenants, promises or agreements contained
in this Agreement or in any of the Notes or to be implied
herefrom or therefrom, and that all liability, if any, of
that character against every such incorporator,
stockholder, officer and director is, by the acceptance
of the Notes and as a condition of, and as part of the
consideration for, the execution of this Agreement and
the issue of the Notes, expressly waived and released;
provided, however, that nothing in the foregoing shall
diminish the obligations of the Guarantor under the
Guarantee.
15.11 Complete Agreement. This Agreement, together with the
other Loan Documents and the Charter Documents, contains
the entire agreement among the parties hereto with
respect to the subject matter hereof and supersedes all
prior written or oral communications or agreements with
respect thereto.
AS WITNESS the hands of the duly authorized
representatives of the parties hereto the day and year first before
written.
KREDITANSTALT FUR WIEDERAUFBAU
/s/ Hans Reich / Peter Klaus
By: Hans Reich / Peter Klaus
Title: Board Member / Director
COMMERZBANK AG, HAMBURG
/s/ Joachim Hagemann
By: Joachim Hagemann
Title: Senior Vice-President
/s/ Stefan Kuch
By: Stefan Kuch
Title: Vice-President
COMMERZBANK AG (KIEL BRANCH)
/s/ Franz-Josef Cleas
By: Franz-Josef Claes
Title: Director
/s/
By:
Title:
DRESDNER BANK AG in HAMBURG
/s/ Gerhard Roller
By: Gerhard Roller
Title: Senior Manager
/s/ Claus-Dieter Bottcher
By: Claus-Dieter Bottcher
Title: Assistant Manager
VEREINS- und WESTBANK AG
/s/ Suzzane Martens
By: Suzzane Martens
Title: Assistent Vice-President
/s/ Jorgen Kopcke
By: Jorgen Kopcke
Title: Senior Vice-President
DEUTSCHE SCHIFFSBANK AG
/s/ Wulf-Peter Schiering
By: Wulf-Peter Schiering
Title: Senior General Manager and
Attorney-in-Fact
NORDDEUTSCHE LANDESBANK -
GIROZENTRALE
/s/ Friedrich Huech
By: Friedrich Huech
Title: Senior Vice-President
/s/ Jurgen Hartmann
By: Jurgen Hartmann
Title: Vice-President
DEUTSCHE VERKEHRS-BANK AG
/s/ Peter Spincke
By: Peter Spincke
Title: Director
/s/ Joachim Winkler
By: Joachim Winkler
Title: Director
BANQUE INTERNATIONALE A LUXEMBOURG
S.A.
/s/ Jean-Pierre Vernier
By: Jean-Pierre Vernier
Title: First Vice-President
AMERICAN PRESIDENT LINES, LTD.
/s/ Will M. Storey
By: Will M. Storey
Title: Executive Vice-President
[Schedules to be
added to Notes]
APPENDIX A-1A
FORM OF FIXED RATE NOTES
[HDW Vessel]
NOTE
No. $
[ ]
Issued in connection with
the purchase financing of
three (3) container vessels
INTEREST RATE MATURITY DATE ISSUE
DATE
[ ] (the "Company"), for
value received, hereby promises to pay to [ ] or
registered assigns the principal sum of ________________ DOLLARS
(USD____________) on the maturity date specified above. This Note shall
bear interest at the rate specified above on the unpaid principal amount
thereof from time to time outstanding from the date thereof to but
excluding the date due at the Interest Rate for each Interest Period
beginning on or after the Fixed Rate Conversion Date (as defined in the
Loan Agreement referred to below) and shall be payable in arrears on
each Interest Payment Date on a basis of the actual number of days
elapsed over a year of three hundred sixty (360) days including the
first day of the relevant Interest Period or portion thereof but
excluding such Interest Payment Date. Principal on this Note shall be
payable on each Repayment Date in the amounts set forth in Schedule 1
attached hereto subject to any HDW * exercised by the Company pursuant
to Section 5.03 of the Loan Agreement. Capitalized terms contained
herein and not defined herein shall have the meanings specified in a
certain Loan Agreement dated March 14, 1994 (the "Loan Agreement") by
and among American President Lines, Ltd., Kreditanstalt fur
Wiederaufbau, Commerzbank AG, Hamburg, Commerzbank AG (Kiel Branch),
Dresdner Bank AG in Hamburg, Vereins-und Westbank AG, Deutsche
Schiffsbank AG, Norddeutsche Landesbank-Girozentrale, Deutsche Verkehrs-
Bank AG and Banque Internationale a Luxembourg S.A.
The interest so payable, and punctually paid or duly
provided for, on any such Interest Payment Date will, as provided in the
Loan Agreement, be paid by the Company to the Agent for payment to the
Person in whose name this Note is registered at the close of business on
the date for payment of such interest. Any such interest not so
punctually paid or duly provided for shall be paid together with default
interest which shall accrue on the amount of such overdue sum in the
case of payments due as more fully provided in the Loan Agreement.
Under the Loan Agreement, the Company is obligated to pay
interest on and the principal of this Note to the Agent in the manner as
provided therein, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public
and private debts.
This Note is subject to prepayment and acceleration as
more fully described in the Loan Agreement.
This Note is one of a duly authorized issue of Notes
issued and to be issued under the Loan Agreement.
Reference is made to the Loan Agreement and all
supplements and amendments thereto (a copy of which is on file with the
Company at its principal corporate office) for a more complete statement
of the terms and provisions thereof, including a statement of the
properties thereby conveyed, pledged and assigned, the nature and extent
of the security, the respective rights thereunder of the Company and the
Holders of the Notes, and the terms upon which the Notes are, and are to
be, executed and delivered, to all of which terms and conditions in the
Loan Agreement each Holder hereof agrees by its acceptance of this Note.
If an Event of Default shall occur and be continuing, the
principal of the Notes may be declared due and payable in the manner and
with the effect provided in the Loan Agreement and the Agent may
exercise the rights and remedies provided for therein.
The right of the Holder of this Note to institute action
for any remedy under the Loan Agreement, including the enforcement of
payment of any amount due hereon, is subject to certain restrictions
specified in the Loan Agreement.
As provided in the Loan Agreement and subject to certain
limitations therein set forth, this Note is transferable, and upon
surrender of this Note for registration of transfer at the principal
office of the Registrar, or at the office or agency maintained for such
purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by, the
Holder or his attorney duly authorized in writing, one or more new Notes
of the same maturity and type and of authorized denominations and for
the same aggregate principal amount will be issued to the designated
transferee or transferees.
As provided in the Loan Agreement and subject to certain
limitations therein set forth, Notes are exchangeable for Fixed Rate
Notes for a like aggregate principal amount of Notes of the same
maturity and type and of authorized denominations, as requested by the
Holder surrendering the same, upon presentation thereof for such purpose
at the principal office of the Registrar, or at an office or agency
maintained for such purpose.
Prior to due presentment for registration of exchange or
transfer of this Note, the Agent, the Paying Agent and the Registrar may
deem and treat the Person in whose name this Note is registered as the
absolute owner hereof for the purpose of receiving payment of the
principal of and interest on this Note and for all other purposes
whatsoever whether or not this Note be overdue, and neither the Agent,
the Paying Agent nor the Registrar shall be affected by notice to the
contrary.
This Note shall not be entitled to any benefit under the
Loan Agreement or be valid or obligatory for any purpose unless this
Note has been executed on behalf of the Company by the manual signature
of an authorized officer of the Company.
AS PROVIDED IN THE LOAN AGREEMENT, THIS NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK (OTHER THAN THE LAW OF THE STATE OF NEW YORK GOVERNING CHOICE
OF LAW).
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
[
]
By:___________________
[Title]
Attest:
By:_______________________
[Title]
Issue Date:
APPENDIX A-1B
FORM OF LIBO RATE NOTE
[HDW Vessel]
NOTE
No. $_______________
[ ]
Issued in connection with
the purchase financing
of three (3) container vessels
Issue Date: __________, ____
MATURITY DATE
__________, ____
[ ] (the "Company"), for value
received, hereby promises to pay to the order of [ ]
or registered assigns the principal sum of _____________________________
DOLLARS (USD___________) on the maturity date specified above. This
Note shall bear interest on the unpaid principal amount hereof from time
to time outstanding from the date hereof to but excluding the date due
at the Interest Rate for each Interest Period (as such term is defined
in the Loan Agreement referred to below) and shall be payable in arrears
on each Interest Payment Date on a basis of the actual number of days
elapsed over a year of three hundred sixty (360) days including the
first day of the relevant Interest Period or portion thereof but
excluding such Interest Payment Date), until the principal hereof is
paid. Principal on this Note shall be payable on each Repayment Date in
the amounts set forth in Schedule 1 attached hereto subject to any HDW
* exercised by the Company pursuant to Section 5.03 of the Loan
Agreement. Capitalized terms contained herein and not defined herein,
shall have the meanings specified in a certain Loan Agreement
dated March 14, 1994 (the "Loan Agreement") by and among American
President Lines, Ltd., Kreditanstalt fur Wiederaufbau, Commerzbank AG,
Hamburg, Commerzbank AG (Kiel Branch), Dresdner Bank AG in Hamburg,
Vereins-und Westbank AG, Deutsche Schiffsbank AG, Norddeutsche
Landesbank-Girozentrale, Deutsche Verkehrs-Bank AG and Banque
Internationale a Luxembourg S.A.
The interest so payable, and punctually paid or duly
provided for, on any such Interest Payment Date will, as provided in the
Loan Agreement, be paid by the Company to the Agent for payment to the
Person in whose name this Note is registered at the close of business on
the date for payment of such interest. Any such interest not so
punctually paid or duly provided for shall be paid together with default
interest which shall accrue on the amount of such overdue sum in the
case of payments due as more fully provided in the Loan Agreement.
Under the Loan Agreement, the Company is obligated to pay
interest on and the principal of this Note to the Agent in the manner as
provided therein, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public
and private debts.
This Note is subject to prepayment and acceleration as
more fully described in the Loan Agreement.
This Note is one of a duly authorized issue of Notes
issued and to be issued under the Loan Agreement.
Reference is made to the Loan Agreement and all
supplements and amendments thereto (a copy of which is on file with the
Company at its principal corporate office) for a more complete statement
of the terms and provisions thereof, including a statement of the
properties thereby conveyed, pledged and assigned, the nature and extent
of the security, the respective rights thereunder of the Company, and
the Holders of the Notes, and the terms upon which the Notes are, and
are to be, executed and delivered, to all of which terms and conditions
in the Loan Agreement each Holder hereof agrees by its acceptance of
this Note.
On the Fixed Rate Conversion Date, the Interest Rate on
this Note shall be converted to the Fixed Rate. Upon such conversion,
the Holders shall exchange this Note for a new Fixed Rate Note or Notes
by delivery of this Note to the principal office of the Registrar or at
an office or agency maintained for that purpose.
If an Event of Default shall occur and be continuing, the
principal of this Note may be declared due and payable in the manner and
with the effect provided in the Loan Agreement and the Agent may
exercise whatever rights and remedies provided for therein.
The right of the Holder of this Note to institute action
for any remedy under the Loan Agreement, including the enforcement of
payment of any amount due hereon, is subject to certain restrictions
specified in the Loan Agreement.
As provided in the Loan Agreement and subject to certain
limitations therein set forth, this Note is transferable, and upon
surrender of this Note for registration of transfer at the principal
office of the Registrar, or at the office or agency maintained for such
purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by, the
Holder or his attorney duly authorized in writing, one or more new Notes
of the same maturity and type and of authorized denominations and for
the same aggregate principal amount will be issued to the designated
transferee or transferees.
As provided in the Loan Agreement and subject to certain
limitations therein set forth, this Note is exchangeable for a like
aggregate principal amount of LIBO Rate Notes of the same maturity and
type and of authorized denominations, as requested by the Holder
surrendering the same, upon presentation thereof for such purpose at the
principal office of the Registrar, or at an office or agency maintained
for such purpose.
Prior to due presentment for registration of exchange or
transfer of this Note, the Agent, the Paying Agent and the Registrar may
deem and treat the Person in whose name this Note is registered as the
absolute owner hereof for the purpose of receiving payment of the
principal of and interest on this Note and for all other purposes
whatsoever whether or not this Note be overdue, and neither the Agent,
the Paying Agent nor the Registrar shall be affected by notice to the
contrary.
This Note shall not be entitled to any benefit under the
Loan Agreement or be valid or obligatory for any purpose unless this
Note has been executed pursuant to the provisions in the Loan Agreement.
AS PROVIDED IN THE LOAN AGREEMENT, THIS NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK.
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
[
]
By:___________________
Title:
Attest:
By:_____________________
Title:
SCHEDULE 1
Maturity Dates, Principal Amounts and
Initial Interest Rates of Notes
Principal Interest
Maturity Date Amount Rate
[Schedules to be
added to Notes]
APPENDIX A-2A
FORM OF FIXED RATE NOTES
[Daewoo Vessel]
NOTE
No.______________$_____________
[ ]
Issued in connection with
the purchase financing of
three (3) container vessels
INTEREST RATE MATURITY DATE ISSUE
DATE
[ ] (the "Company"), for value
received, hereby promises to pay to [ ] or registered
assigns the principal sum of ________________ DOLLARS (USD____________)
on the maturity date specified above. This Note shall bear interest at
the rate specified above on the unpaid principal amount thereof from
time to time outstanding from the date thereof to but excluding the date
due at the Interest Rate for each Interest Period beginning on or after
the Fixed Rate Conversion Date (as defined in the Loan Agreement
referred to below) and shall be payable in arrears on each Interest
Payment Date on a basis of the actual number of days elapsed over a year
of three hundred sixty (360) days including the first day of the
relevant Interest Period or portion thereof but excluding such Interest
Payment Date. Principal on this Note shall be payable on each Repayment
Date in the amounts set forth in Schedule 1 attached hereto subject to
any Daewoo * exercised by the Company pursuant to Section 5.03 of the
Loan Agreement. Capitalized terms contained herein and not defined
herein shall have the meanings specified in a certain Loan Agreement
dated March 14, 1994 (the "Loan Agreement") by and among American
President Lines, Ltd., Kreditanstalt fur Wiederaufbau, Commerzbank AG,
Hamburg, Commerzbank AG (Kiel Branch), Dresdner Bank AG in Hamburg,
Vereins-und Westbank AG, Deutsche Schiffsbank AG, Norddeutsche
Landesbank-Girozentrale, Deutsche Verkehrs-Bank AG and Banque
Internationale a Luxembourg S.A.
The interest so payable, and punctually paid or duly
provided for, on any such Interest Payment Date will, as provided in the
Loan Agreement, be paid by the Company to the Syndicate Agent for
payment to the Person in whose name this Note is registered at the close
of business on the date for payment of such interest. Any such interest
not so punctually paid or duly provided for shall be paid together with
default interest which shall accrue on the amount of such overdue sum in
the case of payments due as more fully provided in the Loan Agreement.
Under the Loan Agreement, the Company is obligated to pay
interest on and the principal of this Note to the Syndicate Agent in the
manner as provided therein, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment
of public and private debts.
This Note is subject to prepayment and acceleration as
more fully described in the Loan Agreement.
This Note is one of a duly authorized issue of Notes
issued and to be issued under the Loan Agreement.
Reference is made to the Loan Agreement and all
supplements and amendments thereto (a copy of which is on file with the
Company at its principal corporate office) for a more complete statement
of the terms and provisions thereof, including a statement of the
properties thereby conveyed, pledged and assigned, the nature and extent
of the security, the respective rights thereunder of the Company and the
Holders of the Notes, and the terms upon which the Notes are, and are to
be, executed and delivered, to all of which terms and conditions in the
Loan Agreement each Holder hereof agrees by its acceptance of this Note.
On a LIBO Rate Conversion Date, the Interest Rate on this
Note shall be converted to a LIBO Rate. Upon such conversion, the
Holders shall exchange this Note for a new LIBO Rate Note or Notes by
delivery of this Note to the principal office of the Registrar or at an
office or agency maintained for that purpose.
If an Event of Default shall occur and be continuing, the
principal of the Notes may be declared due and payable in the manner and
with the effect provided in the Loan Agreement and the Syndicate Agent
may exercise the rights and remedies provided for therein.
The right of the Holder of this Note to institute action
for any remedy under the Loan Agreement, including the enforcement of
payment of any amount due hereon, is subject to certain restrictions
specified in the Loan Agreement.
As provided in the Loan Agreement and subject to certain
limitations therein set forth, this Note is transferable, and upon
surrender of this Note for registration of transfer at the principal
office of the Registrar, or at the office or agency maintained for such
purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by, the
Holder or his attorney duly authorized in writing, one or more new Notes
of the same maturity and type and of authorized denominations and for
the same aggregate principal amount will be issued to the designated
transferee or transferees.
As provided in the Loan Agreement and subject to certain
limitations therein set forth, Notes are exchangeable for a like
aggregate principal amount of Notes of the same maturity and type and of
authorized denominations, as requested by the Holder surrendering the
same, upon presentation thereof for such purpose at the principal office
of the Registrar, or at an office or agency maintained for such purpose.
Prior to due presentment for registration of exchange or
transfer of this Note, the Syndicate Agent, the Paying Agent and the
Registrar may deem and treat the Person in whose name this Note is
registered as the absolute owner hereof for the purpose of receiving
payment of the principal of and interest on this Note and for all other
purposes whatsoever whether or not this Note be overdue, and neither the
Syndicate Agent, the Paying Agent nor the Registrar shall be affected by
notice to the contrary.
This Note shall not be entitled to any benefit under the
Loan Agreement or be valid or obligatory for any purpose unless this
Note has been executed on behalf of the Company by the manual signature
of an authorized officer of the Company.
AS PROVIDED IN THE LOAN AGREEMENT, THIS NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK (OTHER THAN THE LAW OF THE STATE OF NEW YORK GOVERNING CHOICE
OF LAW).
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
[ ]
By:___________________
[Title]
Attest:
By:_______________________
[Title]
Issue Date:
APPENDIX A-2B
FORM OF LIBO RATE NOTE
[Daewoo Vessel]
NOTE
No. $_______________
[ ]
Issued in connection with
the purchase financing
of three (3) container vessels
Issue Date: __________, _____
MATURITY DATE
__________, ____
[ ] (the "Company"), for value
received, hereby promises to pay to the order of [ ]
or registered assigns the principal sum of _____________________________
DOLLARS (USD___________) on the maturity date specified above. This
Note shall bear interest on the unpaid principal amount hereof from time
to time outstanding from the date hereof to but excluding the date due
at the Interest Rate for each Interest Period (as such term is defined
in the Loan Agreement referred to below) and shall be payable in arrears
on each Interest Payment Date on a basis of the actual number of days
elapsed over a year of three hundred sixty (360) days including the
first day of the relevant Interest Period or portion thereof but
excluding such Interest Payment Date), until the principal hereof is
paid. Principal on this Note shall be payable on each Repayment Date in
the amounts set forth in Schedule 1 attached hereto subject to any
Daewoo * exercised by the Company pursuant to Section 5.03 of the
Loan Agreement. Capitalized terms contained herein and not defined
herein, shall have the meanings specified in a certain Loan Agreement
dated March 14, 1994 (the "Loan Agreement") by and among American
President Lines, Ltd., Kreditanstalt fur Wiederaufbau, Commerzbank AG,
Hamburg, Commerzbank AG (Kiel Branch), Dresdner Bank AG in Hamburg,
Vereins-und Westbank AG, Deutsche Schiffsbank AG, Norddeutsche
Landesbank-Girozentrale, Deutsche Verkehrs-Bank AG and Banque
Internationale a Luxembourg S.A.
The interest so payable, and punctually paid or duly
provided for, on any such Interest Payment Date will, as provided in the
Loan Agreement, be paid by the Company to the Syndicate Agent for
payment to the Person in whose name this Note is registered at the close
of business on the date for payment of such interest. Any such interest
not so punctually paid or duly provided for shall be paid together with
default interest which shall accrue on the amount of such overdue sum in
the case of payments due as more fully provided in the Loan Agreement.
Under the Loan Agreement, the Company is obligated to pay
interest on and the principal of this Note to the Syndicate Agent in the
manner as provided therein, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment
of public and private debts.
This Note is subject to prepayment and acceleration as
more fully described in the Loan Agreement.
This Note is one of a duly authorized issue of Notes
issued and to be issued under the Loan Agreement.
Reference is made to the Loan Agreement and all
supplements and amendments thereto (a copy of which is on file with the
Company at its principal corporate office) for a more complete statement
of the terms and provisions thereof, including a statement of the
properties thereby conveyed, pledged and assigned, the nature and extent
of the security, the respective rights thereunder of the Company, and
the Holders of the Notes, and the terms upon which the Notes are, and
are to be, executed and delivered, to all of which terms and conditions
in the Loan Agreement each Holder hereof agrees by its acceptance of
this Note.
On a Fixed Rate Conversion Date, the Interest Rate on
this Note shall be converted to a Fixed Rate. Upon such conversion, the
Holders shall exchange this Note for a new Fixed Rate Note or Notes by
delivery of this Note to the principal office of the Registrar or at an
office or agency maintained for that purpose.
If an Event of Default shall occur and be continuing, the
principal of this Note may be declared due and payable in the manner and
with the effect provided in the Loan Agreement and the Syndicate Agent
may exercise whatever rights and remedies provided for therein.
The right of the Holder of this Note to institute action
for any remedy under the Loan Agreement, including the enforcement of
payment of any amount due hereon, is subject to certain restrictions
specified in the Loan Agreement.
As provided in the Loan Agreement and subject to certain
limitations therein set forth, this Note is transferable, and upon
surrender of this Note for registration of transfer at the principal
office of the Registrar, or at the office or agency maintained for such
purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by, the
Holder or his attorney duly authorized in writing, one or more new Notes
of the same maturity and type and of authorized denominations and for
the same aggregate principal amount will be issued to the designated
transferee or transferees.
As provided in the Loan Agreement and subject to certain
limitations therein set forth, this Note is exchangeable for a like
aggregate principal amount of LIBO Rate Notes of the same maturity and
type and of authorized denominations, as requested by the Holder
surrendering the same, upon presentation thereof for such purpose at the
principal office of the Registrar, or at an office or agency maintained
for such purpose.
Prior to due presentment for registration of exchange or
transfer of this Note, the Syndicate Agent, the Paying Agent and the
Registrar may deem and treat the Person in whose name this Note is
registered as the absolute owner hereof for the purpose of receiving
payment of the principal of and interest on this Note and for all other
purposes whatsoever whether or not this Note be overdue, and neither the
Syndicate Agent, the Paying Agent nor the Registrar shall be affected by
notice to the contrary.
This Note shall not be entitled to any benefit under the
Loan Agreement or be valid or obligatory for any purpose unless this
Note has been executed pursuant to the provisions in the Loan Agreement.
AS PROVIDED IN THE LOAN AGREEMENT, THIS NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK (OTHER THAN THE LAW OF THE STATE OF NEW YORK GOVERNING CHOICE
OF LAW).
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
[
]
By:___________________
Title:
Attest:
By:_____________________
Title:
SCHEDULE 1
Maturity Dates, Principal Amounts and
Initial Interest Rates of Notes
Principal
Maturity Date Amount Interest
Rate
APPENDIX B-1
[FORM SUBJECT TO REVISION TO
CONFORM TO LAWS OF FLAG STATE]
FIRST PREFERRED SHIP MORTGAGE ON
THE " " TO
[ ]
THIS FIRST PREFERRED SHIP MORTGAGE dated this _ day of [ ], 199 ,
made and given by [ ], a [ ]
corporation (the "Borrower") to [ ], a [ ]
organized and existing under the Laws of the Federal Republic of Germany
[for the Daewoo Mortgages, the Syndicate Agent and the Syndicate Members
shall be named as mortgagees] (the "Mortgagee", which term shall include
the Mortgagee's successors and assignees).
WHEREAS:
A. The Borrower is the sole owner of the Republic of The
Marshall Islands flag vessel, " ", Official No. , of
Gross Tons and Net Tons (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 shall exclude any leased equipment).
B. Pursuant to that certain Loan Agreement dated March
14, 1994 among [the Borrower] [American President Lines, Ltd. ("APL")],
the Mortgagee and [other Lender] (the "Loan Agreement") (a copy of which
without Exhibits is attached hereto as Exhibit A), the Mortgagee has
agreed to make loans with respect to three (3) vessels, including the
Vessel, to [the Borrower] [APL], or to [APL Newbuildings, Ltd. ("APLN")]
[the Borrower], with respect to such of said Vessels to be owned by [the
Borrower] [APL] or to be transferred by [the Borrower] [APL] to, and
owned by [APLN] [the Borrower], pursuant to that certain Agreement to
Acquire and Charter, dated the date of the Loan Agreement, among [the
Borrower] [APL], [APLN] [the Borrower], the Mortgagee and [other Lender]
[(a copy of which is attached as Exhibit A-1)], such loans to be in an
aggregate amount not to exceed [ ] United States Dollars (USD
) (collectively, the "Loans"), as evidenced in part by Notes
in the aggregate principal amount of United States
Dollars (USD _____________) dated , 199 (the "[HDW] [Daewoo]
Notes"), with respect to the Vessel by the Borrower in favor of the
Mortgagee (a form of which without Exhibits is attached hereto as
Exhibit B), and in order to induce the Mortgagee to make the loans, the
Borrower has agreed to grant this Mortgage to the Mortgagee to secure
the Borrower's obligations to the Mortgagee under the [HDW] [Daewoo]
Notes and its obligations relating thereto under the Loan Agreement, and
the remainder of the Loans as evidence by other [HDW] [Daewoo] notes,
whether issued by the Borrower or [APLN] [APL] with respect to such
vessels other than the Vessel.
C. The term "Obligations" shall mean all of the
obligations of the Borrower to pay any amount under this Mortgage, the
Loan Agreement insofar as they relate to the [HDW] [Daewoo] Tranche
Loans and the [HDW] [Daewoo] Notes to the Mortgagee [and the Syndicate
Members] whether by way of reimbursement, interest, indemnity or for any
other reasons whatsoever.
D. To secure payment of the Obligations to the
Mortgagee, the Borrower has duly authorized the execution, delivery and
recording of this First Preferred Ship Mortgage under and pursuant to
the laws of the Republic of The Marshall Islands.
[E. Borrower, on the date hereof, has entered into that
certain bareboat charter dated ____________, 199_ (the [HDW] [Daewoo]
Charter) with APL (the "Charterer").]
NOW, THEREFORE, THIS DEED, WITNESSETH:
That the Borrower, in consideration of the premises and
other valuable consideration, the receipt whereof is hereby
acknowledged, and for the purpose of securing payment of the Obligations
and to secure the performance, observance and accuracy of and compliance
with all the covenants, representations, warranties, terms and
conditions in the [HDW] [Daewoo] Notes, the Loan Agreement insofar as it
relates to the [HDW] [Daewoo] Notes, in favor of the Mortgagee [and the
Syndicate Members] and in this Mortgage expressed, for the benefit of
the Mortgagee, 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 the whole of the Vessel;
TO HAVE AND TO HOLD the same unto the Mortgagee forever
in accordance with the terms herein set forth for the enforcement of the
payment of the Obligations and to secure the performance, observance and
accuracy of and compliance with all the covenants, representations,
warranties, terms and conditions contained in the [HDW] [Daewoo] Notes,
the Loan Agreement insofar as it relates to the [HDW] [Daewoo] Notes,
the Loans and this Mortgage expressed, for the benefit of the Mortgagee;
PROVIDED ONLY and the conditions of these presents are
such that if and when the Mortgagee shall have received (i) the full
amount of the Obligations or (ii) the full amount required to be paid in
respect of the Subportion of the [HDW] [Daewoo] Tranche relating to the
Vessel evidenced by the [HDW] [Daewoo] Notes in accordance with the
provisions of Section 5.04 of the Loan Agreement, together with payment
of all other amounts then due and owing secured by this Mortgage, these
presents and the rights of the Mortgagee hereunder shall cease,
determine and be void, otherwise to be and remain in full force and
effect.
The Borrower for itself, its successors and assignees,
hereby covenants and agrees with the Mortgagee that the Vessel is to be
held by the Mortgagee as long as the obligation of the Borrower under
the [HDW] [Daewoo] Notes, the Loan Agreement to the extent it relates to
the [HDW] [Daewoo] Notes and this Mortgage remains in force, subject to
the further covenants, conditions, provisions, terms and uses
hereinafter set forth.
ARTICLE I
REPRESENTATIONS OF THE BORROWER
(1) The Borrower is a corporation duly organized and
validly existing in good standing under the laws of the jurisdiction of
its incorporation with full corporate power and authority to conduct its
business as the same is presently conducted;
(2) the Borrower has legal power and authority to enter
into and carry out the terms of this Mortgage;
(3) this Mortgage has been duly authorized by all
necessary action, corporate or other, on the part of the Borrower, and
this Mortgage constitutes, and upon due execution and delivery by the
Borrower the Mortgage will constitute, in accordance with its respective
terms, a legal, valid and binding instrument enforceable against the
Borrower, except to the extent limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws of general
application relating to or affecting the enforcement of creditors'
rights from time to time in effect;
(4) except as previously disclosed to the Mortgagee in
writing, there are no actions, suits or proceedings pending or, to the
Borrower's knowledge, threatened against the Borrower or any of its
properties affecting the Mortgage which would materially and adversely
affect the ability of the Borrower to perform its obligations hereunder;
(5) the consummation of the transactions contemplated
by, and compliance by the Borrower with all the terms and provisions of,
the Mortgage will not violate any provisions of the Certificate of
Incorporation or Bylaws of the Borrower and will not result in a breach
of the terms and provisions of, or constitute a default under, any other
agreement or undertaking by the Borrower or by which it or any of its
property is bound or any order of any court or administrative agency
entered in any proceedings binding on the Borrower, or violate any
applicable statute, rule or regulation;
(6) the Borrower is not in default and no condition
exists which with notice or lapse of time or both would constitute a
default by the Borrower, in any respect which would materially and
adversely affect the ability of the Borrower to perform its obligations
under this Mortgage, under any mortgage, loan agreement, deed of trust,
indenture or other agreement with respect thereto or evidence of
indebtedness to which it is a party or by which it is bound, and is not
in violation of or in default, in any respect which would materially and
adversely affect the ability of the Borrower to perform its obligations
under this Mortgage, under any order, writ, judgment or decree of any
court, arbitrator or governmental authority, commission, board, agency
or instrumentality, domestic or foreign;
(7) the Borrower has more than one place of business and
the location of the place of business which is its chief executive
office is 1111 Broadway, Oakland, California 94607;
(8) all taxes (other than taxes based on or measured by
income), liability for the payment of which has been incurred by the
Borrower in connection with the execution, delivery and performance by
it of the Mortgage, have been paid (or provided for in its accounts if
not payable on or prior to the delivery date of the Vessel);
(9) all governmental consents, licenses, permissions,
approvals, registrations or authorizations or declarations required (i)
to enable it lawfully to enter into and perform its respective
obligations under this Mortgage, (ii) to ensure that its respective
obligations hereunder and thereunder are legal, valid and enforceable
and (iii) to make this Mortgage admissible in evidence in the Republic
of The Marshall Islands, and the United States of America has been
obtained or made and are in full force and effect;
(10) it has not taken any corporate action nor to its
knowledge have any other steps been taken or legal proceedings been
started or threatened against it for its winding-up, dissolution or
reorganization or for the appointment of a receiver, administrative
receiver, administrator, trustee or similar officer of it or of any or
all of its respective assets and revenues;
(11) except for registration of this Mortgage in
accordance with the provisions of the Republic of the Marshall Islands'
Maritime Act of 1990, as amended, it is not necessary to ensure the
legality, validity, enforceability or admissibility in evidence of this
Mortgage in the country of the Borrower or the United States of America,
or the flag of its registry or, to the best of its knowledge, elsewhere,
that it be filed, recorded or enrolled with any governmental authority
or agency in the country of the Borrower or, to the best of its
knowledge, elsewhere, or that it be stamped with any stamp, registration
or similar transaction tax in the country of the Borrower or the United
States of America, or the flag of its registry or to the best of its
knowledge, elsewhere;
(12) the Vessel is duly documented in the name of the
Borrower under the flag of the Republic of The Marshall Islands; and
(13) the Vessel is in the absolute and unencumbered
ownership of the Borrower except as contemplated by this Mortgage [and
the Second Mortgage].
ARTICLE II
COVENANTS OF THE BORROWER
(14) The Borrower represents and warrants that it
lawfully owns and possesses the Vessel free from any mortgage, security
interest, lien or charge whatsoever other than the Mortgage and
covenants with the Mortgagee that it shall warrant and defend the title
to and lawful possession of the Vessel and every part thereof for the
benefit of the Mortgagee, and shall hold harmless and indemnify the
Mortgagee against the claims and demands of all Persons whomsoever
arising as the result of any mortgage, security interest, lien or charge
whatsoever on the Vessel; provided that the Borrower's foregoing
obligations (other than its agreements to defend title and indemnify and
hold the Mortgagee harmless) shall not apply to the following:
(a) liens for crew's wages ("Crew's Wages") and salvage
(including contract salvage) which shall not have been due and payable
for more than ten (10) days after termination of a voyage or which shall
then be contested in good faith by the Borrower [or the Charterer] in
appropriate proceedings diligently prosecuted and shall not subject the
Vessel or any part thereof to risk, forfeiture or loss, or in any
material way prejudice or impair the Mortgagee's rights or interest in
or under the Mortgage;
(b) liens for Crew's Wages and salvage (including
contract salvage) and general average which are either unclaimed or
covered by insurance;
(c) liens incident to current operations (except for
Crew's Wages, salvage and general average) not more than thirty (30)
days past due, liens for the wages of a stevedore when employed directly
by the Shipowner or the operator, master or any agent of the Vessel, or
liens covered by insurance and any deductible applicable thereto;
(d) liens for repairs or with respect to changes made in
the Vessel pursuant to Section 25(b) hereof;
(e) in the event the use of or title to the Vessel is
requisitioned by any government or any agency thereof insofar as it
relates to possession of the Vessel;
[(f) in the case of a Daewoo Vessel, the Second
Mortgage];
(g) liens for taxes or assessments or other governmental
charges and levies not yet due and payable, or the validity of which is
being contested by the Borrower [or the Charterer] in good faith by
appropriate proceedings upon stay of execution of the enforcement
thereof and for which adequate reserves in accordance with Generally
Accepted Accounting Principles or other appropriate provision has been
made;
(h) in the case of any actual or constructive total loss
or an agreed or compromised total loss of the Vessel insofar as it
relates to possession of the Vessel; and
(i) insofar as it relates to possession of the Vessel,
to charters permitted by the terms of this Mortgage and the Loan
Agreement and by applicable law [and to subcharters permitted by the
terms of the [HDW] [Daewoo] Charter];
provided that any liens described in paragraphs (c), (d) and [(g)]
hereof shall be permitted only to the extent they are subordinate to
lien of the Mortgage.
(15)(a) Neither the Borrower, any 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 this Mortgage [the Second
Mortgage] and the liens referred to in Section 14 hereof.
(b) The Borrower shall forthwith remove or cause to be
removed within thirty (30) days of its knowledge thereof any lien or
encumbrance (other than the items referred to in Section 14(e), (h) and
(i) of this Article II) which shall be filed against the Vessel, unless
the same is being contested by appropriate proceedings in good faith and
(i) such proceedings shall suspend the collection of the related claim
from the Vessel, (ii) neither the Vessel nor any interest therein would
be in any danger of being sold, forfeited or lost during the pendency of
such proceedings, and (iii) the Borrower or the Charterer shall have
furnished such security, if any, or cause or make adequate provision for
release prior to foreclosure, sale, or similar disposition as may be
required in such proceedings.
(16) If the Vessel shall be attached, levied upon or
taken into custody by virtue of any legal proceeding in any court or
tribunal or by any government or other authority, the Borrower or the
Charterer shall promptly notify the Mortgagee thereof by telex and
within fifteen (15) days after any such arrest (except in the case of
requisition or other taking by any government or governmental body)
shall cause the Vessel to be released within thirty (30) days and shall
promptly notify the Mortgagee thereof in the manner aforesaid.
(17) Except as provided in the Granting Clause hereof
the Borrower has not assigned, pledged or otherwise granted a security
interest in or lien on, and shall not assign, pledge or otherwise grant
a security interest in or lien on, the whole or any part of, any rights
assigned by the Granting Clause hereof.
[Include Second Mortgage in case of a Daewoo Vessel]
(18) Upon the occurrence of any Event of Default, the
Borrower shall promptly notify the Mortgagee by telex or telecopy,
confirmed by letter, unless such Event of Default shall have been cured.
(19) The Borrower shall make all payments of principal
and interest on the [HDW] [Daewoo] Notes and shall perform in full its
obligations and liabilities under this Mortgage and the Loan Agreement
to the extent it relates to the [HDW] [Daewoo] Notes and the [HDW]
[Daewoo] Security Documents.
(20) (a) The Borrower represents and warrants that on
the date hereof the Vessel is, and the Borrower covenants with the
Mortgagee that it shall (subject to clauses (b) and (c) below) hereafter
remain, documented under the laws of the Republic of The Marshall
Islands.
(b) The Borrower shall have the right to change the
registry and flag of the Vessel to the registry and flag of the Republic
of Panama, the Republic of Liberia, the Republic of Vanuatu and the
Commonwealth of The Bahamas. Prior to any such change in registry and
flag, the Borrower shall (i) obtain all necessary approvals of
governmental authorities including, without limitation, those of the
then current country of the Vessel's registry and the jurisdiction of
its incorporation, if any, and otherwise comply with all applicable law
if any, (ii) execute and deliver to the Mortgagee, in form and substance
reasonably satisfactory to the Mortgagee, and after execution by the
Mortgagee and immediately after the registration of the Vessel, file for
recordation, a replacement mortgage for this Mortgage (the "Replacement
Mortgage"), with terms and conditions substantially similar to the terms
and conditions of this Mortgage, which Replacement Mortgage shall
constitute a first priority lien on the Vessel and shall be in
compliance with all applicable laws and regulations of any such country
where the Vessel is re-registered and re-flagged, and immediately after
the filing of the Replacement Mortgage for recordation deliver to the
Mortgagee (A) an opinion of counsel reasonably satisfactory to the
Mortgagee confirming that any Replacement Mortgage constitutes such a
first priority lien under the laws and regulations of such country and
is a "preferred mortgage" within the meaning of 46 U.S.C. Section
31301(b)(B), and that, if there shall have been any change in the
applicable laws and regulations of such country of re-registration and
re-flagging after March 14, 1994, such change does not materially
adversely affect the interests of the Mortgagee with respect to the
Vessel, and (B) a certificate of the Borrower that the Vessel is duly
documented under the laws of the country where the Vessel is
re-registered and re-flagged, and that the Vessel is free of any claim,
lien, charge, mortgage or other encumbrance of any character (except the
Replacement Mortgage [and the Second Mortgage]). In connection with any
such change of registry and flag, the Mortgagee shall, at the request of
the Borrower and at the Borrower's cost and expense, and upon compliance
with subclauses (i) and (ii) of this clause (b), execute and deliver to
the Borrower the Replacement Mortgage, an instrument in recordable form
duly acknowledging the satisfaction and discharge of this Mortgage, and
any other instrument or document necessary or appropriate for the
orderly consummation of the change in registry and flag and replacement
of the Mortgage. Notwithstanding the foregoing, no such reflagging shall
be permitted (x) if an Event of Default or Incipient Default shall have
occurred and be continuing or (y) if in the sole opinion of the
Mortgagee such reflagging will, or may be expected to, adversely affect
the rights or remedies of the Mortgagee under the Loan Documents, the
value of the Vessel, or will be or may otherwise be expected to be,
disadvantageous to the Mortgagee.
(c) The Borrower shall have the right to change the
registry and flag of the Vessel to the registry and flag of the United
States of America. Prior to any such change in registry and flag, the
Borrower shall (i) obtain all necessary approvals of governmental
authorities including, without limitation, those of the then current
country of the Vessel's registry and the jurisdiction of its
incorporation, if any, and otherwise comply with all applicable law, if
any, (ii) execute and deliver to the Mortgagee (or an approved trustee
to act as mortgagee), a replacement mortgage with terms and conditions
substantially the same as the terms and conditions of this Mortgage, in
form and substance reasonably satisfactory to the Mortgagee (the
"Replacement Mortgage"), and after execution by the Mortgagee and
immediately after the registration of the Vessel, file for recordation,
the Replacement Mortgage for this Mortgage, which Replacement Mortgage
shall constitute a first priority lien on the Vessel and shall be in
compliance with all applicable laws and regulations of the United States
of America, and, immediately after the filing of the Replacement
Mortgage for recordation, deliver to the Mortgagee (A) an opinion of
counsel reasonably satisfactory to the Mortgagee confirming that any
Replacement Mortgage constitutes such a first "preferred" ship mortgage
under the laws and regulations of the United States of America and (B) a
certificate of the Borrower that the Vessel is duly documented under the
laws of the United States of America, and that the Vessel is free of any
claim, lien, charge, mortgage or other encumbrance of any character
(except the Replacement Mortgage [and the Second Mortgage] [and the
Charter]). In connection with any such change of registry and flag, the
Mortgagee shall, at the request of the Borrower and at the Borrower's
cost and expense, and upon compliance with subclauses (i) and (ii) of
this clause (c), execute and deliver to the Borrower the Replacement
Mortgage, an instrument in recordable form duly acknowledging the
satisfaction and discharge of this Mortgage, and any other instrument or
document necessary or appropriate for the orderly consummation of the
change in registry and flag and replacement of the Mortgage.
Notwithstanding the foregoing, no such reflagging shall be permitted if,
an Event of Default or Incipient Default shall have occurred and be
continuing.
(21) The Borrower (x) shall not cause or permit the
Vessel to be operated in any manner contrary to applicable law except to
the extent that such provision shall have been contested in good faith
by the Borrower in appropriate proceedings diligently prosecuted and
shall not subject the Vessel to risk, forfeiture or loss, or in any
material way prejudice or impair the Mortgagee's rights or interests in
or under the Mortgage, (y) shall not operate the Vessel in any way
contrary to any of the terms or conditions of the insurance required by
Section 29 hereof (unless it shall first have arranged for continuation
of the coverage afforded thereby), and (z) shall not abandon the Vessel
in any foreign port unless (i) there shall have been an actual or
constructive total loss or an agreed or compromised total loss of the
Vessel; or (ii) there has been any other loss with respect to the Vessel
and the Borrower shall not have had reasonable time to repair or rectify
the same; or (iii) the use or title of the Vessel has been taken or
requisitioned by any government or governmental authority; provided,
however, that if an Event of Default shall have occurred and be
continuing, the Borrower shall not abandon the Vessel unless it shall
have first received the written consent of the Mortgagee.
(22) The Borrower shall pay and discharge or cause to be
paid and discharged when due and payable all claims against, and taxes,
assessments, governmental charges, fines and penalties imposed on, the
Vessel or the Vessel's cargo; provided, however, that the Borrower shall
have the right to contest or cause to be contested, in good faith and by
appropriate proceedings, any such claim, tax, assessment, governmental
charge, fine or penalty and, pending such contest, may defer the payment
thereof so long as such contest or deferment in payment shall not
subject the Vessel or any part thereof to risk or forfeiture or loss, or
in any material way prejudice or impair the Mortgagee's rights or
interests in or under the Mortgage.
(23) The Borrower shall, at its expense and at no cost
to the Mortgagee, comply with and satisfy all of the provisions of the
flag of the Republic of The Marshall Islands, in order to establish,
record and maintain the Mortgage as a preferred mortgage thereunder on
the Vessel until it is re-registered, reflagged and the Mortgage is
replaced by a Replacement Mortgage as provided in Section 20(b) hereof.
(24) The Borrower shall place and at all times and
places shall retain a properly certified copy of the Mortgage on board
the Vessel with her papers and shall cause such certified copy and such
papers to be exhibited to any and all Persons having business with the
Vessel and to any representative of the Mortgagee. The Borrower shall
also place and keep prominently displayed on the Vessel a framed printed
or typewritten notice in plain type which shall cover a space of not
less than six inches wide by nine inches high (or of such other
dimensions as may be required by law) reading substantially as follows:
"NOTICE OF FIRST PREFERRED SHIP MORTGAGE"
"This Vessel is owned by [ ] a
[ ] corporation (the "Shipowner"), and is covered by a
First Preferred Ship Mortgage in favor of [ ],
under authority of the Republic of The Marshall Islands. Under
the terms of said Mortgage, neither the Shipowner, any charterer,
the master of the Vessel nor any other person has any right,
power or authority to create, incur or permit to be placed or
imposed upon this Vessel any lien whatsoever other than the lien
of said Mortgage and liens for wages of a stevedore when employed
directly by the Shipowner, operator, master, or any agent of the
Vessel, for Crews' Wages, for general average, for salvage, and,
to the extent subordinate to the lien of said Mortgage, for
certain liens incident to current operations or for repairs or
changes permitted by the Mortgage."
(25)(a) The Borrower shall at all times and without cost
or expense to the Mortgagee (i) maintain and preserve, or cause to be
maintained and preserved, the Vessel in good running order and repair,
so that the Vessel shall be, insofar as due diligence can make her so,
strong and well and sufficiently tackled, apparelled, furnished,
equipped and in every respect seaworthy and in good operating condition,
ordinary wear and tear and depreciation excepted; and (ii) keep the
Vessel, or cause her to be kept, in such condition as will entitle her
to the highest classification and rating for vessels of the same age and
type of The American Bureau of Shipping, and annually shall furnish to
the Mortgagee a certificate by The American Bureau of Shipping that such
classification is maintained; provided that in any event the Borrower
shall notify the Mortgagee of any change in the classification of the
Vessel; and provided, further, that the foregoing shall not apply if
there shall have been an Event of Loss or during such period as (1) the
Vessel has been taken or requisitioned by any government or governmental
body or (2) there has been any other loss with respect to the Vessel and
the Borrower shall not have had a reasonable time to repair the same.
The Borrower shall furnish from time to time upon reasonable demand of
the Mortgagee such information and documents as the Mortgagee may
require concerning the classification of the Vessel. Except during any
period in which the provided further proviso in the first sentence of
this paragraph shall apply, the Vessel shall, and the Borrower covenants
that she will, at all times comply with all applicable laws, treaties
and conventions of the Republic of The Marshall Islands and all rules
and regulations issued thereunder, and shall have on board as and when
required thereby valid certificates showing compliance therewith except
to the extent that such provision shall have been contested in good
faith by the Borrower in appropriate proceeding diligently prosecuted,
so long as such proceeding shall not subject the Vessel or any part
thereof to risk or forfeiture or loss, or in any material way prejudice
or impair the Mortgagee's rights or interests in or under the Mortgage.
(b) The Borrower shall not make, or permit to be made,
any substantial change in the structure, type or speed of the Vessel or
change in her rig unless it shall have received the Mortgagee's prior
written approval thereto, which approval shall not be unreasonably
withheld or delayed; provided, however, that no such approval need be
obtained in respect of any change which shall be necessary to comply
with the requirements of the United States Coast Guard, the Republic of
The Marshall Islands or The American Bureau of Shipping in order to
entitle the Vessel to the classification and rating required by
paragraph (a) hereof.
(c) Until an Event of Default shall occur, the Borrower
(i) shall be suffered and permitted to retain actual possession and use
of the Vessel and (ii) shall have the right, from time to time, in its
discretion, and without application to the Mortgagee, and without
obtaining a release thereof by the Mortgagee, to dispose of, free from
the lien hereof, any boilers, engines, machinery, bowsprits, masts,
spars, sails, rigging, boats, anchors, apparel, furniture, equipment or
any other appurtenances to the Vessel that are no longer useful,
necessary, profitable or advantageous in the operation of the Vessel,
first or simultaneously replacing the same by new boilers, engines,
machinery, bowsprits, masts, spars, sails, rigging, boats, anchors,
apparel, furniture, fittings, equipment or other appurtenances of at
least equal value to the Borrower which shall forthwith become subject
to the lien of this Mortgage.
(26) The Borrower shall at all reasonable times afford
the Mortgagee or its authorized representatives full and complete access
to the Vessel for the purpose of inspecting or surveying the same and
her papers and, at the request and expense of the Mortgagee, the
Borrower shall deliver or cause to be delivered for inspection by such
parties copies of any and all contracts and documents relating to the
Vessel, whether on board or not.
(27) The Borrower shall not sell, demise charter [except
for the [HDW] [Daewoo] Charters], mortgage (except by this Mortgage [and
the Second Mortgage]) or transfer the Vessel (except any sale of the
Vessel after repayment of the amounts of the related subportion of the
[HDW] [Daewoo] Tranche in accordance with Section 5.04 of the Loan
Agreement or by way of requisition or other governmental taking by the
United States of America or the Republic of The Marshall Islands or in
accordance with Section 9.02(b) of the Loan Agreement) without the prior
written consent of the Mortgagee, which consent shall not be
unreasonably withheld. Any such written consent to any one sale, demise
charter, mortgage or transfer shall not be construed to be a waiver of
this provision with respect to any subsequent proposed sale, demise
charter, mortgage or transfer. Any sale, demise charter, mortgage or
transfer of the Vessel shall be subject to the provisions of the
Mortgage and the lien thereof.
(28) The Borrower will reimburse the Mortgagee promptly
for any and all expenditures which the Mortgagee may from time to time
make, lay out or expend in providing protection in respect of insurance,
discharge or purchase of any liens, taxes, dues, assessments,
governmental charges, tolls, fines and penalties imposed, repairs,
attorneys' fees and other matters as the Borrower is obligated herein to
provide but fails to provide. Such obligation of the Borrower to
reimburse the Mortgagee shall constitute Obligations secured by this
Mortgage, and shall be payable by the Borrower on demand, together with
interest thereon from the date of demand until the date of payment (both
before and after judgment) at the Default Interest Rate (as such rate is
set forth in Section 3.08[(a)][(b)] of the Loan Agreement). The
Mortgagee, though privileged so to do, shall be under no obligation to
the Borrower to make any such expenditures, nor shall the making thereof
relieve the Borrower of any default in that respect.
(29)(a) The Borrower shall, at its own expense, provide
and maintain insurance on or with respect to the Vessel and the
operation thereof, as follows:
(1) Marine navigating risk hull and machinery
insurance and marine war navigating risk hull and machinery
insurance, together with, at the Borrower's option, such amounts
of increased value and total loss only insurance as are permitted
by such hull and machinery insurance policies. While the Vessel
is idle or laid up, at the option of the Borrower and in lieu of
the coverage described in the immediately preceding sentence,
port risk hull and machinery insurance may be taken out on the
Vessel by the Borrower. The foregoing insurance shall be in
aggregate amounts equal at all times to the greater of (a) one
hundred ten percent (110%) of the aggregate amount of the
[HDW][Daewoo] Notes outstanding and (b) the full commercial value
of the Vessel. Any of the foregoing may provide for a deductible
amount approved by the Mortgagee, but no consent or approval of
the Mortgagee shall be required for a deductible amount of up to
One Million United States Dollars (USD1,000,000) with respect to
any one accident, occurrence or event. The preceding sentence
shall not apply in the event of an actual, constructive,
compromised or agreed total loss of the Vessel. All policies of
insurance required under this Section 29(a)(1) shall, unless the
Mortgagee shall otherwise consent in writing, be under the
broadest forms which are carried by prudent shipowners for
similar vessels engaged in similar trades (at the time of issue
of the policies in question) and approved by the Mortgagee. The
Borrower shall have the right to procure in excess of the above
requirements for its own sole benefit.
(2) Marine and war risk, full form protection and
indemnity insurance with such clubs or insurance companies
acceptable to the Mortgagee, for such amounts as the Mortgagee
may require or approve. Such protection and indemnity insurance
shall be maintained in the broadest forms generally available in
the United States/United Kingdom markets and shall include a
cross liability endorsement, if obtainable. The Borrower shall
have the right to carry, for its own benefit, excess protection
and indemnity insurance and marine multiliability insurance. The
Mortgagee shall have the right to approve the amounts of
deductibles; provided, however, that no approval of the Mortgagee
shall be required if such deductibles aggregate not more than
Five Hundred Thousand United States Dollars (USD500,000) with
respect to any single accident, occurrence or event excluding
cargo and Five Hundred Thousand United States Dollars
(USD500,000) per vessel voyage with respect to total cargo or
property carried on such voyage.
(3) Insurance against liability under law or
international convention arising out of pollution, spillage or
leakage in an amount not less than the greater of:
(y) the maximum amount available, as that
amount may from time to time change, from
the International Group of Protection and
Indemnity Associations or alternatively
such sources of pollution, spillage or
leakage coverage as are commercially
available in any absence of such coverage
by the International Group as shall be
carried by prudent shipowners for similar
vessels engaged in similar trades plus
amounts available from customary excess
insurers of such risks as excess amounts
shall be carried by prudent shipowners for
similar vessels engaged in similar trades;
and
(z) the amounts required by the laws or
regulations of the United States of
America and any applicable jurisdiction in
which the Vessel may be trading from time
to time except to the extent that any such
laws or regulations shall have been
contested in good faith by the Borrower
[or the Charterer] in appropriate
proceedings diligently prosecuted, as long
as such proceedings or the failure to
provide such insurance shall not subject
the Vessel or any part thereof to risk,
forfeiture or loss, or in any material way
prejudice or impair the Mortgagee's rights
or interests in or under this Mortgage.
The foregoing insurance shall be against such risks and in such
form as are in the reasonable opinion of the Mortgagee, necessary
or advisable for the protection of the interests of the
Mortgagee.
(4) Single interest mortgagee's insurance
covering the Mortgagee against any acts or omissions of the
Borrower whereby marine and war risk hull and machinery insurance
covered by this paragraph (a) shall or may be suspended, impaired
or defeated; and any loss under such insurance shall be payable
directly to the Mortgagee. Such single interest mortgagee's
insurance may, at the option of the Mortgagee, be placed by the
Mortgagee at the expense of the Borrower, unless the Borrower can
arrange coverage acceptable to the Mortgagee at cheaper rates
which can be directly placed by the Mortgagee.
(5) Mortgagee's additional perils insurance
(pollution), and any loss under such insurance shall be payable
directly to the Mortgagee. Such additional perils insurance may,
at the option of the Mortgagee, be placed by the Mortgagee at the
expense of the Borrower, unless the Borrower can arrange
acceptable coverage to the Mortgagee at cheaper rates which can
be directly placed by the Mortgagee.
(6) The Borrower shall carry at its own expense,
for the benefit of the Mortgagee, (i) in connection with any
voyage outside the territorial waters of the United States of
America, such insurance against political risks of confiscation
and expropriation by any government (except the United States of
America and the country of registry) as would be carried by
prudent owners and operators on similar voyages, (ii) additional
insurance in such amounts and against such risks arising from or
connected with the ownership or operation of the Vessel as from
time to time may be commonly insured against and may be
reasonably required by the Mortgagee and (iii) such other
insurance as may at the time be required by applicable law except
to the extent that such law shall have been contested in good
faith by the Borrower [or the Charterer] in appropriate
proceedings diligently prosecuted as long as such proceedings or
the failure to provide such insurance shall not subject the
Vessel or any part thereof to risk, forfeiture or loss, or in any
material way prejudice or impair the Mortgagee's rights or
interests in or under this Mortgage.
(b) (1) All insurance required to be taken out and
maintained pursuant to the terms of this Mortgage (except
insurance pursuant to Section 29(a)(4) and (5) of this
Article II) shall name the Mortgagee (as Mortgagee) [the Second
Mortgagee as defined in subsection (c), below (if a Daewoo
Vessel)], the Borrower and any permitted charterer, as named
insured or additional named insured, and the policies or
certificates of insurance shall provide that there shall be no
recourse against the Mortgagee [or the Second Mortgagee] for the
payment of premiums, commissions, club calls, assessments or
advances.
(2) All insurance carried pursuant to paragraph
(a) of this Section 29 shall contain provisions or endorsements
stating that such insurance is primary insurance without any
right of contribution with respect to any insurance carried by or
on behalf of the Mortgagee [or any other Syndicate Members] [or
the Second Mortgagee] other than as provided pursuant to this
Section 29 on the same interest insured.
(3) The policies in respect of insurance carried
pursuant to paragraph (a) hereof shall provide that at least ten
(10) days' prior written notice shall be given to the Mortgagee
and the Borrower by the underwriters of any cancellation for the
nonpayment of premiums, commissions, club calls, assessments or
advances. Each policy in respect of such insurance shall further
provide that (except in the case of automatic termination and
cancellation clauses pursuant to the terms of the war risk
policies other than for nonpayment of premium) at least ten (10)
days' prior written notice shall be given to the Mortgagee [and
the Second Mortgagee] and the Borrower by the underwriter of any
termination, cancellation, lapse or material modification of the
terms of such policy. Each policy in respect of such insurance
shall contain provisions waiving underwriters' rights of
subrogation thereunder against any assured named in such policy.
The Mortgagee shall have the right, but not the obligation, to
pay any such amounts on behalf of the Borrower which shall not
have been timely paid by the Borrower and to recover such amounts
together with interest pursuant to this Section 29.
(c) All policies of insurance in respect of
insurance required to be taken out and maintained pursuant to the terms
of this Mortgage or other evidence thereof (except policies taken out
pursuant to Sections 29(a)(4) and (a)(5) of this Article II) shall
provide that losses thereunder shall be payable (i) until this Mortgage
shall have been discharged, first to the Mortgagee for application
pursuant to this Mortgage; [(ii) and after underwriters shall have been
given written notice by the Mortgagee of discharge of this Mortgage, to
Kreditanstalt fur Wiederaufbau as mortgagee (the "Second Mortgagee")
under a Second Preferred Ship Mortgage dated [ ], 199__
for application pursuant to the Second Mortgage] and (iii) thereafter,
to the Borrower; provided, however, that such policies of insurance or
other evidence thereof shall provide that:
(1) In the case of insurance carried pursuant to
paragraph (a)(1) of this Section 29 (to the extent liability
insurances are afforded thereunder) or pursuant to paragraph
(a)(2) of this Section:
(i) if the Borrower shall not have
incurred the loss, damage or expense in question, any loss under
such insurance may be paid directly to the Person by whom such
liability covered by such policies has been incurred (whether or
not an Incipient Default or an Event of Default then exists); and
(ii) if the Borrower shall have incurred the
loss, damage or expense in question or if the Borrower shall have
paid the loss, damage or expense in question and shall have
presented to the underwriters satisfactory evidence that the
liability insured against has been discharged or is being
discharged simultaneously with such payment, any such loss under
such insurance shall be paid to the Borrower or to its order in
reimbursement if there is not then an existing Event of Default
or Incipient Default of which the underwriter has written notice
from the Mortgagee, or, if there is such an existing Event of
Default or Incipient Default, to the Mortgagee to apply such
amounts in accordance with Section 39 hereof, or (y) if such
Event of Default or Incipient Default shall have been cured or
waived, in which case such amounts shall be applied as otherwise
provided in this Section 29, and if the Mortgage shall have been
discharged, such loss shall be paid to the Borrower; and
(iii) upon the occurrence of an Event of
Loss, all insurance payments and other compensation therefor
shall be paid to the Mortgagee for application in accordance with
Section 5.04(b) of the Loan Agreement.
(2) In the case of insurance carried pursuant to
paragraph (a)(1) of this Section (to the extent liability
insurances are not afforded thereunder), so long as the accident,
occurrence or event does not result in an Event of Loss, payment
of all losses up to Two Million United States Dollars
(USD2,000,000) (or such higher figure as the Mortgagee may from
time to time approve) by all insurance underwriters with respect
to any one accident, occurrence or event may be made (i) directly
for the repair or other charges involved, (ii) directly to the
Borrower or to its order as reimbursement if the Borrower or any
permitted charterer shall have first fully repaired the damage
and paid the cost thereof and any other charges involved, and the
underwriters shall have received evidence that such repair and
payment have been made or will be made simultaneously with the
payment by the underwriters; provided that if such loss exceeds
Two Million United States Dollars (USD2,000,000), the
underwriters shall not make payment without first obtaining the
prior written consent of the Mortgagee, which consent shall not
be unreasonably withheld, and provided, further, that if the
underwriters shall have received written notice from the
Mortgagee as to the occurrence of an Event of Default or
Incipient Default, unless the underwriters shall thereafter have
been notified by the Mortgagee in writing that such Event of
Default or Incipient Default has been cured or waived, in which
event all such payments shall be made to the Mortgagee for
application in accordance with Section 39 hereof, and after the
Mortgage has been satisfied and discharged, to the Borrower or to
its order.
(d) In the event that a claim is made against the
Vessel for loss, damage or expense which is covered by insurance, and it
is necessary for the Borrower to obtain a bond or to supply other
security to prevent arrest of the Vessel or to release the Vessel from
arrest on account of such claim, the Mortgagee, on written request of
the Borrower, shall assign to any Person executing a surety or guaranty
bond or other agreement to save or release the Vessel from such arrest
all right, title and interest of the Mortgagee in and to such insurance
proceeds covering such loss, damage or expense as collateral security to
indemnify against liability under such bond or other agreement.
(e) The Borrower shall have the duty and
responsibility to make all proofs of loss and taken any and all other
steps necessary to effect collections from underwriters for any loss
under any insurance carried pursuant to paragraph (a) of this Section
29.
(f)(1) The Borrower shall furnish, or cause to be
furnished, to the Mortgagee [and the Second Mortgagee] on the date
hereof and annually (between each January 15th and no later than March
15th) thereafter, copies of (i) cover notes, (ii) policies of insurance,
(iii) letters of undertaking, if any, and (iv) a detailed report signed
by independent marine insurance brokers designated by the Borrower and
satisfactory to the Mortgagee describing the insurance carried on or
with respect to the Vessel and the operation thereof and stating, in
effect, that such insurance complies in all respects with the applicable
requirements of this Section.
(2) Such report shall state that, in the opinion
of such insurance broker, the forms of policies or other evidence
of such insurance and the amounts of insurance and other terms
are (i) not less than what is necessary or advisable for the
protection of the interests of the Mortgagee and (ii) are
customary at the time for vessels of similar size, type, trade
and cargo. Such report shall set forth any recommendations such
insurance broker may have for additional or reduced insurance
which prudent shipowners or operators of vessels of similar size,
type, trade and cargo are then carrying. Such report shall
further state that, in the opinion of such independent insurance
broker, all insurance carried pursuant to paragraph (a) of this
Section 29 is underwritten by insurance companies, underwriters'
associations or underwriting funds which should be satisfactory
to the Mortgagee.
(3) The Borrower shall cause such independent
insurance broker to agree (i) to advise the Mortgagee [and the
Second Mortgagee] promptly of any default in the payment of any
premium, commission, club call, assessment or advance required
(whether for new insurance or for insurance replacing, renewing
or extending existing insurance) and of any other act, omission
or event of which such independent insurance broker has knowledge
and which in its sole judgment (A) might invalidate or render
unenforceable, or cause the cancellation or lapse or prevent the
renewal or extension of, in whole or in part, any insurance
carried pursuant to paragraph (a) of this Section, (B) has
resulted or might result in any material modification of the
terms of any such insurance or (C) has or might result in any
such insurance not being in compliance with the applicable
requirements of this Section and (ii) to furnish the Mortgagee
[and the Second Mortgagee] from time to time, upon request,
detailed information with respect to any of the insurance carried
on or with respect to the Vessel or the operation thereof.
(g) In addition, upon request from time to time, the
Borrower shall deliver, or cause or be delivered to the Mortgagee
evidence satisfactory to the Mortgagee that the insurance required to be
provided and maintained pursuant to this Section 29 has been issued and
is then in full force and effect.
(h) The Borrower shall cause all insurance required to
be provided and maintained by this Mortgage to be carried with marine
insurance companies, underwriters' associations or underwriting funds
approved by the Mortgagee, which approval shall not be unreasonably
withheld or delayed.
(i) The Borrower shall not declare or agree upon a
compromised, constructive or agreed total loss of the Vessel without the
prior written consent of the Mortgagee which approvals shall not be
unreasonably withheld.
(j) The Borrower agrees that it will not do any act or
voluntarily suffer or permit any act to be done whereby any insurance
shall or may be suspended, impaired or defeated and will not suffer or
permit the Vessel to engage in any voyage or to carry out any operations
not permitted under the insurance policies in effect without first
covering the Vessel to the amount herein provided with insurance
satisfactory to the Mortgagee in all other respects for such voyage or
such operations.
ARTICLE III
EVENTS OF DEFAULT AND REMEDIES
(30) The term "Event of Default", whenever used herein,
means any one of the following events:
(a) Default by the Borrower in the due and punctual
observance and performance of any provisions of Sections 14, 15(b) 16,
17, 20, 21(y) and (z), 23, 27 and 29(a), (b), (f) and (j) hereof (and to
the extent that such default exposes the Vessel to forfeiture, Sections
21(x) and 22 hereof); or
(b) Default (other than as specified in paragraph (a) or
(b) of this Section 30) in the due and punctual observance and
performance of any of the covenants of the Borrower herein and
continuance of such default for thirty (30) days after written notice
thereof from the Mortgagee to the Borrower or the Guarantor, as the case
may be; or
(c) An Event of Default shall have occurred under the
Loan Agreement.
(31) If an Event of Default shall have occurred and be
continuing, the Mortgagee shall be entitled to, without further notice
or demand, declare the whole or any part of the Obligations to be
forthwith due and payable, upon which declaration the principal of and
interest on the [HDW] [Daewoo] Notes shall become immediately due and
payable together with interest thereafter on overdue principal at the
Default Interest Rate; provided that the occurrence of an Event of
Default under Sections 12.02(m) and (n) of the Loan Agreement shall be
deemed to be a declaration by the Mortgagee as aforesaid, whereupon the
Mortgagee may:
(a) Enforce and exercise all or any of its rights and
powers as a secured party or mortgagee under and in accordance with the
[HDW] [Daewoo] Security Documents at law, in equity, or in admiralty;
(b) Exercise all the rights and remedies in foreclosure
and otherwise given to mortgagees by the country of its registry, or by
the applicable laws of any jurisdiction where the Vessel or other
security 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
[HDW][Daewoo] Notes and all other Obligations, with the right to enforce
payment of said sum against any assets of the Borrower, whether they are
covered by any [KfW] [Daewoo] Security Document or otherwise, and in
connection therewith obtain a decree ordering the sale of the Vessel in
accordance with paragraph (e) of this Section 31;
(c) Have a receiver of the Vessel appointed as a matter
of right in any suit under this Section (and any such receiver may have
the rights of the Mortgagee under paragraphs (e) and (f) of this Section
31);
(d) Take possession of the Vessel, with or without legal
proceedings, at any place where the Vessel may be found (and the
Borrower or other Person in possession of the Vessel shall forthwith
surrender possession of the Vessel to the Mortgagee on demand), and the
Mortgagee shall, subject to any governmental approval required under the
country of its registry, or any other applicable law, 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 public sale with sealed bids, on
such terms and conditions as it deems best, free of any claim of the
Borrower and, except as provided by law, any other Person, upon advance
notice of ten (10) consecutive days published in a newspaper authorized
to publish legal notices of that kind in San Francisco, California, and
by sending notice of such sale no later than the date of first
publication, by telegraph, cable, telecopy or telex, to the Borrower as
provided in Section 49 hereof. 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 (subject to the provisions
of the laws of the country of its registry and any other applicable law)
any Holder 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 [HDW] [Daewoo] Notes or other Obligations; and
(f) Accept a conveyance of title to, and to take without
legal process (and the Borrower or other Person in possession shall
forthwith surrender possession to the Mortgagee), the whole or any part
of the Vessel wherever the same may be, and to take possession of and
hold the same.
(32) The Borrower hereby irrevocably appoints the
Mortgagee the true and lawful attorney of the Borrower, 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 31 hereof, and for that purpose to execute all necessary
instruments of assignment and transfer. Nevertheless, the Borrower
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.
(33) 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 Borrower therein and thereto, and shall bar the
Borrower, its successors and assigns, and all Persons claiming by,
through or under them. No purchaser shall be bound to inquire whether
notice has been given or whether any Event of Default has occurred, or
as to the propriety of the sale, or as to application of the proceeds
thereof.
(34)(a) In the event that 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
Borrower hereby authorizes the Mortgagee, in the name of the Borrower,
to apply for and receive possession of and to take possession of the
Vessel with all of the rights and powers that the Borrower might have,
possess and exercise in any such event. This authorization is
irrevocable.
(b) The Borrower irrevocably authorizes the Mortgagee or
its appointees (with full power of substitution) to appear in the name
of the Borrower 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 Section 16 hereof.
(35) The Mortgagee is hereby appointed as attorney-in-
fact of the Borrower, during the continuance of any Event of Default, in
the name of the Borrower 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 Borrower acquittances, receipts,
releases or other discharges for the same, whether under seal or
otherwise, and to endorse and accept in the name of the Borrower all
checks, notes, drafts, warrants, agreements and all other instruments in
writing with respect to the foregoing.
(36)(a) The Borrower covenants that upon acceleration of
maturity pursuant to Section 31 hereof, the Borrower will pay to the
Mortgagee the whole amount then due and payable on the Obligations plus
an amount calculated in accordance with Section 11 of the Loan
Agreement. If the Borrower fails to pay such amount forthwith upon
receipt of such notice, the Mortgagee, in its own name and as agent, may
institute a judicial proceeding for the collection of the amount so due
and unpaid, and prosecute such proceeding to judgment or final decree,
and may enforce the same against the Borrower or any other obligor upon
the [HDW] [Daewoo] Notes and collect the money adjudged or decreed to be
payable in the manner provided by law out of the property of the
Borrower or any other obligor upon the [HDW] [Daewoo] Notes, wherever
situated. All monies collected by the Mortgagee under this Section
shall be applied by the Mortgagee in accordance with the provisions of
Section 39 hereof.
(b) If an Event of Default shall occur and be
continuing, irrespective of whether notice of acceleration shall have
been given pursuant to Section 31 hereof, the Mortgagee may in its
discretion proceed to protect its rights and the rights of the Holders
of the [HDW] [Daewoo] Notes by such appropriate judicial proceedings as
the Mortgagee shall deem most effectual to protect any such rights, or
to protect any other proper right, power or remedy then available to the
Mortgagee under any [HDW][Daewoo] Security Document.
(37) In case there shall be pending proceedings for the
bankruptcy or for the reorganization of the Borrower or any other
obligor on the [HDW] [Daewoo] Notes under the Bankruptcy Code of the
United States of America or any other applicable law or in connection
with the insolvency of the Borrower or any other obligor on the [HDW]
[Daewoo] Notes or in case a receiver or trustee shall have been
appointed for its property, or any other obligor on the Notes, its
creditors or its property, the Mortgagee, irrespective of whether the
principal of the [HDW] [Daewoo] Notes shall then be due and payable as
therein expressed or by declaration or otherwise, shall be entitled and
empowered to intervene in such proceedings or otherwise, to file and
prove a claim or claims for the whole amount of principal and interest
owing and unpaid in respect of the [HDW] [Daewoo] Notes and the
remainder of the Loans under the [HDW] [Daewoo] Tranche, and to file
such other papers or documents as may be necessary or advisable in order
to have the claims of the Mortgagee and of the Holders allowed in any
judicial proceeding relative to the Borrower or any obligor on such
[HDW] [Daewoo] Notes, its creditors, or its property, and to collect and
receive any money or other property payable or deliverable on any such
claims, and to distribute the same after the deduction of any amount
payable to the Mortgagee under Section 39 hereof. Nothing contained in
this Mortgage shall be deemed to give the Mortgagee any right to accept
or consent to any plan of reorganization or otherwise by action of any
character in any such proceeding to waive or change in any way any right
of any Holder or to constitute a waiver by the Borrower of its right to
contest the validity of any claim made against it.
(38) All rights of action and claims under this Mortgage
or the [HDW] [Daewoo] Notes may be prosecuted and enforced by the
Mortgagee without the possession of the Notes or any other evidence of
such indebtedness or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Mortgagee shall be
brought in its own name as agent, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Mortgagee, its agents and
counsel, be for the benefit of the Holders of the [HDW] [Daewoo] Notes.
(39) Any monies collected by the Mortgagee pursuant to
any sale of the Vessel or other enforcement of any of its rights
hereunder or under any other [HDW] [Daewoo] Security Document on account
of the occurrence of an Event of Default or Incipient Default by the
Mortgagee shall be distributed in accordance with Section 5.09[(a)][(b)]
of the Loan Agreement.
(40) No Holder shall have any right to institute any
independent proceeding, judicial or otherwise, with respect to this
Mortgage and the other [HDW] [Daewoo] Security Documents or for any
other remedy hereunder or thereunder except the Mortgagee.
(41) Notwithstanding any other provision of this Article
III, each Holder of an [HDW] [Daewoo] Note shall have the right which is
absolute and unconditional to receive payment (whether directly or
through its agent) of the principal of and interest on such Holder's
[HDW] [Daewoo] Notes, as and when the same shall become due, and to
demand payment thereof, and such right shall not be impaired or affected
without the consent of such Holder.
(42) No right or remedy herein conferred upon or
reserved to the Mortgagee or such Holders 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 other [HDW] [Daewoo]
Security Documents 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.
(43) No delay or omission of the Mortgagee or any Holder
to exercise any right or remedy accruing upon any Event of Default nor
any course of dealings between the Mortgagee, the Holders (or any of
them) and the Borrower shall impair any such right or remedy or
constitute a waiver of any Event of Default or an acquiescence therein
nor shall any single exercise or partial exercise of any such right or
remedy preclude any other exercise thereof or any exercise of any other
or further right or remedy; nor shall the acceptance by the Mortgagee of
any security or any payment of any part of the Obligations maturing
after any Event of Default or of any payment on account of any past
default be construed to be a waiver of any right to take advantage of
any future Event of Default or of any past Event of Default not
completely cured thereby. Every right or remedy given by this Mortgage
or any other [HDW] [Daewoo] Security Document or by law to the Mortgagee
or the Holders may be exercised from time to time, and as often and in
such order as may be deemed expedient, by the Mortgagee or the Holders,
as the case may be.
(44) In case the Mortgagee shall have proceeded to
enforce any right, power or remedy under this Mortgage or under any
other [HDW] [Daewoo] Security Document by foreclosure, entry or
otherwise, and such proceeding shall have been discontinued or abandoned
for any reason or shall have been adversely determined to the Mortgagee,
then, and in every such case, the Borrower and the Mortgagee shall be
restored to their former positions and rights hereunder with respect to
the property subject or intended to be subject to this Mortgage or any
other [HDW] [Daewoo] Security Documents, as the case may be, and all
rights, remedies and powers of the Mortgagee shall continue as if no
such proceedings had been taken.
(45) Subject to the provisions of Section 31 hereof, the
Mortgagee shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Mortgagee
under this Mortgage or any other [HDW] [Daewoo] Security Document or
exercising any trust or power conferred on the Mortgagee herein or
therein.
ARTICLE IV
SUNDRY PROVISIONS
(46) For the purposes of recording this First Preferred
Mortgage as required by the Republic of The Marshall Islands' Maritime
Act of 1990, as amended, the total amount of this Mortgage is (i) [
] United States Dollars (USD[ ]), and (ii) interest
and performance of mortgage covenants . The date of maturity is [
]. The discharge amount is the same as the total amount.
(47) All the covenants, promises, stipulations and
agreements of the Borrower contained in this Mortgage shall bind the
Borrower, its successors and assignees, and shall inure to the benefit
of the Mortgagee.
(48) 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.
(49) Any notice or demand or other communication to the
Borrower or the Mortgagee under this Mortgage shall be made in
accordance with Section 15.04 of the Loan Agreement.
(50) The Borrower will pay to the Mortgagee on demand:
(a) All monies whatsoever which the Mortgagee
reasonably and in good faith shall or may expend, be put to or become
liable for in or about the protection, maintenance or enforcement of the
security created by this Mortgage or in or about the exercise by the
Mortgagee of any of the powers vested in it hereunder; and
(b) The amount of all expenses of any kind whatsoever,
stamp duties (if any), registration fees and any other charges incurred
by the Mortgagee in connection with the registration of this Mortgage.
(51) The Mortgagee shall, without prejudice to its
other rights and powers hereunder, be entitled (but not bound) at any
time and from time to time, to take any such action as it may in its
discretion think fit for the purpose of protecting the security created
by this Mortgage, and each and every expense or liability reasonably and
in good faith so incurred by the Mortgagee in or about the protection of
the security shall be repayable to it by the Borrower on demand.
(52) The Mortgagee shall be entitled at any time and
from time to time to delegate all or any of the powers and discretions
vested in it by this Mortgage (including, without limitation, the power
vested in it by virtue of Section 32 hereof) in such manner, upon such
terms and to such persons as the Mortgagee in its absolute discretion
may think fit.
(53) The provisions of this Mortgage shall be governed
by and construed in accordance with the Laws of the Republic of The
Marshall Islands and, to the extent applicable, the internal laws of the
State of New York.
[(54) Deutsche Schiffsbank AG may not without the prior
written consent of its public trustee (Treuhander) sell, assign, waive
or encumber its interest in this mortgage until the Loans and all
interest on the Loans have been repaid in full.]1
(55) No course of dealing between the Mortgagee and the
Borrower or any delay or failure on the part of the Mortgagee thereof in
exercising any rights hereunder shall operate as a waiver of any rights
of the Mortgagee thereof or of the preferred status of this Mortgage.
IN WITNESS WHEREOF, the Borrower has caused this Mortgage
to be duly executed by its authorized representative the day and year
first above written.
[ ]
_____________________________
Name:
Title:
[Notarial Acknowledgement complying with Marshall Islands law to
be added.]
APPENDIX B-2
[FORM SUBJECT TO REVISION TO
CONFORM TO LAWS OF FLAG STATE]
SECOND PREFERRED SHIP MORTGAGE ON
THE " " TO
KREDITANSTALT FUR WIEDERAUFBAU
THIS SECOND PREFERRED SHIP MORTGAGE dated this _ day of [ ], 199__,
made and given by [ ], a [ ] corporation
(the "Borrower") to Kreditanstalt fur Wiederaufbau, a public law
corporation organized and existing under the Laws of the Federal
Republic of Germany (the "Mortgagee", which term shall include the
Mortgagee's successors and assignees).
WHEREAS:
A. The Borrower is the sole owner of the Republic of The
Marshall Islands flag vessel, " ", Official No. , of
Gross Tons and Net Tons (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 shall exclude any leased equipment).
B. Pursuant to that certain Loan Agreement dated March
14, 1994 among [the Borrower] [American President Lines, Ltd. ("APL")],
the Mortgagee and [other Lender] (the "Loan Agreement") (a copy of which
without Exhibits is attached hereto as Exhibit A), the Mortgagee has
agreed to make loans with respect to three (3) vessels, including the
Vessel, to [the Borrower] [APL], or to [APL Newbuildings, Ltd. ("APLN")]
[the Borrower], with respect to such of said Vessels to be owned by [the
Borrower] [APL] or to be transferred by [the Borrower] [APL] to, and
owned by [APLN] [the Borrower], pursuant to that certain Agreement to
Acquire and Charter, dated the date of the Loan Agreement, among [the
Borrower] [APL], [APLN] [the Borrower], the Mortgagee and [other Lender]
[(a copy of which is attached as Exhibit A-1)], such loans to be in an
aggregate amount not to exceed [ ] United States Dollars (USD
) (collectively, the "Loans"), as evidenced in part by Notes in the
aggregate principal amount of United States Dollars
(USD______________) dated , 199 (THE "[HDW] [Daewoo] Notes"),
with respect to the Vessel by the Borrower in favor of the Mortgagee (a
form of which without Exhibits is attached hereto as Exhibit B), and in
order to induce the Mortgagee to make the loans, the Borrower has agreed
to grant this Mortgage to the Mortgagee to secure the Borrower's
obligations to the Mortgagee under the [HDW] [Daewoo] Notes and its
obligations relating thereto under the Loan Agreement, and the remainder
of the Loans as evidence by other [HDW] [Daewoo] notes, whether issued
by the Borrower or [APLN] [APL] with respect to such vessels other than
the Vessel.
C. The term "Obligations" shall mean all of the
obligations of the Borrower to pay any amount under this Mortgage, the
Loan Agreement insofar as they relate to the HDW Tranche Loans and the
HDW Notes to the Mortgagee whether by way of reimbursement, interest,
indemnity or for any other reasons whatsoever.
D. To secure payment of the Obligations to the
Mortgagee, the Borrower has duly authorized the execution, delivery and
recording of this Second Preferred Ship Mortgage under and pursuant to
the laws of the Republic of The Marshall Islands.
[E. Borrower, on the date hereof has entered into that
certain bareboat charter dated __________, 199__ (the Daewoo Charter
with APL (the "Charterer").]
NOW, THEREFORE, THIS DEED, WITNESSETH:
That the Borrower, in consideration of the premises and
other valuable consideration, the receipt whereof is hereby
acknowledged, and for the purpose of securing payment of the Obligations
and to secure the performance, observance and accuracy of and compliance
with all the covenants, representations, warranties, terms and
conditions in the HDW Notes, the Loan Agreement insofar as it relates to
the HDW Notes, in favor of the Mortgagee and in this Mortgage expressed
or implied, for the benefit of the Mortgagee, 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 the whole of the
Vessel;
TO HAVE AND TO HOLD the same unto the Mortgagee forever
in accordance with the terms herein set forth for the enforcement of the
payment of the Obligations and to secure the performance, observance and
accuracy of and compliance with all the covenants, representations,
warranties, terms and conditions contained in the HDW Notes, the Loan
Agreement insofar as it relates to the HDW Notes, the Loans and this
Mortgage expressed or implied, for the benefit of the Mortgagee;
SUBJECT AND SUBORDINATE HOWEVER, to a First Preferred
Ship Mortgage dated [ ], 199_ (the "First Mortgage") in favor of
[ ] as the mortgagee (the "First Mortgagee"), as the
same may be amended and supplemented in accordance with its terms
without increasing the principal amount of indebtedness thereby secured.
PROVIDED ONLY and the conditions of these presents are
such that if and when the Mortgagee shall have received of (i) the full
amount of the Obligations or (ii) the full amount required to be paid in
respect of the Subportion of the Daewoo Tranche relating to the Vessel
evidenced by the Daewoo Notes in accordance with the provisions of
Section 5.04 of the Loan Agreement, together with payment of all other
amounts then due and owing and secured by this Mortgage, these presents
and the rights of the Mortgagee hereunder shall cease, determine and be
void, otherwise to be and remain in full force and effect.
The Borrower for itself, its successors and assignees,
hereby covenants and agrees with the Mortgagee that the Vessel is to be
held by the Mortgagee as long as the obligation of the Borrower under
the HDW Notes, the Loan Agreement to the extent it relates to the HDW
Notes and this Mortgage remains in force, subject to the further
covenants, conditions, provisions, terms and uses hereinafter set forth.
ARTICLE I
REPRESENTATIONS OF THE BORROWER
(1) The Borrower is a corporation duly organized and
validly existing in good standing under the laws of the jurisdiction of
its incorporation with full corporate power and authority to conduct its
business as the same is presently conducted;
(2) the Borrower has legal power and authority to enter
into and carry out the terms of this Mortgage;
(3) this Mortgage has been duly authorized by all
necessary action, corporate or other, on the part of the Borrower, and
this Mortgage constitutes, and upon due execution and delivery by the
Borrower the Mortgage will constitute, in accordance with its respective
terms, a legal, valid and binding instrument enforceable against the
Borrower, except to the extent limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws of general
application relating to or affecting the enforcement of creditors'
rights from time to time in effect;
(4) except as previously disclosed to the Mortgagee in
writing, there are no actions, suits or proceedings pending or, to the
Borrower's knowledge, threatened against the Borrower or any of its
properties affecting the Mortgage which would materially and adversely
affect the ability of the Borrower to perform its obligations hereunder.
(5) the consummation of the transactions contemplated
by, and compliance by the Borrower with all the terms and provisions of,
the Mortgage will not violate any provisions of the Certificate of
Incorporation or Bylaws of the Borrower and will not result in a breach
of the terms and provisions of, or constitute a default under, any other
agreement or undertaking by the Borrower or by which it or any of its
property is bound or any order of any court or administrative agency
entered in any proceedings binding on the Borrower, or violate any
applicable statute, rule or regulation;
(6) the Borrower is not in default and no condition
exists which with notice or lapse of time or both would constitute a
default by the Borrower, in any respect which would materially and
adversely affect the ability of the Borrower to perform its obligations
under this Mortgage, under any mortgage, loan agreement, deed of trust,
indenture or other agreement with respect thereto or evidence of
indebtedness to which it is a party or by which it is bound, and is not
in violation of or in default, in any respect which would materially and
adversely affect the ability of the Borrower to perform its obligations
under this Mortgage, under any order, writ, judgment or decree of any
court, arbitrator or governmental authority, commission, board, agency
or instrumentality, domestic or foreign;
(7) the Borrower has more than one place of business and
the location of the place of business which is its chief executive
office is 1111 Broadway, Oakland, California 94607;
(8) all taxes (other than taxes based on or measured by
income), liability for the payment of which has been incurred by the
Borrower in connection with the execution, delivery and performance by
it of the Mortgage, have been paid (or provided for in its accounts if
not payable on or prior to the delivery date of the Vessel);
(9) all governmental consents, licenses, permissions,
approvals, registrations or authorizations or declarations required (i)
to enable it lawfully to enter into and perform its respective
obligations under this Mortgage, (ii) to ensure that its respective
obligations hereunder and thereunder are legal, valid and enforceable
and (iii) to make this Mortgage admissible in evidence in the Republic
of The Marshall Islands, and the United States of America has been
obtained or made and are in full force and effect;
(10) it has not taken any corporate action nor to its
knowledge have any other steps been taken or legal proceedings been
started or threatened against it for its winding-up, dissolution or
reorganization or for the appointment of a receiver, administrative
receiver, administrator, trustee or similar officer of it or of any or
all of its respective assets and revenues;
(11) except for registration of this Mortgage in
accordance with the provisions of the Republic of The Marshall Islands'
Maritime Act of 1990, as amended, it is not necessary to ensure the
legality, validity, enforceability or admissibility in evidence of this
Mortgage in the country of the Borrower or the United States of America,
or the flag of its registry or, to the best of its knowledge, elsewhere,
that it be filed, recorded or enrolled with any governmental authority
or agency in the country of the Borrower or, to the best of its
knowledge, elsewhere, or that it be stamped with any stamp, registration
or similar transaction tax in the country of the Borrower or the United
States of America, or the flag of its registry or, to the best of its
knowledge, elsewhere;
(12) the Vessel is duly documented in the name of the
Borrower under the flag of the Republic of The Marshall Islands; and
(13) the Vessel is in the absolute and unencumbered
ownership of the Borrower except as contemplated by this Mortgage and
the First Mortgage.
ARTICLE II
COVENANTS OF THE BORROWER
(14) The Borrower represents and warrants that it
lawfully owns and possesses the Vessel free from any mortgage, security
interest, lien or charge whatsoever other than the First Mortgage and
covenants with the Mortgagee that it shall warrant and defend the title
to and lawful possession of the Vessel and every part thereof for the
benefit of the Mortgagee, and shall hold harmless and indemnify the
Mortgagee against the claims and demands of all Persons whomsoever
arising as the result of any mortgage (other than the First Mortgage),
security interest, lien or charge whatsoever on the Vessel; provided
that the Borrower's foregoing obligations (other than its agreements to
defend title and indemnify and hold the Mortgagee harmless) shall not
apply to the following:
(a) liens for crew's wages ("Crew's Wages") and salvage
(including contract salvage) which shall not have been due and payable
for more than ten (10) days after termination of a voyage or which shall
then be contested in good faith by the Borrower [or the Charterer] in
appropriate proceedings diligently prosecuted and shall not subject the
Vessel or any part thereof to risk, forfeiture or loss, or in any
material way prejudice or impair the Mortgagee's rights or interest in
or under the Mortgage;
(b) liens for Crew's Wages and salvage (including
contract salvage) and general average which are either unclaimed or
covered by insurance;
(c) liens incident to current operations (except for
Crew's Wages, salvage and general average) not more than thirty (30)
days past due, liens for the wages of a stevedore when employed directly
by the Shipowner or the operator, master or any agent of the Vessel, or
liens covered by insurance and any deductible applicable thereto;
(d) liens for repairs or with respect to changes made in
the Vessel pursuant to Section 25(b) hereof;
(e) in the event the use of or title to the Vessel is
requisitioned by any government or any agency thereof insofar as it
relates to possession of the Vessel;
(f) liens for taxes or assessments or other governmental
charges and levies not yet due and payable, or the validity of which is
being contested by the Borrower [or the Charterer] in good faith by
appropriate proceedings upon stay of execution of the enforcement
thereof and for which adequate reserves in accordance with Generally
Accepted Accounting Principles or other appropriate provision has been
made;
(g) in the case of any actual or constructive total loss
or an agreed or compromised total loss of the Vessel insofar as it
relates to possession of the Vessel; and
(h) insofar as it relates to possession of the Vessel,
to charters permitted by the terms of this Mortgage and the Loan
Agreement and by applicable law [and to subcharters permitted by the
terms of the Daewoo Charter];
provided that any liens described in paragraphs (c), (d) and (f) hereof
shall be permitted only to the extent they are subordinate to the
Mortgage.
(15)(a) Neither the Borrower, any 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 First Mortgage, this Mortgage
and the liens referred to in Section 14, hereof.
(b) The Borrower shall forthwith remove or cause to be
removed within thirty (30) days of its knowledge thereof any lien or
encumbrance (other than the items referred to in Sections 14(d), (g) and
(h) of this Article III) which shall be filed against the Vessel, unless
the same is being contested by appropriate proceedings in good faith and
(i) such proceedings shall suspend the collection of the related claim
from the Vessel, (ii) neither the Vessel nor any interest therein would
be in any danger of being sold, forfeited or lost during the pendency of
such proceedings, and (iii) the Borrower or the Charterer shall have
furnished such security, if any, or cause or make adequate provision for
release prior to foreclosure, sale or similar disposition as may be
required in such proceedings.
(16) If the Vessel shall be attached, levied upon or
taken into custody by virtue of any legal proceeding in any court or
tribunal or by any government or other authority, the Borrower or the
Charterer shall promptly notify the Mortgagee thereof by telex and
within fifteen (15) days after any such arrest (except in the case of
requisition or other taking by any government or governmental body)
shall cause the Vessel to be released within thirty (30) days and shall
promptly notify the Mortgagee thereof in the manner aforesaid.
(17) Except as provided in the Granting Clause hereof
the Borrower has not assigned, pledged or otherwise granted a security
interest in or lien on, and shall not assign, pledge or otherwise grant
a security interest in or lien on, the whole or any part of, any rights
assigned by the Granting Clause hereof.
(18) Upon the occurrence of any Event of Default or
Incipient Default, the Borrower shall promptly notify the Mortgagee by
telex, confirmed by letter, unless such Event of Default or Incipient
Default shall have been cured.
(19) The Borrower shall make all payments of principal
and interest on the HDW Notes and shall perform in full its obligations
and liabilities under this Mortgage and the Loan Agreement to the extent
it relates to the HDW Notes and the HDW Security Documents.
(20) (a) The Borrower represents and warrants that on
the date hereof the Vessel is, and the Borrower covenants with the
Mortgagee that it shall (subject to clauses (b) and (c) below) hereafter
remain, documented under the laws of the Republic of The Marshall
Islands.
(b) The Borrower shall have the right to change the
registry and flag of the Vessel to the registry and flag of the Republic
of Panama, the Republic of Liberia, the Republic of Vanuatu and the
Commonwealth of The Bahamas. Prior to any such change in registry and
flag, the Borrower shall (i) obtain all necessary approvals of
governmental authorities including, without limitation, those of the
then current country of the Vessel's registry and the jurisdiction of
its incorporation, if any, and otherwise comply with all applicable law
if any, (ii) execute and deliver to the Mortgagee, in form and substance
reasonably satisfactory to the Mortgagee, and after execution by the
Mortgagee and immediately after the registration of the Vessel, file for
recordation, a replacement mortgage for this Mortgage (the "Replacement
Mortgage"), with terms and conditions substantially similar to the terms
and conditions of this Mortgage, which Replacement Mortgage shall
constitute a first priority lien on the Vessel and shall be in
compliance with all applicable laws and regulations of any such country
where the Vessel is re-registered and re-flagged, and immediately after
the filing of the Replacement Mortgage for recordation deliver to the
Mortgagee (A) an opinion of counsel reasonably satisfactory to the
Mortgagee confirming that any Replacement Mortgage constitutes such a
first priority lien under the laws and regulations of such country and
is a "preferred mortgage" within the meaning of 46 U.S.C. Section
31301(b)(B), and that, if there shall have been any change in the
applicable laws and regulations of such country of re-registration and
re-flagging after March 14, 1994, such change does not materially
adversely affect the interests of the Mortgagee with respect to the
Vessel, and (B) a certificate of the Borrower that the Vessel is duly
documented under the laws of the country where the Vessel is re-
registered and re-flagged, and that the Vessel is free of any claim,
lien, charge, mortgage or other encumbrance of any character (except the
Replacement Mortgage and the First Mortgage). In connection with any
such change of registry and flag, the Mortgagee shall, at the request of
the Borrower and at the Borrower's cost and expense, and upon compliance
with subclauses (i) and (ii) of this clause (b), execute and deliver to
the Borrower the Replacement Mortgage, an instrument in recordable form
duly acknowledging the satisfaction and discharge of this Mortgage, and
any other instrument or document necessary or appropriate for the
orderly consummation of the change in registry and flag and replacement
of the Mortgage. Notwithstanding the foregoing, no such reflagging
shall be permitted if (x) an Event of Default or Incipient Default shall
have occurred and be continuing or (y) if, in the sole opinion of the
Mortgagee, such reflagging will, or may be expected to, adversely affect
the rights or remedies of the Mortgagee under the Loan Documents, the
value of the Vessel, or will be or may otherwise be expected to be,
disadvantageous to the Mortgagee.
(c) The Borrower shall have the right to change the
registry and flag of the Vessel to the registry and flag of the United
States of America. Prior to any such change in registry and flag, the
Borrower shall (i) obtain all necessary approvals of governmental
authorities including, without limitation, those of the then current
country of the Vessel's registry and the jurisdiction of its
incorporation, if any, and otherwise comply with all applicable law, if
any, (ii) execute and deliver to the Mortgagee (or an approved trustee
to act as mortgagee) a replacement mortgage with terms and conditions
substantially the same as the terms and conditions of this Mortgage, in
form and substance reasonably satisfactory to the Mortgagee (the
"Replacement Mortgage"), and after execution by the Mortgagee and
immediately after the registration of the Vessel, file for recordation,
the Replacement Mortgage for this Mortgage, which Replacement Mortgage
shall constitute a first priority lien on the Vessel and shall be in
compliance with all applicable laws and regulations of the United States
of America, and, immediately after the filing of the Replacement
Mortgage for recordation, deliver to the Mortgagee (A) an opinion of
counsel reasonably satisfactory to the Mortgagee confirming that any
Replacement Mortgage constitutes such a first "preferred" ship mortgage
under the laws and regulations of the United States of America and (B) a
certificate of the Borrower that the Vessel is duly documented under the
laws of the United States of America, and that the Vessel is free of any
claim, lien, charge, mortgage or other encumbrance of any character
(except the Replacement Mortgage and the First Mortgage [and the
Charter]). In connection with any such change of registry and flag, the
Mortgagee shall, at the request of the Borrower and at the Borrower's
cost and expense, and upon compliance with subclauses (i) and (ii) of
this clause (c), execute and deliver to the Borrower the Replacement
Mortgage, an instrument in recordable form duly acknowledging the
satisfaction and discharge of this Mortgage, and any other instrument or
document necessary or appropriate for the orderly consummation of the
change in registry and flag and replacement of the Mortgage.
Notwithstanding the foregoing, no such reflagging shall be permitted if,
an Event of Default or Incipient Default shall have occurred and be
continuing.
(21) The Borrower (x) shall not cause or permit the
Vessel to be operated in any manner contrary to applicable law except to
the extent that such provision shall have been contested in good faith
by the Borrower in appropriate proceedings diligently prosecuted and
shall not subject the Vessel to risk, forfeiture or loss, or in any
material way prejudice or impair the Mortgagee's rights or interests in
or under the Mortgage, (y) shall not operate the Vessel in any way
contrary to any of the terms or conditions of the insurance required by
Section 29 hereof (unless it shall first have arranged for continuation
of the coverage afforded thereby), and (z) shall not abandon the Vessel
in any foreign port unless (i) there shall have been an actual or
constructive total loss or an agreed or compromised total loss of the
Vessel; or (ii) there has been any other loss with respect to the Vessel
and the Borrower shall not have had reasonable time to repair or rectify
the same, or (iii) the use or title of the Vessel has been taken or
requisitioned by any government or governmental authority; provided,
however, that if an Event of Default shall have occurred and be
continuing, the Borrower shall not abandon the Vessel unless it shall
have first received the written consent of the Mortgagee.
(22) The Borrower shall pay and discharge or cause to be
paid and discharged when due and payable all claims against, and taxes,
assessments, governmental charges, fines and penalties imposed on, the
Vessel or the Vessel's cargo; provided, however, that the Borrower shall
have the right to contest or cause to be contested, in good faith and by
appropriate proceedings, any such claim, tax, assessment, governmental
charge, fine or penalty and, pending such contest, may defer the payment
thereof so long as such contest or deferment in payment shall not
subject the Vessel or any part thereof to risk or forfeiture or loss, or
in any material way prejudice or impair the Mortgagee's rights or
interests in or under the Mortgage.
(23) The Borrower shall, at its expense and at no cost
to the Mortgagee, comply with and satisfy all of the provisions of the
flag of the Republic of The Marshall Islands, in order to establish,
record and maintain the Mortgage as a preferred mortgage thereunder on
the Vessel until it is re-registered, reflagged and the Mortgage is
replaced by a Replacement Mortgage as provided in Section 20(b) hereof.
(24) The Borrower shall place and at all times and
places shall retain a properly certified copy of the Mortgage on board
the Vessel with her papers and shall cause such certified copy and such
papers to be exhibited to any and all Persons having business with the
Vessel and to any representative of the Mortgagee. The Borrower shall
also place and keep prominently displayed on the Vessel a framed printed
or typewritten notice in plain type which shall cover a space of not
less than six inches wide by nine inches high (or of such other
dimensions as may be required by law) reading substantially as follows:
"NOTICE OF PREFERRED SHIP MORTGAGES"
"This Vessel is owned by [ ], a
[ ] corporation (the "Shipowner"), and is covered by
a First Preferred Ship Mortgage in favor of [ ]
as Mortgagee, and a Second Preferred Ship Mortgage in favor of
Kreditanstalt fur Wiederaufbau as Mortgagee, each under authority
of the Republic of The Marshall Islands. Under the terms of said
Mortgages, neither the Shipowner, any charterer, the master of
the Vessel nor any other person has any right, power or authority
to create, incur or permit to be placed or imposed upon this
Vessel any lien whatsoever other than the lien of said Mortgage
and liens for wages of a stevedore when employed directly by the
Shipowner, operator, master, or any agent of the Vessel, for
Crews' Wages, for general average, for salvage, and, to the
extent subordinate to the lien of said Mortgage, for certain
liens incident to current operations or for repairs or changes
permitted by the Mortgage."
(25)(a) The Borrower shall at all times and without cost
or expense to the Mortgagee (i) maintain and preserve, or cause to be
maintained and preserved, the Vessel in good running order and repair,
so that the Vessel shall be, insofar as due diligence can make her so,
strong and well and sufficiently tackled, apparelled, furnished,
equipped and in every respect seaworthy and in good operating condition,
ordinary wear and tear and depreciation excepted; and (ii) keep the
Vessel, or cause her to be kept, in such condition as will entitle her
to the highest classification and rating for vessels of the same age and
type of The American Bureau of Shipping, and annually shall furnish to
the Mortgagee a certificate by The American Bureau of Shipping that such
classification is maintained; provided that in any event the Borrower
shall notify the Mortgagee of any change in the classification of the
Vessel; and provided, further, that the foregoing shall not apply if
there shall have been an Event of Loss or during such period as (1) the
Vessel has been taken or requisitioned by any government or governmental
body or (2) there has been any other loss with respect to the Vessel and
the Borrower shall not have had a reasonable time to repair the same.
The Borrower shall furnish from time to time upon reasonable demand of
the Mortgagee such information and documents as the Mortgagee may
require concerning the classification of the Vessel. Except during any
period in which the provided further proviso in the first sentence of
this paragraph shall apply, the Vessel shall, and the Borrower covenants
that she will, at all times comply with all applicable laws, treaties
and conventions of the Republic of The Marshall Islands and all rules
and regulations issued thereunder, and shall have on board as and when
required thereby valid certificates showing compliance therewith except
to the extent that such provision shall have been contested in good
faith by the Borrower in appropriate proceedings diligently prosecuted
so long as such proceeding shall not subject the Vessel or any part
thereof to risk or forfeiture or loss, or in any material way prejudice
or impair the Mortgagee's rights or interests in or under the Mortgage.
(b) The Borrower shall not make, or permit to be made,
any substantial change in the structure, type or speed of the Vessel or
change in her rig unless it shall have received the Mortgagee's prior
written approval thereto, which approval shall not be unreasonably
withheld or delayed; provided, however, that no such approval need be
obtained in respect of any change which shall be necessary to comply
with the requirements of the United States Coast Guard, the Republic of
The Marshall Islands or The American Bureau of Shipping in order to
entitle the Vessel to the classification and rating required by
paragraph (a) hereof.
(c) Until an Event of Default shall occur, the Borrower
(i) shall be suffered and permitted to retain actual possession and use
of the Vessel and (ii) shall have the right, from time to time, in its
discretion, and without application to the Mortgagee, and without
obtaining a release thereof by the Mortgagee, to dispose of, free from
the lien hereof, any boilers, engines, machinery, bowsprits, masts,
spars, sails, rigging, boats, anchors, apparel, furniture, equipment or
any other appurtenances to the Vessel that are no longer useful,
necessary, profitable or advantageous in the operation of the Vessel,
first or simultaneously replacing the same by new boilers, engines,
machinery, bowsprits, masts, spars, sails, rigging, boats, anchors,
apparel, furniture, fittings, equipment or other appurtenances of at
least equal value to the Borrower which shall forthwith become subject
to the lien of this Mortgage.
(26) The Borrower shall at all reasonable times afford
the Mortgagee or its authorized representatives full and complete access
to the Vessel for the purpose of inspecting or surveying the same and
her papers and, at the request and expense of the Mortgagee, the
Borrower shall deliver or cause to be delivered for inspection by such
parties copies of any and all contracts and documents relating to the
Vessel, whether on board or not.
(27) The Borrower shall not sell, demise charter [except
for the Daewoo Charters], mortgage (except by this Mortgage and the
First Mortgage) or transfer the Vessel (except any sale of the Vessel
after repayment of the amounts of the related Subportion of the HDW
Tranche in accordance with Section 5.04 of the Loan Agreement or by way
of requisition or other governmental taking by the United States of
America or the Republic of The Marshall Islands or in accordance with
Section 9.02(b) of the Loan Agreement) without the prior written consent
of the Mortgagee, which consent shall not be unreasonably withheld. Any
such written consent to any one sale, demise charter, mortgage or
transfer shall not be construed to be a waiver of this provision with
respect to any subsequent proposed sale, demise charter, mortgage or
transfer. Any sale, demise charter, mortgage or transfer of the Vessel
shall be subject to the provisions of the Mortgage and the lien thereof.
(28) The Borrower will reimburse the Mortgagee promptly
for any and all expenditures which the Mortgagee may from time to time
make, lay out or expend in providing protection in respect of insurance,
discharge or purchase of any liens, taxes, dues, assessments,
governmental charges, tolls, fines and penalties imposed, repairs,
attorneys' fees and other matters as the Borrower is obligated herein to
provide but fails to provide. Such obligation of the Borrower to
reimburse the Mortgagee shall constitute Obligations secured by this
Mortgage, and shall be payable by the Borrower on demand, together with
interest thereon from the date of demand until the date of payment (both
before and after judgment) at the Default Interest Rate (as such rate is
set forth in Section 3.08(a) of the Loan Agreement). The Mortgagee,
though privileged so to do, shall be under no obligation to the Borrower
to make any such expenditures, nor shall the making thereof relieve the
Borrower of any default in that respect.
(29)(a) Subject always to the prior rights of the First
Mortgagee under the First Mortgage, the Borrower shall (i) until the
First Mortgage shall have been satisfied and discharged, in accordance
with the provisions of the First Mortgage, except that the Borrower
shall provide to the Mortgagee the single interest Mortgagee's insurance
referred to in Section 29(a)(4) and (5) below, and (ii) thereafter, in
accordance with the insurance provisions set forth below in this Section
29, at its own expense, provide and maintain insurance on or with
respect to the Vessel and the operation thereof, as follows:
(1) Marine navigating risk hull and machinery
insurance and marine war navigating risk hull and machinery
insurance, together with, at the Borrower's option, such amounts
of increased value and total loss only insurance as are permitted
by such hull and machinery insurance policies. While the Vessel
is idle or laid up, at the option of the Borrower and in lieu of
the coverage described in the immediately preceding sentence,
port risk hull and machinery insurance may be taken out on the
Vessel by the Borrower. The foregoing insurance shall be in
aggregate amounts equal at all times to the greater of (a) the
amounts of such coverage required by the First Mortgage and (b)
the full commercial value of the Vessel. Any of the foregoing
may provide for a deductible amount approved by the Mortgagee,
but no consent or approval of the Mortgagee shall be required for
a deductible amount of up to One Million United States Dollars
(USD1,000,000) with respect to any one accident, occurrence or
event. The preceding sentence shall not apply in the event of an
actual, constructive, compromised or agreed total loss of the
Vessel. All policies of insurance required under this Section
29(a)(1) shall, unless the Mortgagee shall otherwise consent in
writing, be under the broadest forms which are carried by prudent
shipowners for similar vessels engaged in similar trades (at the
time of issue of the policies in question) and approved by the
Mortgagee. The Borrower shall have the right to procure in
excess of the above requirements for its own sole benefit.
(2) Marine and war risk, full form protection and
indemnity insurance with such clubs or insurance companies
acceptable to the Mortgagee, for such amounts as the Mortgagee
may require or approve. Such protection and indemnity insurance
shall be maintained in the broadest forms generally available in
the United States of America/United Kingdom markets shall include
a cross liability endorsement, if obtainable. The Borrower shall
have the right to carry, for its own benefit, excess protection
and indemnity insurance and marine multiliability insurance. The
Mortgagee shall have the right to approve the amounts of
deductibles; provided, however, that no approval of the Mortgagee
shall be required if such deductibles aggregate not more than
Five Hundred Thousand United States Dollars (USD500,000) with
respect to any single accident, occurrence or event excluding
cargo and Five Hundred Thousand United States Dollars
(USD500,000) per vessel voyage with respect to total cargo or
property carried on such voyage.
(3) Insurance against liability under law or
international convention arising out of pollution, spillage or
leakage in an amount not less than the greater of:
(y) the maximum amount available, as that
amount may from time to time change, from
the International Group of Protection and
Indemnity Associations or alternatively
such sources of pollution, spillage or
leakage coverage as are commercially
available in any absence of such coverage
by the International Group as shall be
carried by prudent shipowners for similar
vessels engaged in similar trades plus
amounts available from customary excess
insurers of such risks as such excess
amounts shall be carried by prudent
shipowners for similar vessels engaged in
similar trades; and
(z) the amounts required by the laws or
regulations of the United States of
America and any applicable jurisdiction in
which the Vessel may be trading from time
to time except to the extent that any such
laws or regulations shall have been
contested in good faith by the Borrower
[or the Charterer] in appropriate
proceedings diligently prosecuted, as long
as such proceedings or the failure to
provide such insurance shall not subject
the Vessel or any part thereof to risk,
forfeiture or loss, or in any material way
prejudice or impair the Mortgagee's rights
or interests in or under this Mortgage.
The foregoing insurance shall be against such risks and in such
form as are in the reasonable opinion of the Mortgagee, necessary
or advisable for the protection of the interests of the
Mortgagee.
(4) Single interest mortgagee's insurance
covering the Mortgagee against any acts or omissions of the
Borrower whereby marine and war risk hull and machinery insurance
covered by this paragraph (a) shall or may be suspended, impaired
or defeated; and any loss under such insurance shall be payable
directly to the Mortgagee. Such single interest mortgagee's
insurance may, at the option of the Mortgagee, be placed by the
Mortgagee at the expense of the Borrower, unless the Borrower can
arrange coverage acceptable to the Mortgagee at cheaper rates
which can be directly placed by the Mortgagee.
(5) Mortgagee's additional perils insurance
(pollution) and any loss under such insurance shall be payable
directly to the Mortgagee. Such additional perils insurance may,
at the option of the Mortgagee, be placed by the Mortgagee at the
expense of the Borrower, unless the Borrower can arrange coverage
acceptable to the Mortgagee at cheaper rates which can be
directly placed by the Mortgagee.
(6) The Borrower shall carry at its own expense,
for the benefit of the Mortgagee, (i) in connection with any
voyage outside the territorial waters of the United States of
America, such insurance against political risks of confiscation
and expropriation by any government (except the United States of
America and the country of registry) as would be carried by
prudent owners and operators on similar voyages, (ii) additional
insurance in such amounts and against such risks arising from or
connected with the ownership or operation of the Vessel as from
time to time may be commonly insured against and may be
reasonably required by the Mortgagee and (iii) such other
insurance as may at the time be required by applicable law except
to the extent that such law shall have been contested in good
faith by the Borrower [or the Charterer] in appropriate
proceedings diligently prosecuted as long as such proceedings or
the failure to provide such insurance shall not subject the
Vessel or any part thereof to risk, forfeiture or loss, or in any
material way prejudice or impair the Mortgagee's rights or
interests in or under this Mortgage.
(b) (1) All insurance required to be taken out and
maintained pursuant to the terms of this Mortgage (except
insurance pursuant to Section 29(a)(4) and (5) of this Article
II) shall name the Mortgagee (as Mortgagee), the Borrower and any
permitted charterer, as named insured or additional named
insured, and the policies or certificates of insurance shall
provide that there shall be no recourse against the Mortgagee for
the payment of premiums, commissions, club calls, assessments or
advances.
(2) All insurance carried pursuant to paragraph
(a) of this Section 29 shall contain provisions or endorsements
stating that such insurance is primary insurance without any
right of contribution with respect to any insurance carried by or
on behalf of the Mortgagee other than as provided pursuant to
this Section 29 on the same interest insured.
(3) The policies in respect of insurance carried
pursuant to Section 29(a) hereof shall provide that at least ten
(10) days' prior written notice shall be given to the Mortgagee
and the Borrower by the underwriters of any cancellation for the
nonpayment of premiums, commissions, club calls, assessments or
advances. Each policy in respect of such insurance shall further
provide that (except in the case of automatic termination and
cancellation clauses pursuant to the terms of the war risk
policies other than for nonpayment of premium) at least ten (10)
days prior written notice shall be given to the Mortgagee and the
Borrower by the underwriter of any termination, cancellation,
lapse or material modification of the terms of such policy. Each
policy in respect of such insurance shall contain provisions
waiving underwriters' rights of subrogation thereunder against
any assured named in such policy. The Mortgagee shall have the
right, but not the obligation, to pay any such amounts on behalf
of the Borrower which shall not have been timely paid by the
Borrower and to recover such amounts together with interest
pursuant to Section 29 hereof.
(c) All policies of insurance in respect of insurance
required to be taken out and maintained pursuant to the terms of this
Mortgage or other evidence thereof (except policies taken out pursuant
to Section 29(a)(4) and (5) of this Article II) shall provide that
losses thereunder shall be payable (i) until this Mortgage shall have
been discharged and underwriters shall have been given written notice of
such discharge by the First Mortgagee, to the First Mortgagee for
application pursuant to the First Mortgage and (ii) thereafter, to the
Mortgagee for application pursuant to this Mortgage and (iii) finally,
to the Borrower; provided, however, that such policies of insurance or
other evidence thereof shall provide that:
(1) In the case of insurance carried pursuant to
paragraph (a)(1) of this Section 29 (to the extent liability
insurances are afforded thereunder) or pursuant to paragraph
(a)(2) of this Section 29:
(i) if the Borrower shall not have
incurred the loss, damage or expense in question, any loss under
such insurance may be paid directly to the Person by whom such
liability covered by such policies has been incurred (whether or
not an Incipient Default or Event of Default then exists); and
(ii) if the Borrower shall have incurred the
loss, damage or expense in question or if the Borrower shall have
paid the loss, damage or expense in question and shall have
presented to the underwriters satisfactory evidence that the
liability insured against has been discharged or is being
discharged simultaneously with such payment, any such loss under
such insurance shall be paid to the Borrower or to its order in
reimbursement if there is not then an existing Event of Default
or Incipient Default of which the underwriter has written notice
from the Mortgagee, or, if there is such an existing Event of
Default or Incipient Default, to the First Mortgagee to (x) apply
such amounts in accordance with the First Mortgage or (y) if such
Event of Default or Incipient Default shall have been cured or
waived, in which case such amounts shall be applied as otherwise
provided in this Section 29, and if the Mortgage shall have been
discharged, such loss shall be paid to the Borrower; and
(iii) Upon the occurrence of an Event of
Loss, all insurance payments and other compensation therefor
shall be paid to the Mortgagee for application in accordance with
Section 5.04(b) of the Loan Agreement.
(2) In the case of insurance carried pursuant to
paragraph (a)(1) of this Section (to the extent liability
insurances are not afforded thereunder), so long as the accident,
occurrence or event does not result in an Event of Loss, payment
of all losses up to Two Million United States Dollars
(USD2,000,000) (or such higher figure as the Mortgagee may from
time to time approve) by all insurance underwriters with respect
to any one accident, occurrence or event may be made (i) directly
for the repair or other charges involved, (ii) directly to the
Borrower or to its order as reimbursement if the Borrower or any
permitted charterer shall have first fully repaired the damage
and paid the cost thereof and any other charges involved, and the
underwriters shall have received evidence that such repair and
payment have been made or will be made simultaneously with the
payment by the underwriters; provided that if such loss exceeds
Two Million United States Dollars (USD2,000,000), the
underwriters shall not make payment without first obtaining the
prior written consent of the Mortgagee, which consent shall not
be unreasonably withheld; and provided, further, that if the
underwriters shall have received written notice from the
Mortgagee as to the occurrence of an Event of Default or
Incipient Default unless the underwriters shall thereafter have
been notified by the Mortgagee in writing that such Event of
Default or Incipient Default has been cured or waived, in which
event all such payments shall be made to the Mortgagee for
application in accordance with Section 39 hereof, and after the
Mortgage has been satisfied and discharged, to the Borrower or to
its order.
(d) In the event that a claim is made against the Vessel
for loss, damage or expense which is covered by insurance, and it is
necessary for the Borrower to obtain a bond or to supply other security
to prevent arrest of the Vessel or to release the Vessel from arrest on
account of such claim, the Mortgagee, on written request of the
Borrower, shall assign to any Person executing a surety or guaranty bond
or other agreement to save or release the Vessel from such arrest all
right, title and interest of the Mortgagee in and to such insurance
proceeds covering such loss, damage or expense as collateral security to
indemnify against liability under such bond or other agreement.
(e) The Borrower shall have the duty and responsibility
to make all proofs of loss and taken any and all other steps necessary
to effect collections from underwriters for any loss under any insurance
carried pursuant to paragraph (a) of this Section.
(f) (1) The Borrower shall furnish, or cause to be
furnished, to the Mortgagee on the date hereof and annually
(between each January 15th and no later than March 15th)
thereafter, copies of (1) cover notes, (ii) policies of
insurance, (iii) letters of undertaking, if any, and (iv) a
detailed report signed by independent marine insurance brokers
designated by the Borrower and satisfactory to the Mortgagee
describing the insurance carried on or with respect to the Vessel
and the operation thereof and stating, in effect, that such
insurance complies in all respects with the applicable
requirements of this Section.
(2) Such report shall state that, in the opinion
of such insurance broker, the forms of policies or other evidence
of such insurance and the amounts of insurance and other terms
are (i) not less than what is necessary or advisable for the
protection of the interests of the Mortgagee and (ii) are
customary at the time for vessels of similar size, type, trade
and cargo. Such report shall set forth any recommendations such
insurance broker may have for additional or reduced insurance
which prudent shipowners or operators of vessels of similar size,
type, trade and cargo are then carrying. Such report shall
further state that, in the opinion of such independent insurance
broker, all insurance carried pursuant to paragraph (a) of this
Section 29 is underwritten by insurance companies, underwriters'
associations or underwriting funds which should be satisfactory
to the Mortgagee.
(3) The Borrower shall cause such independent
insurance broker to agree (i) to advise the Mortgagee promptly of
any default in the payment of any premium, commission, club call,
assessment or advance required (whether for new insurance or for
insurance replacing, renewing or extending existing insurance)
and of any other act, omission or event of which such independent
insurance broker has knowledge and which in its sole judgment (A)
might invalidate or render unenforceable, or cause the
cancellation or lapse or prevent the renewal or extension of, in
whole or in part, any insurance carried pursuant to paragraph (a)
of this Section, (B) has resulted or might result in any material
modification of the terms of any such insurance or (C) has or
might result in any such insurance not being in compliance with
the applicable requirements of this Section and (ii) to furnish
the Mortgagee from time to time, upon request, detailed
information with respect to any of the insurance carried on or
with respect to the Vessel or the operation thereof.
(g) In addition, upon request from time to time, the
Borrower shall deliver, or cause or be delivered to the Mortgagee
evidence satisfactory to the Mortgagee that the insurance required to be
provided and maintained pursuant to this Section has been issued and is
then in full force and effect.
(h) The Borrower shall cause all insurance required to
be provided and maintained by this Mortgage to be carried with marine
insurance companies, underwriters' associations or underwriting funds
approved by the Mortgagee, which approval shall not be unreasonably
withheld or delayed.
(i) The Borrower shall not declare or agree upon a
compromised, constructive or agreed total loss of the Vessel without the
prior written consent of the Mortgagee which approval shall not be
unreasonably withheld.
(j) The Borrower agrees that it will not do any act or
voluntarily suffer or permit any act to be done whereby any insurance
shall or may be suspended, impaired or defeated and will not suffer or
permit the Vessel to engage in any voyage or to carry out any operations
not permitted under the insurance policies in effect without first
covering the Vessel to the amount herein provided with insurance
satisfactory to the Mortgagee in all other respects for such voyage or
such operations.
ARTICLE III
EVENTS OF DEFAULT AND REMEDIES
(30) The term "Event of Default", whenever used herein,
means any one of the following events:
(a) Default by the Borrower in the due and punctual
observance and performance of any provisions of Sections 14, 15(b), 16,
20, 21(y) and (z), 23, 27 and 29(a), (b), (f) and (j) hereof (and to the
extent that such default exposes the Vessel to forfeiture, Sections
21(x) and 22) hereof; or
(b) Default (other than as specified in paragraph (a) or
(b) of this Section 30) in the due and punctual observance and
performance of any of the covenants of the Borrower herein and
continuance of such default for thirty (30) days after written notice
thereof from the Mortgagee to the Borrower or the Guarantor, as the case
may be; or
(c) An Event of Default shall have occurred under the
Loan Agreement;
(31) If an Event of Default shall have occurred and be
continuing, the Mortgagee shall be entitled to, subject to Section 54
hereof, without further notice or demand, declare the whole or any part
of the Obligations to be forthwith due and payable, upon which
declaration the principal of and interest on the HDW Notes shall become
immediately due and payable together with interest thereafter on overdue
principal at the Default Interest Rate; provided that the occurrence of
an Event of Default under Section 12.02(m) and (n) of the Loan Agreement
shall be deemed to be a declaration by the Mortgagee as aforesaid,
whereupon the Mortgagee may:
(a) Enforce and exercise all or any of its rights and
powers as a secured party or mortgagee under and in accordance with the
Second Security Documents at law, in equity, or in admiralty;
(b) Exercise all the rights and remedies in foreclosure
and otherwise given to mortgagees by the country of its registry, or by
the applicable laws of any jurisdiction where the Vessel or other
security 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 HDW
Notes and all other Obligations, with the right to enforce payment of
said sum against any assets of the Borrower, whether they are covered by
any Second Security Document or otherwise, and in connection therewith
obtain a decree ordering the sale of the Vessel in accordance with
paragraph (e) of this Section 31;
(c) Have a receiver of the Vessel appointed as a matter
of right in any suit under this Section (and any such receiver may have
the rights of the Mortgagee under paragraphs (e) and (f) of this Section
31);
(d) Take possession of the Vessel, with or without legal
proceedings, at any place where the Vessel may be found (and the
Borrower or other Person in possession of the Vessel shall forthwith
surrender possession of the Vessel to the Mortgagee on demand), and the
Mortgagee shall, subject to any governmental approval required under the
country of its registry, or any other applicable law, 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 public sale with sealed bids, on
such terms and conditions as it deems best, free of any claim of the
Borrower and, except as provided by law, any other Person, upon advance
notice of ten (10) consecutive days published in a newspaper authorized
to publish legal notices of that kind in San Francisco, California, and
by sending notice of such sale no later than the date of first
publication by telegraph, cable, telecopy or telex, to the Borrower as
provided in Section 49 hereof. 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 (subject to the provisions
of the laws of the country of its registry and any other applicable law)
any Holder 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 HDW Notes or other Obligations; and
(f) Accept a conveyance of title to, and to take without
legal process (and the Borrower or other Person in possession shall
forthwith surrender possession to the Mortgagee), the whole or any part
of the Vessel wherever the same may be, and to take possession of and
hold the same.
(32) Subject to Section 54 hereof, the Borrower hereby
irrevocably appoints the Mortgagee the true and lawful attorney of the
Borrower, 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 31 hereof, and for that purpose to
execute all necessary instruments of assignment and transfer.
Nevertheless, the Borrower 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.
(33) 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 Borrower therein and thereto, and shall bar the
Borrower, its successors and assigns, and all Persons claiming by,
through or under them. No purchaser shall be bound to inquire whether
notice has been given or whether any Event of Default has occurred, or
as to the propriety of the sale, or as to application of the proceeds
thereof.
(34) Subject to Section 54 hereof:
(a) In the event that 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
Borrower hereby authorizes the Mortgagee, in the name of the Borrower,
to apply for and receive possession of and to take possession of the
Vessel with all of the rights and powers that the Borrower might have,
possess and exercise in any such event. This authorization is
irrevocable.
(b) The Borrower irrevocably authorizes the Mortgagee or
its appointees (with full power of substitution) to appear in the name
of the Borrower 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 Section 16 hereof.
(35) Subject to Section 54 hereof, the Mortgagee is
hereby appointed as attorney-in-fact of the Borrower, during the
continuance of any Event of Default, in the name of the Borrower 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 Borrower acquittances, receipts, releases or other
discharges for the same, whether under seal or otherwise, and to endorse
and accept in the name of the Borrower all checks, notes, drafts,
warrants, agreements and all other instruments in writing with respect
to the foregoing.
(36)(a) The Borrower covenants that upon acceleration of
maturity pursuant to Section 31 hereof, the Borrower will pay to the
Mortgagee the whole amount then due and payable on the Obligations plus
an amount calculated in accordance with Section 11 of the Loan
Agreement. If the Borrower fails to pay such amount forthwith upon
receipt of such notice, the Mortgagee, in its own name and as agent, may
institute a judicial proceeding for the collection of the amount so due
and unpaid, and prosecute such proceeding to judgment or final decree,
and may enforce the same against the Borrower or any other obligor upon
the HDW Notes and collect the money adjudged or decreed to be payable in
the manner provided by law out of the property of the Borrower or any
other obligor upon the HDW Notes, wherever situated. All monies
collected by the Mortgagee under this Section 36 shall be applied by the
Mortgagee in accordance with the provisions of Section 39 hereof.
(b) Subject to Section 54 hereof, if an Event of Default
shall occur and be continuing, irrespective of whether notice of
acceleration shall have been given pursuant to Section 31 hereof, the
Mortgagee may in its discretion proceed to protect its rights and the
rights of the Holders of the HDW Notes by such appropriate judicial
proceedings as the Mortgagee shall deem most effectual to protect any
such rights, or to protect any other proper right, power or remedy then
available to the Mortgagee under any Second Security Document.
(37) Subject to Section 54 hereof, in case there shall
be pending proceedings for the bankruptcy or for the reorganization of
the Borrower or any other obligor on the HDW Notes under the Bankruptcy
Code of the United States of America or any other applicable law or in
connection with the insolvency of the Borrower or any other obligor on
the HDW Notes or in case a receiver or trustee shall have been appointed
for its property, or any other obligor on the HDW Notes, its creditors
or its property, the Mortgagee, irrespective of whether the principal of
the HDW Notes shall then be due and payable as therein expressed or by
declaration or otherwise, shall be entitled and empowered to intervene
in such proceedings or otherwise, to file and prove a claim or claims
for the whole amount of principal and interest owing and unpaid in
respect of the HDW Notes, and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the
Mortgagee and of the Holders allowed in any judicial proceeding relative
to the Borrower or any obligor on such HDW Notes, its creditors, or its
property, and to collect and receive any money or other property payable
or deliverable on any such claims, and to distribute the same after the
deduction of any amount payable to the Mortgagee under Section 39
hereof. Nothing contained in this Mortgage shall be deemed to give the
Mortgagee any right to accept or consent to any plan of reorganization
or otherwise by action of any character in any such proceeding to waive
or change in any way any right of any Holder or to constitute a waiver
by the Borrower of its right to contest the validity of any claim made
against it.
(38) All rights of action and claims under this Mortgage
or the HDW Notes may be prosecuted and enforced by the Mortgagee without
the possession of the HDW Notes or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Mortgagee shall be brought in its own name as agent, and any recovery of
judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Mortgagee, its
agents and counsel, be for the benefit of the Holders of the HDW Notes.
(39) Subject to Section 54 hereof, any monies collected
by the Mortgagee pursuant to any sale of the Vessel or other enforcement
of any of its rights hereunder or under any other Second Security
Document on account of the occurrence of an Event of Default or
Incipient Default by the Mortgagee shall be distributed in accordance
with Section 5.09[(a)] of the Loan Agreement.
(40) No Holder shall have any right to institute any
independent proceeding, judicial or otherwise, with respect to this
Mortgage and the other Second Security Documents or for any other remedy
hereunder or thereunder except the Mortgagee.
(41) Notwithstanding any other provision of this Article
III, each Holder of an HDW Note shall have the right which is absolute
and unconditional to receive payment (whether directly or through its
agent) of the principal of and interest on such Holder's HDW Note, as
and when the same shall become due, and to demand payment thereof, and
such right shall not be impaired or affected without the consent of such
Holder.
(42) No right or remedy herein conferred upon or
reserved to the Mortgagee or such Holders 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 other Second Security
Documents 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.
(43) No delay or omission of the Mortgagee or any Holder
to exercise any right or remedy accruing upon any Event of Default nor
any course of dealings between the Mortgagee, the Holders (or any of
them) and the Borrower shall impair any such right or remedy or
constitute a waiver of any Event of Default or an acquiescence therein
nor shall any single exercise or partial exercise of any such right or
remedy preclude any other exercise thereof or any exercise of any other
or further right or remedy; nor shall the acceptance by the Mortgagee of
any security or any payment of any part of the Obligations maturing
after any Event of Default or of any payment on account of any past
default be construed to be a waiver of any right to take advantage of
any future Event of Default or of any past Event of Default not
completely cured thereby. Every right or remedy given by this Mortgage
or any other Second Security Document or by law to the Mortgagee or the
Holders may be exercised from time to time, and as often and in such
order as may be deemed expedient, by the Mortgagee or the Holders, as
the case may be.
(44) In case the Mortgagee shall have proceeded to
enforce any right, power or remedy under this Mortgage or under any
other Second Security Document by foreclosure, entry or otherwise, and
such proceeding shall have been discontinued or abandoned for any reason
or shall have been adversely determined to the Mortgagee, then, and in
every such case, the Borrower and the Mortgagee shall be restored to
their former positions and rights hereunder with respect to the property
subject or intended to be subject to this Mortgage or any other Second
Security Document, as the case may be, and all rights, remedies and
powers of the Mortgagee shall continue as if no such proceedings had
been taken.
(45) Subject to the provisions of Sections 31 and 54
hereof, the Mortgagee shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the
Mortgagee under this Mortgage or any other Second Security Document or
exercising any trust or power conferred on the Mortgagee herein or
therein.
ARTICLE IV
SUNDRY PROVISIONS
(46) For the purposes of recording this Second Preferred
Mortgage as required by the Republic of The Marshall Islands Maritime
Act of 1990, as amended, the total amount of this Mortgage is (i) [
] United States Dollars (USD[ ]), and (ii) interest and
performance of mortgage covenants. The date of maturity is [ ]. The
discharge amount is the same as the total amount.
(47) All the covenants, promises, stipulations and
agreements of the Borrower contained in this Mortgage shall bind the
Borrower, its successors and assignees, and shall inure to the benefit
of the Mortgagee.
(48) 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.
(49) Any notice or demand or other communication to the
Borrower or the Mortgagee under this Mortgage shall be made in
accordance with Section 15.04 of the Loan Agreement.
(50) The Borrower will pay to the Mortgagee on demand:
(a) All monies whatsoever which the Mortgagee
reasonably and in good faith shall or may expend, be put to or become
liable for in or about the protection, maintenance or enforcement of the
security created by this Mortgage or in or about the exercise by the
Mortgagee of any of the powers vested in it hereunder; and
(b) The amount of all expenses of any kind whatsoever,
stamp duties (if any), registration fees and any other charges incurred
by the Mortgagee in connection with the registration of this Mortgage.
(51) The Mortgagee shall, without prejudice to its other
rights and powers hereunder, be entitled (but not bound) at any time and
from time to time, to take any such action as it may in its discretion
think fit for the purpose of protecting the security created by this
Mortgage, and each and every expense or liability reasonably and in good
faith so incurred by the Mortgagee in or about the protection of the
security shall be repayable to it by the Borrower on demand.
(52) The Mortgagee shall be entitled at any time and
from time to time to delegate all or any of the powers and discretions
vested in it by this Mortgage (including, without limitation, the power
vested in it by virtue of Section 32 hereof) in such manner, upon such
terms and to such persons as the Mortgagee in its absolute discretion
may think fit.
(53) The provisions of this Mortgage shall be governed
by and construed in accordance with the Laws of the Republic of The
Marshall Islands and, to the extent applicable, to the internal laws of
the State of New York.
(54) Notwithstanding any other provision of this
Mortgage, the rights of the Mortgagee hereunder are expressly made
subject and subordinate in all respects to the First Mortgage and all
provisions of this Mortgage shall be construed according to the
following:
(a) Anything herein to the contrary notwithstanding this
Mortgage is subject and subordinate to the First Mortgage, and the
rights and powers granted to the Mortgagee herein are subject and are
subordinate to the corresponding rights and powers granted to the First
Mortgagee under the First Mortgage and may not be exercised in a manner
as to impair or prejudice such rights and powers under the First
Mortgage except as provided herein.
(b) The Mortgagee will release this Mortgage upon the
written request of the First Mortgagee in conjunction with any sale or
transfer of the Vessel under the provisions of Section 31 of the First
Mortgage.
(c) This Mortgage has the right of succession on payment
or discharge of the First Mortgage.
(d) Anything herein to the contrary notwithstanding,
until the First Mortgage shall have been satisfied and discharged the
Mortgagee may exercise the rights and remedies other than those set
forth in Sections 31(a) and (b) and 34 hereof only under the following
circumstances:
(i) with the prior written consent of the First
Mortgagee; or
(ii) the Mortgagee shall have tendered to the
First Mortgagee all amounts secured by the First Mortgage; or
(iii) the First Mortgagee shall have seized or
arrested the Vessel and commenced foreclosure proceedings or the
commencement of a bankruptcy, reorganization or receivership or similar
proceeding involving the Borrower under; or
(iv) upon prior written notice to the First
Mortgagee of its intent to do so, exercise the rights provided in
Section 35 hereof (except as and to the extent the First Mortgagee shall
otherwise direct in the event it determines to exercise its
corresponding rights under the First Mortgage); provided that any moneys
collected shall be forthwith surrendered to the First Mortgagee for
application under the First Mortgage.
(e) To the extent that the provisions of the First
Mortgage or the exercise by the First Mortgagee of any rights under the
First Mortgage require the Borrower to do something prohibited hereby or
refrain from doing something required hereby or by the Mortgagee, or
require a distribution of funds other than as provided herein, no Event
of Default, or Incipient Default, hereunder shall result from the
Borrower's compliance with such provisions or actions. This Section 54
shall not, however, relieve the Borrower from the obligation of
complying with the provisions of this Mortgage to the extent that they
require different or additional performance than that required by the
First Mortgage or the First Mortgagee so long as the same does not
require performance that would result in an Event of Default, or with
the passage or time or notice, or both, would result in an Event of
Default, under the First Mortgage.
(f) Until the First Mortgage shall have been satisfied
and discharged, this Mortgage shall not be amended, modified or
supplemented without the prior written consent of the First Mortgagee.
(55) No course of dealing between the Mortgagee and the
Borrower or any delay or failure on the part of the Mortgagee thereof in
exercising any rights hereunder shall operate as a waiver of any rights
of the Mortgagee thereof or of the preferred status of this Mortgage.
IN WITNESS WHEREOF, the Borrower has caused this Mortgage
to be duly executed by its authorized representative the day and year
first above written.
[ ]
_____________________________
Name:
Title:
[Notarial Acknowledgment complying with Marshall Islands law to
be added.]
EXHIBIT C
[ ]
Re: [ ]
Dear Sirs:
This refers to the Second Preferred Ship Mortgage (the
"Mortgage"), dated today by [ ] (such shipowner, its
successors and assigns, the "Shipowner") to KREDITANSTALT FUR
WIEDERAUFBAU, as mortgagee (such mortgagee and its successors and
assigns, the "Mortgagee") relating to the Vessel, [ ], Official
Number [ ]. Terms defined in the Mortgage when used herein have the
same meanings as so defined. You are the mortgagee (such mortgagee and
its successors and assigns, the "First Mortgagee") under the First
Preferred Ship Mortgage dated [ ], 199_(the "First Mortgage"),
relating to the Vessel.
Anything in the Mortgage to the contrary notwithstanding,
so long as the obligations secured by the First Mortgage remains
outstanding and in consideration of the First Mortgagee consenting to
the Mortgage, the Mortgagee hereby acknowledges and agrees that (a) the
lien of the Mortgage and all the terms, provisions and conditions
thereof and the rights of the Mortgagee thereunder are subject and
subordinate in all respects to the First Mortgage and the lien created
thereby and the Mortgagee agrees to comply with the provisions of
Section 54 of the Mortgage, (b) the Mortgagee will release the Mortgage
upon the written request of the First Mortgagee in conjunction with any
sale or transfer of the Vessel in accordance with Section 31 of the
First Mortgage, (c) none of the rights, powers or remedies as against
the Vessel, including foreclosure, provided for in the Mortgage shall be
exercised by or on behalf of the Mortgagee in advance of the foreclosure
of the lien of the First Mortgagee (or the commencement of a bankruptcy,
reorganization or receivership or similar proceeding involving the
Shipowner as debtor) without the written consent of the First Mortgagee;
provided, however, that the Mortgagee may, after giving prior notice to
the First Mortgage of its intent to do so, but without obtaining such
written consent, exercise its rights provided in Section 35 of the
Mortgage (except as and to the extent the First Mortgagee shall
otherwise direct in the event it determines to exercise its
corresponding rights under the First Mortgage provided that any monies
collected or received by the Mortgagee through such exercise shall be
forthwith surrendered to the First Mortgagee for application under the
First Mortgage, and (d) the Mortgage shall not be amended, modified or
supplemented without the prior written consent of the First Mortgagee;
provided, however, that nothing in the foregoing shall be construed to
inhibit the Mortgagee (i) from establishing and protecting in any
foreclosure proceeding in respect of the Vessel commenced by anyone
other than the Mortgagee, or in any bankruptcy, reorganization,
receivership or similar proceeding involving the Shipowner as debtor,
the status of the Mortgagee as a secured creditor of the Shipowner with
the priority granted in the Mortgage or (ii) from exercising for the
benefit of the HDW Notes issued pursuant to the Loan Agreement, as and
when in its sole discretion it may from time to time determine, any
right, power or remedy against the Vessel (including, without
limitation, the acceleration or maturity of such Notes or the
commencement of, and participation in, bankruptcy, reorganization or
receivership proceedings involving the Shipowner as debtor) to which the
Mortgagee shall be or become entitled, other than under the Mortgage,
whether or not such right, power or remedy is the same as or similar to
the rights, powers or remedies of the Mortgagee set forth in the
Mortgage.
Very truly yours,
KREDITANSTALT FUR WIEDERAUFBAU
By: __________________________
Name:
Title:
Accepted and Agreed:
[ ]
By: _______________
Name:
Title:
APPENDIX C-1
FORM OF ASSIGNMENT OF INSURANCE
The undersigned [ ], a corporation organized
and existing under the laws of [ ] [("Owner") and American President
Lines, Ltd., a corporation organized and existing under the laws of Delaware
(the "Charterer")] (collectively the "Assignor[s]"), in consideration of One
Dollar ($1) lawful money of the United States of America, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, pursuant to the Agreement to Acquire and Charter dated March 14,
1994 (the "Acquisition Agreement") by and among the Assignor, Commerzbank AG
(Kiel Branch), Dresdner Bank AG in Hamburg, Vereins-und Westbank AG, Deutsche
Schiffsbank AG, Norddeutsche Landesbank - Girozentrale, Commerzbank AG, Hamburg,
Deutsche Verkehrs-Bank AG, Banque Internationale a Luxembourg S.A. and
Kreditanstalt fur Wiederaufbau ("the Assignee") and as owner of the [insert name
and official number of HDW Vessel] (the "Vessel") [and American President Lines,
Ltd. as the bareboat charterer of the Vessel], [each] Assignor has sold,
transferred and set over and by this instrument, do sell, assign, transfer and
set over unto the Assignee mortgagee of the Vessel under a First Preferred
Mortgage dated the date hereof (the "Mortgage"), and unto the Assignee's
successors and assigns, as such mortgagee, to it and its successors' and
assigns' own proper use and benefit, all right, title and interest of the
[respective] Assignor under, in and to (i) all policies and contracts of
insurance (which expression includes all entries of the Vessel in Protection and
Indemnity Associations or War Risk Associations) in respect of the Vessel
whether now or hereafter to be effected, and all renewals of or replacements for
the same, (ii) when the context so admits, any reinsurance of such insurances,
(iii) all claims, returns of premium and other monies and claims for monies due
and to become due under said insurances or in respect of said insurances, (iv)
all other rights of [each] Assignor [respectively] under or in respect of said
insurances, and (v) any proceeds of any of the foregoing.
It is expressly agreed that anything herein contained to the
contrary notwithstanding, [each] Assignor shall remain liable under said
insurances to perform all of the [respective] obligations assumed by it
thereunder, and the Assignee shall have no obligation or liability under said
insurances by reason of or arising out of this instrument of assignment nor
shall the Assignee be required or obligated in any manner to perform or fulfill
any obligations of [each] Assignor respectively under or pursuant to said
insurances or 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 other action to collect or enforce the payment of any amounts which
may have been assigned to it or to which it may be entitled hereunder at any
time or times.
It is expressly agreed anything herein to the contrary
notwithstanding that (i) unless and until an Incipient Default or an Event of
Default is continuing and has not been cured or waived and unless and until the
Assignee shall have notified the underwriters in writing of such an Incipient
Default or Event of Default, or (ii) unless and until the Vessel shall have
become an actual or constructive total loss or a compromised or arranged total
loss or requisition of title, [each] Assignor shall be entitled to exercise all
of its rights, including the right to receive insurance proceeds payable in
respect of the insurances hereby assigned (except as otherwise provided in the
loss payable clauses attached hereto and except for amounts payable in respect
of single interest mortgagee's insurance and mortgagee's additional perils
insurance (pollution)) to the same extent as if none of the rights had been
assigned hereby.
[Each] Assignor does hereby constitute the Assignee, its
successors and assigns, [such] Assignor's true and lawful attorney, irrevocably,
with full power (in the name of [such] Assignor or otherwise), upon an event of
default under the Loan Agreement or the Mortgage having occurred and in
accordance with the provisions thereof, to ask, require, demand, receive,
compound and give acquittance for any and all monies and claims for monies due
and to become due under or arising out of said insurances, to endorse any checks
or other instruments or orders in connection therewith and to file any claims or
to take any action or institute any proceedings which the Assignee may deem to
be necessary or advisable in the premises.
[Each] Assignor hereby covenants and agrees (A) to procure that
notice of this Assignment shall be duly given to all underwriters and brokers,
(B) that where the consent of any underwriter is required pursuant to any of the
claims for monies due and monies due assigned hereby that it shall be obtained
and evidence thereof shall be given to the Assignee, or, in the alternative,
that in the case of protection and indemnity coverage, the Assignor[s] shall
obtain a letter of undertaking by the underwriters duly noting the interest of
the Assignee, and (C) that there shall be duly endorsed upon all slips, cover
notes, policies, certificates of entry or other instruments issued or to be
issued in connection with the insurances assigned hereby such clauses as to loss
payees as the Assignee may require or approve. In all cases, unless otherwise
agreed in writing by the Assignee, such slips, cover notes, notices,
certificates of entry or other instruments shall provide that there will be no
recourse against the Assignee for payment of premiums, calls or assessments.
[Each] Assignor further covenants and agrees that in the event the Assignee
shall agree that any insurance is placed with a "captive insurer," all such
amounts shall be reinsured in a manner satisfactory to the Assignee and all
monies and claims for monies under policies of reinsurance shall be assigned to
the Assignee and/or there shall be a "cut through" clause respecting such
reinsurance satisfactory in its sole discretion to the Assignee.
[Each] Assignor agrees that at any time and from time to time,
upon the written request of the Assignee, [such] Assignor will promptly and duly
execute and deliver any and all such further instruments and documents as the
Assignee may deem desirable in obtaining the full benefits of this Assignment
and of the rights and powers herein granted.
[Each] Assignor does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants that, without the prior written
consent thereto of the Assignee, so long as this instrument of assignment shall
remain in effect, they will not assign or pledge the whole or any part of the
right, title and interest hereby assigned to anyone other than the Assignee, its
successors or assigns, and it will not take or omit to take any action, the
taking or omission of which might result in an alteration or impairment of said
insurances, of this Assignment or of any of the rights created by said
insurances or this Assignment.
This assignment to the Assignee shall take effect immediately
upon the execution hereof and the powers and authorities granted to the
Assignee, its successors and assigns, herein, having been given for valuable
consideration, are hereby declared to be irrevocable.
[Each] Assignor agrees that the Assignee is hereby appointed its
attorney-in-fact and may execute on [each] Assignor's behalf and file any
financing statements under the Uniform Commercial Code or notices respecting the
Companies Register, or papers of similar purpose or effect in respect of this
Assignment which the Assignee deems appropriate.
All notices or other communications which are required to be made
to the Assignee hereunder shall be made by telex or facsimile transmission,
confirmed by postage prepaid letter to:
if to the Assignor [Charterer], addressed to:
American President Lines, Ltd.
1111 Broadway
Oakland, California 94607
Attention: Treasurer
Telecopy: (510) 272-8931
Telex: 671 4840 APL OAK
[if to the Owner, addressed to:
APL Newbuildings, Ltd.
1111 Broadway
Oakland, California 94607
Attention: Treasurer
Telecopy: (510) 272-8931
Telex: 671 4840 APL OAK]
if to the Assignee, addressed to:
Kreditanstalt fur Wiederaufbau
Palmengartenstrasse 5-9
Postfach 11-11-41
D-60325 Frankfurt am Main
Federal Republic of Germany
Attention: Mr. Andreas Uibeleisen
Mr. Wolfgang Pfisterer
Telecopy: 49-7431-2944 or 49-7431-2198
Telex: 415256-0 KWD
or at such other address as may have been furnished in writing by the Assignee.
Any consents, waivers, approvals or other actions to be given or taken by the
Assignee hereunder shall be effective if contained in a writing signed by the
Assignee or such other person or persons as the Assignee may from time to time
appoint, and forwarded to the Assignor[s] at its [their respective] address[es]
as provided in Section 7 of the Acquisition Agreement.
Any payments made pursuant to the terms hereof shall be payable
to the Assignee to such account or accounts as may, from time to time, be
designated by the Assignee.
Upon payment in full to the Assignee of all amounts due and owing
thereto under each of the HDW Security Documents (as such term is defined in the
Acquisition Agreement) relating to the Vessel, this Assignment shall terminate.
This Assignment shall be governed by the laws of the State of New
York (other than the law of the State of New York governing choice of law) and
shall not be amended or altered nor shall any provision hereto be waived except
by an amendment or waiver in writing signed by the Assignee.
[SIGNATURE APPEARS ON NEXT PAGE.]
IN WITNESS WHEREOF, the Assignor[s] has [have] caused this
Assignment respecting the Vessel's insurances to be duly executed this _____ day
of ________, 199_.
[ ]
[Owner]
By:____________________
Title:
[ ]
[Charterer]
By:____________________
Title:
NOTICE OF ASSIGNMENT
OF INSURANCE
PLEASE TAKE NOTICE that the Undersigned, Owner [and Charterer] of
the [Insert name and official number of HDW Vessel] has assigned to
KREDITANSTALT FUR WIEDERAUFBAU, mortgagee, under a certain First Preferred
Mortgage dated the date hereof covering said Vessel, all of the Undersigned's
right, title and interest in and to any and all insurances respecting said
Vessel including all monies payable and to become payable thereunder or in
connection therewith (including return of premium). This Notice and the
attached Loss Payable Clauses shall be endorsed on all policies and certificates
of entry evidencing such insurances.
Dated: ________, 199_
[ ]
[Owner]
By: ____________________________
Title:
[ ]
[Charterer]
By: ____________________________
Title:
Loss Payable Clause
Hull and War Risks
[Loss, if any, payable to Kreditanstalt fur Wiederaufbau (the
"Mortgagee"), for distribution by it in accordance with the terms of the
Mortgage in favor of the Mortgagee, except that, in the case of any loss
involving any damage to the Vessel or liability of the Vessel, the Underwriters
may pay directly for the repair, salvage, liability or other charges involved
or, if the Shipowner [or the Charterer] shall have first fully repaired the
damage and paid the cost thereof, or discharged the liability or paid all of the
salvage or other charges and Underwriters shall have received evidence that such
repair and payment have been made or will be made simultaneously with the
payment by the Underwriters and there is not an Event of Default or Incipient
Default, written notice of which the Mortgagee has given the Underwriters, then
the Underwriters may pay the Shipowner [or the Charterer, as the case may be,],
as reimbursements therefor; provided, further, that if such damage involves a
loss in excess of USD 2,000,000 or its equivalent, the Underwriters shall not
make such payment without first obtaining the written consent of the Mortgagee.
In the event of an actual or constructive total loss or a
compromised or arranged total loss or requisition of title, all insurance
payment therefor shall be paid to the Mortgagee, for distribution by it in
accordance with the terms of the Mortgage in favor of the Mortgagee.]
Loss Payable Clause
Protection and Indemnity
[If APL Newbuildings, Ltd. (the "Shipowner") or American
President Lines, Ltd. (the "Charterer")] shall have incurred the loss, if any,
payable to Kreditanstalt fur Wiederaufbau (the "Mortgagee"), for distribution by
it in accordance with the terms of the Mortgage, except that, any loss may be
paid directly to the person to whom liability covered by this insurance has been
incurred if the Shipowner [or the Charterer] shall not have incurred the loss,
damage or expense in question, or, unless there is an Event of Default or an
Incipient Default, written notice of which the Mortgagee has given the
underwriters, to the Shipowner [or to the Charterer] to reimburse it for any
loss, damage or expenses incurred by it and covered by this insurance, provided
the underwriters shall have first evidence that the liability insured against
has been discharged.]
APPENDIX C-2
FORM OF ASSIGNMENT OF INSURANCE
The undersigned [ ], a
corporation organized and existing under the laws of [ ] [("Owner")
and American President Lines Ltd., a corporation organized and existing
under the laws of __________ (the "Charterer")] (collectively, the
"Assignor[s]"), in consideration of One Dollar ($1) lawful money of the
United States of America, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, pursuant to
the Agreement to Acquire and Charter dated March 14, 1994 (the
"Acquisition Agreement") by and among the Assignor, Kreditanstalt fur
Wiederaufbau, Commerzbank AG (Kiel Branch), Dresdner Bank AG in Hamburg,
Vereins-und Westbank AG, Deutsche Schiffsbank AG, Norddeutsche
Landesbank-Girozentrale, Deutsche Verkehrs-Bank AG, Banque
Internationale a Luxembourg S.A. and Commerzbank AG, Hamburg, as Agent
("the Assignee"), and as owner of the [insert name and official number
of Daewoo Vessel] (the "Vessel"), [each] Assignor has sold, assigned,
transferred and set over and by this instrument, do sell, assign,
transfer and set over unto the Assignee mortgagee of the Vessel under a
First Preferred Mortgage dated the date hereof (the "Mortgage"), and
unto the Assignee's successors and assigns, as such mortgagee, to it and
its successors' and assigns' own proper use and benefit, all right,
title and interest of the [respective] Assignor under, in and to (i) all
policies and contracts of insurance (which expression includes all
entries of the Vessel in Protection and Indemnity Associations or War
Risk Associations) in respect of the Vessel whether now or hereafter to
be effected, and all renewals of or replacements for the same, (ii) when
the context so admits, any reinsurance of such insurances, (iii) all
claims, returns of premium and other monies and claims for monies due
and to become due under said insurances or in respect of said
insurances, (iv) all other rights of [each] Assignor[s] [respectively]
under or in respect of said insurances, and (v) any proceeds of any of
the foregoing.
It is expressly agreed that anything herein contained to
the contrary notwithstanding, [each] Assignor shall remain liable under
said insurances to perform all of the [respective] obligations assumed
by it thereunder, and the Assignee shall have no obligation or liability
under said insurances by reason of or arising out of this instrument of
assignment nor shall the Assignee be required or obligated in any manner
to perform or fulfill any obligations of [each] Assignor respectively
under or pursuant to said insurances or 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 other action to
collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled hereunder at any time or
times.
It is expressly agreed anything herein to the contrary
notwithstanding that (i) unless and until an Incipient Default or an
Event of Default is continuing and has not been cured or waived and
unless and until the Assignee shall have notified the underwriters in
writing of such an Incipient Default or Event of Default, or (ii) unless
and until the Vessel shall have become an actual or constructive total
loss or a compromised or arranged total loss or requisition of title,
[each] Assignor shall be entitled to exercise all of its rights,
including the right to receive insurance proceeds payable in respect of
the insurances hereby assigned (except as otherwise provided in the loss
payable clauses attached hereto and except for amounts payable in
respect of single interest mortgagee's insurance and mortgagee's
additional perils insurance (pollution) to the same extent as if none of
the rights had been assigned hereby.
[Each] Assignor does hereby constitute the Assignee, its
successors and assigns, [such] Assignor's true and lawful attorney,
irrevocably, with full power (in the name of [such] Assignor or
otherwise), upon an event of default under the Loan Agreement or the
Mortgage having occurred and in accordance with the provisions thereof,
to ask, require, demand, receive, compound and give acquittance for any
and all monies and claims for monies due and to become due under or
arising out of said insurances, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or
to take any action or institute any proceedings which the Assignee may
deem to be necessary or advisable in the premises.
[Each] Assignor hereby covenants and agrees (A) to
procure that notice of this Assignment shall be duly given to all
underwriters and brokers, (B) that where the consent of any underwriter
is required pursuant to any of the claims for monies due and monies due
assigned hereby that it shall be obtained and evidence thereof shall be
given to the Assignee, or, in the alternative, that in the case of
protection and indemnity coverage, the Assignor[s] shall obtain a letter
of undertaking by the underwriters duly noting the interest of the
Assignee, and (C) that there shall be duly endorsed upon all slips,
cover notes, policies, certificates of entry or other instruments issued
or to be issued in connection with the insurances assigned hereby such
clauses as to loss payees as the Assignee may require or approve. In
all cases, unless otherwise agreed in writing by the Assignee, such
slips, cover notes, notices, certificates of entry or other instruments
shall provide that there will be no recourse against the Assignee for
payment of premiums, calls or assessments. [Each] Assignor further
covenants and agrees that in the event the Assignee shall agree that any
insurance is placed with a "captive insurer," all such amounts shall be
reinsured in a manner satisfactory to the Assignee and all monies and
claims for monies under policies of reinsurance shall be assigned to the
Assignee and/or there shall be a "cut through" clause respecting such
reinsurance satisfactory in its sole discretion to the Assignee.
[Each] Assignor agrees that at any time and from time to
time, upon the written request of the Assignee, [such] Assignor will
promptly and duly execute and deliver any and all such further
instruments and documents as the Assignee may deem desirable in
obtaining the full benefits of this Assignment and of the rights and
powers herein granted.
[Each] Assignor does hereby warrant and represent that it
has not assigned or pledged, and hereby covenants that, without the
prior written consent thereto of the Assignee, so long as this
instrument of assignment shall remain in effect, they will not assign or
pledge the whole or any part of the right, title and interest hereby
assigned to anyone other than the Assignee, its successors or assigns,
and it will not take or omit to take any action, the taking or omission
of which might result in an alteration or impairment of said insurances,
of this Assignment or of any of the rights created by said insurances or
this Assignment.
This assignment to the Assignee shall take effect
immediately upon the execution hereof and the powers and authorities
granted to the Assignee, its successors and assigns, herein, having been
given for valuable consideration, are hereby declared to be irrevocable.
[Each] Assignor agrees that the Assignee is hereby
appointed its attorney-in-fact and may execute on [each] Assignor's
behalf and file any financing statements under the Uniform Commercial
Code or notices respecting the Companies Register, or papers of similar
purpose or effect in respect of this Assignment which the Assignee deems
appropriate.
All notices or other communications which are required to
be made to the Assignee hereunder shall be made by telex or facsimile
transmission, confirmed by postage prepaid letter to:
if to the Assignor [Charterer], addressed to:
American President Lines, Ltd.
1111 Broadway
Oakland, California 94607
Attention: Treasurer
Telecopy: (510) 272-8931
Telex: 671 4840 APL OAK
[if to the Owner, addressed to:
APL Newbuildings, Ltd.
1111 Broadway
Oakland, California 94607
Attention: Treasurer
Telecopy: (510) 272-8931
Telex: 671 4840 APL OAK]
if to the Assignee, to:
Commerzbank AG, Hamburg
Ness 7-9
D-20457 Hamburg
Federal Republic of Germany
Attention: Stefan E. Kuch
Telecopy: 49-40-3683-4068
Telex: 212391 CBKD
or at such other address as may have been furnished in writing by the
Assignee. Any consents, waivers, approvals or other actions to be given
or taken by the Assignee hereunder shall be effective if contained in a
writing signed by the Assignee or such other person or persons as the
Assignee may from time to time appoint, and forwarded to the Assignor[s]
at its [their respective] address[es] as provided in Section 7 of the
Acquisition Agreement.
Any payments made pursuant to the terms hereof shall be
payable to the Assignee to such account or accounts as may, from time to
time, be designated by the Assignee.
Upon payment in full to the Assignee of all amounts due
and owing thereto under each of the Daewoo Security Documents (as such
term is defined in the Acquisition Agreement) relating to the Vessel,
this Assignment shall terminate.
This Assignment shall be governed by the laws of the
State of New York (other than the law of the State of New York governing
choice of law) and shall not be amended or altered nor shall any
provision hereto be waived except by an amendment or waiver in writing
signed by the Assignee.
[SIGNATURE APPEARS ON NEXT PAGE.]
IN WITNESS WHEREOF, the Assignor[s] [have] caused this
Assignment respecting the Vessel's insurances to be duly executed this
_____ day of _________, 199_.
[
] [Owner]
By:__________________________
Title:
[
]
[Charterer]
By:__________________________
Title:
NOTICE OF ASSIGNMENT
OF INSURANCE
PLEASE TAKE NOTICE that the Undersigned, Owner [and
Charterer] of the [insert name and official number of Daewoo Vessel] has
assigned to COMMERZBANK AG, HAMBURG as syndicate agent and mortgagee
under a certain First Preferred Mortgage dated the date hereof covering
said Vessel, all of the Undersigned's right, title and interest in and
to any and all insurances respecting said Vessel, including all monies
payable and to become payable thereunder or in connection therewith
(including return of premium). This Notice and the attached Loss
Payable Clauses shall be endorsed on all policies and certificates of
entry evidencing such insurances.
Dated: __________, 199_
[
]
[Owner]
By:____________________________
Title:
[ ]
[Charterer]
By:_________________________
Title:
Loss Payable Clause
Hull and War Risks
[Loss, if any, payable to Commerzbank AG as the Syndicate
Agent (the "Mortgagee"), for distribution by it in accordance with the
terms of the Mortgage in favor of the Mortgagee except that, in the case
of any loss involving any damage to the Vessel or liability of the
Vessel, the Underwriters may pay directly for the repair, salvage,
liability or other charges involved or, if the Shipowner [or the
Charterer] shall have first fully repaired the damage and paid the cost
thereof, or discharged the liability or paid all of the salvage or other
charges and Underwriters shall have received evidence that such repair
and payment have been made or will be made simultaneously with the
payment by the Underwriters and there is not an Event of Default or
Incipient Default, written notice of which the Mortgagee has given the
Underwriters, then the Underwriters may pay the Shipowner [or the
Charterer, as the case may be,] as reimbursements therefor; provided,
further, that if such damage involves a loss in excess of USD2,000,000
or its equivalent, the Underwriters shall not make such payment without
first obtaining the written consent of the Mortgagee.
In the event of an actual or constructive total loss or a
compromised or arranged total loss or requisition of title, all
insurance payment therefor shall be paid to the Mortgagee, for
distribution by it in accordance with the terms of the Mortgage in favor
of the Mortgagee.]
Loss Payable Clause
Protection and Indemnity
[If APL Newbuildings, Ltd. (the "Shipowner") or American
President Lines, Ltd. (the "Charterer")] shall have incurred the loss,
if any, payable to Commerzbank AG (the "Mortgagee"), for distribution by
it in accordance with the terms of the Mortgage, except that, any loss
may be paid directly to the person to whom liability covered by this
insurance has been incurred if the Shipowner [or the Charterer] shall
not have incurred the loss, damage or expense in question, or, unless
there is an Event of Default or Incipient Default, written notice of
which the Mortgagee has given the underwriters, to the Shipowner [or to
the Charterer] to reimburse it for any loss, damage or expenses incurred
by it and covered by this insurance, provided the underwriters shall
have first evidence that the liability insured against has been
discharged.
APPENDIX C-3
FORM OF SECOND ASSIGNMENT OF INSURANCE
The undersigned [ ], a
corporation organized and existing under the laws of [ ] [("Owner")
and American President Lines, Ltd., a corporation organized and existing
under the laws of ___________ (the "Charterer")] ([collectively,] the
"Assignor[s]"), in consideration of One Dollar ($1) lawful money of the
United States of America, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, pursuant to
the Agreement to Acquire and Charter dated March 14, 1994 (the
"Acquisition Agreement") by and among the Assignor, Kreditanstalt fur
Wiederaufbau (the "Assignee"), Commerzbank AG (Kiel Branch), Dresdner
Bank AG in Hamburg, Vereins-und Westbank AG, Deutsche Schiffsbank AG,
Norddeutsche Landesbank-Girozentrale, Deutsche Verkehrs-Bank AG, Banque
Internationale a Luxembourg S.A. and Commerzbank AG, Hamburg, as Agent
and as owner of the [insert name and official number of Daewoo Vessel]
(the "Vessel") [(and American President Lines, Ltd. as the bareboat
charterer of the Vessels], [each] Assignor has sold, assigned,
transferred and set over and by this instrument, do sell, assign,
transfer and set over and grant a second priority security interest,
subject only to a first priority security interest granted to
Commerzbank AG unto the Assignee mortgagee of the Vessel under a Second
Preferred Mortgage dated the date hereof (the "Mortgage"), and unto the
Assignee's successors and assigns, as such mortgagee, to it and its
successors' and assigns' own proper use and benefit, all right, title
and interest of the [respective] Assignor under, in and to (i) all
policies and contracts of insurance (which expression includes all
entries of the Vessel in Protection and Indemnity Associations or War
Risk Associations) in respect of the Vessel whether now or hereafter to
be effected, and all renewals of or replacements for the same, (ii) when
the context so admits, any reinsurance of such insurances, (iii) all
claims, returns of premium and other monies and claims for monies due
and to become due under said insurances or in respect of said
insurances, (iv) all other rights of [each] Assignor [respectively]
under or in respect of said insurances, and (v) any proceeds of any of
the foregoing.
It is expressly agreed that anything herein contained to
the contrary notwithstanding, [each] Assignor shall remain liable under
said insurances to perform all of the [respective] obligations assumed
by it thereunder, and the Assignee shall have no obligation or liability
under said insurances by reason of or arising out of this instrument of
assignment nor shall the Assignee be required or obligated in any manner
to perform or fulfill any obligations of [each] Assignor [respectively]
under or pursuant to said insurances or 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 other action to
collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled hereunder at any time or
times.
It is expressly agreed anything herein to the contrary
notwithstanding that (i) unless and until an Incipient Default or an
Event of Default is continuing and has not been cured or waived and
unless and until the Assignee shall have notified the underwriters in
writing of such an Incipient Default or Event of Default, or (ii) unless
and until the Vessel shall have become an actual or constructive total
loss or a compromised or arranged total loss or requisition of title,
[each] Assignor shall be entitled to exercise all of its rights,
including the right to receive insurance proceeds payable in respect of
the insurances hereby assigned (except as otherwise provided in the loss
payable clauses attached hereto and except for amounts payable in
respect of single interest mortgagee's insurance and mortgagee's
additional perils insurance (pollution) to the same extent as if none of
the rights had been assigned hereby.
Subject only to a First Assignment of Insurances in favor
of Commerzbank AG, [each] Assignor does hereby constitute the Assignee,
its successors and assigns, [such] Assignor's true and lawful attorney,
irrevocably, with full power (in the name of [such] Assignor or
otherwise), upon an event of default under the Loan Agreement or the
Mortgage having occurred and in accordance with the provisions thereof,
to ask, require, demand, receive, compound and give acquittance for any
and all monies and claims for monies due and to become due under or
arising out of said insurances, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or
to take any action or institute any proceedings which the Assignee may
deem to be necessary or advisable in the premises.
[Each] Assignor hereby covenants and agrees (A) to
procure that notice of this Assignment shall be duly given to all
underwriters and brokers, (B) that where the consent of any underwriter
is required pursuant to any of the claims for monies due and monies due
assigned hereby that it shall be obtained and evidence thereof shall be
given to the Assignee, or, in the alternative, that in the case of
protection and indemnity coverage, the Assignor[s] shall obtain a letter
of undertaking by the underwriters duly noting the interest of the
Assignee, and (C) that there shall be duly endorsed upon all slips,
cover notes, policies, certificates of entry or other instruments issued
or to be issued in connection with the insurances assigned hereby such
clauses as to loss payees as the Assignee may require or approve. In
all cases, unless otherwise agreed in writing by the Assignee, such
slips, cover notes, notices, certificates of entry or other instruments
shall provide that there will be no recourse against the Assignee for
payment of premiums, calls or assessments. [Each] Assignor further
covenants and agrees that in the event the Assignee shall agree that any
insurance is placed with a "captive insurer," all such amounts shall be
reissued in a manner satisfactory to the Assignee and all monies and
claims for monies under policies of reinsurance shall be assigned to the
Assignee and/or there shall be a "cut through" clause respecting such
reinsurance satisfactory in its sole discretion to the Assignee.
[Each] Assignor agrees that at any time and from time to
time, upon the written request of the Assignee, [such] Assignor will
promptly and duly execute and deliver any and all such further
instruments and documents as the Assignee may deem desirable in
obtaining the full benefits of this Assignment and of the rights and
powers herein granted.
[Each] Assignor does hereby warrant and represent that,
except for the First Assignment of Insurances in favor of Commerzbank
AG, it has not assigned or pledged, and hereby covenants that, without
the prior written consent thereto of the Assignee, so long as this
instrument of assignment shall remain in effect, they will not assign or
pledge the whole or any part of the right, title and interest hereby
assigned to anyone other than the Assignee, its successors or assigns,
and it will not take or omit to take any action, the taking or omission
of which might result in an alteration or impairment of said insurances,
of this Assignment or of any of the rights created by said insurances or
this Assignment.
This assignment to the Assignee shall take effect
immediately upon the execution hereof and the powers and authorities
granted to the Assignee, its successors and assigns, herein, having been
given for valuable consideration, are hereby declared to be irrevocable.
[Each] Assignor agrees that the Assignee is hereby
appointed its attorney-in-fact and may execute on [such] Assignor's
behalf and file any financing statements under the Uniform Commercial
Code or notices respecting the Companies Register, or papers of similar
purpose or effect in respect of this Assignment which the Assignee deems
appropriate.
All notices or other communications which are required to
be made to the Assignee hereunder shall be made by telex or facsimile
transmission, confirmed by postage prepaid letter to:
if to the Assignor [Charterer], addressed to:
American President Lines, Ltd.
1111 Broadway
Oakland, California 94607
Attention: Treasurer
Telecopy: (510) 272-8931
Telex: 671 4840 APL OAK
[if to the Owner, addressed to:
APL Newbuildings, Ltd.
1111 Broadway
Oakland, California 94607
Attention: Treasurer
Telecopy: (510) 272-8931
Telex: 671 4840 APL OAK]
if to the Assignee, addressed to:
Kreditanstalt fur Wiederaufbau
Palmengartenstrasse 5-9
Postfach 11-11-41
D-60325 Frankfurt am Main
Federal Republic of Germany
Attention: Mr. Andreas Uibeleisen
Mr. Wolfgang Pfisterer
Telecopy: 49-7431-2944 or 49-7431-2198
Telex: 415256-0 KWD
or at such other address as may have been furnished in writing by the
Assignee. Any consents, waivers, approvals or other actions to be given
or taken by the Assignee hereunder shall be effective if contained in a
writing signed by the Assignee or such other person or persons as the
Assignee may from time to time appoint, and forwarded to the Assignor[s]
at its [their respective] address[es] as provided in Section 7 of the
Acquisition Agreement.
Any payments made pursuant to the terms hereof shall be
payable to the Assignee to such account or accounts as may, from time to
time, be designated by the Assignee.
Upon payment in full to Assignee of all amounts due and
owing thereto under each of the Second Security Documents (as such term
is defined in the Acquisition Agreement) relating to the Vessel, this
Assignment shall terminate.
This Assignment shall be governed by the laws of the
State of New York (other than the law of the State of New York governing
choice of law) and shall not be amended or altered nor shall any
provision hereto be waived except by an amendment or waiver in writing
signed by the Assignee.
[SIGNATURE APPEARS ON NEXT PAGE.]
IN WITNESS WHEREOF, the Assignor[s] [have] caused this
Assignment respecting the Vessel's Insurances to be duly executed this
_____ day of_________, 199_.
[
]
[Owner]
By:_____________________________
Title:
[
]
[Charterer]
By:____________________________
Title:
NOTICE OF ASSIGNMENT
OF INSURANCE
PLEASE TAKE NOTICE that the Undersigned, Owner [and
Charterer] of the [insert name and official number of Daewoo Vessel] has
assigned to KREDITANSTALT FUR WIEDERAUFBAU as agent and mortgagee under
a certain Second Preferred Mortgage dated the date hereof covering said
Vessel, all of the Undersigned's right, title and interest in and to any
and all insurances respecting said Vessel, including all monies payable
and to become payable thereunder or in connection therewith (including
return of premium), subject only to a First Assignment of Insurances in
favor of Commerzbank AG, as Syndicate Agent and Mortgagee under a First
Preferred Mortgage dated the date hereof. This Notice and the attached
Loss Payable Clauses shall be endorsed on all policies and certificates
of entry evidencing such insurances.
Dated: __________, 199_
[
]
[Owner]
By:____________________________
Title:
[ ]
[Charterer]
By:____________________________
Title:
Loss Payable Clause
Hull and War Risks
[Subject only to an Assignment of Insurance dated
_______, 199_ by the Shipowner in favor of Commerzbank, AG, loss, if
any, payable to Kreditanstalt fur Wiederaufbau (the "Mortgagee"), for
distribution by it in accordance with the terms of the Mortgage in favor
of the Mortgagee except that, in the case of any loss involving any
damage to the Vessel or liability of the Vessel, the Underwriters may
pay directly for the repair, salvage, liability or other charges
involved or, if the Shipowner [or the Charterer] shall have first fully
repaired the damage and paid the cost thereof, or discharged the
liability or paid all of the salvage or other charges and Underwriters
shall have received evidence that such repair and payment have been made
or will be made simultaneously with the payment by the Underwriters and
there is not an Event of Default or Incipient Default, notice of which
the Mortgagee has given the Underwriters, then the Underwriters may pay
the Shipowner [or the Charterer, as the case may be,], as reimbursements
therefor; provided, further, that if such damage involves a loss in
excess of USD2,000,000 or its equivalent, the Underwriters shall not
make such payment without first obtaining the written consent of the
Mortgagee.
Subject only to an Assignment of Insurance dated _______,
199_ by the Shipowner in favor of Commerzbank, AG, in the event of an
actual or constructive total loss or a compromised or arranged total
loss or requisition of title, all insurance payment therefor shall be
paid to the Mortgagee, for distribution by it in accordance with the
terms of the Mortgage in favor of the Mortgagee.]
Loss Payable Clause
Protection and Indemnity
Subject to an Assignment of Insurance dated [ ], 199
by the Shipowner to Commerzbank AG, if APL Newbuildings, Ltd. (the
"Shipowner") or American President Lines, Ltd. (the "Charterer") shall
have incurred the loss, if any, payable to Kreditanstalt fur
Wiederaufbau (the "Mortgagee"), for distribution by it in accordance
with the terms of the Mortgage, except that, any loss may be paid
directly to the person to whom liability covered by this insurance has
been incurred if the Shipowner shall not have incurred loss, damage or
expense in question, or, unless there is an Event of Default or an
Incipient Default, written notice of which the Mortgagee has given the
underwriters, to the Shipowner [or to the Charterer] to reimburse it for
any loss, damage or expenses incurred by it and covered by this
insurance, provided the underwriters shall have first evidence that the
liability insured against has been discharged.
APPENDIX D*
APPENDIX E
_________________________________________________________________
_________________________________________________________________
GUARANTEE
dated as of ____________, 199
by
AMERICAN PRESIDENT COMPANIES, LTD.
(as Guarantor)
in favor of
KREDITANSTALT FUR WIEDERAUFBAU
(as Agent and
Lender)
and
COMMERZBANK AG, HAMBURG
(as Syndicate Agent)
COMMERZBANK AG (KIEL BRANCH)
DRESDNER BANK AG IN HAMBURG
VEREINS-und WESTBANK AG
DEUTSCHE SCHIFFSBANK AG
NORDDEUTSCHE LANDESBANK-GIROZENTRALE
DEUTSCHE VERKEHRS-BANK AG
BANQUE INTERNATIONALE A LUXEMBOURG S.A.
(as the Syndicate)
_________________________________________________________________
_________________________________________________________________
GUARANTEE, dated as of _________, 199 , by AMERICAN
PRESIDENT COMPANIES, LTD., a Delaware corporation (the "Guarantor"), in
favor of Kreditanstalt fur Wiederaufbau, a corporation organized and
existing under the laws of the Federal Republic of Germany whose address
is Palmengartenstrasse 5-9, Postfach 11-11-41, D-60325, Frankfurt am
Main ("KfW"), COMMERZBANK AG (HAMBURG), a banking corporation
incorporated in the Federal Republic of Germany whose address is Ness 7-
9, D-20457 Hamburg, (the "Syndicate Agent") and the banks listed in
Schedule 1 which is attached hereto (KfW, the Syndicate Agent and such
banks hereinafter referred to as the "Obligees"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings set
forth in the Loan Agreement dated March 14, 1994 (the "Loan Agreement")
by and among the Obligees and American President Lines, Ltd., a Delaware
corporation ("APL").
WHEREAS, pursuant to the Loan Agreement and the Agreement
to Acquire and Charter dated as of March 14, 1994 by and among American
President Lines, Ltd., APL Newbuildings, Ltd. and the Obligees, at the
option of APL, APL or APL Newbuildings Ltd. will be obligated for any
Notes issued by it under the Loan Agreement and related Vessel
Indebtedness with respect to the purchase financing of certain of the
HDW or Daewoo Vessels;
WHEREAS, the registered owner of each Vessel in
accordance with the Loan Documents shall be the sole obligor under all
Notes issued by it under the Loan Agreement, and all related Vessel
Indebtedness, with respect to the purchase financing for such Vessel;
WHEREAS, the Guarantor, which is the beneficial owner of
all the issued and outstanding capital stock of ________, is entering
into this Guarantee in consideration of the Obligees entering into the
Loan Agreement and purchasing the Notes (as defined in the Loan
Agreement). Accordingly, the Guarantor hereby agrees with the Obligees
as follows:
SECTION 1. GUARANTEE
1.1 The Guarantee. The Guarantor hereby guarantees as
primary obligor and not as a surety the full and punctual payment and,
to the fullest extent permitted by applicable law, performance when due
of all amounts payable and actions required by ________ under the Loan
Documents. Upon failure by ________ to pay punctually any such payment
required by it to be paid within any applicable grace periods permitted
under such agreements and documents, the Guarantor shall forthwith on
demand pay the amount not so paid in immediately available funds as
specified in the Loan Agreement. Upon payment or performance by the
Guarantor of any obligation of ________ pursuant to this Section 1.1,
________'s obligation with respect to such payment or performance under
the Loan Agreement or any Loan Document as the case may be shall
terminate.
1.2 Guarantee Unconditional. The obligations of the
Guarantor hereunder shall be irrevocable, unconditional and absolute
without regard to:
(a) any amendment, consent or release in respect
of any of the terms of any of the Loan Documents or of the
obligations under any thereof of any Person (provided only that
such amendment, consent or release is effected in accordance with
the terms of such Loan Documents); or
(b) any taking, holding, exchange, release, non-
perfection or invalidity of any direct or indirect security for
any obligation of ________ under the Loan Documents; or
(c) any change in the corporate existence,
structure or ownership of ________, or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting
________ or its assets; or
(d) the existence of any claim, setoff or other
rights which the Guarantor may have at any time against ________,
HDW or Daewoo; or
(e) any defense arising by reason of any
invalidity, unenforceability or other defense of ________, or
other defense of the Guarantor or by reason of the cessation from
any cause whatsoever of the liability either in whole or in part
of ________ to pay any amount payable by ________ under the Loan
Documents; or
(f) any consent, release, renewal, refinancing,
refunding, amendment or modification of or addition or supplement
to or waiver of any of the terms of any of the Loan Documents or
of any other agreement which may be made relating to any of the
Loan Documents or of the obligations under any thereof of any
Person (provided only that such consent, release, renewal,
refinancing, refunding, amendment or modification of or addition
or supplement to or waiver is effected in accordance with the
terms of such Loan Documents); or
(g) any exercise or non-exercise of any right,
power, privilege or remedy under or in respect of this Guarantee
or any other Loan Document, or any waiver of any such right,
power, privilege or remedy or of any default in respect of any
Loan Document, or any receipt of any collateral security or any
sale, exchange, surrender, release, discharge, failure to perfect
or to continue perfected, loss, abandonment or alteration of, or
other dealing with, any collateral security by whomsoever at any
time pledged or mortgaged to secure, or however securing, any of
the Guarantor's obligations or any liabilities (including
liabilities of any Guarantor hereunder) incurred directly or
indirectly in respect thereof.
1.3 Discharge Only Upon Payment in Full; Reinstatement
in Certain Circumstances. The Guarantor's obligations hereunder shall
remain in full force and effect until the amounts payable by ________
under the Loan Documents shall have been paid in full or the obligations
of ________ thereunder have otherwise terminated, whichever is earlier.
If at any time any amount payable by ________ under the Loan Documents
is rescinded or must be otherwise restored or returned upon the
insolvency, bankruptcy or reorganization of ________ or otherwise, the
Guarantor's obligations hereunder with respect to such payment shall be
reinstated at such time as though such payment had not been made.
1.4 Waiver. The Guarantor irrevocably waives acceptance
of this Guarantee, presentment, demand except as required pursuant to
Section 1.1 hereof, protest, and notice, as well as any requirement that
at any time any action be taken by any Person against ________ or any
other Person.
1.5 Subrogation. Upon making any payment hereunder, the
Guarantor shall be subrogated to the rights of the Obligee under the
Loan Documents against ________ with respect to such payment; provided
that the Guarantor shall have no right of subrogation and waives, to the
fullest extent permitted by applicable law, any right to any security in
any right or property which is the subject of any Loan Document and to
exercise any remedy which the Obligees have or may hereafter have
against ________ for payment of money under the Loan until all amounts
payable by _______ under the Loan Documents have been paid in full or
the obligations of ________ thereunder have otherwise terminated,
whichever is earlier. Nothing contained in this Guarantee shall
preclude the Guarantor, as the corporate parent of ________, and not as
a subrogee, from causing ________ to make payments or perform such
actions as are required to be performed by ________ under the Loan
Documents.
1.6 Payment and Performance Guarantee; No Set-Off or
Deductions; No Waiver. The Guarantor hereby agrees that (a) this
Guarantee is a guarantee of payment and performance and not of
collection, and shall continue in full force and effect and be binding
upon the Guarantor, its successors and assigns; and (b) amounts payable
hereunder shall be paid when due without set-off or reduction for any
reason whatsoever; provided, however, that nothing contained in this
Section shall be construed to be a waiver, modification, alteration or
release of any claims which the Guarantor may have for damages or
equitable relief for any breach by the Obligees of any provision of the
Loan Agreement or any other Loan Document or for any loss due to any
acts taken by the Obligees thereunder.
1.7 Obligations Unaffected. Any Obligee may, at any
time and from time to time, without the consent of, or notice to, the
Guarantor, without incurring responsibility to the Guarantor and without
impairing, diminishing, or discharging, releasing, suspending,
prejudicing or terminating the obligations of the Guarantor hereunder,
in accordance with the terms and conditions of the Loan Documents and in
whole or in part, take or refrain from taking (either directly or
indirectly) any and all actions with respect to the Guarantor's
obligations, this Guarantee, the other Loan Documents, any collateral
security at any time granted or received for any of the Guarantor's
obligations, or any Person (including any Guarantor) that such Obligee
determines in its sole discretion to be necessary or appropriate,
whether or not such action or refraining from action varies or increases
the risk of, such Guarantor; provided, however, that any amount received
by any such Obligee as a result of any such action shall correspondingly
reduce the Guarantor's obligations hereunder.
SECTION 2. Representations and Warranties of the
Guarantor. The Guarantor represents and warrants to each Obligee that:
2.1 the Guarantor is a corporation duly organized and
validly existing in good standing under the laws of the jurisdiction of
its incorporation with full corporate power and authority to conduct its
business as the same is presently conducted;
2.2 the Guarantor has legal power and authority to enter
into and carry out the terms of this Guarantee;
2.3 this Guarantee has been duly authorized by all
necessary action, corporate or other, on the part of the Guarantor, and
this Guarantee constitutes in accordance with its terms, a legal, valid
and binding instrument enforceable against the Guarantor, except to the
extent limited by applicable bankruptcy, reorganization, insolvency,
moratorium or other laws of general application relating to or affecting
the enforcement of creditors' rights from time to time in effect;
2.4 except as previously disclosed to the Syndicate
Agent and the Agent in writing, there are no actions, suits or
proceedings pending or, to the Guarantor's knowledge, threatened against
the Guarantor, which question the validity of this Guarantee or action
taken or to be taken by the Guarantor pursuant to this Guarantee which
would, if adversely determined, materially and adversely affect the
performance by the Guarantor of its obligations hereunder;
2.5 the execution and delivery of this Guarantee by the
Guarantor and the performance by the Guarantor of its obligations under
this Guarantee will not violate any provisions of the Certificate of
Incorporation or Bylaws of the Guarantor and will not result in a breach
of the terms and provisions of, or constitute a default under, any other
agreement or undertaking by the Guarantor or by which it or any of its
property is bound or any order of any court or administrative agency
entered in any proceedings binding on the Guarantor, or violate any
applicable statute, rule or regulation;
2.6 the Guarantor is not in default and no Incipient
Default has occurred, in any respect which would materially and
adversely affect the ability of the Guarantor to perform its obligations
under this Guarantee, under any mortgage, loan agreement, deed of trust,
indenture or other agreement with respect thereto or evidence of
indebtedness to which it is a party or by which it is bound, and is not
in violation of or in default, in any respect which would materially and
adversely affect the ability of the Guarantor to perform its obligations
under this Guarantee, under any order, writ, judgment or decree of any
court, arbitrator or governmental authority, commission, board, agency
or instrumentality, domestic or foreign;
2.7 the Guarantor has more than one place of business
and the present location of the place of business which is its chief
executive office is 1111 Broadway, Oakland, California 94607;
2.8 the Guarantor has no knowledge of any actual or
proposed deficiency or additional assessment in connection with any
Taxes which either in any case or in the aggregate would be materially
adverse to the Guarantor and which would materially and adversely affect
the ability of the Guarantor to perform its obligations hereunder;
2.9 all Taxes (other than taxes based on or measured by
income and withholding taxes), liability for the payment of which has
been incurred by the Guarantor in connection with the execution,
delivery and performance by it of each Loan Document to which it is or
will be a party, have been paid (or provided for in its accounts if not
payable on or prior to the delivery date of the respective Vessel);
2.10 all governmental consents, licenses, permissions,
approvals, registrations or authorizations or declarations required (i)
to enable it lawfully to enter into and perform its payment obligations
under this Guarantee and to require ________ to perform its other
obligations under each of the Loan Documents to which ________ is a
party, (ii) to ensure that its respective obligations under clause (i)
hereunder are legal, valid and enforceable and (iii) to make this
Guarantee admissible in evidence have been obtained or made and are in
full force and effect;
2.11 it has not taken any corporate action nor to its
knowledge have any other steps been taken or legal proceedings been
started or threatened against it for its winding-up, dissolution or
reorganization or for the appointment of a receiver, administrative
receiver, administrator, trustee or similar officer of it or of any or
all of its respective assets and revenues;
2.12 (i) no written representation, warranty or
statement made or other document provided by the Guarantor in connection
with the negotiation of this Guarantee at the time when given is or was
untrue or contains or contained any misrepresentation of a material fact
or omits or omitted to state any material fact necessary to make any
such statement herein or therein not misleading and (ii) all financial
projections, if any, prepared by the Borrower or the Guarantor and made
available to any Lender have been prepared in good faith based upon
reasonable assumptions (it being understood that such projections are
subject to significant uncertainties and contingencies, many of which
are beyond the Borrower's and the Guarantor's control, and that no
assurances can be given that any such projections will be realized);
2.13 ERISA. To the best knowledge of the Guarantor (i)
each Plan maintained by the Guarantor and each ERISA Affiliate is in
substantial compliance in all material respects with ERISA; (ii) no Plan
maintained by the Guarantor or any ERISA Affiliate is insolvent or in
reorganization; (iii) no Insufficiency or Termination Event has occurred
or is reasonably expected to occur, and no "accumulated funding
deficiency" exists and no "variance" from the "minimum funding standard"
has been granted (each such term as defined in Part III, Subtitle B, of
Title I of ERISA) with respect to any Plan in which the Guarantor or any
of its Subsidiaries, or any ERISA Affiliate is a participant; (iv)
neither the Guarantor nor any ERISA Affiliate has incurred, or is
reasonably expected to incur, any Withdrawal Liability to any
Multiemployer Plan; (v) neither the Guarantor, its Subsidiaries, nor any
ERISA affiliate has received any notification that any Multiemployer
Plan in which it is a participant is in reorganization or has been
terminated, within the meaning of Title IV of ERISA and no such
Multiemployer Plan is reasonably expected to be in reorganization or
terminated within the meaning of Title IV of ERISA; (vi) no lien imposed
under the Code or ERISA on the assets of the Guarantor or any Subsidiary
or any ERISA Affiliate exists or is reasonably expected to arise on
account of any Plan; (vii) no material liability will be incurred by the
Guarantor, its Subsidiaries, or any ERISA Affiliate if any of them
should terminate contributions to any other employee benefit plan
maintained by them;
2.14 it is not an "investment company" or a company
"controlled" by an "investment company" (as each of such terms is
defined or used in the Investment Company Act of 1940, as amended).
SECTION 3. Covenants of the Guarantor. The Guarantor
covenants to each Obligee that:
3.1 The Guarantor will not consolidate or amalgamate
with, or merge into, any other entity, or sell, convey, transfer, lease,
or otherwise dispose of all or substantially all of its assets,
including, but not limited to, by dividend (whether by one transaction
or a series of transactions and whether related or not); provided,
however, that it may consolidate or amalgamate with, or merge into, any
other entity, or sell, convey, transfer, lease, or otherwise dispose of
all or substantially all of its assets if the buyer, assignee or
transferee corporation (the "Assignee") shall be a solvent corporation
organized and existing under the laws of the United States of America or
any state thereof following such transaction and shall have executed and
delivered an agreement, in form and substance reasonably satisfactory to
the Obligees, containing an assumption by the Assignee of the due and
punctual performance and observance of all covenants and obligations of
the Guarantor hereunder, and confirming the accuracy of any
representations and warranties made herein as of the date hereof
required with respect to such Assignee; and provided further that
immediately following such transaction, no Incipient Default or Event of
Default shall have occurred and be continuing.
SECTION 4. Financial Statements.
4.1 The Guarantor shall, as soon as possible, provide to
the Agent and the Syndicate Agent (a) but in no event later than one
hundred twenty (120) days after the end of each fiscal year, its
consolidated audited accounts of all consolidated financial statements
of the Guarantor, such financial statements to be prepared in accordance
with generally accepted United States of America accounting principles
at such time consistently applied and a report thereon by Arthur
Andersen & Co. or other independent public auditors of internationally
recognized standing as may be acceptable to the Agent and the Syndicate
Agent, (b) copies of all quarterly reports filed with the Securities and
Exchange Commission and, within seventy-five (75) days after the end of
the first three (3) quarters of its fiscal year, unaudited consolidated
statements of income and changes in financial position of the Guarantor
and related balance sheets for each such period, all certified as true
and correct by a financial officer of the Guarantor, (c) as soon as the
same is instituted (or, to the knowledge of the Guarantor threatened),
details of any litigation, arbitration or administrative proceedings
against or involving the Guarantor, ________ or the Vessels which if
adversely determined would have a material adverse effect on the
Guarantor, ________ and its other subsidiaries on a consolidated basis,
or construction of the Vessels, and (d) from time to time, and on
demand, such additional financial or other information relating to the
Guarantor as may be reasonably requested by the Agent or the Syndicate
Agent.
SECTION 5. Miscellaneous
5.1 No failure on the part of any Obligee to exercise,
no delay in exercising, and no course of dealing with respect to, any
right or remedy hereunder will operate as a waiver thereof; nor will any
single or partial exercise of any right or remedy hereunder preclude any
other further exercise of any other right or remedy. This Guarantee may
not be amended or modified except by written agreement of the Guarantor
and the Obligees.
5.2 All notices or other communications required under
the terms and provisions hereof shall be made in the manner provided in
Section 15.04 of the Loan Agreement addressed as follows: to (i)
Kreditanstalt fur Wiederaufbau at: Palmengartenstrasse 5-9, D-60325
Frankfurt am Main (if by hand), Postfach 11-11-41, D-60046 Frankfurt am
Main (if by mail), Federal Republic of Germany, Telefax No.: 7431-2944
or 7431-2198; (ii) to Commerzbank AG at: Ness 7-9, D-20457 Hamburg,
Federal Republic of Germany, Attention: Stefan E. Kuch, Telefax No.: 49-
40-3683-4068; (iii) to the other Obligees to the addresses as set forth
in Schedule 1; and (iv) to the Guarantor at: 1111 Broadway, Oakland,
California 94607; Attention: Treasurer, Telefax No.: (510) 272-8931.
5.3 The terms of this Guarantee shall be binding upon,
and inure to the benefit of, the Guarantor and the Obligees and their
respective successors and assigns.
5.4 No recourse shall be had for the payment of any
amount payable hereunder against any incorporator, stockholder, officer
or director, as such, past, present or future, of the Guarantor or of
any successor corporation, either directly or through the Guarantor or
any successor corporation, whether by virtue of any constitutional
provision, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly agreed and
understood that this Guarantee is solely a corporate obligation, and
that no personal liability whatsoever shall attach to, or be incurred
by, any incorporator, stockholder, officer or director, as such, past,
present or future, of the Guarantor or of any successor corporation,
because of the incurring of the indebtedness hereby authorized or under
or by reason of any of the obligations, covenants, promises or
agreements contained in this Guarantee or to be implied herefrom, and
that all liability, if any, of that character against every such
incorporator, stockholder, officer and director is, by the acceptance of
this Guarantee and as a condition of, and as part of the consideration
for, the execution of this Guarantee, expressly waived and released.
5.5 This Guarantee shall be construed in accordance with
and governed by the laws of the State of New York (other than the law of
the State of New York governing choice of law).
5.6 The Guarantor (a) hereby irrevocably submits itself
to the jurisdiction of the Supreme Court of the State of New York, New
York County and to the jurisdiction of the United States District Court
for the Southern District of New York for the purposes of any suit,
action or other proceeding arising out of this Agreement or any other
Loan Document referred to therein, or the subject matter hereof or
thereof or any of the transactions contemplated hereby or thereby,
brought by any of the Obligees or their respective successors, subrogees
or assigns, (b) hereby irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined, in such New York
State or Federal court, and (c) to the extent that it has or hereafter
may acquire any immunity from jurisdiction of any court or from any
legal process, hereby waives such immunity, and agrees not to assert, by
way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, (i) any claim that it is not personally subject to the
jurisdiction of the above-named New York State or Federal courts, (ii)
that the suit, action or proceeding is brought in an inconvenient forum,
that the venue of the suit, action or proceeding is improper, or
(iii) that this Guarantee or the subject matter hereof may not be
enforced in or by such courts or under any applicable law. The
Guarantor hereby consents to service of process in any suit, action or
other proceeding arising out of this Guarantee or the subject matter
hereof or any of the transactions contemplated hereby and hereby
appoints the Person set forth in Schedule 7 of the Loan Agreement as
Process Agent for the Borrower (the "Process Agent") as its attorneys-in-
fact to receive service of process in such action, suit or proceeding,
it being agreed that service upon the Process Agent shall constitute
valid service upon the Guarantor and its successors and assigns. The
Guarantor agrees that (x) the sole responsibilities of the Process Agent
shall be (i) to receive such process, (ii) to send a copy of any such
process so received to the Guarantor, by registered airmail, return
receipt requested, at its address set forth in Section 5.2 hereof, or at
the last address filed in writing by it with the Process Agent and (iii)
to give prompt telegraphic notice of receipt thereof to the Guarantor at
such address and (y) the Process Agent shall have no responsibility for
the receipt or nonreceipt by the Guarantor of such process, nor for any
performance or nonperformance by it or its respective successors or
assigns. The Guarantor hereby agrees to pay to the Process Agent such
compensation as shall be agreed upon from time to time by it and the
Process Agent for the Process Agent's services hereunder. The Guarantor
hereby agrees that its submission to jurisdiction and its designation of
the Process Agent set forth above is made for the express benefit of
each of the Obligees and their respective successors, subrogees and
assigns. The Guarantor agrees that it will at all times continuously
maintain a Process Agent to receive service of process in the City of
New York or San Francisco, California on behalf of itself and its
properties with respect to this Agreement, and in the event that, for
any reason, the Process Agent named pursuant to this Section 5.6 shall
no longer serve as Process Agent to receive service of process on the
Guarantor's behalf, the Guarantor shall promptly appoint a successor
Process Agent. The Guarantor further agrees that a final judgment
against the Guarantor in any such action or proceeding shall be
conclusive, and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law, a certified or true
copy of which final judgment shall be conclusive evidence of the fact
and of the amount of any indebtedness or liability of the Guarantor
therein described; provided that nothing in this Section 5.6 shall
affect the right of the Guarantor or the Obligees or their respective
successors, subrogees or assigns to serve legal process in any other
manner permitted by law or affect the right of the Guarantor or the
Obligees or their respective successors, subrogees or assigns to bring
any action or proceeding against the Guarantor or the Obligees, as the
case may be, or its property in the courts of other jurisdictions. In
the event of the transfer of all or substantially all the assets and
business of the Process Agent to any other corporation, by
consolidation, merger, sale of assets or otherwise, such other
corporation shall be substituted hereunder for the Process Agent with
the same effect as if named herein in place of the Process Agent. THE
GUARANTOR HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO
WHICH IT IS A PARTY INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT REFERRED TO THEREIN, OR THE RELATIONSHIP ESTABLISHED HEREUNDER
AND WHETHER ARISING OR ASSERTED BEFORE OR AFTER THE DATE HEREOF OR
BEFORE OR AFTER THE PAYMENT, OBSERVANCE AND PERFORMANCE IN FULL OF THE
GUARANTOR'S OBLIGATIONS UNDER THIS AGREEMENT.
5.7 Currency of Account. (a) The Dollar is the
currency of account or each and every sum due from the Guarantor to the
Obligees under this Guarantee in respect of any of the Obligations.
(b) If after the occurrence of any Event of Default, any
sum is due from the Guarantor under this Guarantee or if any order or
judgment given or made in relation hereto has to be converted from the
currency ("the first currency") in which the same is payable hereunder
or under such order or judgment into another currency ("the second
currency") for the purpose of:
(i) making or filing a claim or proof against the
Guarantor;
(ii) obtaining an order or judgment in any court or
tribunal; or
(iii) enforcing any order or judgment given or made in
relation hereto.
(c) The Guarantor shall indemnify and hold harmless the
Obligees from and against any damages or losses suffered as a result of
any discrepancy between (A) the rate of exchange used for such purpose
to convert the sum in question from the first currency into the second
currency and (B) the rate or rates of exchange at which any Obligee may
in the ordinary course of business purchase the first currency with the
second currency in the Frankfurt foreign exchange market upon receipt of
a sum paid to it in satisfaction, in whole or in part, of any such
order, judgment, claim or proof. The above indemnity shall constitute a
separate and independent obligation of the Guarantor from its other
obligations and shall apply irrespective of any indulgence granted by
such Obligee.
5.8 If any term of this Guarantee and any other
application thereof shall be invalid or unenforceable, the remainder of
this Guarantee and any other application of such terms shall not be
affected thereby.
5.9 This Guarantee shall be binding upon, inure to the
benefit of, and be enforceable by, the Guarantor and each of the
Obligees and their respective successors and assigns.
IN WITNESS WHEREOF, the Guarantor has caused this
Guarantee to be duly executed as of the date first set forth herein.
AMERICAN PRESIDENT
COMPANIES, LTD.
By:
_____________________________
Title:
SCHEDULE 1
NAMES AND ADDRESSES OF SYNDICATE MEMBERS
Syndicate Member Address
Commerzbank AG (Kiel Branch) Holstenstrasse 64
D-24103 Kiel
Federal Republic of Germany
Attention: Mr. Claes
Telex: 292898 CBKD
Telecopy: 49-431-9974-372
Dresdner Bank AG in Hamburg Jungfernstieg 22
D-20354 Hamburg
Federal Republic of Germany
Attention: Mr. Roller
Mr.
Bottcher
Telex: 2157170 DR D
Telecopy: 49-40-3501-3818
Vereins- und Westbank AG Alter Wall 22
D-20457 Hamburg
Federal Republic of Germany
Attention: Mr. Kopcke
Mrs.
Mertens
Telex: 215164 VH D
Telecopy: 49-40-3692-3696
Deutsche Schiffsbank AG Domshof 17
D-28195 Bremen
Federal Republic of Germany
Attention: Mr. Pieper
Mr. Onnen
Telex: 244870 DSBR D
Telecopy: 49-421-323539
Norddeutsche Landesbank - Georgsplatz 1
Girozentrale D-30159 Hannover
Federal Republic of Germany
Attention: Mr. Hartmann
Telex: 921634 GZH D
Telecopy: 49 511 36 14785
Deutsche Verkehrs-Bank AG Filiale Hamburg
Ballindamm 6
D-20095 Hamburg
Federal Republic of Germany
Attention: Mr. Spincke
Telex: 402077 DVB
Telecopy: 49-40-308004-12
Banque Internationale a
Luxembourg S.A. 2 Boulevard Royal
L-2953 Luxembourg
Attention: Mr. Jean Pierre
Vernier
Telex: 3326 BIL LU
Telecopy: 35-2-4590-2010
APPENDIX F
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated _________________,
Reference is made to the Loan Agreement, dated as of
March 14, 1994 (the "Loan Agreement") by and among American President
Lines, Ltd. ("the Borrower"), Kreditanstalt fur Wiederaufbau (the
"Agent"), Commerzbank AG, Hamburg (the "Syndicate Agent"), and
Commerzbank AG (Kiel Branch), Dresdner Bank AG in Hamburg, Vereins-und
Westbank AG, Deutsche Schiffsbank AG, Deutsche Verkehrs-Bank AG,
Nordeutsche Landesbank-Girozentrale and Banque Internationale a
Luxembourg S.A. (the "Syndicate"). Terms defined in the Loan Agreement
are used herein with the same meaning.
____________________________ (the "Assignor") and
_________________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes from the
Assignor, a %2 interest in and to all of the Assignor's rights and
obligations under the Loan Agreement and the other Loan Documents as of
the Effective Date, as defined in paragraph 4 below, including, without
limitation, such percentage interest in the Assignor's Commitment as in
effect on the Effective Date, together with the Notes in respect of such
Facility (a copy of which Notes, endorsed to Assignee, is hereto
attached).
2. The Assignor (i) represents and warrants that as
of the date hereof its Commitment (without giving effect to assignments
thereof which have not yet become effective) is United
States Dollars (USD__________) and the aggregate outstanding principal
amount of the Facility owing and each Note payable to it (without giving
effect to assignments thereof which have not yet become effective) is
United States Dollars (USD__________) in respect of the
Facility; (ii) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim; (iii) represents
and warrants that this Assignment and Acceptance is not in violation of
the restrictions set forth in clause (iv) of Section 10.02 (a) of the
Loan Agreement; (iv) makes no representation or warranty and assumes no
responsibility with respect to (x) any statements, warranties or
representations made in or in connection with the Loan Agreement, (y)
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Agreement, (z) or any other instrument
or document furnished pursuant thereto; and (v) makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrower or the performance or observance by the
Borrower of any of its obligations under the Loan Agreement or any other
instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a
copy of the Loan Agreement and the other Loan Documents, together with
copies of the financial statements referred to in the Loan Agreement,
and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Assignment
and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Assignor or any Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the
Loan Agreement; (iii) appoints and authorizes the Syndicate Agent to
take such action as agent on its behalf and to exercise such powers
under the Loan Agreement as are delegated to the Syndicate Agent by the
terms thereof, together with such powers as are reasonably incidental
thereto and ratifies the appointment of Commerzbank AG Hamburg as
Syndicate Agent; (iv) agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Loan
Agreement are required to be performed by it as a Syndicate Member; (v)
specifies as its lending office (and address for notices) the offices
set forth beneath its name on the signature page hereof; and (vi)
attaches hereto an executed counterpart signature page to the Loan
Agreement (reflecting the Assignee's aggregate Commitment after giving
effect hereto, if applicable).
4. The effective date for this Assignment and
Acceptance shall be _____________________ (the "Effective Date").
Following the execution of this Assignment and Acceptance, two (2)
counterparts will be promptly delivered by the Assignee to the Syndicate
Agent for acceptance and recording by the Syndicate Agent, and the
Syndicate Agent shall promptly forward a counterpart to the Borrower.
5. Upon such acceptance and recording, as of the
Effective Date, (i) the Assignee shall be a party to the Loan Agreement
and, to the extent provided in this Assignment and Acceptance, have the
rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the
Loan Agreement.
6. Upon such acceptance and recording, from and after
the Effective Date, the Agent shall make all payments under the Loan
Agreement in respect of the assignment effected hereby (including,
without limitation, all payments of principal, interest and commitment
fees with respect thereto) to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments under the Loan
Agreement for periods prior to the Effective Date directly between
themselves.
7. This Assignment and Acceptance shall be governed
by, and shall be construed in accordance with, the laws of the State of
New York (other than the law of the State of New York governing choice
of law). This Assignment and Acceptance may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original, and all of which when taken together shall constitute one and
the same agreement.
[NAME OF ASSIGNOR)
By:___________________________
Title:
[NAME OF ASSIGNEE]
By:_________________
__________
Title:
[INSERT LENDING
OFFICES]
Appendix G
[NAME OF CHARTERER] [SUBCHARTERER] CHARTER HIRE ASSIGNMENT
FROM
[ ], Assignor
TO
[ ], Assignee
CONSENTED TO BY
_________________________, Charterer
Dated: ____________ __, ____
_____________
_____________
___________ [SUB]CHARTER HIRE ASSIGNMENT
This Assignment dated _________ __, ____, is made between
(i) [AMERICAN PRESIDENT LINES LTD., a Delaware corporation] [APL
NEWBUILDINGS, LTD., a Nevada corporation] (the "Assignor") and (ii) [
].
WITNESSETH
WHEREAS, American President Lines, Ltd. entered into that
certain Loan Agreement dated March 14, 1994 (the "Loan Agreement") by
and among Kreditanstalt fur Wiederaufbau, as Agent and Lender, the
Commerzbank AG, Hamburg, as Syndicate Agent, and Commerzbank AG (Kiel
Branch), Dresdner Bank AG in Hamburg, Vereins- und Westbank AG, Deutsche
Schiffsbank AG, Deutsche Verkehrs-Bank AG, Norddeutsche Landesbank-
Girozentrale and Banque Internationale a Luxembourg S.A. as the
Syndicate.
WHEREAS, the Vessel was delivered to [Owner] Assignor by
the Builder on ________ __, 199_, [transferred by the Owner to the
Assignor], documented in the name of Assignor under the flag of the
Republic of The Marshall Islands, named the _________ and given
[Official No. ______]; and
WHEREAS, Assignor has given a first [preferred] ship
mortgage on the Vessel dated ________ __, 199__ (the "Mortgage") in
favor of Assignee, as mortgagee to secure the Assignee's promissory
notes given to the Assignee (the "Notes") dated the same date and other
Obligations as defined in the Mortgage (the "Obligations").
WHEREAS, Section 9.02(b) of the Loan Agreement and
Section 27 of the Mortgage, requires that the Assignor shall grant a
first priority interest in monies and claims for monies due and to
become due to Assignor under certain demise charters and time charters
to be entered into by Assignor from time to time, as further security
for the Obligations.
WHEREAS, concurrently herewith, Assignor is entering into
a ___________________ charter with _________________ dated as of
__________ __, ____ providing for the chartering of the Vessel to
_______ for [a term of ______ (___) years, with options (the "__________
Charter") and the ________ Charter is one of the types of charters
referred to in Section 9.02(b) of the Loan Agreement and Section (27) of
the Mortgage.
WHEREAS, Assignor desires to assign, to secure its
Obligations under the Mortgage, charter hire and all other monies
payable under the ________ Charter to Assignor, to Assignee to secure
the Obligations; and
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms used herein which are not
otherwise defined herein shall have the meanings set forth in the
Mortgage.
2. Assignor hereby sells, pledges, hypothecates,
assigns, transfers and sets over unto the Assignee and unto Assignee's
successors and assigns, not absolutely but as security only for the
performance by Assignor of its Obligations, and grants to Assignee a
first priority security interest in all right, title and interest of
Assignor in and to all monies due and to become due and claims for
monies due and to become due to Assignor under, and all claims for
damages arising out of the breach of, the _______ Charter, together with
any extensions, renewals, modifications, changes or amendments of the
_______________ Charter and any and all proceeds of the foregoing.
3. Assignor hereby agrees, represents and warrants
that:
(a) The _______ Charter is in full force and effect
and enforceable in accordance with its terms;
(b) Assignor is not in default of any of the terms of
the ________ Charter;
(c) Neither the whole nor any part of the right, title
and interest hereby assigned are the subject of any present assignment
or pledge other than the assignment contained herein, and so long as
this Assignment shall remain in effect, Assignor will not, without the
prior written consent thereto of the Assignee, assign or pledge the
whole or any part of the right, title and interest hereby assigned to
anyone other than the Assignee, its successors or assigns;
(d) Assignor will not take or omit to take any action,
the taking or omission of which might result in any alteration or
impairment of the ________ Charter or this Assignment or any of the
rights created by said _______ Charter or this Assignment;
(e) To the knowledge of Assignor, _________________ is
not in default of any of the terms of the ___ Charter;
(f) Assignor will not enter into or consent to any
amendment, modification or other alteration of the _______ Charter
without first obtaining the prior written consent to the Assignee. Any
amendment, modification or other alternation made without the written
consent of the Assignee shall be null and void. The Assignee shall not
unreasonably withhold consent to any amendment, modification or other
alteration of the _________ Charter which does not adversely affect the
rights and interests assigned hereunder.
4. Notwithstanding this Assignment, it is
acknowledged, understood and agreed that:
(a) Assignor will remain liable to perform all of the
owner's obligations and duties under the ________ Charter, including,
but not limited to, its duties as owner upon redelivery of the Vessel by
_________ and with respect to warranty claims, regardless of this
Assignment to the Assignee;
(b) Assignor will be deemed the owner under the
________ Charter except as expressly set forth herein;
(c) Assignee shall have no obligation or liability
under the _________ Charter by reason of or arising out of this
Assignment, nor to make any inquiry as to the nature or sufficiency of
any payment received by Assignor, nor to present or file any claim, nor
to take any other action to collect or enforce the payment of any
amounts which may have been assigned to them or to which they may be
entitled under this Assignment at any time or times;
(d) So long as no default (as that term is defined in
the _________ Charter) arising out of any act or omission of the
_________ has occurred, is continuing and shall not have been cured and
waived, neither Assignee, Assignor or any successor and assignee thereof
shall interfere with _________ possession and its peaceful and quiet
enjoyment of the Vessel.
5. Upon the occurrence of an Event of Default under
the Mortgage which shall be continuing and upon acceleration of all or
any portion of the Notes pursuant to Section 12.01(a) of the Loan
Agreement and upon written notice thereof to Assignor and
______________, the Assignor agrees to authorize and direct ________ to
make payment of all monies due and to become due under or arising out of
the _________ Charter in accordance with the payment provisions set
forth in the Loan Agreement and all in accordance with and pursuant to
the ____________ Charter, this Assignment and the Agreement and the
Consent to Assignment of _____________ attached hereto as Annex A, which
is incorporated by this reference herein, and does hereby constitute the
Assignee, its successors and assigns, Assignor's true and lawful
attorneys, irrevocably, with full power (in the name of Assignor or
otherwise), to ask, require, demand, receive, compound and give
acquittance for any and all monies, and claims for monies and rights
hereby assigned, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or take any action or
institute any proceedings which Assignee may deem to be necessary or
advisable in the premises. Any action or proceeding brought by Assignee
pursuant to any of the provisions hereof or of the _________ Charter and
any claim made by Assignee hereunder or thereunder, may be compromised,
withdrawn or otherwise dealt with by Assignee without any notice to, or
approval of, Assignor, and shall be binding upon Assignor in all matters
affecting the rights of Assignor against Assignee and _________, if any,
under the _________ Charter and thereafter, Assignor shall have no
further rights against Assignee as to any such action or proceedings so
compromised, withdrawn or otherwise dealt with by Assignee.
6. Assignor hereby irrevocably authorizes Assignee,
at Assignor's expense to file such financing and continuation statements
relating to this Assignment, without Assignor's signature, as to
Assignee at its option may deem appropriate and appoints Assignee as
Assignor's attorney-in-fact to execute any such statements in Assignor's
name and to perform all other acts which Assignee may deem appropriate
to perfect and continue the security interest conferred hereby.
7. In the event that Assignee becomes entitled to
exercise any of its rights hereunder and shall, in its judgment decline
to take any action, Assignee shall give prompt notice to Assignor and
Assignor shall have the right and option to take such actions as it
deems necessary.
8. This Assignment shall be governed by the laws of
the State of New York (other than the law of the State of New York
governing choice of law) and may not be amended or changed except by an
instrument in writing signed by the party against whom enforcement is
sought.
9. Assignor hereby authorizes Assignee to execute and
file financing statements and amendments thereto as provided in Article
9 of the Uniform Commercial Code.
10. Terms used herein and not otherwise defined shall
have the meanings as defined in the Mortgage.
[The remainder of this page has been left intentionally blank.]
IN WITNESS WHEREOF, the undersigned have hereunto caused
this instrument to be duly executed as of the day and year first above
written.
[
]
BY:
_______________________
Title
[
]
BY:
_______________________
Title
Annex A
to ________________ Charter Assignment
[CHARTERER'S] AGREEMENT AND CONSENT TO ASSIGNMENT
PRESIDENT __________________
In consideration of the sum of $1.00 and other good and
valuable consideration, the receipt of which is hereby acknowledged, and
the covenants and agreements of the parties hereto,
__________________________________________, a __________________
corporation (the "Charterer"), hereby acknowledges notice of and
consents to the assignment of the monies due and to become due and
claims for monies due and to become due under the _______________
Charter given in the ________________ Charter Assignment of even date
herewith with respect to the ___________________ a copy of such
Assignment being attached hereto and agrees and confirms that:
(a) The _______________ Charter and the rights and any
claims of the Charterer thereunder shall be subject and subordinate to
the [first preferred ship mortgage] dated __________ (the "Mortgage") in
favor of the Assignee and the rights of the Assignee thereunder. Upon
written notice by the Assignee to ____________________ that an Event of
Default under the Mortgage has occurred and is continuing and that
Assignee has accelerated all or part of the [HDW] [Daewoo] Notes
pursuant to the Loan Agreement it will make payment of all monies due
and to become due to [ ] ("Assignor") under
or pursuant to the ______________ Charter in accordance with the payment
provisions set forth in Section 5 of the Loan Agreement direct for
credit to Assignee's account, until receipt of written notice from the
Assignee that such Notes have been paid in full, after which time such
payment shall be made direct to such bank account as may be provided in
the ________________ Charter or otherwise as Assignor may from time to
time designate;
(b) Any such payment shall be final and _____________
will not seek to recover from Assignor or Assignee any monies paid to
either Assignor or the Assignee by virtue of the aforesaid assignment;
(c) It will not agree to, allow or permit any
amendment to, modification of, or other alteration in, the _____________
Charter without the prior written consent of Assignor and, so long as
the Obligations are outstanding, Assignee.
______________________________
, Charterer
By:
_________________________
Title:
APPENDIX H
AGREEMENT OF AMERICAN PRESIDENT COMPANIES, LTD.
American President Companies, Ltd. ("APC") hereby
confirms its obligations under the Guarantee dated the date hereof in
favor of Kreditanstalt fur Wiederaufbau, Agent (the "Agent"),
Commerzbank AG, Hamburg, Syndicate Agent (the "Syndicate Agent"), and
Commerzbank AG (Kiel Branch), Dresdner Bank AG in Hamburg, Vereins- und
Westbank AG, Deutsche Schiffsbank AG, Norddeutsche Landesbank-
Girozentrale, Deutsche Verkehrs-Bank AG and Banque Internationale a
Luxembourg S.A. as the Syndicate (the "Syndicate"), guaranteeing the
obligations of American President Lines, Ltd. ("APL") under the Loan
Agreement dated the date hereof (the "Loan Agreement") among APL, the
Agent, the Syndicate Agent and the Syndicate, and the other Loan
Documents to which it is or will become a party. APC acknowledges that
it has reviewed all of the terms and conditions set forth in the Loan
Documents and each of the obligations of the Borrower set forth therein.
APC further confirms that it will issue a new Guarantee
in favor of the Agent, the Syndicate Agent and the Syndicate in respect
of obligations of the Transferee on the first Delivery Date, if and when
APL exercises its option under the Agreement to Acquire and Charter to
transfer a Vessel or Vessels to APL Newbuildings, Ltd. (the
"Transferee"). APC represents and warrants that both APL and the
Transferee are wholly owned subsidiaries of APC.
Capitalized terms used herein and not defined herein
shall have the meanings set forth in the Loan Agreement.
Dated: March 14, 1994
AMERICAN PRESIDENT
COMPANIES, LTD.
By:
_______________________________
Name:
Title:
APPENDIX I
AGREEMENT TO
ACQUIRE AND CHARTER
BY AND AMONG
AMERICAN PRESIDENT LINES, LTD.,
Transferor,
APL NEWBUILDINGS, LTD.,
Transferee,
KREDITANSTALT FUR WIEDERAUFBAU
(as Agent and Lender),
COMMERZBANK AG, HAMBURG
(as Syndicate Agent),
COMMERZBANK AG (KIEL BRANCH),
DRESDNER BANK AG (HAMBURG),
VEREINS-und WEST BANK AG,
DEUTSCHE SCHIFFSBANK AG
NORDDEUTSCHE LANDESBANK-GIROZENTRALE and
DEUTSCHE VERKEHRS-BANK AG
BANQUE INTERNATIONALE A LUXEMBOURG S.A.
(as the Syndicate)
Dated March 14, 1994
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C>
RECITALS 1
SECTION 1. DEFINITIONS 2
SECTION 2. TRANSFER AND CHARTER OF THE VESSELS 3
SECTION 3. CONDITIONS PRECEDENT TO TRANSFEREE'S
OBLIGATIONS ON A DELIVERY DATE 4
SECTION 4. REPRESENTATIONS AND WARRANTIES OF TRANSFEREE 6
SECTION 5. COVENANTS 9
SECTION 6. NOTICES 13
SECTION 7. COUNTERPARTS 13
SECTION 8. MODIFICATION 13
SECTION 9. SUCCESSORS AND ASSIGNS 13
SECTION 10. GOVERNING LAW 13
SECTION 11. ASSIGNMENT 13
SECTION 12. SEVERABILITY 14
SECTION 13. TABLE OF CONTENTS; HEADINGS 14
</TABLE>
EXHIBIT A. FORM OF DAEWOO CHARTER OR HDW CHARTER
EXHIBIT B. FORM OF CERTIFICATE OF DELIVERY
AND ACCEPTANCE
EXHIBIT C. FORM OF CHARTER ASSIGNMENT AND SECOND
CHARTER ASSIGNMENT AND CONSENT
SCHEDULE 1 NAMES AND ADDRESSES OF SYNDICATE MEMBERS
AGREEMENT TO
ACQUIRE AND CHARTER
THIS AGREEMENT TO ACQUIRE AND CHARTER ("Acquisition
Agreement") dated this 14th day of March, 1994 by and among AMERICAN
PRESIDENT LINES, LTD., a Delaware corporation (the "Transferor"), APL
NEWBUILDINGS, LTD., a Nevada corporation (the "Transferee"),
KREDITANSTALT FUR WIEDERAUFBAU, a public law corporation incorporated in
the Federal Republic of Germany ("KfW"); COMMERZBANK AG (Hamburg), a
banking corporation incorporated in the Federal Republic of Germany (the
"Syndicate Agent") and the banks listed in Schedule 1 which is attached
hereto (each a "Syndicate Member" and, collectively, "the Syndicate").
WITNESSETH:
WHEREAS, the Transferor has ordered three (3)container
vessels (the "HDW Vessels") from Howaldtswerke-Deutsche Werft AG ("HDW")
as is more specifically set forth in a certain Shipbuilding Agreement
dated May 10, 1993, as amended (the "HDW Shipbuilding Agreement")
between the Transferor and HDW;
WHEREAS, the Transferor has also ordered three (3)
container vessels (the "Daewoo Vessels") from Daewoo Shipbuilding &
Heavy Machinery, Ltd. ("Daewoo") as is more specifically set forth in a
certain Shipbuilding Agreement dated May 10, 1993, as amended (the
"Daewoo Shipbuilding Agreement") between the Transferor and Daewoo (the
HDW Vessels and the Daewoo Vessels being individually referred to as a
Vessel and, collectively, as the "Vessels");
WHEREAS, the Transferor, KfW, the Syndicate Agent and the
Syndicate entered into a Loan Agreement dated March 14, 1994, 1994
providing a loan facility in respect of the HDW Vessels and the Daewoo
Vessels under which the Transferor may borrow from KfW up to *
(the "HDW Tranche") for the purchase of the HDW Vessels; and may borrow
from the Syndicate up to *
(the "Daewoo Tranche") for the purchase of the Daewoo Vessels;
WHEREAS, in order to induce KfW and the Syndicate to make
available to the Transferor the HDW Tranche and the Daewoo Tranche,
respectively, American President Companies, Ltd., a Delaware
corporation, and the corporate parent of the Transferor and the
Transferee, has, under the Guarantee, guaranteed the obligations of the
Transferor under the Loan Agreement and the other Loan Documents;
WHEREAS, concurrently with the sale of any Vessel from
HDW or Daewoo, as the case may be, to the Transferor, the Transferor may
transfer all of its right, title and interest in the Vessel to the
Transferee, and the Transferee shall thereupon assume all of the
obligations relating to the Vessel Indebtedness in respect of that
Vessel, including but not limited to the execution and delivery of all
of the Security Documents relevant to such Vessel;
WHEREAS, concurrently, with the transfer of each Vessel
in each of the Daewoo and HDW Tranche to the Transferee, the Transferor
shall enter into a Charter for such Vessels to be so transferred, as
evidenced by the execution of the Daewoo Charter or the HDW Charter,
respectively, with respect to each Vessel delivered under such Tranche
each in the form of Exhibit A to this Acquisition Agreement;
WHEREAS, concurrently with, the execution and delivery of
each Charter the Transferee will assign all of its right, title and
interest in and to (i) such Charter to KfW if it relates to an HDW
Vessel, (ii) such Charter to the Syndicate Agent and the Syndicate if it
is a Daewoo Vessel, and (iii) a second priority assignment of the
Charter to KfW if it is a Daewoo Vessel, as security for its obligations
assumed under the Loan Documents to which it is a party with respect to
the related Vessel Indebtedness;
WHEREAS, concurrently with the transfer to the Transferee
of the first Vessel delivered under a Charter, the Guarantor will
execute and deliver to the Lenders the Guarantee which shall guarantee
all obligations of the Transferee as Borrower under the Loan Agreement
and the other Loan Documents;
NOW, THEREFORE, in consideration of mutual agreements
herein contained, the portion hereto agree as follows:
SECTION 1. Definitions.
A. The terms "hereof," "herein," "hereby," "hereto,"
"hereunder" and "herewith" refer to this Agreement as the same
may be supplemented or amended;
B. Reference to a given agreement or instrument is a
reference to that agreement or instrument as originally executed,
and as modified, amended, supplemented and restated through the
date as of which reference is made to that agreement or
instrument.
C. All capitalized terms used in this Acquisition
Agreement including the Whereas clauses hereof which are not
defined herein shall have the meanings ascribed to them in the
Loan Agreement and in the Schedules and Appendices to the Loan
Agreement. In addition, the following capitalized terms shall
have the meanings set forth below:
"Bill of Sale" means, with respect to a given Vessel, a
valid and sufficient bill of sale in recordable form in the Republic of
The Marshall Islands made by the Transferor in favor of the Transferee,
dated the relevant Delivery Date, and transferring title to the Vessel
(including its equipment) free and clear of all liens, claims and
encumbrances.
"Certificate of Delivery and Acceptance" means, with
respect to a given Vessel, a certificate in the form of Exhibit B-1 or B-
2, as the case may be, to this Acquisition Agreement dated on the
Vessel's Delivery Date, evidencing the delivery of that Vessel to the
Transferee and its acceptance by the Transferee.
"Charter Assignment" means each, and "Charter
Assignments" means every, first priority assignment of each HDW Charter
and each Daewoo Charter by the Transferee to KfW and to the Syndicate
Agent and the Syndicate, respectively, as security for the Transferee's
obligations under the Loan Documents to which it is a party with respect
to the corresponding Vessel Indebtedness and in the form of Exhibit C to
this Acquisition Agreement.
"Charter Documents" means this Acquisition Agreement the
* Agreement Assignment, the Bills of Sale, the Certificates of
Delivery and Acceptance, the Charters, the Charter Assignments and the
Second Charter Assignments.
*
"Second Charter Assignment and Consent" means each, and
"Second Charters Assignments" means every, second priority assignment of
a Daewoo Charter by the Transferee to KfW as security for the
Transferee's obligations under the Loan Documents with respect to the
Vessel Indebtedness under the HDW Tranche relating to the Vessel covered
by such Daewoo Charter and in the form of Exhibit C to this Acquisition
Agreement.
"Solvent" means, with respect to the Transferee on a
Delivery Date, that on such date each of the following is true: (1) the
fair market value of the assets of the Transferee is greater than the
total amount of liabilities (including contingent liabilities) of the
Transferee, (ii) the present fair salable value of the assets of the
Transferee is greater than the amount that will be required to pay the
probable liabilities of the Transferee for its debts as they become
absolute and matured, (iii) the Transferee is able to realize upon its
assets and pay its debts and any other liabilities, including contingent
obligations, as they mature and (iv) the Transferee does not have
unreasonably small capital. In making the determinations required by
(i) and (ii) hereof, it will be deemed that (a) the fair market value or
fair salable value, as the case may be, of any Vessels owned by the
Transferee is at least 85% of the purchase price of such Vessels, and
(b) any loan made to the Transferee by the Guarantor or the Transferor
in connection with the purchase of the Vessels is treated for purposes
of this definition only as a capital contribution to the Transferee.
SECTION 2. Transfer and Charter of the Vessels.
A. On each Delivery Date, upon the satisfaction of
all conditions precedent set forth in Section 7 of the Loan
Agreement and Sections 2 and 3 of this Acquisition Agreement, the
Lenders shall make their Commitment available and the Transferor
shall purchase the relevant Vessel from HDW or Daewoo, as the
case may be.
B. Simultaneously with the actions specified in Section
2.A, the Transferor shall transfer the Vessel to the Transferee
pursuant to the terms of this Acquisition Agreement. The Vessel
will be registered under the laws of the Republic of The Marshall
Islands in the name of the Transferee, and the Transferee will
record a first preferred mortgage in substantially the form
attached to the Loan Agreement, and with respect to the Daewoo
Vessels, a second preferred mortgage in substantially the form
attached to the Loan Agreement covering the Vessel in favor of
the relevant Lenders.
C. Simultaneously with the actions specified in Section
2.B, the Transferor shall charter each such Vessel from the
Transferee and the Transferee shall charter such Vessel to the
Transferor, pursuant to the relevant Charter.
D. Simultaneously with the actions specified in Section
2.B, the Transferee shall undertake the Vessel Indebtedness
corresponding to the Vessel.
E. Delivery and presentation of all documents to
complete the transactions contemplated herein shall be made at
the Closing to be held on a Delivery Date convened pursuant to
the Loan Agreement.
SECTION 3. Conditions Precedent to Transferee's Obligations on a
Delivery Date.
The Transferee's obligations to undertake all of the
payment and certain performance obligations relating to the Vessel's
Indebtedness in respect of a given Vessel is expressly conditioned upon
the following preconditions being satisfied and upon receipt by the
Agent or the Syndicate Agent, as the case may be, of the following
documents and evidenced on or before a closing to be held on the
Delivery Date at the offices of Haight, Gardner, Poor & Havens, 195
Broadway, New York, New York 10007, or at such other place as may be
agreed upon by the Transferor, Transferee, the Agent and the Syndicate
Agent:
(a) The Transferee shall be a corporation duly
organized and existing in good standing under the laws of
the jurisdiction of its incorporation; the Transferee
shall have full corporate power and authority to own its
assets, conduct its business as then being conducted, and
enter into and consummate the transactions contemplated
hereby and by the Charter Documents and the Security
Documents to which it is a party, and the Agent or the
Syndicate Agent, as the case may be, shall have received
(1) a certified copy of the certificate of incorporation
of the Transferee, (2) a certificate of the Secretary of
the Transferee attaching the minutes or resolutions of
its Board of Directors authorizing the transactions
contemplated herein, (3) a certificate from the Secretary
of the Transferee or evidencing the authority of the
persons executing the Security Documents and the Charter
Documents, to which it is a party, to execute and deliver
such Security Documents and Charter Documents and the
Transferee to perform under the Security Charter
Documents to which it is a party, and (4) a certificate
of good standing as to the Transferee, all in form and
substance reasonably satisfactory to the Agent or the
Syndicate Agent, as the case may be, and its special
counsel;
(b) the Agent and the Syndicate Agent shall have
received no later than sixty (60) days prior to the
above-referenced closing, written notice from the
Transferor of its intention of transferring the related
Vessel to the Transferee in accordance with the
provisions of this Acquisition Agreement;
(c) no Event of Default shall have occurred and
be continuing and no Incipient Default shall have
occurred and be continuing and the Transferee shall
provide an officer's certificate to such effect in form
and substance reasonably satisfactory to the Agent or the
Syndicate Agent, as the case may be, and its special
counsel;
(d) there shall not have occurred any material
adverse change in the financial condition of the
Transferee which in the reasonable opinion of the Agent
and/or the Syndicate would materially and adversely
affect the ability of the Transferee to perform its
obligations as to the repayment of the Facility by the
installments together with interests thereon herein set
out or to perform its obligations under the Loan
Documents, to which it is or will become a party;
(e) all representations and warranties of the
Transferee contained in this Acquisition Agreement being
true and correct in all material respects on that
Delivery Date, except insofar as they relate exclusively
to an earlier date, and the Transferee shall provide
officer's certificates confirming such matters;
(f) all governmental and other consents,
licenses, approvals and authorizations, if any, required
with respect to the performance of (i) the Transferee
under this Acquisition Agreement and the other Loan
Documents and Charter Documents and (ii) the Transferor
under this Acquisition Agreement and the other Loan
Documents and Charter Documents, to which it is a party
shall have been obtained and shall not have been revoked
and, if requested by the Agent or the Syndicate Agent or
its special counsel, copies of any of the same shall be
provided;
(g) all Uniform Commercial Code financing
statements or other document necessary, or reasonably
requested by the Agent or the Syndicate Agent, to perfect
its security interests under any of the Security
Documents and the Charter Documents in the United States
of America, jurisdiction of registration of such Vessel
or any other relevant jurisdiction;
(h) copies of the Bill of Sale to the relevant
Vessel from the Transferor to the Transferee;
(i) evidence that such Vessel is duly registered
in the name and ownership of the Transferee under the
laws and flag of the Republic of The Marshall Islands,
free of registered liens except the relevant Mortgage(s);
(j) each Loan Document and Charter Document, in
respect of such Vessel shall have been duly executed,
delivered and, where appropriate, registered or recorded
(together with any documents to be executed pursuant to
the terms thereof, including without limitation, notices
of the Assignment(s) of Insurance);
(k) each of the Lenders shall have received
executed originals of the opinions as to the Transferee
substantially in the form attached as Schedule 4 to the
Loan Agreement as well as such other opinions from such
counsel as each Lender shall reasonably request and each
of the Lenders shall have received from its special
counsel, Haight, Gardner, Poor & Havens, a favorable
opinion, in form and substance satisfactory to the
Lenders, as to such matters incident to the transactions
contemplated hereby as any such Lender may reasonably
request;
(l) all conditions precedent as set forth in
Section 7 of the Loan Agreement shall have been
satisfied.
SECTION 4. Representations and Warranties of Transferee.
The Transferee represents and warrants to each of the
Lenders that:
(a) the Transferee is a corporation duly
organized and validly existing in good standing under the
laws of its jurisdiction of incorporation with full
corporate power and authority to conduct its business as
the same is presently conducted;
(b) the Transferee has legal power and authority
to enter into and carry out the terms of this Acquisition
Agreement and each of the other Loan Documents and the
Charter Documents to which the Transferee will be a
party;
(c) each of this Acquisition Agreement, the other
Loan Documents and the Charter Documents to which the
Transferee will be a party has been duly authorized by
all necessary action, corporate or other, on the part of
the Transferee, and this Acquisition Agreement
constitutes, and upon due execution and delivery by the
Transferee, each of the other Loan Documents and the
Charter Documents will constitute, in accordance with
their respective terms, legal, valid and binding
instruments enforceable against the Transferee, except to
the extent limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws of
general application relating to or affecting the
enforcement of creditors' rights from time to time in
effect;
(d) except as previously disclosed to the
Syndicate Agent and the Agent in writing, there are no
actions, suits or proceedings pending or, to the
Transferee's knowledge, threatened against the
Transferee, any of its properties affecting this
Acquisition Agreement, the other Loan Documents, the
Charter Documents or the transactions contemplated
thereby which would materially and adversely affect the
performance of the Transferee of its obligations (if any)
thereunder;
(e) the consummation of the transactions
contemplated by, and compliance by the Transferee with
all the terms and provisions of, this Acquisition
Agreement, the other Loan Documents and the Charter
Documents to which the Transferee is or will be a party
will not violate any provisions of the Certificate of
Incorporation or Bylaws of the Transferee and will not
result in a breach of the terms and provisions of, or
constitute a default under, any other agreement or
undertaking by the Transferee or by which it or any of
its property is bound or any order of any court or
administrative agency entered in any proceedings binding
on the Transferee, or violate any applicable statute,
rule or regulation;
(f) the Transferee is not in default and no
condition exists which with notice or lapse of time or
both would constitute a default by the Transferee, in any
respect which would materially and adversely affect the
ability of the Transferee to perform its obligations
under this Acquisition Agreement, any other Loan
Document, any Charter Document, under any mortgage, loan
agreement, deed of trust, indenture or other agreement
with respect thereto or evidence of indebtedness to which
it is a party or by which it is bound, and is not in
violation of or in default, in any respect which would
materially and adversely affect the ability of the
Transferee to perform its obligations under this
Acquisition Agreement, any other Loan Document, or any
Charter Document, under any order, writ, judgment or
decree of any court, arbitrator or governmental
authority, commission, board, agency or instrumentality,
domestic or foreign;
(g) the Transferee has only one place of business
which is also the location of the place of business which
is its chief executive office is 1111 Broadway, Oakland,
California 94607;
(h) the Transferee has no knowledge of any actual
or proposed deficiency or additional assessment in
connection with any Taxes which either in any case or in
the aggregate would be materially adverse to the
Transferee and which would materially and adversely
affect the ability of the Transferee to perform its
obligations under this Acquisition Agreement, any of the
other Loan Documents or any of the Charter Documents;
(i) all Taxes (other than taxes based on or
measured by income and withholding taxes), liability for
the payment of which has been incurred by the Transferee
in connection with the execution, delivery and
performance by it of this Acquisition Agreement, each
other Loan Document and Charter Document to which it is
or will be a party, have been paid (or provided for in
its accounts if not payable on or prior to the Delivery
Date of the respective Vessel);
(j) all governmental consents, licenses,
permissions, approvals, registrations or authorizations
or declarations required (i) to enable it lawfully to
enter into and perform its respective obligations under
this Acquisition Agreement, each of the other Loan
Documents and each of the Charter Documents to which it
is or will be a party and (ii) to ensure that its
respective obligations hereunder and thereunder are
legal, valid and enforceable have been obtained or made
and are in full force and effect or will be obtained or
made and be in full force and effect on the date any such
document is executed and delivered; and all governmental
consents, licenses, permissions, approvals, registrations
or authorizations or declarations of the country of
registry of each vessel required (A) to enable it
lawfully to enter into and perform its obligations under
the Mortgages, (B) to ensure that its obligations
thereunder are legal, valid and enforceable and (C) to
make the Mortgages admissible in evidence in the country
in which each Vessel is registered and the United States
of America, will be obtained or made and be in full force
and effect on the date any such Mortgage is executed and
delivered;
(k) it has not taken any corporate action nor, to
its knowledge, have any other steps been taken or legal
proceedings been started or threatened against it for its
winding-up, dissolution or reorganization or for the
appointment of a receiver, administrative receiver,
administrator, trustee or similar officer of it or of any
or all of its respective assets and revenues;
(l) except as provided by applicable laws of
bankruptcy, insolvency, liquidation or similar laws of
general application, its obligations under this
Acquisition Agreement, each of the other Loan Documents,
and each of the Charter Documents rank and will rank at
least pari passu in priority of payment, and as to
security having the priority contemplated by the Loan
Documents and in all other respects with all its
respective other indebtedness;
(m) except for registration of the First Mortgage
on each Vessel and the Second Mortgage on each Daewoo
Vessel at the country of its registry (including any
other Loan Document or Charter Document required by the
laws of the country of its registry to be filed with the
Mortgage), it is not necessary to ensure the legality,
validity, enforceability or admissibility in evidence of
this Acquisition Agreement, any of the other Loan
Documents or any of the Charter Documents to which it is
or will be a party in the United States of America or, to
the best of its knowledge, elsewhere or that it be filed,
recorded or enrolled with any governmental authority or
agency in the United States of America or, to the best of
its knowledge, elsewhere, that it be stamped with any
stamp, registration or similar transaction tax in the
United States of America or, to the best of its
knowledge, elsewhere;
(n) the Transferee is a wholly owned Subsidiary
of the Guarantor;
(o) the Transferee does not maintain any Plans;
(p) none of the proceeds of the Loan will be
used to purchase or carry margin stock within the
meanings of Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System. The Transferee
is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock within
the meaning of Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System;
(q) it is not an "investment company" or a
company "controlled" by an "investment company" (as each
of such terms is defined or used in the Investment
Company Act of 1940, as amended);
(r) each Vessel delivered will be duly
documented in the name of the Transferee under the flag
of the Republic of The Marshall Islands; and
(s) each Vessel delivered will be in the
absolute and unencumbered ownership of the Transferee
except as contemplated by this Acquisition Agreement, the
other Loan Documents and the Charter Documents.
(t) the Transferee is, and immediately after
the relevant Lender advances its Commitment will be,
Solvent.
SECTION 5. Covenants.
A. Affirmative Covenants. The Transferee covenants
with each of the Lenders that it shall:
(a) do all that is necessary to maintain in full
force and effect its corporate existence in good standing
under the laws of its jurisdiction of incorporation and
use its best efforts to obtain, comply with the terms of
and do all that is necessary to maintain in full force
and effect all authorizations, approvals, licenses and
consents required in or by the laws of its jurisdiction
of incorporation and the United States of America and any
other relevant jurisdiction to enable the Transferee to
enter into and perform its obligations under the Loan
Documents and the Charter Documents to which the
Transferee is or will become a party and to ensure the
legality, validity, enforceability or admissibility in
evidence in the United States of America of the Loan
Documents and the Charter Documents to which the
Transferee is or will become a party and to comply with
the terms of and to do all that is necessary to maintain
in full force and effect all authorizations, approvals,
licenses and consents required in or by the national laws
of the Republic of The Marshall Islands to enable the
Transferee to enter into and perform its obligations
under the Mortgages and to ensure the legality, validity,
enforceability and admissibility in evidence in such
country of each Mortgage;
(b) from time to time on the request of the
Lenders, but at the expense of the Transferee, do all
such acts and execute or procure the execution of all
such assurances and documents as the Agent or the
Syndicate Agent may reasonably consider necessary for
giving full effect to the Loan Documents and the Charter
Documents to which it is or will become a party or for
more effectively subjecting the security interests under
the Security Documents and Charter Documents to which it
is or will be a party to the liens of such Security
Documents or more effectively subject such security
interests to the performance of the provisions thereof;
(c) promptly inform the Agent and the Syndicate
Agent of the occurrence of any Incipient Default or an
Event of Default and upon receipt of a written request
from the Agent or the Syndicate Agent to do so, confirm
to the Agent or the Syndicate Agent, as the case may be,
that save as previously notified to the Agent or the
Syndicate Agent, as the case may be, to the best of the
knowledge of the Transferee, no Event of Default has
occurred;
(d) if the Transferee's agent for service of
process referred to in Section 10 shall for any reason
cease to be validly appointed, ensure that another such
agent is appointed (and ensure that such agent
acknowledges such appointment to the Agent or Syndicate
Agent, as the case may be) in a manner reasonably
satisfactory to the Agent or the Syndicate Agent, as the
case may be;
(e) the Transferee shall send to the Agent and
the Syndicate Agent as soon as possible, (i) but in no
event later than one hundred twenty (120) days after the
end of each fiscal year, its accounts of all financial
statements of the Transferee, such financial statements
to be prepared in accordance with generally accepted
United States of America accounting principles at such
time consistently applied all certified as true and
correct by a senior financial officer of the Transferee,
(ii) as soon as the same is instituted (or, to the
knowledge of the Transferee threatened), details of any
litigation, arbitration or administrative proceedings
against or involving it or the Vessels which if adversely
determined would have a material adverse effect on the
Transferee, or operation of the Vessels, (iv) together
with the annual financial statements to be provided in
accordance with clause (i) above a certificate of a
financial officer of the Transferee that no Event of
Default and Incipient Default has occurred and is
continuing, and (v) from time to time, and on demand,
such additional financial or other information relating
to the Transferee and the Vessels as may be reasonably
requested by the Agent or the Syndicate Agent;
B. Negative Covenants.
(1) The Transferee shall not without prior
consent of the Agent and the Syndicate
Agent consolidate or amalgamate with, or
merge into, any other entity, or sell,
convey, transfer, lease, or otherwise
dispose of all or substantially all of its
assets, including but not limited to, by
dividend (whether by one transaction or a
series of transactions and whether related
or not); provided, however, that it may
consolidate or amalgamate with, or merge
into, any other entity, or sell, convey,
transfer, lease, or otherwise dispose of
all or substantially all of its assets if
the buyer, assignee or transferee
corporation (the "Assignee") shall be a
solvent corporation organized and existing
under the laws of the United States of
America or any state thereof following
such transaction and shall have executed
and delivered an agreement, in form and
substance reasonably satisfactory to the
Agent and the Syndicate Agent, containing
an assumption by the Assignee of the due
and punctual performance and observance of
all covenants and obligations of the
Transferee hereunder and under the other
Loan Documents and the Charter Documents
to which it is or shall be a party, and
confirming the accuracy of any
representations and warranties made herein
and in each such other Loan Document and
Charter Document as of the dates herein or
therein required with respect to such
Assignee; and provided further, that
immediately following such transaction, no
Incipient Default or Event of Default
shall have occurred and be continuing.
(2) Except for the Charters, the Transferee
shall not charter any HDW Vessel or Daewoo
Vessel without the prior written approval
of the Agent and the Syndicate Agent,
respectively.
(3) The Transferee will not create or permit
to subsist any lien on the whole or any
part of its present or future assets
except for liens permitted under Section
14 of the Mortgage.
(4) The Transferee shall not make or threaten
to make any substantial changes in its
business as presently conducted, namely
that of a single purpose corporation
owning any of the HDW or Daewoo Vessels
and chartering such Vessels to the
Transferor, and the Transferee shall not
form any subsidiaries.
(5) The Transferee will not create, incur,
assume or allow to exist any Financial
Indebtedness, nor enter into any financing
lease or undertake any material capital
commitment (including but not limited to
the purchase of any capital asset), except
as contemplated hereby.
(6) The Transferee will not make any loan or
advance or extend credit to any Person or
issue or enter into any guarantee or
indemnity or otherwise become directly or
contingently liable for the obligations,
stocks or dividends of, or own, purchase,
repurchase or acquire (or agree
contingently to do so) any stock,
obligations or securities of, or any other
interest in, or make any capital
contribution to, or any other investment
in, any Person, firm or corporation. The
Transferee will not issue any capital
stock or any options, warrants or other
rights with respect to, or securities
convertible into, its capital stock,
except to the Guarantor.
(7) The Transferee will not acquire any
equity, share capital, assets or
obligations of any corporation or other
entity, except as contemplated hereby, and
it will not permit any of its voting
shares or capital stock to be held by any
party other than the Guarantor.
(8) Without the consent of the Agent in the
case of the HDW Vessels and the Syndicate
Agent in the case of the Daewoo Vessels,
the Transferee will not amend, repeal or
modify, its Articles of Incorporation or
other similar documents relating to the
governance of the Transferee.
SECTION 6. Notices.
Notices required or permitted by the terms of this
Acquisition Agreement or any other Loan Document or Charter Document
shall be made in accordance with Section 15.04 of the Loan Agreement.
SECTION 7. Counterparts.
This agreement may be executed in separate counterparts,
each of which, when executed and delivered shall be an original, but all
such counterparts shall together constitute but one and the same
instrument.
SECTION 8. Modification.
Neither this Acquisition Agreement nor any of its terms
may be terminated, amended, supplemented, waived or modified orally, but
only by an instrument in writing signed by the party against which the
enforcement of the termination, amendment, supplement, waiver or
modification is sought.
So long as any Vessel is subject to a Mortgage, neither
this Acquisition Agreement nor any of its terms as the same relate to
that Vessel may be terminated, amended, supplemented, waived or modified
without the prior written consent of KfW or the Syndicate Agent or the
Syndicate, as the case may be.
SECTION 9. Successors and Assigns.
The terms of this Acquisition Agreement shall be binding
upon, and inure to the benefit of, each of the parties hereto, and their
respective successors and assigns.
SECTION 10. Governing Law.
This Acquisition Agreement shall be construed and enforced in
accordance with and governed by the applicable law of the State of New
York (other than the law of the State of New York governing choice of
law), and the Transferee hereby submits itself to New York jurisdiction
and agrees to observe and perform the agreements and covenants and shall
have the rights contained in Section 15.08 of the Loan Agreement to the
same extent and under the same terms and conditions so provided in said
Section 15.08.
SECTION 11. Assignment.
The rights of any Party hereunder may not be assigned,
whether by operation of law or otherwise, except to the extent permitted
by Sections 5.B.(1) of this Acquisition Agreement and Section 10 of the
Loan Agreement, without the consent of the other parties hereto.
SECTION 12. Severability.
If any provision hereof is invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions, and of such provisions in
other jurisdictions, shall not be affected or impaired thereby.
SECTION 13. Table of Contents; Headings.
The Table of Contents and the headings of the Sections
herein are for convenience only and shall not affect the construction or
meaning of any provision of this Acquisition Agreement.
[THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have caused this
Acquisition Agreement to be duly executed by their respective officers
as of the day and year first above written.
KREDITANSTALT FUR WIEDERAUFBAU
/s/
By:
Title:
COMMERZBANK AG, HAMBURG
/s/
By:
Title:
/s/
By:
Title:
COMMERZBANK AG (KIEL BRANCH)
/s/
By:
Title:
/s/
By:
Title:
DRESDNER BANK AG in HAMBURG
/s/
By:
Title:
/s/
By:
Title:
VEREINS- und WESTBANK AG
/s/
By:
Title:
/s/
By:
Title:
DEUTSCHE SCHIFFSBANK AG
/s/
By:
Title:
NORDDEUTSCHE LANDESBANK -
GIROZENTRALE
/s/
By:
Title:
/s/
By:
Title:
DEUTSCHE VERKEHRS-BANK AG
/s/
By:
Title:
/s/
By:
Title:
BANQUE INTERNATIONALE A LUXEMBOURG
S.A.
/s/
By:
Title:
AMERICAN PRESIDENT LINES, LTD.
/s/
By:
Title:
APL NEWBUILDINGS, LTD.
/s/
By:
Title:
TO THE EXTENT THAT THIS BAREBOAT 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 BAREBOAT
CHARTER PARTY MAY BE CREATED OR PERFECTED THROUGH THE TRANSFER OR
POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL EXECUTED
COUNTERPART CONTAINING THE ACKNOWLEDGEMENT THEREOF EXECUTED BY
[KREDITANSTALT FUR WIEDERAUFBAU AS AGENT] [COMMERZBANK AG AS SYNDICATE
AGENT] ON THE SIGNATURE PAGE THEREOF.
EXHIBIT A
FORM OF [HDW] [DAEWOO]
BAREBOAT CHARTER PARTY
THIS BAREBOAT CHARTER PARTY (the "Charter") dated this
___ day of ______________, 19 , between ______________________, a
corporation organized and existing under the laws of _________
(hereinafter "Owner") and American President Lines, Ltd., a corporation
organized and existing under the laws of Delaware (hereinafter called
"Charterer" or "APL").
W I T N E S S E T H:
WHEREAS, APL has heretofore entered into that certain
Loan Agreement dated ________, 1994 (the "Loan Agreement"), by and among
APL, as Borrower, Kreditanstalt fur Wiederaufbau ("KfW"), Commerzbank AG
(Hamburg) (the "Syndicate Agent"), and the banks listed on Schedule ___
thereto (each, a "Syndicate Member" and, collectively, the "Syndicate"),
as Lenders, with respect to the purchase financing of six (6) container
vessels, including the Vessel described below, and American President
Companies, Ltd. ("APC") has heretofore entered into that certain
Guarantee dated ________, 199 (the "Guarantee"), relating to Owner's
obligations under the Loan Agreement as established pursuant to the
below-defined Acquisition Agreement;
WHEREAS, the date hereof is the Delivery Date of the
below-described Vessel pursuant to the Loan Agreement;
WHEREAS, as contemplated by Section 7(k) of the Loan
Agreement, APL has entered into that certain Agreement to Acquire and
Charter (the "Acquisition Agreement") among Owner and the parties to the
Loan Agreement, pursuant to which APL has transferred to Owner, and
Owner has accepted title to, and is currently the disponent owner of,
the Republic of The Marshall Islands flag vessel PRESIDENT
______________, Official Number _________ (the "Vessel") which term
shall include all the boilers, engines, machinery, bowsprits, masts,
spars, sails, riggings, boats, anchors, cables, apparel, furniture,
fittings, equipment and all other appurtenances to the Vessel
appertaining or belonging, whether now owned or hereafter acquired,
whether on board or not on board, and all additions, improvements and
replacements hereafter made in and to the Vessel, or any part thereof,
or in or to the appurtenances and equipment aforesaid, but shall exclude
leased equipment), and Owner has undertaken all of the payment and
certain of the performance obligations relating to Vessel Indebtedness
in respect of the Vessel under the Loan Agreement, as Borrower (as such
term is defined in the Loan Agreement) (the "Owner Obligations");
WHEREAS, pursuant to the Acquisition Agreement, APL is
permitted, at its option, to transfer to Owner, and Owner has agreed
upon the exercise of such option by APL, to accept title to any or all
of the other [HDW] [Daewoo] Vessels (each of such other [HDW] [Daewoo]
Vessels which is so transferred, together with the above-referenced
Vessel, referred to individually herein as a "Vessel" and collectively
as the "Vessels"), on their respective Delivery Dates pursuant to the
Loan Agreement;
WHEREAS, Owner has simultaneously herewith entered into a
First Mortgage on the Vessel in favor of [KfW] [the Syndicate Agent or
the Syndicate Members] (the "Vessel Lender") [and has also entered into
a Second Mortgage on the Vessel in favor of KfW], in substantially the
form of the First Mortgage set forth in Appendix B-1 [and Appendix B-2,
respectively] to the Loan Agreement as security for the Owner
Obligations in respect of the Vessel, and all other Loans made under the
[Daewoo Tranche] [HDW Tranche] (as such term is defined in the Loan
Agreement) (individually, a "Mortgage" and collectively, the
"Mortgages");
WHEREAS, as contemplated by Section 9.02(h) of the Loan
Agreement and by the Acquisition Agreement, as a condition to the
transfer of the Vessel and any other Vessels pursuant to the Acquisition
Agreement, Owner has agreed to let and demise the Vessel and Charterer
has agreed to hire the Vessel from Owner, on the terms and conditions
set forth in this Charter, such charter of the Vessel to be effective
upon the execution and delivery of this Charter;
WHEREAS, as further contemplated by the Acquisition
Agreement, as further conditions to the transfer of the Vessel and the
other Vessels pursuant to the Acquisition Agreement simultaneously
herewith Owner is entering into the Charter Assignment relating to the
Charter in favor of the Vessel Lender [and the Second Charter Assignment
in favor of [KfW], and Charterer is consenting to such Charter
Assignment [and such Second Charter Assignment] pursuant to this
Charter; and
WHEREAS, capitalized terms used herein but not defined
herein shall have the meanings assigned to them in the Loan Agreement
and the Acquisition Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the receipt and adequacy of which is
hereby acknowledged, Owner and Charterer hereby agree as follows:
1. REPRESENTATIONS OF CHARTERER.
(a) Charterer is a corporation duly organized and
validly existing in good standing under the laws of Delaware with full
corporate power and authority to conduct its business as the same is
presently conducted.
(b) Charterer has legal power and authority to enter
into and carry out the terms of this Charter.
(c) This Charter has been duly authorized by all
necessary action, corporate or other, on the part of Charterer, and this
Charter constitutes, and upon due execution and delivery by Charterer,
the Charter will constitute, in accordance with its respective terms, a
legal, valid and binding instrument enforceable against Charterer,
except to the extent limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws of general application relating to
or affecting the enforcement of creditors' rights from time-to-time in
effect.
(d) Except as previously disclosed to Owner, the Agent
and the Syndicate Agent in writing, there are no actions, suits or
proceedings pending or, to Charterer's knowledge, threatened against
Charterer, or any of its properties affecting the Charter or the
transactions contemplated thereby which would, if adversely determined,
materially and adversely affect the performance of Charterer of its
obligations hereunder.
(e) The consummation of the transactions contemplated
by, and compliance by Charterer with all the terms and provisions of,
the Charter will not violate any provisions of the Certificate of
Incorporation or bylaws of Charterer and will not result in a breach of
the terms and provisions of, or constitute a default under, any other
agreement or undertaking by Charterer or by which it or any of its
property is bound or any order of any court or administrative agency
entered in any proceedings binding on Charterer, or violate any
applicable statute, rule or regulation.
(f) Charterer is not in default and no condition exists
which with notice or lapse of time or both would constitute a default by
Charterer, in any respect which would materially and adversely affect
the ability of Charterer to perform its obligations under this Charter,
under any mortgage, loan agreement, deed of trust, indenture or other
agreement with respect thereto or evidence of indebtedness to which it
is a party or by which it is bound, and is not in violation of or in
default, in any respect which would materially and adversely affect the
ability of Charterer to perform its obligations under this Charter,
under any order, writ, judgment or decree of any court, arbitrator or
governmental authority, commission, board, agency or instrumentality,
domestic or foreign.
(g) Charterer has more than one place of business and
the location of the place of business which is its chief executive
office is 1111 Broadway, Oakland, California 94607.
(h) All taxes (other than taxes based on or measured by
income and withholding taxes), liability for the payment of which has
been incurred by Charterer as such in connection with the execution,
delivery and performance by it of the Charter, have been paid (or
provided for in its accounts if not payable) on or prior to the delivery
date of the Vessel.
(i) All consents, licenses, permissions, approvals,
registrations or authorizations or declarations required by United
States of America federal, state and local governments and the
government of the jurisdiction of incorporation of Charterer and any
applicable foreign jurisdiction (1) to enable it lawfully to enter into
and perform its respective obligations under this Charter, (2) to ensure
that its obligations hereunder are legal, valid and enforceable, and (3)
to make this Charter admissible in evidence in the United States of
America and such country of Charterer's incorporation have been obtained
or made and are in full force and effect.
(j) It has not taken any corporate action nor to its
knowledge has any other steps been taken or legal proceedings been
started or threatened against it for its winding-up, dissolution or
reorganization or for the appointment of a receiver, administrative
receiver, administrator, trustee or similar officer of it or of any or
all of its respective assets and revenues.
2. PERIOD OF CHARTER AND BASIS OF CHARTER HIRE.
(a) Owner agrees to charter and Charterer agrees to hire
the Vessel delivered hereunder on the terms and conditions herein set
forth for a period from the date hereof with respect to the Vessel,
until payment in full on the due date of the final installment of
principal and interest with respect to the Subportion relating to the
Vessel pursuant to Section 5 of the Loan Agreement (together with all
other amounts relating to such Subportion payable in accordance with the
terms of the Loan Agreement, unless earlier terminated in accordance
with the terms hereof upon payment of all such principal and interest
and such other amounts (said period with respect to each Vessel
hereinafter referred to as its "Charter Period").
(b) Subject to the provisions of Section 24(b)(i)
hereof, Charter hire ("Charter Hire") shall be paid by Charterer to
Owner in amount of (i) principal and interest due with respect to the
Subportion relating to the Vessel from the Borrower to the Agent
pursuant to Sections 3, 4, 5, 6 and 12 of the Loan Agreement, and the
related [HDW] [Daewoo] Notes issued by Owner pursuant to Section 4 of
the Loan Agreement, at the times and places, in the manner and to the
parties set forth in said sections and such Notes, [including without
limitation the provisions of Section 3.05(a) with respect to * ]3,
Section 3.08 with respect to default interest, Section 5.03 with respect
to
* , and Section 5.04 with respect to prepayment and (ii) all
indemnity payments required under Section 11 of the Loan Agreement when
due and payable. Upon payment in full (upon maturity or through
prepayment pursuant to Section 5.04 of the Loan Agreement), of all such
amounts with respect to any Subportion, together with any Supplemental
Charter Hire required to be paid with respect thereto pursuant to clause
(d) of this Section 2, this Charter shall terminate with respect to the
Vessel.
(c) This Charter may not be cancelled or terminated,
except in accordance with the expressed provisions hereof, for any
reason whatsoever and Charterer shall have no right to be relieved or
discharged from obligation or liability under this Charter except as
otherwise expressly provided herein for any reason whatsoever.
Charterer hereby waives, to the extent permitted by applicable law, any
and all rights which it may now have or which at any time hereafter may
be conferred upon it by statute or otherwise, to terminate, cancel, quit
or surrender this Charter except as otherwise expressly provided herein.
Charterer acknowledges and agrees that its obligation to pay all Charter
Hire and Supplemental Charter Hire pursuant to this Section 2 and all
other amounts payable on behalf of Owner to [the Agent] [the Syndicate
Agent] and the [Holders of the Daewoo Notes] pursuant to the terms of
this Charter shall be absolute and unconditional under any and all
circumstances, shall not be subject to any counterclaim, set-off,
deduction, abatement or defense based upon any claim Charterer may have
against Owner, the Agent, the Syndicate Agent or any other Lender or any
other Person whatsoever, and shall remain in full force and effect
without regard to, and shall not be released, discharged or in any way
effected by any circumstance or condition (whether or not Charterer
shall have knowledge or notice thereof), including, without limitation:
(i) any amendment or modification of this Charter, the Loan Agreement,
any agreements relating to any thereof or any other instrument or
agreement applicable to the Vessel or any part thereof or any assignment
or transfer of any thereof or any furnishing or acceptance of additional
security, or any release of any security, or any failure or inability to
perfect any security; (ii) any failure on the part of the Owner to
perform or comply with any term of this Charter or any failure on the
part of the Agent, the Syndicate Agent or any other Lender to perform or
comply with the terms of the Loan Agreement or any other instrument
agreement applicable thereto; (iii) any waiver, consent, change,
extension, indulgence or other action or inaction under or in respect to
this Charter or any other such instrument or agreement, or any exercise
or nonexercise of any right, remedy, power or privilege under or in
respect of any such instrument or agreement; (iv) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition,
liquidation or similar proceeding with respect to Owner, the Agent, the
Syndicate Agent, the Guarantor, any Lender or any affiliate of any of
them, or their respective properties or creditors, or any action taken
by any court, trustee, receiver or liquidating agent in any such
proceeding, including, without limitation, any termination or rejection
of this Charter or any assignment of either thereof by any court,
trustee, receiver or liquidating agent of Charterer or Owner or of any
of their respective properties in any such proceeding; (v) limitation on
the liability or obligations of Charterer under this Charter or any
termination, or cancellation (except as expressly provided in this
Charter), frustration, invalidity, irregularity or unenforceability, in
whole or in part, of this Charter or any term hereof or any lack of
power or authority of Charterer or Owner to enter into this Charter;
(vi) any assignment or other transfer of this Charter by Owner (whether
pursuant to Section 30 hereof or otherwise) or any lien, charge or
encumbrance, from whatever source arising, on or affecting Charterer's
estate in, or any subchartering of, all or any part of the Vessel
(whether or not pursuant to the express provisions of this Charter or
otherwise); (vii) any damage to, or loss, destruction, requisition,
seizure, forfeiture or marshal's or other sale of, the Vessel or any
exercise of rights with respect to the Vessel under the Mortgage[s];
(viii) any libel, attachment, levy, detention, sequestration or taking
into custody of the Vessel, or any interruption or prevention of or
restriction on or interference with the use or possession of the Vessel;
(ix) any title defect or encumbrance or any dispossession from the
Vessel by title paramount or otherwise; (x) any act, omission,
misrepresentation or breach on the part of Owner under this Charter or
any other agreement at any time existing between Owner and Charterer, or
under any statute, law or governmental regulation; (xi) any other
circumstance whatsoever which might otherwise constitute a legal or
equitable discharge or defense of a charterer and irrespective of any
other circumstance which might otherwise limit the recourse against
Charterer; (xii) any defect in the seaworthiness, condition, design,
operation or fitness for use of the Vessel or the ineligibility of the
Vessel for any particular trade; or (xiii) any other occurrence or
condition whatsoever, foreseen or unforeseen, whether similar or
dissimilar to the foregoing, now existing or hereafter occurring.
Even though Charterer shall be deprived of or limited in
the use of the Vessel in any respect or for any length of time, whether
or not by reason of some act, omission or breach on the part of Owner,
Charterer or any other party, whether or not resulting from accident and
whether or not without fault on the part of Charterer, Charterer will
continue to make all payments required of Charterer by the terms of this
Charter, whether for Charter Hire, Supplemental Charter Hire or
otherwise, without interruption or abatement, unless and until this
Charter shall have terminated with respect to the Vessel in accordance
with the express provisions hereof. If, for any reason whatsoever, this
Charter shall be terminated in whole or in part by operation of law or
otherwise, except as specifically provided herein, Charterer nonetheless
agrees to pay an amount equal to each payment of Charter Hire,
Supplemental Charter Hire or other amounts, at the time such payment
would have become due and payable in accordance with the terms hereof
had this Charter not been terminated in whole or in part.
Nothing contained in this clause (c) shall be construed
to be a waiver, modification, alteration or release of any claims which
Charterer may have at any time during the Charter Period or subsequent
thereto for damages or equitable relief, for breach by Owner or APL of
any provisions in any of the Charter Documents or the Loan Documents, or
by the Vessel Lender of any provisions in any of the Loan Documents, or
for any loss due to any acts taken by any of the parties hereto or
thereto.
(d) As supplemental charter hire ("Supplemental Charter
Hire"), Charterer shall pay as and when due any and all amounts (other
than principal and interest on the [HDW] [Daewoo] Notes, including
interest at the Default Interest Rate) payable by Owner pursuant to the
Loan Agreement with respect to the Subportion relating to each Vessel,
at the times and places, and in the manner and to the parties set forth
in such agreements.
3. DELIVERY AND ACCEPTANCE.
Owner hereby lets, demises and delivers the Vessel to
Charterer and Charterer hereby accepts delivery of the Vessel, pursuant
to the terms of this Charter. IT IS AGREED THAT OWNER MAKES NO WARRANTY
OR REPRESENTATION, EITHER EXPRESSED OR IMPLIED, AS TO TITLE TO, AS TO
THE DESIGN, CONDITION, MERCHANTABILITY OR SEAWORTHINESS OF, AS TO THE
QUALITY OF THE MATERIAL, EQUIPMENT OR WORKMANSHIP IN OR AS TO THE
CONSUMABLE STORES ON BOARD THE VESSEL, OR AS TO THE FITNESS OF THE
VESSEL FOR ANY PARTICULAR PURPOSE OR AS TO THE ELIGIBILITY OF THE VESSEL
FOR ANY PARTICULAR TRADE, OR ANY OTHER WARRANTY OR REPRESENTATION
WHATSOEVER.
4. REDELIVERY.
At the expiration of its Charter Period, the Vessel
(unless lost) shall be redelivered by Charterer to Owner at the end of
the voyage then in progress at a safe berth to be selected by Owner at a
port to be designated by Owner or another mutually agreed port.
5. OPERATING LIMITS.
Charterer shall have the full use of the Vessel, and may
operate the Vessel throughout the world, for the carriage of any lawful
cargoes in any lawful trade on voyages for which the Vessel is suitable
and for which insurance is procured by Charterer and in effect prior to
entering such trades. All necessary insurance required for the trades
in which the Vessel is engaged will be procured by Charterer pursuant to
Section 17 hereof and paid for by Charterer.
6. CONDITION OF VESSEL ON DELIVERY.
(a) The Vessel, upon its delivery hereunder, shall be
documented under the laws of the Republic of The Marshall Islands. No
change will be made in the registry of the Vessel without the approval
of Owner and compliance by Owner with the terms of Section (20)(b) of
the applicable [Mortgage] [Mortgages].
(b) On its delivery, the Vessel is classed _________. On
its delivery, the Vessel shall be in good running order and repair, and
will be, insofar as due diligence shall make it so, strong and well and
sufficiently tackled, apparelled, furnished, equipped and in good
operating condition, ordinary wear and tear and depreciation excepted.
(c) By its acceptance of delivery of the Vessel,
Charterer acknowledges that the Vessel is in all respects satisfactory
to Charterer and such delivery shall constitute full performance by
Owner of all of Owner's obligations hereunder, relating to the condition
of the Vessel, required to be performed by Owner prior to the delivery.
7. INSPECTIONS.
(a) Owner and Charterer shall agree on a single surveyor
appointed for the purpose of determining and stating in writing the
condition of the Vessel at the time of redelivery. If not less than ten
(10) days prior to redelivery, Owner and Charterer shall fail to have
agreed on the surveyor to be appointed for such purpose, either party
may request The American Bureau of Shipping, New York, to make such
appointment, and the surveyor so appointed shall perform such survey.
The expense of the aforesaid surveyor shall be shared equally by Owner
and Charterer. Owner and Charterer may have their own representative in
attendance at all surveys.
(b) Prior to redelivery of the Vessel, the auxiliary
machinery, generators, main propulsion units and boilers may be opened
for inspection only by mutual agreement between Owner and Charterer, in
which event any damage disclosed shall be repaired as may be required
prior to redelivery. The expense of repair shall be paid by Charterer.
If no repairs are found necessary as a result of opening said machinery,
the cost of opening will be borne by the party requesting the opening.
8. MAINTENANCE AND CLASSIFICATION.
Charterer shall be charged with full responsibility for
maintenance and repair of the Vessel throughout the Charter Period and
shall at all times, without expense to Owner, maintain and preserve the
Vessel in good running order and repair, so that the Vessel shall be,
insofar as due diligence can make it so, strong and well and
sufficiently tackled, apparelled, furnished, equipped and supplied and
in every respect seaworthy and good operating condition, ordinary wear
and tear excepted. Furthermore, Charterer shall maintain the Vessel so
as to enable it to the highest classification and rating of The American
Bureau of Shipping for vessels of the same age and type. On redelivery,
any outstanding requirements shall be taken care of by Charterer, or as
Charterer may otherwise mutually agree with Owner in respect thereto.
Owner will authorize The American Bureau of Shipping to release all
records to Charterer relating to the Vessel.
9. INVENTORY.
A complete inventory of the Vessel's entire outfit,
equipment, furniture, furnishings, appliances, spare and replacement
parts whether owned, pooled or shared with other operators, and of all
unbroached consumable stores and slop chest is warranted by Owner at
delivery. An inventory shall be taken and mutually agreed upon by
representatives of Charterer and Owner at the time of redelivery. The
cost of taking such inventory shall be borne equally by Charterer and
Owner. Charterer shall pay all shortfalls from the delivery inventory at
the current market prices at the port of redelivery, except as may be
otherwise mutually agreed.
10. FUEL AND LUBRICANTS.
Charterer shall accept and pay for all fuel and
lubricants in storage tanks on board at the time of the Vessel's
delivery hereunder and, correspondingly, Owner shall accept and pay for
all such fuel and lubricants in storage tanks left on board at the time
of redelivery. Each shall pay for fuel and lubricants in storage tanks
at the last invoiced price paid therefor.
11. USE OF EQUIPMENT.
(a) Charterer shall have the use of the Vessel and its
outfit, equipment (including cabin, crew, galley and container lashing
equipment), furniture, furnishings, appliances, spare and replacement
parts on board the Vessel or ashore as available and shown in the
inventory at delivery under this Charter, and Charterer shall at all
times, and at its own expense, comply with and discharge Owner's
obligations, and shall be entitled to all the benefits and rights of
Owner, under Section (25)(a) of the [Mortgage] [Mortgages] as to
maintenance of the Vessel and its classification and compliance with all
applicable laws, treaties, conventions, rules and regulations of
[state/country of flag], all in accordance with the terms of said
Section (25)(a).
(b) Charterer furnished outfit, equipment (including
cabin, crew, galley and container lashing equipment), furniture,
furnishings, appliances, spare and replacement parts on board the Vessel
and not shown in the inventory or supplemental inventories as Owner
furnished at the time of delivery shall remain the property of
Charterer, and Charterer at the time of redelivery shall have the right
to remove such items or at its option may leave such items on board the
Vessel. All items left aboard the Vessel at the termination of the
Charter with respect to the Vessel shall be deemed abandoned to Owner.
(c) Charterer shall be at liberty to fit any additional
equipment required for the services of Charterer, beyond what is on
board at commencement of Charter with respect to the Vessel, such work
to be done at its time and expense, and such equipment to be considered
its property, and Charterer shall be at liberty to remove such equipment
at its time and expense during or prior to the expiry of this Charter
with respect to the Vessel; provided that such removal shall in no way
significantly alter the condition of the Vessel at the time of its
redelivery to Owner. All additional equipment left aboard the Vessel at
the termination of the Charter shall be deemed abandoned to Owner.
Charterer shall make no substantial change in the structure, type or
speed of the Vessel or change its rig without first obtaining the
written approval of Owner and the Vessel Lender; provided, however, that
no such approval need be obtained in respect of any change which shall
be necessary to comply with the requirements of the United States Coast
Guard, [state/country of flag], or The American Bureau of Shipping in
order to entitle the Vessel to the classification and rating required
above.
12. WARRANTY CLAIMS.
Charterer has retained, and not assigned to Owner, its
rights under the [HDW] [Daewoo] Shipbuilding Agreement with respect to
the Vessel with [Howaldtswerke-Deutsche Werft AG] [Daewoo Shipbuilding &
Heavy Machinery Ltd.] (the "Shipyard") relating to the condition and
performance of the Vessel, including its replacement and repair warranty
rights under said contract, and its rights with respect to the standby
letter of credit relating to such warranty rights, and it is agreed
that:
(a) Charterer may negotiate and process all warranty
claims directly with the Shipyard and shall provide Owner with prior
notice of all warranty claims whenever reasonably practicable;
(b) Owner will cooperate with Charterer in processing
all Vessel warranty claims against the Shipyard if requested by
Charterer; and
(c) All fees and expenses incurred to prosecute or
litigate Vessel warranty claims against the Shipyard shall be borne by
Charterer.
13. OWNER AND VESSEL LENDER INSPECTIONS.
Charterer shall at all reasonable times afford Owner and
the Vessel Lender, or their respective authorized representatives, full
and complete access to the Vessel for the purpose of inspecting or
surveying the same and its papers and, at the request and expense of
Owner or the Vessel Lender, Charterer shall deliver for inspection by
such requesting party copies of any and all contracts and documents
relating to the Vessel, whether on board or not on board.
14. LAY-UP.
Notwithstanding anything to the contrary in this Charter,
Charterer may at any time during the period of this Charter, lay-up the
Vessel at a safe place so long as permitted by the applicable Mortgage
in which case Charterer's obligations under this Charter shall include,
during the period of lay-up, taking the customary precautions for the
maintenance and safety of the Vessel and of paying, in addition to all
other amounts required under this Charter, all other expenses
attributable to such precautions and to the laying-up of the Vessel.
15. CHARTERER TO MAN.
During the period of this Charter, Charterer shall at its
expense, and by its own procurement, man, victual, navigate, operate,
supply, and fuel the Vessel and shall pay all charges and expenses of
every kind and nature whatsoever incident to the use and operation of
the Vessel under this Charter.
16. CONDITION ON REDELIVERY OF VESSEL.
(a) The Vessel shall be redelivered to Owner (unless
lost) pursuant to the terms of this Charter in all respects in the same
condition of operation and repair as when delivered, except as otherwise
provided herein or mutually agreed, ordinary wear and tear not affecting
class excepted. Unless otherwise agreed between the parties and, except
as provided in paragraph (b) of this Section 16, Charterer shall repair
all damages to the Vessel occurring during the Charter Period, and shall
replace all lost, worn out or otherwise non-operating items, to the
extent necessary to put each Vessel in all respects in the same
condition of operation and repair as when delivered, ordinary wear and
tear not affecting class excepted. If, at the time of redelivery,
repairs, renewals, replacements or other obligations for which Charterer
is liable remain to be accomplished and it is mutually agreed between
the parties that such items need not be accomplished before redelivery,
Charterer shall pay the agreed upon cost of such items. At the
redelivery survey provided for in Section 7 hereof, the surveyor
representing both Charterer and Owner shall determine and state the
repairs or work necessary to place the Vessel on the date of redelivery
in the condition and class required in this Charter, which statement
shall include all repairs or work required by outstanding classification
requirements of The American Bureau of Shipping or marine inspection
requirements of the United States Coast Guard, if applicable, in effect
with respect to the Vessel as of the date of the redelivery to place it
in such condition.
(b) Owner agrees that upon the redelivery Charterer
shall have no obligation to renew or repair the Vessel's cell guides,
which shall be returned in "as is, where is" condition.
17. RISK OF LOSS, INSURANCE.
Charterer hereby assumes all of the risks and liability
resulting from or arising out of Charterer's possession, use, operation
or storage of the Vessel, and Charterer shall at all times, at its own
expense, comply with and discharge Owner's obligations under Section
(29) of the [Mortgage] [Mortgages] as to the maintenance of insurance on
the Vessel, and shall be entitled to all the benefits and rights of
Owner under said section, during the Charter Period (and shall, along
with Owner and the Vessel Lender, be named as an assured, additional
assured, and loss payee, as applicable), all in accordance with the
provisions of said section. In any case where Charterer shall be
obligated to give notice to the Vessel Lender pursuant to this Section
17, Charterer shall also give simultaneous notice to Owner.
18. ACTUAL OR CONSTRUCTIVE TOTAL LOSS.
If an Event of Loss shall occur, Charterer shall (i) give
prompt written notice thereof to Owner and the Vessel Lender, (ii)
deposit with the Vessel Lender for the account of Owner, on or before
the Redemption Date, all amounts required to be paid by Owner to the
Vessel Lender on such date pursuant to Section 5.04(b)(ii) of the Loan
Agreement, (iii) pay to Owner any insurance proceeds or other
compensation, in excess of its payment obligations pursuant to subclause
(ii) hereof, and (iv) be entitled to the credit referred to in Section
5.04(b)(iii) with respect to its payment obligations pursuant to
subclause (ii) hereof. Upon Charterer's payment pursuant to subclause
(ii) hereof (to the extent modified by subclause (iv) hereof), this
Charter shall terminate.
19. BILLS OF LADING.
Charterer shall utilize its customary contracts of
affreightment, including its long form and short form bills of lading,
the standard form of Military Sealift Command Shipping Agreement, and
cargo charter parties all of which foregoing documents shall include
Clause Paramount, Liberties Clause, General Average Clause, New Jason
Clause, and Both-to-Blame Collision Clause.
20. GENERAL AND PARTICULAR AVERAGE.
Average adjusters, appointed by Charterer from a list of
adjusters satisfactory to Owner, shall attend to the settlement and
collection of both general and particular average losses subject to the
customary charges. Charterer agrees to assist the adjuster in preparing
the average statement and to take all other possible measures to protect
the interests of the Vessel and Owner.
21. SALVAGE.
All earned salvage will be for Charterer's account.
22. LIENS.
(a) Neither Charterer nor the Master of the Vessel nor
any other Person shall have the right, power, or authority to create,
incur or permit to be placed upon the Vessel any liens whatsoever other
than those permitted by Section 14 of the Mortgage, and shall hold
harmless and indemnify Owner and the Vessel Lender against the claims
and demands of all Persons whomsoever arising as a result of any
mortgage, security interest, lien or charge whatsoever on the Vessel,
except that such undertaking by Charterer shall not apply to the lien of
the [Mortgage] [Mortgages].
(b) Charterer shall at all times, at its own cost and
expense, comply with and discharge Owner's obligations under Sections
(15), (16) and (22) of the [Mortgage] [Mortgages] with respect to the
release and discharge of any lien or levy against the Vessel, and shall
give notice to Owner if it shall be required to give notice to the
Vessel Lender pursuant to said Section (16).
(c) Charterer agrees to carry a properly certified copy
of this Charter and the [Mortgage] [Mortgages] with the ship's papers on
board the Vessel, and agrees to exhibit the same to any person having
business with such Vessel and to any representative of the Vessel
Lender, and agrees also to exhibit the same to any representative of
Owner on demand.
(d) Charterer further agrees to fasten in the Vessel in
a prominent place, and to maintain during the Charter Period a framed
printed or typewritten notice in plain type and which shall cover a
space of not less than six (6) inches wide by nine (9) inches high (or
of such other dimensions as may be required by law) reading
substantially as follows:
"NOTICE OF FIRST [AND SECOND] PREFERRED
SHIP MORTGAGE[S] AND CHARTER
THIS VESSEL IS OWNED BY APL NEWBUILDINGS, LTD., A NEVADA
CORPORATION (THE "SHIPOWNER"), AND IS CHARTERED BY AMERICAN
PRESIDENT LINES, LTD., A DELAWARE CORPORATION, AND IS COVERED BY
A FIRST PREFERRED SHIP MORTGAGE IN FAVOR OF [KREDITANSTALT FUR
WIEDERAUFBAU] [SYNDICATE AGENT OR SYNDICATE MEMBERS] [AND A
SECOND PREFERRED SHIP MORTGAGE IN FAVOR OF KREDITANSTALT FUR
WIEDERAUFBAU], UNDER AUTHORITY OF THE REPUBLIC OF THE MARSHALL
ISLANDS. UNDER THE TERMS OF SAID MORTGAGE[S] AND CHARTER,
NEITHER THE SHIPOWNER, ANY CHARTERER, THE MASTER OF THE VESSEL
NOR ANY OTHER PERSON, HAS ANY RIGHT, POWER OR AUTHORITY TO
CREATE, INCUR OR PERMIT TO BE PLACED OR IMPOSED UPON THIS VESSEL
ANY LIEN WHATSOEVER OTHER THAN THE LIEN OF SAID MORTGAGE[S] AND
LIENS FOR WAGES OF A STEVEDORE WHEN EMPLOYED DIRECTLY BY THE
SHIPOWNER, OPERATOR, MASTER, OR ANY AGENT OF THE VESSEL, FOR
CREW'S WAGES, FOR GENERAL AVERAGE, FOR SALVAGE, AND, TO THE
EXTENT SUBORDINATE TO THE LIEN OF SAID MORTGAGE[S], FOR CERTAIN
LIENS INCIDENT TO CURRENT OPERATIONS OR FOR REPAIRS OR CHANGES
PERMITTED BY THE MORTGAGE[S]."
23. TRANSFER OF ASSIGNMENT.
Charterer shall not, without Owner's and the Vessel
Lender's prior written consent, sell, demise, charter, transfer, or
assign this Charter or any interest therein, or, without such consent,
make any arrangement whereby the maintenance, management, or operation
of the Vessel is to be performed by any other person, except with
respect to requisition or other governmental taking, and except that
Charterer may subcharter the Vessel on a time basis as long as Charterer
shall, at its own cost and expense, comply with Section 9.02(b) of the
Loan Agreement; provided that, notwithstanding such subcharter,
Charterer remains fully liable for all of its obligations under the
Charter Documents. Charterer shall have the right to voyage charter the
Vessel, or to arrange for space or slot charters of a portion of the
Vessel in connection with Charterer's normal liner service.
24. EVENTS OF DEFAULT AND REMEDIES.
(a) The following shall constitute an event of default
under this Charter (hereinafter called a "Event of Default"):
(i) An Event of Default shall have occurred under the
Loan Agreement or [the Mortgage] [or the Second
Mortgage]; or
(ii) Charterer's failure to duly and punctually observe
and perform any of the covenants of Charterer herein and
the continuance of such failure for thirty (30) days
after written notice thereof from Owner to Charterer; or
(iii) Any representation or warranty made by or on
behalf of Charterer in this Charter or in any of the
Charter Documents, or by Charterer in any certificate,
statement or other document issued by or on behalf of
Charterer pursuant to this Charter shall prove to have
been incorrect or misleading in any material respect when
made or deemed made; or
(iv) Any license, authorization, consent or approval at
any time necessary to enable Charterer to comply with its
obligations under this Charter and/or any of the Charter
Documents with respect to the Vessel is revoked or not
granted or fails to remain in full force and effect for a
period of thirty (30) days after notice thereof from the
Vessel Lender.
(b) If an Event of Default shall have occurred and be
continuing:
(i) If the Vessel Lender shall have declared or shall
have been deemed to have declared the whole or any part
of the outstanding principal amount of the [HDW] [Daewoo]
Notes to be immediately due and payable by Owner pursuant
to Section 12.01 of the Loan Agreement and Section (31)
of the Mortgage[s], Charterer shall be immediately
obligated to pay Charter Hire in an amount equal to such
principal amount and interest thereon and interest
thereafter on overdue principal at the Default Interest
Rate;
(ii) Upon such declaration or deemed declaration of
acceleration pursuant to clause (i) hereof, Owner may:
(A) Institute and prosecute any judicial, extra-
judicial, or administrative proceedings as it may
consider appropriate to recover any or all sums due, or
declared due, with respect to Charter Hire and with
respect to any Supplemental Charter Hire due, with the
right to enforce payment of said sums against any assets
of Charterer;
(B) Owner may take possession of the Vessel, with
or without legal proceedings, at any place where the
Vessel may be found (and Charterer shall forthwith
surrender possession of the Vessel to Owner on demand);
and
(C) Owner may terminate Charterer's rights under
this Charter.
(c) In case there shall be pending proceedings for the
bankruptcy or for the reorganization of Charterer under any applicable
law or in connection with the insolvency of Charterer or in case a
receiver or trustee shall have been appointed for its property or its
creditors, Owner or the Vessel Lender as assignee of the Owner,
irrespective of whether Charter Hire shall then be due and payable as
herein expressed or by declaration of acceleration or otherwise, shall
be entitled and empowered to intervene in such proceedings or otherwise,
to file and prove a claim or claims for the whole amount of Charter Hire
or Supplemental Charter Hire owing and unpaid, and to file such other
papers or documents as may be necessary or advisable in order to have
the claims of Owner allowed in any judicial proceeding relative to
Charterer, its creditors, or its property, and to collect and receive
any money or other property payable or deliverable on any such claims,
and to have the same applied pursuant to Section 5.09 [(a)] [(b)] of the
Loan Agreement. Nothing contained in this Charter shall be deemed to
give Owner any right to accept or consent to any plan of reorganization
or otherwise by action of any character in any such proceeding to waive
or change in any way any right of any Holder.
(d) Any monies collected by Owner pursuant to
enforcement of any of its rights hereunder or under any other Charter
Document on account of the occurrence of an Event of Default by or on
behalf of Owner shall be payable to the Vessel Lender and distributed in
accordance with Section 5.09[(a)] [(b)] of the Loan Agreement.
(e) No right or remedy herein conferred upon or reserved
to Owner 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 other Charter Documents 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.
(f) No delay or omission of Owner to exercise any right
or remedy accruing upon any Event of Default nor any course of dealings
between Owner and Charterer shall impair any such right or remedy or
constitute a waiver of any Event of Default or an acquiescence therein
nor shall any single exercise or partial exercise of any such right or
remedy preclude any other exercise thereof or any exercise of any other
or further right or remedy; nor shall the acceptance by Owner of any
security or any payment of any part of Charter Hire or Supplemental
Charter Hire maturing after any Event of Default or of any payment on
account of any past default be construed to be a waiver of any right to
take advantage of any future Event of Default or of any past Event of
Default not completely cured thereby. Every right or remedy given by
this Charter or any other Charter Document or by law to Owner may be
exercised from time-to-time, and as often and in such order as may be
deemed expedient, by Owner.
(g) In case Owner shall have proceeded to enforce any
right, power or remedy under this Charter or under any other Charter
Document, and such proceeding shall have been discontinued or abandoned
for any reason or shall have been adversely determined to Owner, then,
and in every such case, Charterer and Owner shall be restored to their
former positions and rights hereunder with respect to the property
subject or intended to be subject to this Charter or any other Charter
Documents, as the case may be, and all rights, remedies and powers of
Owner shall continue as if no such proceedings had been taken.
(h) Subject to the provisions of Section 24(b) hereof,
Owner shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to Owner under this
Charter or any other Charter Document.
(i) Charterer hereby expressly waives demand and
presentment for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor, bringing of suit, and diligence in taking
any action to collect amounts called for under this Charter at any time
in connection herewith.
(j) No right or remedy herein conferred upon or reserved
to Owner is intended to be exclusive, but cumulative and in addition to
any other right and remedy given hereunder or under the other Charter
Documents.
25. SPECIAL CONDITIONS; SUBORDINATION TO THE LIEN OF THE MORTGAGE[S].
(a) During the period of this Charter, Charterer may
substitute its own stack marks and insignia for those of Owner on the
Vessel.
(b) Owner shall effect initial registry of the Vessel in
the official name designated by Charterer.
(c) This Charter and each and every provision hereof
shall be subject and subordinate to each and every provision of the
Mortgage[s] in each and every right and any remedy of any party hereto
is subject and subordinate to each and every right and remedy of any
party to the Mortgage[s]. Any lien of the Charterer against the Vessel
for breach of this Charter (whether pleaded and proved as a tort or
otherwise) shall be subject and subordinate to the lien of the
Mortgage[s]. Charterer agrees not to take any action under this Charter
or otherwise which would violate, or cause Owner to violate, any
provisions of the [Mortgage] [Mortgages]. Without limiting the
generality of the foregoing, and in addition to all other obligations
assumed by Charterer hereunder, Charterer will at all times, and at its
own expense, comply with and discharge Owner's obligations, and shall be
entitled to all the benefits and rights of Owner, under the following
sections of the [Mortgage] [Mortgages], all in accordance with the
provisions of said sections: (i) Section (18) with respect to notice of
Events of Default, (ii) Section (21) with respect to operation of the
Vessel in accordance with law, (iii) Section (23) with respect to the
maintenance of the [Mortgage] [Mortgages], (iv) Section 25(c) with
respect to dealing with the Vessel's equipment (in connection with which
Charterer may act without Owner's consent whenever Mortgagee consent is
not required), and (v) Sections (28), (50)(a) and (b) and (51) with
respect to the payment or reimbursement of expenses.
26. OWNERSHIP.
So long as this Charter shall be in effect, Charterer's
interest in the Vessel shall be solely that of a bareboat charterer.
There shall be no option to purchase or other right to acquire a legal
or equitable ownership interest in the Vessel permitted or impled so
long as this Charter shall be in effect. Any contract or implied right
of Charterer to a legal or equitable interest in the Vessel made or
given while this Charter is in effect shall be void and unenforceable.
27. AMENDMENT.
This Charter shall be binding upon, in or to the benefit
of and enforceable by the parties hereto and their respective successors
and assigns. Neither this Charter nor any provision hereof may be
amended, modified, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement
of the amendment, modification, waiver, discharge or termination is
sought; provided that no such amendment, modification, waiver, discharge
or termination shall be made without the prior written consent of the
Vessel Lender.
28. APPLICABLE LAW.
This Charter shall be construed and governed in
accordance with the admiralty and maritime law of the United States of
America and where applicable the law of the State of New York (other
than the law of the State of New York governing choice of law).
29. NOTICES.
All notices or other communications by either party to
the other shall be in writing. If such notice is to the Charterer, it
shall be addressed to:
American President Lines, Ltd.
1111 Broadway
Oakland, CA 94607
Telephone: (510) 272-8000
Facsimile: (510) 272-8932
Telex: 671 4840
Answerback: APL OAK
Attention: Treasurer
If to Owner, it shall be addressed to:
APL Newbuildings, Ltd.
1111 Broadway
Oakland, CA 94607
Telephone: (510) 272-8000
Facsimile: (510) 272-8932
Telex: 671 4840
Answerback: APL OAK
Attention: Treasurer
Any notices or communications provided for herein shall
be deemed to have been given, unless otherwise expressly provided
herein, at the time of mailing when (in the case of telex) the
addressee's answerback shall have been received at the end of the
transmission thereof or (in the case of any letter) when
delivered to that address by facsimile or personally) or when
actually received by the relevant party after being deposited in
the post, first class, postage prepaid, in an envelope addressed
as above. Any party shall have the right to change the address
at which it is to receive notices upon fifteen (15) days prior
written notice.
30. CONSENT TO ASSIGNMENT.
Charterer hereby consents to the assignment of all of
Owner's rights, title and interest in and to this Charter to
[KfW] [Syndicate Agent or Syndicate Members] pursuant to the
[HDW] [Daewoo] Charter Assignment as security for the payment and
performance of the Owner Obligations with respect to the Vessel [and the
second priority security assignment of all such right, title and
interest in this KfW pursuant to the Second Charter Assignment, as
security for certain obligations of Owner to KfW under the Loan
Agreement] and agrees to make all payments due hereunder to the accounts
specified and otherwise in accordance with Section [5.06][5.07] of the
Loan Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Charter to be executed the day and year first above written.
OWNER
APL NEWBUILDINGS,
LTD.
By:
_________________________
Its:
_________________________
CHARTERER
AMERICAN PRESIDENT
LINES, LTD.
By:
_________________________
Its:
_________________________
RECEIPT OF ORIGINAL EXECUTED
COUNTERPART ACKNOWLEDGED:
[Name]
By:__________________________
EXHIBIT B-1 TO
THE AGREEMENT TO
ACQUIRE AND CHARTER
Kreditanstalt fur Wiederaufbau
Palmengartenstrasse 5-9
D - 60325 Frankfurt am Main
Date: 19
Re.: Container Vessel identified by Howaldtswerke-Deutsche Werft AG
(the "Builder") as Yard No. (297) (298) (299) ("the Vessel") -
B IV a F(W) 753
Dear Sirs,
We refer to an agreement ("the Acquisition Agreement") dated ( )
199_ and made between yourselves as Agent and Lender and ourselves as
Transferee. Terms defined in the Acquisition Agreement have the same
meanings herein.
In relation to the Vessel, we hereby confirm that we are ready to take
delivery of and accept the Vessel under the [Acquisition Agreement]
[Shipbuilding Agreement].
We also confirm that the Vessel is recommended for class " " with
The American Bureau of Shipping as per the photocopy or duplicate
provisional certificate attached hereto, and that there is no lien nor
encumbrance on the Vessel other than the lien in favor of the Builder in
respect of the final installment of the Contract Price under the
Shipbuilding Agreement in the amount of DM( ) for the
Vessel payable on delivery under the [Acquisition Agreement]
[Shipbuilding Agreement].
Yours faithfully,
for and on behalf of
APL NEWBUILDINGS, LTD.
EXHIBIT B-2
TO THE AGREEMENT TO
ACQUIRE AND CHARTER
Commerzbank AG
Ness 7-9
D-20457 Hamburg
Date: 19
Re.: Container Vessel identified by Daewoo Shipbuilding & Heavy
Machinery, Ltd. (the "Builder") as Yard No. ( ) ( )
( ) ("the Vessel")
Dear Sirs,
We refer to an agreement ("the Acquisition Agreement") dated ( )
199_ and made between yourselves as Syndicate Agent and ourselves as
Transferee. Terms defined in the Acquisition Agreement have the same
meanings herein.
In relation to the Vessel, we hereby confirm that we are ready to take
delivery of and accept the Vessel under the [Acquisition
Agreement][Shipbuilding Agreement].
We also confirm that the Vessel is recommended for class " " with
The American Bureau Shipping as per the photocopy or duplicate
provisional certificate attached hereto, and that there is no lien nor
encumbrance on the Vessel other than the lien in favor of the Builder in
respect of the final installment of the Contract Price under the
Shipbuilding Agreement in the amount of USD( ) for the
Vessel payable on delivery under the Shipbuilding Agreement.
Yours faithfully,
for and on behalf of
APL NEWBUILDINGS, LTD.
Exhibit C to
Agreement to
Acquire and Charter
[HDW] [DAEWOO] [SECOND] CHARTER ASSIGNMENT
FROM
APL NEWBUILDINGS, LTD., the Assignor
TO
[KREDITANSTALT FUR WIEDERAUFBAU, the Assignee]
[COMMERZBANK AG, HAMBURG, as Syndicate Agent, the Assignee]
Dated: __________, 19__
[HDW] [DAEWOO] [SECOND] CHARTER ASSIGNMENT
This [Second] Charter Assignment dated __________ __, 199_ is
made between (i) APL NEWBUILDINGS, LTD., a Nevada corporation (the
"Assignor") and (ii) KREDITANSTALT FUR WIEDERAUFBAU, a public law
company incorporated in the Federal Republic of Germany. [(ii)
COMMERZBANK AG, Hamburg, a banking corporation incorporated in the
Federal Republic of Germany.
W I T N E S S E T H:
WHEREAS, American President Lines, Ltd. ("APL") has
heretofore entered into that certain Loan Agreement dated ________, 1994
(the "Loan Agreement"), by and among APL, as Borrower, Kreditanstalt fur
Wiederaufbau ("KfW"), Commerzbank AG (Hamburg) (the Syndicate Agent),
and the banks listed on Schedule I thereto (each, a "Syndicate Member"
and, collectively, the "Syndicate"), as Lenders, with respect to the
purchase financing of six (6) container vessels, including the Vessel
described below, and American President Companies, Ltd. ("APC") has
heretofore entered into that certain Guarantee dated _______, 199_ (the
"Guarantee"), relating to APL's obligations under the Loan Agreement and
the Assignor's obligations under the Loan Agreement as established
pursuant to the below-defined Acquisition Agreement.
WHEREAS, the date hereof is the Delivery Date of the
below-described [HDW] [Daewoo] Vessel pursuant to the Loan Agreement;
WHEREAS, as contemplated by Section 7(k) of the Loan
Agreement, APL has entered into that certain Agreement to Acquire and
Charter (the "Acquisition Agreement") among the Assignor and the parties
to the Loan Agreement, pursuant to which APL has transferred to the
Assignor, and the Assignor has accepted title to, and is currently the
disponent owner of, the Republic of The Marshall Islands flag vessel
PRESIDENT _______________, Official Number __________ (the "Vessel"),
and the Assignor has undertaken all of the payment and certain of the
performance obligations relating to Vessel Indebtedness in respect of
the Vessel under the Loan Agreement, (the "Owner Obligations");
WHEREAS, pursuant to the Acquisition Agreement, APL is
permitted, at its option, to transfer to the Assignor, and the Assignor
has agreed, at its option, to accept, title to any and all of the other
[HDW] [Daewoo] Vessels (each of such other [HDW] [Daewoo] Vessels which
is so transferred together with the above-referenced Vessel, referred to
individually herein as a "Vessel" and collectively as the "Vessels", on
their respective Delivery Dates pursuant to the Loan Agreement;
WHEREAS, the Assignor has simultaneously herewith entered
into a First Mortgage on the Vessel in favor of [KfW] the Syndicate
and/or Agent or the Syndicate Members (the "Vessel Lender") [and has
also entered into a Second Mortgage on the Vessel in favor of KfW], as
security for the Owner Obligations in respect of the Vessel, and the
Assignor shall, upon their respective Delivery Dates, enter into a First
Mortgage in such form in favor of the Vessel Lender [and a Second
Mortgage thereon in favor of KfW with respect to each of the other
Vessels];
WHEREAS, as contemplated by Section 9.02(h) of the Loan
Agreement and by the Acquisition Agreement, as a condition to the
transfer of the Vessel and any other Vessels pursuant to the Acquisition
Agreement, the Assignor has let and demised the Vessel to American
President Lines, Ltd. as charterer, ("the Charterer") and Charterer has
hired the Vessel from the Assignor on the terms and conditions set forth
in the [HDW] [Daewoo] Charter, dated the date hereof, such charter of
the Vessel being effective upon the execution and delivery of the
Charter;
WHEREAS, as further contemplated by the Acquisition
Agreement, as further conditions to the transfer of the Vessel and the
other Vessels pursuant to the Acquisition Agreement the Assignor is
entering into this [Second] Charter Assignment relating to the [HDW]
[Daewoo] Charter in favor of the Vessel Lender [and the Second Charter
Assignment of the Daewoo Charter in favor of KfW], and the Charterer is
consenting to such Charter Assignment and such Second Charter Assignment
pursuant to the [HDW] [Daewoo] Charter;
WHEREAS, capitalized terms used herein but not defined
herein shall have the meanings assigned to them in the Loan Agreement
and the Acquisition Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Assignor hereby sells, pledges, hypothecates, assigns,
transfers and sets over unto the Assignee and unto the Assignee's
successors and assigns, not absolutely but as security only for the
performance by the Assignor of the Owner Obligations, and grants to the
Assignee a first priority security interest [second priority security
interest] in all right, title and interest of the Assignor in and to the
[HDW] [Daewoo] Charter, all monies due and to become due and claims for
monies due and to become due, and all claims for damages arising out of
the breach of, the [HDW] [Daewoo] Charter, together with any extensions,
renewals, modifications, changes or amendments of the
[HDW] [Daewoo] Charter and any and all proceeds of the foregoing.
2. The Assignor hereby agrees, represents and warrants that:
(a) The [HDW] [Daewoo] Charter is in full force and
effect and enforceable in accordance with its terms;
(b) The Assignor is not in default of any of the terms
of the [HDW] [Daewoo] Charter;
(c) Neither the whole nor any part of the right, title
and interest hereby assigned are the subject of any present assignment
or pledge other than the assignment contained herein [and the Second
Charter Assignment in favor of KfW], and so long as this Charter
Assignment [Second Charter Assignment] shall remain in effect, the
Assignor will not, without the prior written consent thereto of the
Assignee and, assign or pledge the whole or any part of the right, title
and interest hereby assigned to anyone other than the Assignee, its
successors or assigns;
(d) The Assignor will not take or omit to take any
action, the taking or omission of which might result in any alteration
or impairment of the [HDW] [Daewoo] Charter or this Charter Assignment
[Second Charter Assignment] or any of the rights created by the [HDW]
[Daewoo] Charter or this Charter Assignment [Second Charter Assignment];
(e) To the knowledge of the Assignor, the Charterer is
not in default of any of the terms of the [HDW] [Daewoo] Charter;
(f) [Subject to the rights of the Assignee under the
Charter Assignment] [The] Assignor will not enter into or consent to any
amendment, modification or other alteration of the [HDW] [Daewoo]
Charter without first obtaining the prior written consent of the
Assignee. Any amendment, modification or other alteration made without
the written consent of the Assignee shall be null and void.
3. Notwithstanding this Assignment, it is acknowledged,
understood and agreed that:
(a) The Assignor will remain liable to perform all of
the owner's obligations and duties under the [HDW] [Daewoo] Charter.
(b) The Assignor will be deemed the owner under the
[HDW] [Daewoo] Charter except as expressly set forth herein.
(c) The Assignee shall have no obligation or liability
under or pursuant to the [HDW] [Daewoo] Charter by reason of or arising
out of this Assignment, nor to present or file any claim, nor to take
any other action to collect or enforce the performance obligations of
the Charterer or payment of any amounts which have been assigned to them
or to which they may be entitled under this Charter Assignment [Second
Charter Assignment] at any time or times;
(d) So long as no Event of Default (as that term is
defined in the Loan Agreement and the First Mortgage [the Second
Mortgage]) has occurred, is continuing and shall not have been cured and
waived, neither the Assignee, the Assignor nor any successor thereof
shall interfere with the Charterer's possession and its peaceful and
quiet enjoyment of the Vessel.
4. The Assignor confirms to the Assignee its authorization and
direction to the Charterer in the [HDW] [Daewoo] Charter to make payment
of all monies due and to become due under or arising out of the [HDW]
[Daewoo] Charter at the time and in the manner set forth in Section 2(b)
of the [HDW] [Daewoo] Charter.
5. The Assignor does hereby constitute the Assignee, its
successors and assigns, the Assignor's true and lawful attorneys,
irrevocably, with full power (in the name of the Assignor or otherwise),
upon an Event of Default under the Loan Agreement or the First Mortgage
[the Second Mortgage], and in accordance therewith, to ask, require,
demand, receive, compound and give acquittance for any and all monies,
and claims for monies and rights hereby assigned, to endorse any checks
or other instruments or orders in connection therewith and to file any
claims or take any action or institute any proceedings which the
Assignee may deem to be necessary or advisable in the premises.
6. The Assignor hereby irrevocably authorizes the Assignee, at
the Assignor's expense, to file such financing and continuation
statements relating to this Charter Assignment [Second Charter
Assignment] without the Assignor's signature, as the Assignee at its
option may deem appropriate and appoints the Assignee as the Assignor's
attorney-in-fact to execute any such statements in the Assignor's name
and to perform all other acts which the Assignee may deem appropriate to
perfect and continue the security interest conferred hereby.
7. The assignment of the [HDW] [Daewoo] Charter to the Assignee
provided for herein shall take effect immediately upon the execution
hereof and the powers and authorities granted to the Assignee, its
successors or assigns herein, having been given for valuable
consideration, are hereby declared to be irrevocable.
8. The Assignor hereby agrees that at any time and from time to
time, upon the written request of the Assignee, its successors and
assigns, it will promptly and duly execute and deliver any and all such
further instruments and documents as the Assignee, its successors or
assigns, may reasonably require in order to obtain the full benefits of
this Second Charter Assignment and of the rights and powers herein
granted.
9. This [Second] Charter Assignment shall be governed by the
laws of the State of New York (other than the law of the State of New
York governing choice of law) and may not be amended or changed except
by an instrument in writing signed by the party against whom enforcement
is sought.
10. The Assignor hereby authorizes the Assignee to execute and file
financing statements and amendments thereto as provided in Article 9 of
the Uniform Commercial Code.
IN WITNESS WHEREOF, the Assignor has caused this
instrument to be duly executed as of the day and year first above
written.
By:
__________________________
Title:
SCHEDULE 1
NAMES AND ADDRESSES OF SYNDICATE MEMBERS
Syndicate Member Address
Commerzbank AG (Kiel Branch) Holstenstrasse 64
D-24103 Kiel
Federal Republic of Germany
Attention: Mr. Claes
Telex: 292898 CBKD
Telecopy: 49-431-9974-372
Dresdner Bank AG in Hamburg Jungfernstieg 22
D-20354 Hamburg
Federal Republic of Germany
Attention: Mr. Roller
Mr.
Bottcher
Telex: 2157170 DR D
Telecopy: 49-40-3501-3818
Vereins- und Westbank AG Alter Wall 22
D-20457 Hamburg
Federal Republic of Germany
Attention: Mr. Kopcke
Mrs.
Mertens
Telex: 215164 VH D
Telecopy: 49-40-3692-3696
Deutsche Schiffsbank AG Domshof 17
D-28195 Bremen
Federal Republic of Germany
Attention: Mr. Pieper
Mr. Onnen
Telex: 244870 DSBR D
Telecopy: 49-421-323539
Norddeutsche Landesbank - Georgsplatz 1
Girozentrale D-30159 Hannover
Federal Republic of Germany
Attention: Mr. Hartmann
Telex: 921634 GZH D
Telecopy: 49 511 36 14785
Deutsche Verkehrs-Bank AG Filiale Hamburg
Ballindamm 6
D-20095 Hamburg
Federal Republic of Germany
Attention: Mr. Spincke
Telex: 402077 DVB
Telecopy: 49-40-308004-12
Banque Internationale a
Luxembourg S.A. 2 Boulevard Royal
L-2953 Luxembourg
Attention: Mr. Jean Pierre
Vernier
Telex: 3326 BIL LU
Telecopy: 35-2-4590-2010
SCHEDULE 1
NAMES AND ADDRESSES OF SYNDICATE MEMBERS
Syndicate Member Address
Commerzbank AG (Kiel Branch) Holstenstrasse 64
D-24103 Kiel
Federal Republic of Germany
Attention: Mr. Claes
Telex: 292898 CBKD
Telecopy: 49-431-9974-372
Dresdner Bank AG in Hamburg Jungfernstieg 22
D-20354 Hamburg
Federal Republic of Germany
Attention: Mr. Roller
Mr.
Bottcher
Telex: 2157170 DR D
Telecopy: 49-40-3501-3818
Vereins- und Westbank AG Alter Wall 22
D-20457 Hamburg
Federal Republic of Germany
Attention: Mr. Kopcke
Mrs.
Mertens
Telex: 215164 VH D
Telecopy: 49-40-3692-3696
Deutsche Schiffsbank AG Domshof 17
D-28195 Bremen
Federal Republic of Germany
Attention: Mr. Pieper
Mr. Onnen
Telex: 244870 DSBR D
Telecopy: 49-421-323539
Norddeutsche Landesbank - Georgsplatz 1
Girozentrale D-30159 Hannover
Federal Republic of Germany
Attention: Mr. Hartmann
Telex: 921634 GZH D
Telecopy: 49 511 36 14785
Deutsche Verkehrs-Bank AG Filiale Hamburg
Ballindamm 6
D-20095 Hamburg
Federal Republic of Germany
Attention: Mr. Spincke
Telex: 402077 DVB
Telecopy: 49-40-308004-12
Banque Internationale a
Luxembourg S.A. 2 Boulevard Royal
L-2953 Luxembourg
Attention: Mr. Jean Pierre
Vernier
Telex: 3326 BIL LU
Telecopy: 35-2-4590-2010
SCHEDULE 2A
Kreditanstalt fur Wiederaufbau
Palmengartenstrasse 5 - 9
D - 60325 Frankfurt am Main
Date: 199_
Re: Notice of Drawdown in respect of container vessel
"President " identified by Howaldtswerke-Deutsche Werft
AG as Yard No. (297) (298) (299)
Loan No.: F(W)
Dear Sirs,
We refer to the Loan Agreement dated 1994 made between
ourselves and yourselves as the Agent and Lender. Terms defined in the
Loan Agreement shall have the same meaning in this Notice.
We hereby give you notice that, pursuant to Section 2.01(b) of the Loan
Agreement and on (date of proposed advance), we propose to drawdown the
HDW Subportion (A) (B) (C) in the sum of US$( ) upon the
terms and subject to the conditions contained therein.
We hereby request you to make the Advance in respect of HDW Subportion
(A) (B) (C) by paying the following sum(s) to the following account(s)
in order to finance such amount of the Contract Price paid or payable by
us to the Builder under the HDW Shipbuilding Agreement, provided for
under Section 2.01(a) of the Loan Agreement:
Account Bank Beneficiary Amount
No. US$
Yours faithfully,
AMERICAN PRESIDENT LINES, LTD.
By
Title:
SCHEDULE 2B
Commerzbank AG
Ness 7-9
D-20457 HamburgDate: 199__
Re.: Notice of Drawdown in respect of container vessel
"President " identified by Daewoo Shipbuilding
& Heavy Machinery, Ltd. as Yard No.
Dear Sirs,
We refer to the Loan Agreement dated 1994 made between
ourselves and yourselves as the Syndicate Agent. Terms defined in the
Loan Agreement shall have the same meaning in this Notice.
We hereby give you notice that, pursuant to Section 2.02(b) of the Loan
Agreement and on (date of proposed advance), we propose to drawdown the
Daewoo Subportion (A) (B) (C) in the sum of US$( ) upon the terms and
subject to the conditions contained therein.
We hereby request you to make the Advance in respect of HDW Subportion
(A) (B) (C) by paying the following sum(s) to the following account(s)
in order to finance such amount of the Contract Price paid or payable by
us to the Builder under the Daewoo Shipbuilding Agreement as provided
for under Section 2.02(a) of the Loan Agreement:
Account Bank Beneficiary Amount
No. US$
Yours faithfully,
AMERICAN PRESIDENT LINES, LTD.
SCHEDULE 3
MAXIMUM AGGREGATE AMOUNTS AND PERCENTAGE INTERESTS OF
EACH SYNDICATE MEMBER FOR EACH OF THE DAEWOO SUBPORTIONS
Syndicate Member Aggregate Amount Percentage
Interest
*
SCHEDULE 4-A
FORM OF OPINION OF LILLICK & CHARLES
[ ] ,
199_
TO THE PARTIES SET FORTH ON
SCHEDULE A ATTACHED HERETO
Re: American President Lines, Ltd.
Dear Sirs:
We have acted as special counsel to American President
Lines, Ltd. ("APL"), a Delaware corporation, APL Newbuildings, Ltd., a
Nevada corporation and American President Companies, Ltd., a Delaware
corporation (together, the "AP Companies"), in connection with the
purchase financing and chartering of six container vessels pursuant to
the Loan Agreement dated __________, 1994 (the "Loan Agreement") by and
among APL, Kreditanstalt fur Wiederaufbau, Commerzbank AG (Kiel Branch),
Dresdner Bank AG in Hamburg, Vereins-und Westbank AG, Deutsche
Schiffsbank AG, Norddeutsche Landesbank-Girozentrale, Deutsche Verkehrs-
Bank AG, Banque Internationale a Luxembourg S.A. and Commerzbank AG,
Hamburg, and an Agreement to Acquire and Charter dated ______________,
1994 (the "Acquisition Agreement") by and among APL, APL Newbuildings,
Ltd., Kreditanstalt fur Wiederaufbau, Commerzbank AG (Kiel Branch),
Dresdner Bank AG in Hamburg, Vereins-und Westbank AG, Deutsche
Schiffsbank AG, Norddeutsche Landesbank-Girozentrale, Deutsche Verkehrs-
Bank AG, Banque Internationale a Luxembourg S.A. and Commerzbank AG,
Hamburg. Capitalized terms used herein and not defined shall have the
meanings ascribed to them in the Loan Agreement.
In this connection, we have examined originals or
photostatic or certified copies of the Loan Documents, Charter Documents
and all such other corporate documents and such certificates or
comparable documents of public officials as we have deemed relevant and
necessary for the basis of our opinions hereinafter set forth. In such
examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the
conformity with the original documents submitted to us as copies and the
authenticity of the originals of such latter documents. As to any
question of fact material to the opinions expressed in this letter where
factual matters have not been independently established, we have relied
upon certificates of the AP Companies and we have not independently
verified such factual matters.
Our opinion is limited to the federal laws of the United
States of America, the General Corporation law of the State of Delaware,
[Nevada corporate law] and the internal laws of the States of New York
and California, and we express no opinion as to the effect on the
matters covered by this opinion of the laws of any other jurisdiction.
In rendering these opinions, we have examined and relied on the opinion
of Peter A.V. Huegel, Senior Counsel of the AP Companies, dated the date
hereof and delivered to you pursuant to Section 7(s) of the Loan
Agreement.
Based upon the foregoing, and subject to the
qualifications expressed herein, we are of the opinion that:
1. Each of the AP Companies is a duly incorporated
and validly existing corporation in good standing under the laws of its
jurisdiction of incorporation and has full corporate authority to enter
into the Loan Documents and Charter Documents to which it is a party,
and to perform all obligations under the relevant Loan Documents and
Charter Documents to be performed by it.
2. Each of the Loan Documents and Charter Documents
has been duly authorized by all necessary corporate action on the part
of the AP Companies party thereto, and has been duly executed and
delivered by each of the AP Companies party thereto, and each of the
Loan Documents and Charter Documents constitutes the legal, valid and
binding obligation of each of the AP Companies, party thereto,
enforceable against such AP Company in accordance with its terms, except
as to enforceability as limited by applicable bankruptcy, fraudulent
conveyance, insolvency, moratorium, reorganization and similar laws
affecting the rights of creditors, and except as limited by equitable
principles of general application, including, without limitation
concepts of materiality, reasonableness, good faith and fair dealing,
public policy and the possible unavailability of specific performance or
injunctive relief (regardless of whether such enforceability is
considered in a proceeding in equity or at law), and no opinion is
expressed herein as to the specific remedy that any court, other
governmental authority or arbitrator may grant, impose or render.
3. The execution and delivery by each of the AP
Companies of each of the Loan Documents and Charter Documents, to which
it is a party, and the performance by such AP Company of its obligations
thereunder, will not contravene any applicable law, ordinance, order,
rule or regulation or any provision of such AP Company's articles of
incorporation or bylaws.
4. No approval, consent or permission of, or filing,
registration or qualification with, any governmental authority of the
United States of America or the States of New York and California is
required in connection with the execution or delivery by any of the AP
Company of the Loan Documents and Charter Documents, to which it is a
party, or the performance by any of the AP Companies, of its obligations
under the Loan Documents and Charter Documents, to which it is a party
other than (a) any such approvals, consents or permissions which have
been previously obtained and which are in full force and effect and (b)
routine permits from, inspections by, and filings with, governmental
authorities that are required or will be required from time to time in
connection with the operation of the Vessel.
5. The Mortgage with respect to the Vessel [insert
name of Vessel] has been duly received for record and has been duly
recorded at [ ] on the date hereof, all in accordance with the
laws of the Republic of The Marshall Islands, and constitutes a first
"preferred mortgage" within the meaning of Section 31301(6)(B) of Title
46 of the United States Code, entitled to the benefits accorded a
preferred mortgage on a foreign vessel under Sections 31325 and 31326 of
Title 46. Sections 31325 and 31326 of Title 46 have replaced subsections
(K), (L), (M) and (N) of the United States Ship Mortgage Act of 1920, as
amended.
[Similar opinion to be added for Second Mortgage in the
case of a Daewoo Vessel.]
6. On the Delivery Date, the Vessel is free and clear
of any liens other than liens permitted pursuant to Section 14 of the
Mortgage; and except for the documentation of the Vessel in the name of
the Borrower which is the owner of the Vessel, under the laws and
regulations of the
[ ], which has duly occurred and is in full force and effect,
there is no other filing, documentation, registration or other action
required or advisable in order to perfect title to the Vessel in the
Borrower as against any third parties.
7. The Charter Assignment creates the security
interest it purports to create in the [HDW][Daewoo] Charter covering the
Vessel and no filings, recordings, notices or other actions are
necessary or advisable in order to perfect such security interest except
as follows: in the case of the Charter Assignment, the filing of
Uniform Commercial Code Financing Statements in the States of California
[and_____] which filings have been made.
[Similar opinion to be added covering the Second Charter
Assignment in the case of a Daewoo Vessel.]
8. No taxes, liability for the payment of which has
been incurred by any of the AP Companies are payable in connection with
the execution and delivery of the Loan Documents other than the filing
fees payable in connection with the filing and recording of the Mortgage
[and the Second Mortgage.], [except for taxes that have been paid];
provided, however, that no opinion is given with respect to taxes based
on or measured by income or withholding taxes.
The opinions set forth above are subject to the following
qualifications.
a. For purposes of the opinion set forth in clause 6,
we have relied solely on the opinion of counsel in the Republic of The
Marshall Islands with respect to the records regarding recordation of
mortgages and other liens of the Republic of The Marshall Islands, and
on the representations of APL set forth in Section 8 of the Loan
Agreement.
b. For the purposes of the opinion set forth in
clauses 5 and 6, we have relied solely on the opinion of [counsel in the
Republic of The Marshall Islands] as to the due execution of the
Mortgage, the due documentation of the Vessel, and the due registration
of the Mortgage, all under the laws of the Republic of The Marshall
Islands.
c. For the purposes of the opinion set forth in
clause 2, we have assumed the due authentication, execution and delivery
of the Loan Documents and Charter Documents by all non-AP Companies
parties thereto.
d. This opinion is limited to the matters stated
herein and no opinion is implied or may be inferred beyond the matters
expressly stated. The opinions expressed above are based solely on
applicable laws, statutes, ordinances, rules and regulations and facts,
all as in existence on this date, and we assume no obligation to update
or supplement such opinions to reflect any facts or circumstances which
may hereafter come to our attention or any changes in applicable laws,
statutes, ordinances, rules, regulations or facts which may hereafter
occur.
e. This opinion is rendered as of the date hereof and
is being issued solely for the benefit of the addressees hereto, and may
not be relied upon, or used for any purpose, by any other Person without
our prior written consent other than P.A.V. Huegel, Senior Counsel of
the AP Companies in connection with his opinion rendered to you pursuant
to Section 7(s) of the Loan Agreement.
Very truly yours,
LILLICK & CHARLES
By
SCHEDULE A
KREDITANSTALT FUR WIEDERAUFBAU
COMMERZBANK AG (KIEL BRANCH)
DRESDNER BANK AG IN HAMBURG
VEREINS- UND WESTBANK AG
DEUTSCHE SCHIFFSBANK AG
COMMERZBANK AG, HAMBURG
NORDDEUTSCHE LANDESBANK-GIROZENTRALE
DEUTSCHE VERKEHRS-BANK AG
BANQUE INTERNATIONALE A LUXEMBOURG S.A.
SCHEDULE 4-B
FORM OF OPINION OF IN-HOUSE COUNSEL
[ ] ,
199_
TO THE PARTIES SET FORTH ON
SCHEDULE A ATTACHED HERETO
Re: American President Lines, Ltd.
Dear Sirs:
I am senior counsel to American President Lines, Ltd.
("APL"), a Delaware corporation, APL Newbuildings, Ltd., a Nevada
corporation and American President Companies, Ltd., a Delaware
corporation (together, the "AP Companies") and I render this opinion in
connection with the purchase financing [and chartering] of six container
vessels pursuant to the Loan Agreement dated ____________, 1994 (the
"Loan Agreement") by and among APL, Kreditanstalt fur Wiederaufbau,
Commerzbank AG (Kiel Branch), Dresdner Bank AG in Hamburg, Vereins-und
Westbank AG, Deutsche Schiffsbank AG, Norddeutsche Landesbank-
Girozentrale, Deutsche Verkehrs-Bank AG, Banque Internationale a
Luxembourg S.A. and Commerzbank AG, Hamburg, and an Agreement to Acquire
and Charter dated ___________, 1994 (the "Acquisition Agreement") by and
among APL, APL Newbuildings, Ltd., Kreditanstalt fur Wiederaufbau,
Commerzbank AG (Kiel Branch), Dresdner Bank AG in Hamburg, Vereins-und
Westbank AG, Deutsche Schiffsbank AG, Norddeutsche Landesbank-
Girozentrale, Deutsche Verkehrs-Bank AG, Banque Internationale a
Luxembourg S.A. and Commerzbank AG, Hamburg. Capitalized terms used
herein and not defined shall have the meanings ascribed to them in the
Loan Agreement.
In this connection, I have examined originals or
photostatic or certified copies of the Loan Documents, the Charter
Documents and all such other corporate documents and such certificates
or comparable documents of public officials as I have deemed relevant
and necessary for the basis of my opinions hereinafter set forth. In
such examination, I have assumed the genuineness of all signatures, the
authenticity of all documents submitted to me as originals, the
conformity with the originals of all documents submitted to me as copies
and the authenticity of the originals of such latter documents. As to
any question of fact material to the opinions expressed in this letter,
where factual matters have not been independently established. I have
relied upon certificates of officers of the AP Companies, and I have not
independently verified such factual matters.
I am an active member of the bar of the State of
California only and the opinions expressed herein are limited to the
laws of the State of California, the federal laws of the United States
of America, [Nevada corporate law] and the General Corporation Law of
the State of Delaware. Insofar as my opinions given herein relate to
(i) Nevada corporate law or (ii) the admiralty or maritime laws or
regulations of any jurisdiction, I have relied upon the opinion of this
date given to you by the law firms of ____________________ and Lillick &
Charles, respectively. In connection with my opinions given in
paragraphs 6 and 7 below, I have relied upon the representations of
other officers of the AP Companies.
I note that the "governing law" provision in the Loan
Documents (other than the Mortgages) and the Charter Documents provides
that the laws of the State of New York are to govern. In my opinion a
court applying California conflict of laws rules would give effect to
such choice of New York law; however, I express no opinion as to what
law a court applying any other State's conflict of laws rules would
apply.
Based upon the foregoing, and subject to the
qualifications set forth herein, I am of the opinion that:
1. Each of the AP Companies is a duly incorporated
and validly existing corporation in good standing under the laws of its
jurisdiction of incorporation and has full corporate authority to enter
into the Loan Documents and the Charter Documents to which it is a
party, and to perform all obligations under the relevant Loan Documents
and Charter Documents to be performed by it.
2. Each of the Loan Documents and the Charter
Documents has been duly authorized by all necessary corporate action on
the part of the AP Companies party thereto, and has been duly, executed
and delivered by each of the AP Companies party thereto, and each of the
Loan Documents constitutes the legal, valid and binding obligation of
each of the AP Companies, party thereto, enforceable against such AP
Company in accordance with its terms, except as limited by applicable
bankruptcy, fraudulent conveyance, insolvency, moratorium,
reorganization and similar laws affecting the rights of creditors and
except as limited by equitable principles of general application,
including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing, public policy and possible unavailability
of the remedy of specific performance or injunctive relief (regardless
of whether such enforceability is considered in a proceeding in equity
or at law), and no opinion is expressed herein as to the specific remedy
that any court or other governmental authority, or arbitration can
grant, impose or render.
3. The execution and delivery by each of the AP
Companies of each of the Loan Documents and the Charter Documents to
which it is a party, and the performance by such AP Company of its
obligations thereunder, will not contravene any provision of such AP
Company's articles of incorporation or bylaws, and, to the best of my
knowledge, will not conflict with, result in a breach of or constitute a
default under, any indenture, mortgage, loan agreement, deed of trust or
other instrument of indebtedness to which such AP Company is subject or
by which such AP Company or any of the property of such AP Company is
bound, and will not result in the creation or imposition of a lien upon
any asset of such AP Company (other than liens contemplated by or
created pursuant to the Loan Documents and the Charter Documents)
resulting from any act of or claim against such AP Company.
4. No actions, suits, investigations or other
proceedings against any of the AP Companies are pending or, on the basis
of my current actual knowledge, threatened against any of the AP
Companies which, if determined adversely to any of the AP Companies,
would materially adversely affect such AP Company's ability to perform
its obligations under the Loan Documents and the Charter Documents to
which it is a party.
5. No approval, consent or permission of, or filing,
registration or qualification with, any governmental authority of the
United States of America or the States of Delaware, Nevada or California
is required in connection with the execution or delivery by any AP
Company of the Loan Documents and the Charter Documents to which it is a
party, or the performance by any AP Company, of its obligations under
the Loan Documents and the Charter Documents to which it is a party,
other than (i) any such approvals, consents or permissions which have
been previously obtained and which are in full force and effect, and
(ii) routine permits from, inspections by and filings with, governmental
authorities that are required or will be required from time to time in
connection with the operation of the Vessel.
6. All taxes (other than taxes based on or measured
by income or withholding taxes), liability for the payment of which has
been incurred by an AP Company in connection with the execution,
delivery and performance by it of each Loan Document and the Charter
Documents to which it is or will be a party, have been paid (or provided
for in its accounts if not payable on or prior to the Delivery Date of
the Vessel [insert Vessel's name].
7. None of the proceeds of the Facility will be used
to purchase or carry margin stock within the meanings of Regulations G,
T, U and X of the Board of Governors of the Federal Reserve System. APL
is not engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock within the meaning of Regulations G,
T, U or X of the Board of Governors of the Federal Reserve System.
8. APL is not an "investment company" or a company
"controlled" by an "investment company" (as each of such terms is
defined or used in the Investment Company Act of 1940, as amended).
The opinions set forth above are subject to the following
qualifications.
a. For the purpose of the opinion set forth in clause
2, we have assumed the due authorization, execution and delivery of the
Loan Documents and the Charter Documents by all non-AP Companies parties
thereto.
b. This opinion is limited to the matters stated
herein and no opinion is implied or may be inferred beyond the matters
expressly stated. The opinions expressed above are based solely on
applicable laws, statutes, ordinances, rules and regulations and facts,
all as in existence on this date, and I assume no obligation to update
or supplement such opinions to reflect any facts or circumstances which
may hereafter come to my attention or any changes in applicable laws,
statutes, ordinances, rules, regulations or facts which may hereafter
occur.
c. This opinion is rendered as of the date hereof and
being issued solely for the benefit of the addressees hereto, and may
not be relied upon, or used for any purpose, by any other Person without
my prior written consent other than Lillick & Charles in connection with
their opinion rendered to you pursuant to Section 7(s) of the Loan
Agreement.
Very truly
yours,
SCHEDULE A
KREDITANSTALT FUR WIEDERAUFBAU
COMMERZBANK AG (KIEL BRANCH)
DRESDNER BANK AG IN HAMBURG
VEREINS- UND WESTBANK AG
DEUTSCHE SCHIFFSBANK AG
COMMERZBANK AG, HAMBURG
NORDDEUTSCHE LANDESBANK-GIROZENTRALE
DEUTSCHE VERKEHRS-BANK AG
BANQUE INTERNATIONALE A LUXEMBOURG S.A.
SCHEDULE 5A
Kreditanstalt fur Wiederaufbau
Palmengartenstrasse 5-9
D- 60325 Frankfurt am Main
Date: 19
Re.: Container Vessel " " identified by us as Yard
No. (297) (298) (299) ("the Vessel") - B IV a F(W) 753
Dear Sirs,
We refer to the Shipbuilding Agreement between ourselves as "the
Builder" and American President Lines Ltd. as "the Purchaser" contained
in a shipbuilding agreement dated May 10, 1993 made between the
Purchaser of the first part and ourselves of the other part [, as
amended,] ("the Contract") concerning the construction and supply of the
Vessel. Please find enclosed a true copy of the Builder's Certificate
relating to the Vessel.
In relation to the Vessel, we hereby confirm that:
(a) we have received payment of all sums due to us under the Contract
other than the sum of DM ( ) which is now due
to us;
(b) the definite contract price for the Vessel under the Contract is
DM ( );
(c) the Vessel is ready for delivery and acceptance by the Purchaser
under the Contract and is free from any lien or encumbrance other
than (i) our lien in respect of the said sum of DM ( )
payable on delivery which will be automatically discharged upon
payment of such sum, and
(d) we will deliver the Vessel to the Purchaser upon receipt of the
above amount and upon advice from the Purchaser that it is ready
to accept such delivery and to that end we enclose an undated
Protocol of Delivery and Acceptance Certificate signed by
ourselves which may be dated and delivered by you upon such
receipt and advice.
We also enclose a copy of an invoice relating to the total purchase
price of the Vessel.
Yours faithfully,
for and on behalf of
HOWALDTSWERKE-DEUTSCHE WERFT AG
Director
SCHEDULE 5B
Commerzbank AG
Ness 7-9
D - 20457 Hamburg
Date: 19
Re: Container Vessel " " identified by us as
Yard No. ( ) ( ) ( ) ("the Vessel")
Dear Sirs,
We refer to the Shipbuilding Agreement between ourselves as "the
Builder" and American President Lines Ltd. as "the Purchaser" contained
in a shipbuilding agreement date May 10, 1993 made between the Purchaser
of the first part and ourselves of the other part [, as amended,] ("the
Contract") concerning the construction and supply of the Vessel. Please
find enclosed a true copy of the Builder's Certificate relating to the
Vessel.
In relation to the Vessel, we hereby confirm that:
(a) we have received payment of all sums due to us under the Contract
other than the sum of USD ( ) which is now due
to us;
(b) the definite contract price for the Vessel under the Contract is
USD ( );
(c) the Vessel is ready for delivery and acceptance by the Purchaser
under the Contract and is free from any lien or encumbrance other
than (i) our lien in respect of the said sum of USD ( )
payable on delivery which will be automatically discharged upon
payment of such sum, and
(d) we will deliver the Vessel to the Purchaser upon receipt of the
above amount and upon advice from the Purchaser that it is ready
to accept such delivery and to that end we enclose an undated
Protocol of Delivery and Acceptance Certificate signed by
ourselves which may be dated and delivered by you upon such
receipt and advice.
We also enclose a copy of an invoice relating to the total purchase
price of the Vessel.
Yours faithfully,
for and on behalf of
DAEWOO SHIPBUILDING & HEAVY MACHINERY, LTD.
Director
SCHEDULE 5C
Kreditanstalt fur Wiederaufbau
Palmengartenstrasse 5-9
D - 60325 Frankfurt am Main
Date: 19
Re.: Container Vessel identified by Howaldtswerke-Deutsche Werft AG as
Yard No. (297) (298) (299) ("the Vessel") -B IV a F(W) 753
Dear Sirs,
We refer to an agreement ("the Loan Agreement") dated ( ) 1994 and
made between yourselves as Agent and Lender and ourselves as Borrower.
Terms defined in the Loan Agreement have the same meanings herein.
In relation to the Vessel, we hereby confirm that we are ready to take
delivery of and accept the Vessel under the Shipbuilding Agreement.
We also confirm that the Vessel is recommended for class " " with
The American Bureau of Shipping as per the photocopy or duplicate
provisional certificate attached hereto, and that there is no lien nor
encumbrance on the Vessel other than the lien in favor of the Builder in
respect of the final installment of the Contract Price under the
Shipbuilding Agreement in the amount of DM( ) for the
Vessel payable on delivery under the Shipbuilding Agreement.
Yours faithfully,
for and on behalf of
AMERICAN PRESIDENT LINES, LTD.
SCHEDULE 5D
Commerzbank AG
Ness 7-9
D-20457 Hamburg
Date: 19
Re.: Container Vessel identified by Daewoo Shipbuilding & Heavy
Machinery, Ltd. as Yard No. ( ) ( ) ( ) ("the
Vessel")
Dear Sirs,
We refer to an agreement ("the Loan Agreement") dated ( ) 1994
and made between yourselves as Syndicate Agent and ourselves as
Borrower. Terms defined in the Loan Agreement have the same meanings
herein.
In relation to the Vessel, we hereby confirm that we are ready to take
delivery of and accept the Vessel under the Shipbuilding Agreement.
We also confirm that the Vessel is recommended for class " " with
The American Bureau of Shipping as per the photocopy or duplicate
provisional certificate attached hereto, and that there is no lien nor
encumbrance on the Vessel other than the lien in favor of the Builder in
respect of the final installment of the Contract Price under the
Shipbuilding Agreement in the amount of USD( ) for the
Vessel payable on delivery under the Shipbuilding Agreement.
Yours faithfully,
for and on behalf of
AMERICAN PRESIDENT LINES, LTD.
SCHEDULE 6A*
SCHEDULE 6B
Daewoo Scheduled Installments
(amounts per $1,000,000 of initial value of each relevant subportion)
Semi-Annual Payment Due at Principal Balance
Period # End of Period Remaining at End of Period
*
SCHEDULE 7
NAMES AND ADDRESSES OF PROCESS AGENTS
Party Name and Address of
Process Agents
American President Lines, Ltd. Lillick & Charles
Two Embarcadero
Center, 27th
Flr.
San Francisco,
California
94111
Attention: Donald T.
Gray,
Esq.
APL Newbuildings, Ltd. Lillick & Charles
Two Embarcadero
Center, 27th
Flr.
San Francisco,
California
94111
Attention: Donald
T. Gray,
Esq.
American President Companies, Ltd. Lillick & Charles
Two Embarcadero
Center, 27th
Flr.
San Francisco,
California
94111
Attention: Donald
T. Gray,
Esq.
Kreditanstalt fur
Wiederaufbau Haight, Gardner,
Poor & Havens
195 Broadway
New York, New York
10007
Attention: Thomas
J. Whalen,
Esq.
Commerzbank AG, Hamburg Haight, Gardner,
Poor & Havens
195 Broadway
New York, New York
10007
Attention: Thomas
J. Whalen,
Esq.
Commerzbank AG, (Kiel Branch) Haight, Gardner,
Poor & Havens
195 Broadway
New York, New York
10007
Attention: Thomas
J. Whalen,
Esq.
Dresdner Bank AG in Hamburg Haight, Gardner,
Poor & Havens
195 Broadway
New York, New York
10007
Attention: Thomas
J. Whalen,
Esq.
Vereins- und Westbank AG Haight, Gardner,
Poor & Havens
195 Broadway
New York, New York
10007
Attention: Thomas
J. Whalen,
Esq.
Deutsche Schiffsbank AG Haight, Gardner,
Poor & Havens
195 Broadway
New York, New York
10007
Attention: Thomas
J. Whalen,
Esq.
Norddeutsche Landesbank- Haight, Gardner,
Poor & Havens
Girozentrale 195 Broadway
New York, New York
10007
Attention: Thomas
J. Whalen,
Esq.
Deutsche Verkehrs-Bank AG Haight, Gardner,
Poor & Havens
195 Broadway
New York, New York
10007
Attention: Thomas
J. Whalen, Esq.
Banque Internationale Haight, Gardner,
Poor & Havens
a Luxembourg S.A. 195 Broadway
New York, New York
10007
Attention: Thomas
J. Whalen,
Esq.
_______________________________
1 (Only to appear in Daewoo mortgage)
2 Specify percentage in no more than 4 decimal points.
3 Insert in HDW Vessel Charter only.
--
_________________________________________________________________
_________________________________________________________________
GUARANTEE
dated as of March 14, 1994
by
AMERICAN PRESIDENT COMPANIES, LTD.
(as Guarantor)
in favor of
KREDITANSTALT FUR WIEDERAUFBAU
(as Agent and
Lender)
and
COMMERZBANK AG, HAMBURG
(as Syndicate Agent)
COMMERZBANK AG (KIEL BRANCH)
DRESDNER BANK AG IN HAMBURG
VEREINS- und WESTBANK AG
DEUTSCHE SCHIFFSBANK AG
NORDDEUTSCHE LANDESBANK-GIROZENTRALE
DEUTSCHE VERKEHRS-BANK AG
BANQUE INTERNATIONALE A LUXEMBOURG S.A.
(as the Syndicate)
_________________________________________________________________
_________________________________________________________________
GUARANTEE, dated as of March 14, 1994, by AMERICAN
PRESIDENT COMPANIES, LTD., a Delaware corporation (the "Guarantor"), in
favor of Kreditanstalt fur Wiederaufbau, a corporation organized and
existing under the laws of the Federal Republic of Germany whose address
is Palmengartenstrasse 5-9, Postfach 11-11-41, D-60325 Frankfurt am Main
("KfW"), COMMERZBANK AG (HAMBURG), a banking corporation incorporated in
the Federal Republic of Germany whose address is Ness 7-9, D-20457
Hamburg, (the "Syndicate Agent") and the banks listed in Schedule 1
which is attached hereto (KfW, the Syndicate Agent and such banks
hereinafter referred to as the "Obligees"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings set
forth in the Loan Agreement dated March 14, 1994 (the "Loan Agreement")
by and among the Obligees and American President Lines, Ltd., a Delaware
corporation ("APL").
WHEREAS, pursuant to the Loan Agreement and the Agreement
to Acquire and Charter dated as of March 14, 1994 by and among American
President Lines, Ltd., APL Newbuildings, Ltd. and the Obligees, at the
option of APL, APL or APL Newbuildings Ltd. will be obligated for any
Notes issued by it under the Loan Agreement and related Vessel
Indebtedness with respect to the purchase financing of certain of the
HDW or Daewoo Vessels;
WHEREAS, the registered owner of each Vessel in
accordance with the Loan Documents shall be the sole obligor under all
Notes issued by it under the Loan Agreement, and all related Vessel
Indebtedness, with respect to the purchase financing for such Vessel;
WHEREAS, the Guarantor, which is the beneficial owner of
all the issued and outstanding capital stock of APL, is entering into
this Guarantee in consideration of the Obligees entering into the Loan
Agreement and purchasing the Notes (as defined in the Loan Agreement).
Accordingly, the Guarantor hereby agrees with the Obligees as follows:
SECTION 1. GUARANTEE
1.1 The Guarantee. The Guarantor hereby guarantees as
primary obligor and not as a surety the full and punctual payment and,
to the fullest extent permitted by applicable law, performance when due
of all amounts payable and actions required by APL under the Loan
Documents. Upon failure by APL to pay punctually any such payment
required by it to be paid within any applicable grace periods permitted
under such agreements and documents, the Guarantor shall forthwith on
demand pay the amount not so paid in immediately available funds as
specified in the Loan Agreement. Upon payment or performance by the
Guarantor of any obligation of APL pursuant to this Section 1.1, APL's
obligation with respect to such payment or performance under the Loan
Agreement or any Loan Document as the case may be shall terminate.
1.2 Guarantee Unconditional. The obligations of the
Guarantor hereunder shall be irrevocable, unconditional and absolute
without regard to:
(a) any amendment, consent or release in respect
of any of the terms of any of the Loan Documents or of the
obligations under any thereof of any Person (provided only that
such amendment, consent or release is effected in accordance with
the terms of such Loan Documents); or
(b) any taking, holding, exchange, release, non-
perfection or invalidity of any direct or indirect security for
any obligation of APL under the Loan Documents; or
(c) any change in the corporate existence,
structure or ownership of APL, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting APL or its
assets; or
(d) the existence of any claim, setoff or other
rights which the Guarantor may have at any time against APL, HDW
or Daewoo; or
(e) any defense arising by reason of any
invalidity, unenforceability or other defense of APL, or other
defense of the Guarantor or by reason of the cessation from any
cause whatsoever of the liability either in whole or in part of
APL to pay any amount payable by APL under the Loan Documents; or
(f) any consent, release, renewal, refinancing,
refunding, amendment or modification of or addition or supplement
to or waiver of any of the terms of any of the Loan Documents or
of any other agreement which may be made relating to any of the
Loan Documents or of the obligations under any thereof of any
Person (provided only that such consent, release, renewal,
refinancing, refunding, amendment or modification of or addition
or supplement to or waiver is effected in accordance with the
terms of such Loan Documents); or
(g) any exercise or non-exercise of any right,
power, privilege or remedy under or in respect of this Guarantee
or any other Loan Document, or any waiver of any such right,
power, privilege or remedy or of any default in respect of any
Loan Document, or any receipt of any collateral security or any
sale, exchange, surrender, release, discharge, failure to perfect
or to continue perfected, loss, abandonment or alteration of, or
other dealing with, any collateral security by whomsoever at any
time pledged or mortgaged to secure, or however securing, any of
the Guarantor's obligations or any liabilities (including
liabilities of any Guarantor hereunder) incurred directly or
indirectly in respect thereof.
1.3 Discharge Only Upon Payment in Full; Reinstatement
in Certain Circumstances. The Guarantor's obligations hereunder shall
remain in full force and effect until the amounts payable by APL under
the Loan Documents shall have been paid in full or the obligations of
APL thereunder have otherwise terminated, whichever is earlier. If at
any time any amount payable by APL under the Loan Documents is rescinded
or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of APL or otherwise, the Guarantor's
obligations hereunder with respect to such payment shall be reinstated
at such time as though such payment had not been made.
1.4 Waiver. The Guarantor irrevocably waives acceptance
of this Guarantee, presentment, demand except as required pursuant to
Section 1.1 hereof, protest, and notice, as well as any requirement that
at any time any action be taken by any Person against APL or any other
Person.
1.5 Subrogation. Upon making any payment hereunder, the
Guarantor shall be subrogated to the rights of the Obligee under the
Loan Documents against APL with respect to such payment; provided that
the Guarantor shall have no right of subrogation and waives, to the
fullest extent permitted by applicable law, any right to any security in
any right or property which is the subject of any Loan Document and to
exercise any remedy which the Obligees have or may hereafter have
against APL for payment of money under the Loan until all amounts
payable by APL under the Loan Documents have been paid in full or the
obligations of APL thereunder have otherwise terminated, whichever is
earlier. Nothing contained in this Guarantee shall preclude the
Guarantor, as the corporate parent of APL, and not as a subrogee, from
causing APL to make payments or perform such actions as are required to
be performed by APL under the Loan Documents.
1.6 Payment and Performance Guarantee; No Set-Off or
Deductions; No Waiver. The Guarantor hereby agrees that (a) this
Guarantee is a guarantee of payment and performance and not of
collection, and shall continue in full force and effect and be binding
upon the Guarantor, its successors and assigns; and (b) amounts payable
hereunder shall be paid when due without set-off or reduction for any
reason whatsoever; provided, however, that nothing contained in this
Section shall be construed to be a waiver, modification, alteration or
release of any claims which the Guarantor may have for damages or
equitable relief for any breach by the Obligees of any provision of the
Loan Agreement or any other Loan Document or for any loss due to any
acts taken by the Obligees thereunder.
1.7 Obligations Unaffected. Any Obligee may, at any
time and from time to time, without the consent of, or notice to, the
Guarantor, without incurring responsibility to the Guarantor and without
impairing, diminishing, or discharging, releasing, suspending,
prejudicing or terminating the obligations of the Guarantor hereunder,
in accordance with the terms and conditions of the Loan Documents and in
whole or in part, take or refrain from taking (either directly or
indirectly) any and all actions with respect to the Guarantor's
obligations, this Guarantee, the other Loan Documents, any collateral
security at any time granted or received for any of the Guarantor's
obligations, or any Person (including any Guarantor) that such Obligee
determines in its sole discretion to be necessary or appropriate,
whether or not such action or refraining from action varies or increases
the risk of, such Guarantor; provided, however, that any amount received
by any such Obligee as a result of any such action shall correspondingly
reduce the Guarantor's obligations hereunder.
SECTION 2. Representations and Warranties of the
Guarantor. The Guarantor represents and warrants to each Obligee that:
2.1 the Guarantor is a corporation duly organized and
validly existing in good standing under the laws of the jurisdiction of
its incorporation with full corporate power and authority to conduct its
business as the same is presently conducted;
2.2 the Guarantor has legal power and authority to enter
into and carry out the terms of this Guarantee;
2.3 this Guarantee has been duly authorized by all
necessary action, corporate or other, on the part of the Guarantor, and
this Guarantee constitutes in accordance with its terms, a legal, valid
and binding instrument enforceable against the Guarantor, except to the
extent limited by applicable bankruptcy, reorganization, insolvency,
moratorium or other laws of general application relating to or affecting
the enforcement of creditors' rights from time to time in effect;
2.4 except as previously disclosed to the Syndicate
Agent and the Agent in writing, there are no actions, suits or
proceedings pending or, to the Guarantor's knowledge, threatened against
the Guarantor, which question the validity of this Guarantee or action
taken or to be taken by the Guarantor pursuant to this Guarantee which
would, if adversely determined, materially and adversely affect the
performance by the Guarantor of its obligations hereunder;
2.5 the execution and delivery of this Guarantee by the
Guarantor and the performance by the Guarantor of its obligations under
this Guarantee will not violate any provisions of the Certificate of
Incorporation or Bylaws of the Guarantor and will not result in a breach
of the terms and provisions of, or constitute a default under, any other
agreement or undertaking by the Guarantor or by which it or any of its
property is bound or any order of any court or administrative agency
entered in any proceedings binding on the Guarantor, or violate any
applicable statute, rule or regulation;
2.6 the Guarantor is not in default and no Incipient
Default has occurred, in any respect which would materially and
adversely affect the ability of the Guarantor to perform its obligations
under this Guarantee, under any mortgage, loan agreement, deed of trust,
indenture or other agreement with respect thereto or evidence of
indebtedness to which it is a party or by which it is bound, and is not
in violation of or in default, in any respect which would materially and
adversely affect the ability of the Guarantor to perform its obligations
under this Guarantee, under any order, writ, judgment or decree of any
court, arbitrator or governmental authority, commission, board, agency
or instrumentality, domestic or foreign;
2.7 the Guarantor has more than one place of business
and the present location of the place of business which is its chief
executive office is 1111 Broadway, Oakland, California 94607;
2.8 the Guarantor has no knowledge of any actual or
proposed deficiency or additional assessment in connection with any
Taxes which either in any case or in the aggregate would be materially
adverse to the Guarantor and which would materially and adversely affect
the ability of the Guarantor to perform its obligations hereunder;
2.9 all Taxes (other than taxes based on or measured by
income and withholding taxes), liability for the payment of which has
been incurred by the Guarantor in connection with the execution,
delivery and performance by it of each Loan Document to which it is or
will be a party, have been paid (or provided for in its accounts if not
payable on or prior to the delivery date of the respective Vessel);
2.10 all governmental consents, licenses, permissions,
approvals, registrations or authorizations or declarations required (i)
to enable it lawfully to enter into and perform its payment obligations
under this Guarantee and to require APL to perform its other obligations
under each of the Loan Documents to which APL is a party, (ii) to ensure
that its respective obligations under clause (i) hereunder are legal,
valid and enforceable and (iii) to make this Guarantee admissible in
evidence have been obtained or made and are in full force and effect;
2.11 it has not taken any corporate action nor to its
knowledge have any other steps been taken or legal proceedings been
started or threatened against it for its winding-up, dissolution or
reorganization or for the appointment of a receiver, administrative
receiver, administrator, trustee or similar officer of it or of any or
all of its respective assets and revenues;
2.12 (i) no written representation, warranty or
statement made or other document provided by the Guarantor in connection
with the negotiation of this Guarantee at the time when given is or was
untrue or contains or contained any misrepresentation of a material fact
or omits or omitted to state any material fact necessary to make any
such statement herein or therein not misleading and (ii) all financial
projections, if any, prepared by the Borrower or the Guarantor and made
available to any Lender have been prepared in good faith based upon
reasonable assumptions (it being understood that such projections are
subject to significant uncertainties and contingencies, many of which
are beyond the Borrower's and the Guarantor's control, and that no
assurances can be given that any such projections will be realized);
2.13 ERISA. To the best knowledge of the Guarantor (i)
each Plan maintained by the Guarantor and each ERISA Affiliate is in
substantial compliance in all material respects with ERISA; (ii) no Plan
maintained by the Guarantor or any ERISA Affiliate is insolvent or in
reorganization; (iii) no Insufficiency or Termination Event has occurred
or is reasonably expected to occur, and no "accumulated funding
deficiency" exists and no "variance" from the "minimum funding standard"
has been granted (each such term as defined in Part III, Subtitle B, of
Title I of ERISA) with respect to any Plan in which the Guarantor or any
of its Subsidiaries, or any ERISA Affiliate is a participant; (iv)
neither the Guarantor nor any ERISA Affiliate has incurred, or is
reasonably expected to incur, any Withdrawal Liability to any
Multiemployer Plan; (v) neither the Guarantor, its Subsidiaries, nor any
ERISA affiliate has received any notification that any Multiemployer
Plan in which it is a participant is in reorganization or has been
terminated, within the meaning of Title IV of ERISA and no such
Multiemployer Plan is reasonably expected to be in reorganization or
terminated within the meaning of Title IV of ERISA; (vi) no lien imposed
under the Code or ERISA on the assets of the Guarantor or any Subsidiary
or any ERISA Affiliate exists or is reasonably expected to arise on
account of any Plan; (vii) no material liability will be incurred by the
Guarantor, its Subsidiaries, or any ERISA Affiliate if any of them
should terminate contributions to any other employee benefit plan
maintained by them;
2.14 it is not an "investment company" or a company
"controlled" by an "investment company" (as each of such terms is
defined or used in the Investment Company Act of 1940, as amended).
SECTION 3. Covenants of the Guarantor. The Guarantor
covenants to each Obligee that:
3.1 The Guarantor will not consolidate or amalgamate
with, or merge into, any other entity, or sell, convey, transfer, lease,
or otherwise dispose of all or substantially all of its assets,
including, but not limited to, by dividend (whether by one transaction
or a series of transactions and whether related or not); provided,
however, that it may consolidate or amalgamate with, or merge into, any
other entity, or sell, convey, transfer, lease, or otherwise dispose of
all or substantially all of its assets if the buyer, assignee or
transferee corporation (the "Assignee") shall be a solvent corporation
organized and existing under the laws of the United States of America or
any state thereof following such transaction and shall have executed and
delivered an agreement, in form and substance reasonably satisfactory to
the Obligees, containing an assumption by the Assignee of the due and
punctual performance and observance of all covenants and obligations of
the Guarantor hereunder, and confirming the accuracy of any
representations and warranties made herein as of the date hereof
required with respect to such Assignee; and provided further that
immediately following such transaction, no Incipient Default or Event of
Default shall have occurred and be continuing.
SECTION 4. Financial Statements.
4.1 The Guarantor shall, as soon as possible, provide to
the Agent and the Syndicate Agent (a) but in no event later than one
hundred twenty (120) days after the end of each fiscal year, its
consolidated audited accounts of all consolidated financial statements
of the Guarantor, such financial statements to be prepared in accordance
with generally accepted United States of America accounting principles
at such time consistently applied and a report thereon by Arthur
Andersen & Co. or other independent public auditors of internationally
recognized standing as may be acceptable to the Agent and the Syndicate
Agent, (b) copies of all quarterly reports filed with the Securities and
Exchange Commission and, within seventy-five (75) days after the end of
the first three (3) quarters of its fiscal year, unaudited consolidated
statements of income and changes in financial position of the Guarantor
and related balance sheets for each such period, all certified as true
and correct by a financial officer of the Guarantor, (c) as soon as the
same is instituted (or, to the knowledge of the Guarantor threatened),
details of any litigation, arbitration or administrative proceedings
against or involving the Guarantor, APL or the Vessels which if
adversely determined would have a material adverse effect on the
Guarantor, APL and its other subsidiaries on a consolidated basis, or
construction of the Vessels, and (d) from time to time, and on demand,
such additional financial or other information relating to the Guarantor
as may be reasonably requested by the Agent or the Syndicate Agent.
SECTION 5. Miscellaneous
no
no delay in exercising, and no course of dealing with respect to, any
right or remedy hereunder will operate as a waiver thereof; nor will any
single or partial exercise of any right or remedy hereunder preclude any
other further exercise of any other right or remedy. This Guarantee may
not be amended or modified except by written agreement of the Guarantor
and the Obligees.
5.2 All notices or other communications required under
the terms and provisions hereof shall be made in the manner provided in
Section 15.04 of the Loan Agreement addressed as follows: to (i)
Kreditanstalt fur Wiederaufbau at: Palmengartenstrasse 5-9, D-60325
Frankfurt am Main (if by hand), Postfach 11-11-41, D-60046 Frankfurt am
Main (if by mail), Federal Republic of Germany, Telefax No.: 7431-2944
or 7431-2198; (ii) to Commerzbank AG at: Ness 7-9, D-20457 Hamburg,
Federal Republic of Germany, Attention: Stefan E. Kuch, Telefax No.: 49-
40-3683-4068; (iii) to the other Obligees to the addresses as set forth
in Schedule 1; and (iv) to the Guarantor at: 1111 Broadway, Oakland,
California 94607; Attention: Treasurer, Telefax No.: (510) 272-8931.
5.3 The terms of this Guarantee shall be binding upon,
and inure to the benefit of, the Guarantor and the Obligees and their
respective successors and assigns.
an
any successor corporation, whether by virtue of any constitutional
provision, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly agreed and
understood that this Guarantee is solely a corporate obligation, and
that no personal liability whatsoever shall attach to, or be incurred
by, any incorporator, stockholder, officer or director, as such, past,
present or future, of the Guarantor or of any successor corporation,
because of the incurring of the indebtedness hereby authorized or under
or by reason of any of the obligations, covenants, promises or
agreements contained in this Guarantee or to be implied herefrom, and
that all liability, if any, of that character against every such
incorporator, stockholder, officer and director is, by the acceptance of
this Guarantee and as a condition of, and as part of the consideration
for, the execution of this Guarantee, expressly waived and released.
5.5 This Guarantee shall be construed in accordance with
and governed by the laws of the State of New York (other than the law of
the State of New York governing choice of law).
actio
action or other proceeding arising out of this Agreement or any other
Loan Document referred to therein, or the subject matter hereof or
thereof or any of the transactions contemplated hereby or thereby,
brought by any of the Obligees or their respective successors, subrogees
or assigns, (b) hereby irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined, in such New York
State or Federal court, and (c) to the extent that it has or hereafter
may acquire any immunity from jurisdiction of any court or from any
legal process, hereby waives such immunity, and agrees not to assert, by
way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, (i) any claim that it is not personally subject to the
jurisdiction of the above-named New York State or Federal courts, (ii)
that the suit, action or proceeding is brought in an inconvenient forum,
that the venue of the suit, action or proceeding is improper, or
(iii) that this Guarantee or the subject matter hereof may not be
enforced in or by such courts or under any applicable law. The
Guarantor hereby consents to service of process in any suit, action or
other proceeding arising out of this Guarantee or the subject matter
hereof or any of the transactions contemplated hereby and hereby
appoints the Person set forth in Schedule 7 of the Loan Agreement as
Process Agent for the Borrower (the "Process Agent") as its attorneys-in-
fact to receive service of process in such action, suit or proceeding,
it being agreed that service upon the Process Agent shall constitute
valid service upon the Guarantor and its successors and assigns. The
Guarantor agrees that (x) the sole responsibilities of the Process Agent
shall be (i) to receive such process, (ii) to send a copy of any such
process so received to the Guarantor, by registered airmail, return
receipt requested, at its address set forth in Section 5.2 hereof, or at
the last address filed in writing by it with the Process Agent and (iii)
to give prompt telegraphic notice of receipt thereof to the Guarantor at
such address and (y) the Process Agent shall have no responsibility for
the receipt or nonreceipt by the Guarantor of such process, nor for any
performance or nonperformance by it or its respective successors or
assigns. The Guarantor hereby agrees to pay to the Process Agent such
compensation as shall be agreed upon from time to time by it and the
Process Agent for the Process Agent's services hereunder. The Guarantor
hereby agrees that its submission to jurisdiction and its designation of
the Process Agent set forth above is made for the express benefit of
each of the Obligees and their respective successors, subrogees and
assigns. The Guarantor agrees that it will at all times continuously
maintain a Process Agent to receive service of process in the City of
New York or San Francisco, California on behalf of itself and its
properties with respect to this Agreement, and in the event that, for
any reason, the Process Agent named pursuant to this Section 5.6 shall
no longer serve as Process Agent to receive service of process on the
Guarantor's behalf, the Guarantor shall promptly appoint a successor
Process Agent. The Guarantor further agrees that a final judgment
against the Guarantor in any such action or proceeding shall be
conclusive, and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law, a certified or true
copy of which final judgment shall be conclusive evidence of the fact
and of the amount of any indebtedness or liability of the Guarantor
therein described; provided that nothing in this Section 5.6 shall
affect the right of the Guarantor or the Obligees or their respective
successors, subrogees or assigns to serve legal process in any other
manner permitted by law or affect the right of the Guarantor or the
Obligees or their respective successors, subrogees or assigns to bring
any action or proceeding against the Guarantor or the Obligees, as the
case may be, or its property in the courts of other jurisdictions. In
the event of the transfer of all or substantially all the assets and
business of the Process Agent to any other corporation, by
consolidation, merger, sale of assets or otherwise, such other
corporation shall be substituted hereunder for the Process Agent with
the same effect as if named herein in place of the Process Agent. THE
GUARANTOR HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO
WHICH IT IS A PARTY INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT REFERRED TO THEREIN, OR THE RELATIONSHIP ESTABLISHED HEREUNDER
AND WHETHER ARISING OR ASSERTED BEFORE OR AFTER THE DATE HEREOF OR
BEFORE OR AFTER THE PAYMENT, OBSERVANCE AND PERFORMANCE IN FULL OF THE
GUARANTOR'S OBLIGATIONS UNDER THIS AGREEMENT.
5.7 Currency of Account. (a) The Dollar is the
currency of account or each and every sum due from the Guarantor to the
Obligees under this Guarantee in respect of any of the Obligations.
(b) If after the occurrence of any Event of Default, any
sum is due from the Guarantor under this Guarantee or if any order or
judgment given or made in relation hereto has to be converted from the
currency ("the first currency") in which the same is payable hereunder
or under such order or judgment into another currency ("the second
currency") for the purpose of:
(i) making or filing a claim or proof against the
Guarantor;
(ii) obtaining an order or judgment in any court or
tribunal; or
(iii) enforcing any order or judgment given or made in
relation hereto.
(c) The Guarantor shall indemnify and hold harmless the
Obligees from and against any damages or losses suffered as a result of
any discrepancy between (A) the rate of exchange used for such purpose
to convert the sum in question from the first currency into the second
currency and (B) the rate or rates of exchange at which any Obligee may
in the ordinary course of business purchase the first currency with the
second currency in the Frankfurt foreign exchange market upon receipt of
a sum paid to it in satisfaction, in whole or in part, of any such
order, judgment, claim or proof. The above indemnity shall constitute a
separate and independent obligation of the Guarantor from its other
obligations and shall apply irrespective of any indulgence granted by
such Obligee.
5.8 If any term of this Guarantee and any other
application thereof shall be invalid or unenforceable, the remainder of
this Guarantee and any other application of such terms shall not be
affected thereby.
5.9 This Guarantee shall be binding upon, inure to the
benefit of, and be enforceable by, the Guarantor and each of the
Obligees and their respective successors and assigns.
IN WITNESS WHEREOF, the Guarantor has caused this
Guarantee to be duly executed as of the date first set forth herein.
AMERICAN PRESIDENT
COMPANIES, LTD.
By: Will M. Storey
Title:Executive Vice President
SCHEDULE 1
NAMES AND ADDRESSES OF SYNDICATE MEMBERS
Syndicate Member Address
Commerzbank AG (Kiel Branch) Holstenstrasse 64
D-24103 Kiel
Federal Republic of Germany
Attention: Mr. Claes
Telex: 292898 CBKD
Telecopy: 49-431-9974-372
Dresdner Bank AG in Hamburg Jungfernstieg 22
D-20354 Hamburg
Federal Republic of Germany
Attention: Mr. Roller
Mr.
Bottcher
Telex: 2157170 DR D
Telecopy: 49-40-3501-3818
Vereins- und Westbank AG Alter Wall 22
D-20457 Hamburg
Federal Republic of Germany
Attention: Mr. Kopcke
Mrs.
Mertens
Telex: 215164 VH D
Telecopy: 49-40-3692-3696
Deutsche Schiffsbank AG Domshof 17
D-28195 Bremen
Federal Republic of Germany
Attention: Mr. Pieper
Mr. Onnen
Telex: 244870 DSBR D
Telecopy: 49-421-323539
Norddeutsche Landesbank - Georgsplatz 1
Girozentrale D-30159 Hannover
Federal Republic of Germany
Attention: Mr. Hartmann
Telex: 921634 GZH D
Telecopy: 49 511 36 14785
Deutsche Verkehrs-Bank AG Filiale Hamburg
Ballindamm 6
D-20095 Hamburg
Federal Republic of Germany
Attention: Mr. Spincke
Telex: 402077 DVB
Telecopy: 49-40-308004-12
Banque Internationale a
Luxembourg S.A. 2 Boulevard Royal
L-2953 Luxembourg
Attention: Mr. Jean Pierre
Vernier
Telex: 3326 BIL LU
Telecopy: 35-2-4590-2010
--
* Application to be filed with the Securities and Exchange
Commission, pursuant to Exchange Act Rule 24b-2, for
confidential treatment of certain portions of this exhibit.
AGREEMENT TO
ACQUIRE AND CHARTER
BY AND AMONG
AMERICAN PRESIDENT LINES, LTD.,
Transferor,
APL NEWBUILDINGS, LTD.,
Transferee,
KREDITANSTALT FUR WIEDERAUFBAU
(as Agent and Lender),
COMMERZBANK AG, HAMBURG
(as Syndicate Agent),
COMMERZBANK AG (KIEL BRANCH),
DRESDNER BANK AG (HAMBURG),
VEREINS-und WEST BANK AG,
DEUTSCHE SCHIFFSBANK AG
NORDDEUTSCHE LANDESBANK-GIROZENTRALE and
DEUTSCHE VERKEHRS-BANK AG
BANQUE INTERNATIONALE A LUXEMBOURG S.A.
(as the Syndicate)
Dated March 14, 1994
TABLE OF CONTENTS
Page
RECITALS 1
SECTION 1. DEFINITIONS 2
SECTION 2. TRANSFER AND CHARTER OF THE VESSELS 3
SECTION 3. CONDITIONS PRECEDENT TO
TRANSFEREE'S
OBLIGATIONS ON A DELIVERY DATE 4
SECTION 4. REPRESENTATIONS AND WARRANTIES OF TRANSFEREE 6
SECTION 5. COVENANTS 9
SECTION 6. NOTICES 12
SECTION 7. COUNTERPARTS 13
SECTION 8. MODIFICATION 13
SECTION 9. SUCCESSORS AND ASSIGNS 13
SECTION 10. GOVERNING LAW 13
SECTION 11. ASSIGNMENT 13
SECTION 12. SEVERABILITY 13
SECTION 13. TABLE OF CONTENTS; HEADINGS 14
EXHIBIT A. FORM OF DAEWOO CHARTER OR HDW CHARTER
EXHIBIT B. FORM OF CERTIFICATE OF DELIVERY
AND ACCEPTANCE
EXHIBIT C. FORM OF CHARTER ASSIGNMENT AND SECOND
CHARTER ASSIGNMENT AND CONSENT
SCHEDULE 1 NAMES AND ADDRESSES OF SYNDICATE MEMBERS
AGREEMENT TO
ACQUIRE AND CHARTER
THIS AGREEMENT TO ACQUIRE AND CHARTER ("Acquisition
Agreement") dated this 14th day of March, 1994 by and among AMERICAN
PRESIDENT LINES, LTD., a Delaware corporation (the "Transferor"), APL
NEWBUILDINGS, LTD., a Nevada corporation (the "Transferee"),
KREDITANSTALT FUR WIEDERAUFBAU, a public law corporation incorporated in
the Federal Republic of Germany ("KfW"); COMMERZBANK AG (Hamburg), a
banking corporation incorporated in the Federal Republic of Germany (the
"Syndicate Agent") and the banks listed in Schedule 1 which is attached
hereto (each a "Syndicate Member" and, collectively, "the Syndicate").
WITNESSETH:
WHEREAS, the Transferor has ordered three (3)container
vessels (the "HDW Vessels") from Howaldtswerke-Deutsche Werft AG ("HDW")
as is more specifically set forth in a certain Shipbuilding Agreement
dated May 10, 1993, as amended (the "HDW Shipbuilding Agreement")
between the Transferor and HDW;
WHEREAS, the Transferor has also ordered three (3)
container vessels (the "Daewoo Vessels") from Daewoo Shipbuilding &
Heavy Machinery, Ltd. ("Daewoo") as is more specifically set forth in a
certain Shipbuilding Agreement dated May 10, 1993, as amended (the
"Daewoo Shipbuilding Agreement") between the Transferor and Daewoo (the
HDW Vessels and the Daewoo Vessels being individually referred to as a
Vessel and, collectively, as the "Vessels");
WHEREAS, the Transferor, KfW, the Syndicate Agent and the
Syndicate entered into a Loan Agreement dated March 14, 1994, 1994
providing a loan facility in respect of the HDW Vessels and the Daewoo
Vessels under which the Transferor may borrow from KfW up to *
(the "HDW Tranche") for the purchase of the HDW Vessels; and may borrow
from the Syndicate up to *
(the "Daewoo Tranche") for the purchase of the Daewoo Vessels;
WHEREAS, in order to induce KfW and the Syndicate to make
available to the Transferor the HDW Tranche and the Daewoo Tranche,
respectively, American President Companies, Ltd., a Delaware
corporation, and the corporate parent of the Transferor and the
Transferee, has, under the Guarantee, guaranteed the obligations of the
Transferor under the Loan Agreement and the other Loan Documents;
WHEREAS, concurrently with the sale of any Vessel from
HDW or Daewoo, as the case may be, to the Transferor, the Transferor may
transfer all of its right, title and interest in the Vessel to the
Transferee, and the Transferee shall thereupon assume all of the
obligations relating to the Vessel Indebtedness in respect of that
Vessel, including but not limited to the execution and delivery of all
of the Security Documents relevant to such Vessel;
WHEREAS, concurrently, with the transfer of each Vessel
in each of the Daewoo and HDW Tranche to the Transferee, the Transferor
shall enter into a Charter for such Vessels to be so transferred, as
evidenced by the execution of the Daewoo Charter or the HDW Charter,
respectively, with respect to each Vessel delivered under such Tranche
each in the form of Exhibit A to this Acquisition Agreement;
WHEREAS, concurrently with, the execution and delivery of
each Charter the Transferee will assign all of its right, title and
interest in and to (i) such Charter to KfW if it relates to an HDW
Vessel, (ii) such Charter to the Syndicate Agent and the Syndicate if it
is a Daewoo Vessel, and (iii) a second priority assignment of the
Charter to KfW if it is a Daewoo Vessel, as security for its obligations
assumed under the Loan Documents to which it is a party with respect to
the related Vessel Indebtedness;
WHEREAS, concurrently with the transfer to the Transferee
of the first Vessel delivered under a Charter, the Guarantor will
execute and deliver to the Lenders the Guarantee which shall guarantee
all obligations of the Transferee as Borrower under the Loan Agreement
and the other Loan Documents;
NOW, THEREFORE, in consideration of mutual agreements
herein contained, the portion hereto agree as follows:
SECTION 1. Definitions.
A. The terms "hereof," "herein," "hereby," "hereto,"
"hereunder" and "herewith" refer to this Agreement as the same
may be supplemented or amended;
B. Reference to a given agreement or instrument is a
reference to that agreement or instrument as originally executed,
and as modified, amended, supplemented and restated through the
date as of which reference is made to that agreement or
instrument.
C. All capitalized terms used in this Acquisition
Agreement including the Whereas clauses hereof which are not
defined herein shall have the meanings ascribed to them in the
Loan Agreement and in the Schedules and Appendices to the Loan
Agreement. In addition, the following capitalized terms shall
have the meanings set forth below:
"Bill of Sale" means, with respect to a given Vessel, a
valid and sufficient bill of sale in recordable form in the Republic of
The Marshall Islands made by the Transferor in favor of the Transferee,
dated the relevant Delivery Date, and transferring title to the Vessel
(including its equipment) free and clear of all liens, claims and
encumbrances.
"Certificate of Delivery and Acceptance" means, with
respect to a given Vessel, a certificate in the form of Exhibit B-1 or B-
2, as the case may be, to this Acquisition Agreement dated on the
Vessel's Delivery Date, evidencing the delivery of that Vessel to the
Transferee and its acceptance by the Transferee.
"Charter Assignment" means each, and "Charter
Assignments" means every, first priority assignment of each HDW Charter
and each Daewoo Charter by the Transferee to KfW and to the Syndicate
Agent and the Syndicate, respectively, as security for the Transferee's
obligations under the Loan Documents to which it is a party with respect
to the corresponding Vessel Indebtedness and in the form of Exhibit C to
this Acquisition Agreement.
"Charter Documents" means this Acquisition Agreement the
Interest Equalization Agreement Assignment, the Bills of Sale, the
Certificates of Delivery and Acceptance, the Charters, the Charter
Assignments and the Second Charter Assignments.
*
"Second Charter Assignment and Consent" means each, and
"Second Charters Assignments" means every, second priority assignment of
a Daewoo Charter by the Transferee to KfW as security for the
Transferee's obligations under the Loan Documents with respect to the
Vessel Indebtedness under the HDW Tranche relating to the Vessel covered
by such Daewoo Charter and in the form of Exhibit C to this Acquisition
Agreement.
"Solvent" means, with respect to the Transferee on a
Delivery Date, that on such date each of the following is true: (1) the
fair market value of the assets of the Transferee is greater than the
total amount of liabilities (including contingent liabilities) of the
Transferee, (ii) the present fair salable value of the assets of the
Transferee is greater than the amount that will be required to pay the
probable liabilities of the Transferee for its debts as they become
absolute and matured, (iii) the Transferee is able to realize upon its
assets and pay its debts and any other liabilities, including contingent
obligations, as they mature and (iv) the Transferee does not have
unreasonably small capital. In making the determinations required by
(i) and (ii) hereof, it will be deemed that (a) the fair market value or
fair salable value, as the case may be, of any Vessels owned by the
Transferee is at least 85% of the purchase price of such Vessels, and
(b) any loan made to the Transferee by the Guarantor or the Transferor
in connection with the purchase of the Vessels is treated for purposes
of this definition only as a capital contribution to the Transferee.
SECTION 2. Transfer and Charter of the Vessels.
A. On each Delivery Date, upon the satisfaction of
all conditions precedent set forth in Section 7 of the Loan
Agreement and Sections 2 and 3 of this Acquisition Agreement, the
Lenders shall make their Commitment available and the Transferor
shall purchase the relevant Vessel from HDW or Daewoo, as the
case may be.
B. Simultaneously with the actions specified in Section
2.A, the Transferor shall transfer the Vessel to the Transferee
pursuant to the terms of this Acquisition Agreement. The Vessel
will be registered under the laws of the Republic of The Marshall
Islands in the name of the Transferee, and the Transferee will
record a first preferred mortgage in substantially the form
attached to the Loan Agreement, and with respect to the Daewoo
Vessels, a second preferred mortgage in substantially the form
attached to the Loan Agreement covering the Vessel in favor of
the relevant Lenders.
C. Simultaneously with the actions specified in Section
2.B, the Transferor shall charter each such Vessel from the
Transferee and the Transferee shall charter such Vessel to the
Transferor, pursuant to the relevant Charter.
D. Simultaneously with the actions specified in Section
2.B, the Transferee shall undertake the Vessel Indebtedness
corresponding to the Vessel.
E. Delivery and presentation of all documents to
complete the transactions contemplated herein shall be made at
the Closing to be held on a Delivery Date convened pursuant to
the Loan Agreement.
SECTION 3. Conditions Precedent to Transferee's Obligations on a
Delivery Date.
The Transferee's obligations to undertake all of the
payment and certain performance obligations relating to the Vessel's
Indebtedness in respect of a given Vessel is expressly conditioned upon
the following preconditions being satisfied and upon receipt by the
Agent or the Syndicate Agent, as the case may be, of the following
documents and evidenced on or before a closing to be held on the
Delivery Date at the offices of Haight, Gardner, Poor & Havens, 195
Broadway, New York, New York 10007, or at such other place as may be
agreed upon by the Transferor, Transferee, the Agent and the Syndicate
Agent:
(a) The Transferee shall be a corporation duly
organized and existing in good standing under the laws of
the jurisdiction of its incorporation; the Transferee
shall have full corporate power and authority to own its
assets, conduct its business as then being conducted, and
enter into and consummate the transactions contemplated
hereby and by the Charter Documents and the Security
Documents to which it is a party, and the Agent or the
Syndicate Agent, as the case may be, shall have received
(1) a certified copy of the certificate of incorporation
of the Transferee, (2) a certificate of the Secretary of
the Transferee attaching the minutes or resolutions of
its Board of Directors authorizing the transactions
contemplated herein, (3) a certificate from the Secretary
of the Transferee or evidencing the authority of the
persons executing the Security Documents and the Charter
Documents, to which it is a party, to execute and deliver
such Security Documents and Charter Documents and the
Transferee to perform under the Security Charter
Documents to which it is a party, and (4) a certificate
of good standing as to the Transferee, all in form and
substance reasonably satisfactory to the Agent or the
Syndicate Agent, as the case may be, and its special
counsel;
(b) the Agent and the Syndicate Agent shall have
received no later than sixty (60) days prior to the
above-referenced closing, written notice from the
Transferor of its intention of transferring the related
Vessel to the Transferee in accordance with the
provisions of this Acquisition Agreement;
(c) no Event of Default shall have occurred and
be continuing and no Incipient Default shall have
occurred and be continuing and the Transferee shall
provide an officer's certificate to such effect in form
and substance reasonably satisfactory to the Agent or the
Syndicate Agent, as the case may be, and its special
counsel;
(d) there shall not have occurred any material
adverse change in the financial condition of the
Transferee which in the reasonable opinion of the Agent
and/or the Syndicate would materially and adversely
affect the ability of the Transferee to perform its
obligations as to the repayment of the Facility by the
installments together with interests thereon herein set
out or to perform its obligations under the Loan
Documents, to which it is or will become a party;
(e) all representations and warranties of the
Transferee contained in this Acquisition Agreement being
true and correct in all material respects on that
Delivery Date, except insofar as they relate exclusively
to an earlier date, and the Transferee shall provide
officer's certificates confirming such matters;
(f) all governmental and other consents,
licenses, approvals and authorizations, if any, required
with respect to the performance of (i) the Transferee
under this Acquisition Agreement and the other Loan
Documents and Charter Documents and (ii) the Transferor
under this Acquisition Agreement and the other Loan
Documents and Charter Documents, to which it is a party
shall have been obtained and shall not have been revoked
and, if requested by the Agent or the Syndicate Agent or
its special counsel, copies of any of the same shall be
provided;
(g) all Uniform Commercial Code financing
statements or other document necessary, or reasonably
requested by the Agent or the Syndicate Agent, to perfect
its security interests under any of the Security
Documents and the Charter Documents in the United States
of America, jurisdiction of registration of such Vessel
or any other relevant jurisdiction;
(h) copies of the Bill of Sale to the relevant
Vessel from the Transferor to the Transferee;
(i) evidence that such Vessel is duly registered
in the name and ownership of the Transferee under the
laws and flag of the Republic of The Marshall Islands,
free of registered liens except the relevant Mortgage(s);
(j) each Loan Document and Charter Document, in
respect of such Vessel shall have been duly executed,
delivered and, where appropriate, registered or recorded
(together with any documents to be executed pursuant to
the terms thereof, including without limitation, notices
of the Assignment(s) of Insurance);
(k) each of the Lenders shall have received
executed originals of the opinions as to the Transferee
substantially in the form attached as Schedule 4 to the
Loan Agreement as well as such other opinions from such
counsel as each Lender shall reasonably request and each
of the Lenders shall have received from its special
counsel, Haight, Gardner, Poor & Havens, a favorable
opinion, in form and substance satisfactory to the
Lenders, as to such matters incident to the transactions
contemplated hereby as any such Lender may reasonably
request;
(l) all conditions precedent as set forth in
Section 7 of the Loan Agreement shall have been
satisfied.
SECTION 4. Representations and Warranties of Transferee.
The Transferee represents and warrants to each of the
Lenders that:
(a) the Transferee is a corporation duly
organized and validly existing in good standing under the
laws of its jurisdiction of incorporation with full
corporate power and authority to conduct its business as
the same is presently conducted;
(b) the Transferee has legal power and authority
to enter into and carry out the terms of this Acquisition
Agreement and each of the other Loan Documents and the
Charter Documents to which the Transferee will be a
party;
(c) each of this Acquisition Agreement, the other
Loan Documents and the Charter Documents to which the
Transferee will be a party has been duly authorized by
all necessary action, corporate or other, on the part of
the Transferee, and this Acquisition Agreement
constitutes, and upon due execution and delivery by the
Transferee, each of the other Loan Documents and the
Charter Documents will constitute, in accordance with
their respective terms, legal, valid and binding
instruments enforceable against the Transferee, except to
the extent limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws of
general application relating to or affecting the
enforcement of creditors' rights from time to time in
effect;
(d) except as previously disclosed to the
Syndicate Agent and the Agent in writing, there are no
actions, suits or proceedings pending or, to the
Transferee's knowledge, threatened against the
Transferee, any of its properties affecting this
Acquisition Agreement, the other Loan Documents, the
Charter Documents or the transactions contemplated
thereby which would materially and adversely affect the
performance of the Transferee of its obligations (if any)
thereunder;
(e) the consummation of the transactions
contemplated by, and compliance by the Transferee with
all the terms and provisions of, this Acquisition
Agreement, the other Loan Documents and the Charter
Documents to which the Transferee is or will be a party
will not violate any provisions of the Certificate of
Incorporation or Bylaws of the Transferee and will not
result in a breach of the terms and provisions of, or
constitute a default under, any other agreement or
undertaking by the Transferee or by which it or any of
its property is bound or any order of any court or
administrative agency entered in any proceedings binding
on the Transferee, or violate any applicable statute,
rule or regulation;
(f) the Transferee is not in default and no
condition exists which with notice or lapse of time or
both would constitute a default by the Transferee, in any
respect which would materially and adversely affect the
ability of the Transferee to perform its obligations
under this Acquisition Agreement, any other Loan
Document, any Charter Document, under any mortgage, loan
agreement, deed of trust, indenture or other agreement
with respect thereto or evidence of indebtedness to which
it is a party or by which it is bound, and is not in
violation of or in default, in any respect which would
materially and adversely affect the ability of the
Transferee to perform its obligations under this
Acquisition Agreement, any other Loan Document, or any
Charter Document, under any order, writ, judgment or
decree of any court, arbitrator or governmental
authority, commission, board, agency or instrumentality,
domestic or foreign;
(g) the Transferee has only one place of business
which is also the location of the place of business which
is its chief executive office is 1111 Broadway, Oakland,
California 94607;
(h) the Transferee has no knowledge of any actual
or proposed deficiency or additional assessment in
connection with any Taxes which either in any case or in
the aggregate would be materially adverse to the
Transferee and which would materially and adversely
affect the ability of the Transferee to perform its
obligations under this Acquisition Agreement, any of the
other Loan Documents or any of the Charter Documents;
(i) all Taxes (other than taxes based on or
measured by income and withholding taxes), liability for
the payment of which has been incurred by the Transferee
in connection with the execution, delivery and
performance by it of this Acquisition Agreement, each
other Loan Document and Charter Document to which it is
or will be a party, have been paid (or provided for in
its accounts if not payable on or prior to the Delivery
Date of the respective Vessel);
(j) all governmental consents, licenses,
permissions, approvals, registrations or authorizations
or declarations required (i) to enable it lawfully to
enter into and perform its respective obligations under
this Acquisition Agreement, each of the other Loan
Documents and each of the Charter Documents to which it
is or will be a party and (ii) to ensure that its
respective obligations hereunder and thereunder are
legal, valid and enforceable have been obtained or made
and are in full force and effect or will be obtained or
made and be in full force and effect on the date any such
document is executed and delivered; and all governmental
consents, licenses, permissions, approvals, registrations
or authorizations or declarations of the country of
registry of each vessel required (A) to enable it
lawfully to enter into and perform its obligations under
the Mortgages, (B) to ensure that its obligations
thereunder are legal, valid and enforceable and (C) to
make the Mortgages admissible in evidence in the country
in which each Vessel is registered and the United States
of America, will be obtained or made and be in full force
and effect on the date any such Mortgage is executed and
delivered;
(k) it has not taken any corporate action nor, to
its knowledge, have any other steps been taken or legal
proceedings been started or threatened against it for its
winding-up, dissolution or reorganization or for the
appointment of a receiver, administrative receiver,
administrator, trustee or similar officer of it or of any
or all of its respective assets and revenues;
(l) except as provided by applicable laws of
bankruptcy, insolvency, liquidation or similar laws of
general application, its obligations under this
Acquisition Agreement, each of the other Loan Documents,
and each of the Charter Documents rank and will rank at
least pari passu in priority of payment, and as to
security having the priority contemplated by the Loan
Documents and in all other respects with all its
respective other indebtedness;
(m) except for registration of the First Mortgage
on each Vessel and the Second Mortgage on each Daewoo
Vessel at the country of its registry (including any
other Loan Document or Charter Document required by the
laws of the country of its registry to be filed with the
Mortgage), it is not necessary to ensure the legality,
validity, enforceability or admissibility in evidence of
this Acquisition Agreement, any of the other Loan
Documents or any of the Charter Documents to which it is
or will be a party in the United States of America or, to
the best of its knowledge, elsewhere or that it be filed,
recorded or enrolled with any governmental authority or
agency in the United States of America or, to the best of
its knowledge, elsewhere, that it be stamped with any
stamp, registration or similar transaction tax in the
United States of America or, to the best of its
knowledge, elsewhere;
(n) the Transferee is a wholly owned Subsidiary
of the Guarantor;
(o) the Transferee does not maintain any Plans;
(p) none of the proceeds of the Loan will be
used to purchase or carry margin stock within the
meanings of Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System. The Transferee
is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock within
the meaning of Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System;
(q) it is not an "investment company" or a
company "controlled" by an "investment company" (as each
of such terms is defined or used in the Investment
Company Act of 1940, as amended);
(r) each Vessel delivered will be duly
documented in the name of the Transferee under the flag
of the Republic of The Marshall Islands; and
(s) each Vessel delivered will be in the
absolute and unencumbered ownership of the Transferee
except as contemplated by this Acquisition Agreement, the
other Loan Documents and the Charter Documents.
(t) the Transferee is, and immediately after
the relevant Lender advances its Commitment will be,
Solvent.
SECTION 5. Covenants.
A. Affirmative Covenants. The Transferee covenants
with each of the Lenders that it shall:
(a) do all that is necessary to maintain in full
force and effect its corporate existence in good standing
under the laws of its jurisdiction of incorporation and
use its best efforts to obtain, comply with the terms of
and do all that is necessary to maintain in full force
and effect all authorizations, approvals, licenses and
consents required in or by the laws of its jurisdiction
of incorporation and the United States of America and any
other relevant jurisdiction to enable the Transferee to
enter into and perform its obligations under the Loan
Documents and the Charter Documents to which the
Transferee is or will become a party and to ensure the
legality, validity, enforceability or admissibility in
evidence in the United States of America of the Loan
Documents and the Charter Documents to which the
Transferee is or will become a party and to comply with
the terms of and to do all that is necessary to maintain
in full force and effect all authorizations, approvals,
licenses and consents required in or by the national laws
of the Republic of The Marshall Islands to enable the
Transferee to enter into and perform its obligations
under the Mortgages and to ensure the legality, validity,
enforceability and admissibility in evidence in such
country of each Mortgage;
(b) from time to time on the request of the
Lenders, but at the expense of the Transferee, do all
such acts and execute or procure the execution of all
such assurances and documents as the Agent or the
Syndicate Agent may reasonably consider necessary for
giving full effect to the Loan Documents and the Charter
Documents to which it is or will become a party or for
more effectively subjecting the security interests under
the Security Documents and Charter Documents to which it
is or will be a party to the liens of such Security
Documents or more effectively subject such security
interests to the performance of the provisions thereof;
(c) promptly inform the Agent and the Syndicate
Agent of the occurrence of any Incipient Default or an
Event of Default and upon receipt of a written request
from the Agent or the Syndicate Agent to do so, confirm
to the Agent or the Syndicate Agent, as the case may be,
that save as previously notified to the Agent or the
Syndicate Agent, as the case may be, to the best of the
knowledge of the Transferee, no Event of Default has
occurred;
(d) if the Transferee's agent for service of
process referred to in Section 10 shall for any reason
cease to be validly appointed, ensure that another such
agent is appointed (and ensure that such agent
acknowledges such appointment to the Agent or Syndicate
Agent, as the case may be) in a manner reasonably
satisfactory to the Agent or the Syndicate Agent, as the
case may be;
(e) the Transferee shall send to the Agent and
the Syndicate Agent as soon as possible, (i) but in no
event later than one hundred twenty (120) days after the
end of each fiscal year, its accounts of all financial
statements of the Transferee, such financial statements
to be prepared in accordance with generally accepted
United States of America accounting principles at such
time consistently applied all certified as true and
correct by a senior financial officer of the Transferee,
(ii) as soon as the same is instituted (or, to the
knowledge of the Transferee threatened), details of any
litigation, arbitration or administrative proceedings
against or involving it or the Vessels which if adversely
determined would have a material adverse effect on the
Transferee, or operation of the Vessels, (iv) together
with the annual financial statements to be provided in
accordance with clause (i) above a certificate of a
financial officer of the Transferee that no Event of
Default and Incipient Default has occurred and is
continuing, and (v) from time to time, and on demand,
such additional financial or other information relating
to the Transferee and the Vessels as may be reasonably
requested by the Agent or the Syndicate Agent;
B. Negative Covenants.
(1) The Transferee shall not without prior
consent of the Agent and the Syndicate
Agent consolidate or amalgamate with, or
merge into, any other entity, or sell,
convey, transfer, lease, or otherwise
dispose of all or substantially all of its
assets, including but not limited to, by
dividend (whether by one transaction or a
series of transactions and whether related
or not); provided, however, that it may
consolidate or amalgamate with, or merge
into, any other entity, or sell, convey,
transfer, lease, or otherwise dispose of
all or substantially all of its assets if
the buyer, assignee or transferee
corporation (the "Assignee") shall be a
solvent corporation organized and existing
under the laws of the United States of
America or any state thereof following
such transaction and shall have executed
and delivered an agreement, in form and
substance reasonably satisfactory to the
Agent and the Syndicate Agent, containing
an assumption by the Assignee of the due
and punctual performance and observance of
all covenants and obligations of the
Transferee hereunder and under the other
Loan Documents and the Charter Documents
to which it is or shall be a party, and
confirming the accuracy of any
representations and warranties made herein
and in each such other Loan Document and
Charter Document as of the dates herein or
therein required with respect to such
Assignee; and provided further, that
immediately following such transaction, no
Incipient Default or Event of Default
shall have occurred and be continuing.
(2) Except for the Charters, the Transferee
shall not charter any HDW Vessel or Daewoo
Vessel without the prior written approval
of the Agent and the Syndicate Agent,
respectively.
(3) The Transferee will not create or permit
to subsist any lien on the whole or any
part of its present or future assets
except for liens permitted under Section
14 of the Mortgage.
(4) The Transferee shall not make or threaten
to make any substantial changes in its
business as presently conducted, namely
that of a single purpose corporation
owning any of the HDW or Daewoo Vessels
and chartering such Vessels to the
Transferor, and the Transferee shall not
form any subsidiaries.
(5) The Transferee will not create, incur,
assume or allow to exist any Financial
Indebtedness, nor enter into any financing
lease or undertake any material capital
commitment (including but not limited to
the purchase of any capital asset), except
as contemplated hereby.
(6) The Transferee will not make any loan or
advance or extend credit to any Person or
issue or enter into any guarantee or
indemnity or otherwise become directly or
contingently liable for the obligations,
stocks or dividends of, or own, purchase,
repurchase or acquire (or agree
contingently to do so) any stock,
obligations or securities of, or any other
interest in, or make any capital
contribution to, or any other investment
in, any Person, firm or corporation. The
Transferee will not issue any capital
stock or any options, warrants or other
rights with respect to, or securities
convertible into, its capital stock,
except to the Guarantor.
(7) The Transferee will not acquire any
equity, share capital, assets or
obligations of any corporation or other
entity, except as contemplated hereby, and
it will not permit any of its voting
shares or capital stock to be held by any
party other than the Guarantor.
(8) Without the consent of the Agent in the
case of the HDW Vessels and the Syndicate
Agent in the case of the Daewoo Vessels,
the Transferee will not amend, repeal or
modify, its Articles of Incorporation or
other similar documents relating to the
governance of the Transferee.
SECTION 6. Notices.
Notices required or permitted by the terms of this
Acquisition Agreement or any other Loan Document or Charter Document
shall be made in accordance with Section 15.04 of the Loan Agreement.
SECTION 7. Counterparts.
This agreement may be executed in separate counterparts,
each of which, when executed and delivered shall be an original, but all
such counterparts shall together constitute but one and the same
instrument.
SECTION 8. Modification.
Neither this Acquisition Agreement nor any of its terms
may be terminated, amended, supplemented, waived or modified orally, but
only by an instrument in writing signed by the party against which the
enforcement of the termination, amendment, supplement, waiver or
modification is sought.
So long as any Vessel is subject to a Mortgage, neither
this Acquisition Agreement nor any of its terms as the same relate to
that Vessel may be terminated, amended, supplemented, waived or modified
without the prior written consent of KfW or the Syndicate Agent or the
Syndicate, as the case may be.
SECTION 9. Successors and Assigns.
The terms of this Acquisition Agreement shall be binding
upon, and inure to the benefit of, each of the parties hereto, and their
respective successors and assigns.
SECTION 10. Governing Law.
This Acquisition Agreement shall be construed and enforced in
accordance with and governed by the applicable law of the State of New
York (other than the law of the State of New York governing choice of
law), and the Transferee hereby submits itself to New York jurisdiction
and agrees to observe and perform the agreements and covenants and shall
have the rights contained in Section 15.08 of the Loan Agreement to the
same extent and under the same terms and conditions so provided in said
Section 15.08.
SECTION 11. Assignment.
The rights of any Party hereunder may not be assigned,
whether by operation of law or otherwise, except to the extent permitted
by Sections 5.B.(1) of this Acquisition Agreement and Section 10 of the
Loan Agreement, without the consent of the other parties hereto.
SECTION 12. Severability.
If any provision hereof is invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions, and of such provisions in
other jurisdictions, shall not be affected or impaired thereby.
SECTION 13. Table of Contents; Headings.
The Table of Contents and the headings of the Sections
herein are for convenience only and shall not affect the construction or
meaning of any provision of this Acquisition Agreement.
IN WITNESS WHEREOF, the parties have caused this
Acquisition Agreement to be duly executed by their respective officers
as of the day and year first above written.
KREDITANSTALT FUR WIEDERAUFBAU
/s/ Hans Reich / Peter Klaus
By: Hans Reich / Peter Klaus
Title: Board Member / Director
COMMERZBANK AG, HAMBURG
/s/ Joachim Hagemann
By: Joachim Hagemann
Title: Senior Vice-President
/s/ Stefan Kuch
By: Stefan Kuch
Title: Vice-Presient
COMMERZBANK AG (KIEL BRANCH)
/s/ Franz-Josef Cleas
By: Franz-Josef Claes
Title: Director
/s/
By:
Title:
DRESDNER BANK AG in HAMBURG
/s/ Gerhard Roller
By: Gerhard Roller
Title: Senior Manager
/s/ Claus-Dieter Bottcher
By: Claus-Dieter Bottcher
Title: Assistant Manager
VEREINS- und WESTBANK AG
/s/ Suzzane Martens
By: Suzzane Martens
Title: Assistent Vice-President
/s/ Jorgen Kopcke
By: Jorgen Kopcke
Title: Senior Vice-President
DEUTSCHE SCHIFFSBANK AG
/s/ Wulf-Peter Schiering
By: Wulf-Peter Schiering
Title: Senior General Manager and
Attorney-in-Fact
NORDDEUTSCHE LANDESBANK -
GIROZENTRALE
/s/ Friedrich Huech
By: Friedrich Huech
Title: Senior Vice-President
/s/ Jurgen Hartmann
By: Jurgen Hartmann
Title: Vice-President
DEUTSCHE VERKEHRS-BANK AG
/s/ Peter Spincke
By: Peter Spincke
Title: Director
/s/ Joachim Winkler
By: Joachim Winkler
Title: Director
BANQUE INTERNATIONALE A LUXEMBOURG
S.A.
/s/ Jean-Pierre Vernier
By: Jean-Pierre Vernier
Title: First Vice-President
AMERICAN PRESIDENT LINES, LTD.
/s/ Will M. Storey
By: Will M. Storey
Title: Executive Vice-President
APL NEWBUILDINGS, LTD.
/s/ Will M. Storey
By: Will M. Storey
Title: Executive Vice-President
SCHEDULE 1
NAMES AND ADDRESSES OF SYNDICATE MEMBERS
Syndicate Member Address
Commerzbank AG (Kiel Branch) Holstenstrasse 64
D-24103 Kiel
Federal Republic of Germany
Attention: Mr. Claes
Telex: 292898 CBKD
Telecopy: 49-431-9974-372
Dresdner Bank AG in Hamburg Jungfernstieg 22
D-20354 Hamburg
Federal Republic of Germany
Attention: Mr. Roller
Mr.
Bottcher
Telex: 2157170 DR D
Telecopy: 49-40-3501-3818
Vereins- und Westbank AG Alter Wall 22
D-20457 Hamburg
Federal Republic of Germany
Attention: Mr. Kopcke
Mrs.
Mertens
Telex: 215164 VH D
Telecopy: 49-40-3692-3696
Deutsche Schiffsbank AG Domshof 17
D-28195 Bremen
Federal Republic of Germany
Attention: Mr. Pieper
Mr. Onnen
Telex: 244870 DSBR D
Telecopy: 49-421-323539
Norddeutsche Landesbank - Georgsplatz 1
Girozentrale D-30159 Hannover
Federal Republic of Germany
Attention: Mr. Hartmann
Telex: 921634 GZH D
Telecopy: 49 511 36 14785
Deutsche Verkehrs-Bank AG Filiale Hamburg
Ballindamm 6
D-20095 Hamburg
Federal Republic of Germany
Attention: Mr. Spincke
Telex: 402077 DVB
Telecopy: 49-40-308004-12
Banque Internationale a
Luxembourg S.A. 2 Boulevard Royal
L-2953 Luxembourg
Attention: Mr. Jean Pierre
Vernier
Telex: 3326 BIL LU
Telecopy: 35-2-4590-2010
TO THE EXTENT THAT THIS BAREBOAT 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 BAREBOAT
CHARTER PARTY MAY BE CREATED OR PERFECTED THROUGH THE TRANSFER OR
POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL EXECUTED
COUNTERPART CONTAINING THE ACKNOWLEDGEMENT THEREOF EXECUTED BY
[KREDITANSTALT FUR WIEDERAUFBAU AS AGENT] [COMMERZBANK AG AS SYNDICATE
AGENT] ON THE SIGNATURE PAGE THEREOF.
EXHIBIT A
FORM OF [HDW] [DAEWOO]
BAREBOAT CHARTER PARTY
THIS BAREBOAT CHARTER PARTY (the "Charter") dated this
___ day of ______________, 19 , between ______________________, a
corporation organized and existing under the laws of _________
(hereinafter "Owner") and American President Lines, Ltd., a corporation
organized and existing under the laws of Delaware (hereinafter called
"Charterer" or "APL").
W I T N E S S E T H:
WHEREAS, APL has heretofore entered into that certain
Loan Agreement dated ________, 1994 (the "Loan Agreement"), by and among
APL, as Borrower, Kreditanstalt fur Wiederaufbau ("KfW"), Commerzbank AG
(Hamburg) (the "Syndicate Agent"), and the banks listed on Schedule ___
thereto (each, a "Syndicate Member" and, collectively, the "Syndicate"),
as Lenders, with respect to the purchase financing of six (6) container
vessels, including the Vessel described below, and American President
Companies, Ltd. ("APC") has heretofore entered into that certain
Guarantee dated ________, 199 (the "Guarantee"), relating to Owner's
obligations under the Loan Agreement as established pursuant to the
below-defined Acquisition Agreement;
WHEREAS, the date hereof is the Delivery Date of the
below-described Vessel pursuant to the Loan Agreement;
WHEREAS, as contemplated by Section 7(k) of the Loan
Agreement, APL has entered into that certain Agreement to Acquire and
Charter (the "Acquisition Agreement") among Owner and the parties to the
Loan Agreement, pursuant to which APL has transferred to Owner, and
Owner has accepted title to, and is currently the disponent owner of,
the Republic of The Marshall Islands flag vessel PRESIDENT
______________, Official Number _________ (the "Vessel") which term
shall include all the boilers, engines, machinery, bowsprits, masts,
spars, sails, riggings, boats, anchors, cables, apparel, furniture,
fittings, equipment and all other appurtenances to the Vessel
appertaining or belonging, whether now owned or hereafter acquired,
whether on board or not on board, and all additions, improvements and
replacements hereafter made in and to the Vessel, or any part thereof,
or in or to the appurtenances and equipment aforesaid, but shall exclude
leased equipment), and Owner has undertaken all of the payment and
certain of the performance obligations relating to Vessel Indebtedness
in respect of the Vessel under the Loan Agreement, as Borrower (as such
term is defined in the Loan Agreement) (the "Owner Obligations");
WHEREAS, pursuant to the Acquisition Agreement, APL is
permitted, at its option, to transfer to Owner, and Owner has agreed
upon the exercise of such option by APL, to accept title to any or all
of the other [HDW] [Daewoo] Vessels (each of such other [HDW] [Daewoo]
Vessels which is so transferred, together with the above-referenced
Vessel, referred to individually herein as a "Vessel" and collectively
as the "Vessels"), on their respective Delivery Dates pursuant to the
Loan Agreement;
WHEREAS, Owner has simultaneously herewith entered into a
First Mortgage on the Vessel in favor of [KfW] [the Syndicate Agent or
the Syndicate Members] (the "Vessel Lender") [and has also entered into
a Second Mortgage on the Vessel in favor of KfW], in substantially the
form of the First Mortgage set forth in Appendix B-1 [and Appendix B-2,
respectively] to the Loan Agreement as security for the Owner
Obligations in respect of the Vessel, and all other Loans made under the
[Daewoo Tranche] [HDW Tranche] (as such term is defined in the Loan
Agreement) (individually, a "Mortgage" and collectively, the
"Mortgages");
WHEREAS, as contemplated by Section 9.02(h) of the Loan
Agreement and by the Acquisition Agreement, as a condition to the
transfer of the Vessel and any other Vessels pursuant to the Acquisition
Agreement, Owner has agreed to let and demise the Vessel and Charterer
has agreed to hire the Vessel from Owner, on the terms and conditions
set forth in this Charter, such charter of the Vessel to be effective
upon the execution and delivery of this Charter;
WHEREAS, as further contemplated by the Acquisition
Agreement, as further conditions to the transfer of the Vessel and the
other Vessels pursuant to the Acquisition Agreement simultaneously
herewith Owner is entering into the Charter Assignment relating to the
Charter in favor of the Vessel Lender [and the Second Charter Assignment
in favor of [KfW], and Charterer is consenting to such Charter
Assignment [and such Second Charter Assignment] pursuant to this
Charter; and
WHEREAS, capitalized terms used herein but not defined
herein shall have the meanings assigned to them in the Loan Agreement
and the Acquisition Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the receipt and adequacy of which is
hereby acknowledged, Owner and Charterer hereby agree as follows:
1. REPRESENTATIONS OF CHARTERER.
(a) Charterer is a corporation duly organized and
validly existing in good standing under the laws of Delaware with full
corporate power and authority to conduct its business as the same is
presently conducted.
(b) Charterer has legal power and authority to enter
into and carry out the terms of this Charter.
(c) This Charter has been duly authorized by all
necessary action, corporate or other, on the part of Charterer, and this
Charter constitutes, and upon due execution and delivery by Charterer,
the Charter will constitute, in accordance with its respective terms, a
legal, valid and binding instrument enforceable against Charterer,
except to the extent limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws of general application relating to
or affecting the enforcement of creditors' rights from time-to-time in
effect.
(d) Except as previously disclosed to Owner, the Agent
and the Syndicate Agent in writing, there are no actions, suits or
proceedings pending or, to Charterer's knowledge, threatened against
Charterer, or any of its properties affecting the Charter or the
transactions contemplated thereby which would, if adversely determined,
materially and adversely affect the performance of Charterer of its
obligations hereunder.
(e) The consummation of the transactions contemplated
by, and compliance by Charterer with all the terms and provisions of,
the Charter will not violate any provisions of the Certificate of
Incorporation or bylaws of Charterer and will not result in a breach of
the terms and provisions of, or constitute a default under, any other
agreement or undertaking by Charterer or by which it or any of its
property is bound or any order of any court or administrative agency
entered in any proceedings binding on Charterer, or violate any
applicable statute, rule or regulation.
(f) Charterer is not in default and no condition exists
which with notice or lapse of time or both would constitute a default by
Charterer, in any respect which would materially and adversely affect
the ability of Charterer to perform its obligations under this Charter,
under any mortgage, loan agreement, deed of trust, indenture or other
agreement with respect thereto or evidence of indebtedness to which it
is a party or by which it is bound, and is not in violation of or in
default, in any respect which would materially and adversely affect the
ability of Charterer to perform its obligations under this Charter,
under any order, writ, judgment or decree of any court, arbitrator or
governmental authority, commission, board, agency or instrumentality,
domestic or foreign.
(g) Charterer has more than one place of business and
the location of the place of business which is its chief executive
office is 1111 Broadway, Oakland, California 94607.
(h) All taxes (other than taxes based on or measured by
income and withholding taxes), liability for the payment of which has
been incurred by Charterer as such in connection with the execution,
delivery and performance by it of the Charter, have been paid (or
provided for in its accounts if not payable) on or prior to the delivery
date of the Vessel.
(i) All consents, licenses, permissions, approvals,
registrations or authorizations or declarations required by United
States of America federal, state and local governments and the
government of the jurisdiction of incorporation of Charterer and any
applicable foreign jurisdiction (1) to enable it lawfully to enter into
and perform its respective obligations under this Charter, (2) to ensure
that its obligations hereunder are legal, valid and enforceable, and (3)
to make this Charter admissible in evidence in the United States of
America and such country of Charterer's incorporation have been obtained
or made and are in full force and effect.
(j) It has not taken any corporate action nor to its
knowledge has any other steps been taken or legal proceedings been
started or threatened against it for its winding-up, dissolution or
reorganization or for the appointment of a receiver, administrative
receiver, administrator, trustee or similar officer of it or of any or
all of its respective assets and revenues.
2. PERIOD OF CHARTER AND BASIS OF CHARTER HIRE.
(a) Owner agrees to charter and Charterer agrees to hire
the Vessel delivered hereunder on the terms and conditions herein set
forth for a period from the date hereof with respect to the Vessel,
until payment in full on the due date of the final installment of
principal and interest with respect to the Subportion relating to the
Vessel pursuant to Section 5 of the Loan Agreement (together with all
other amounts relating to such Subportion payable in accordance with the
terms of the Loan Agreement, unless earlier terminated in accordance
with the terms hereof upon payment of all such principal and interest
and such other amounts (said period with respect to each Vessel
hereinafter referred to as its "Charter Period").
(b) Subject to the provisions of Section 24(b)(i)
hereof, Charter hire ("Charter Hire") shall be paid by Charterer to
Owner in amount of (i) principal and interest due with respect to the
Subportion relating to the Vessel from the Borrower to the Agent
pursuant to Sections 3, 4, 5, 6 and 12 of the Loan Agreement, and the
related [HDW] [Daewoo] Notes issued by Owner pursuant to Section 4 of
the Loan Agreement, at the times and places, in the manner and to the
parties set forth in said sections and such Notes, [including without
limitation the provisions of Section 3.05(a) with respect to subsidized
interest]1, Section 3.08 with respect to default interest, Section 5.03
with respect to deferrals, and Section 5.04 with respect to prepayment
and (ii) all indemnity payments required under Section 11 of the Loan
Agreement when due and payable. Upon payment in full (upon maturity or
through prepayment pursuant to Section 5.04 of the Loan Agreement), of
all such amounts with respect to any Subportion, together with any
Supplemental Charter Hire required to be paid with respect thereto
pursuant to clause (d) of this Section 2, this Charter shall terminate
with respect to the Vessel.
(c) This Charter may not be cancelled or terminated,
except in accordance with the expressed provisions hereof, for any
reason whatsoever and Charterer shall have no right to be relieved or
discharged from obligation or liability under this Charter except as
otherwise expressly provided herein for any reason whatsoever.
Charterer hereby waives, to the extent permitted by applicable law, any
and all rights which it may now have or which at any time hereafter may
be conferred upon it by statute or otherwise, to terminate, cancel, quit
or surrender this Charter except as otherwise expressly provided herein.
Charterer acknowledges and agrees that its obligation to pay all Charter
Hire and Supplemental Charter Hire pursuant to this Section 2 and all
other amounts payable on behalf of Owner to [the Agent] [the Syndicate
Agent] and the [Holders of the Daewoo Notes] pursuant to the terms of
this Charter shall be absolute and unconditional under any and all
circumstances, shall not be subject to any counterclaim, set-off,
deduction, abatement or defense based upon any claim Charterer may have
against Owner, the Agent, the Syndicate Agent or any other Lender or any
other Person whatsoever, and shall remain in full force and effect
without regard to, and shall not be released, discharged or in any way
effected by any circumstance or condition (whether or not Charterer
shall have knowledge or notice thereof), including, without limitation:
(i) any amendment or modification of this Charter, the Loan Agreement,
any agreements relating to any thereof or any other instrument or
agreement applicable to the Vessel or any part thereof or any assignment
or transfer of any thereof or any furnishing or acceptance of additional
security, or any release of any security, or any failure or inability to
perfect any security; (ii) any failure on the part of the Owner to
perform or comply with any term of this Charter or any failure on the
part of the Agent, the Syndicate Agent or any other Lender to perform or
comply with the terms of the Loan Agreement or any other instrument
agreement applicable thereto; (iii) any waiver, consent, change,
extension, indulgence or other action or inaction under or in respect to
this Charter or any other such instrument or agreement, or any exercise
or nonexercise of any right, remedy, power or privilege under or in
respect of any such instrument or agreement; (iv) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition,
liquidation or similar proceeding with respect to Owner, the Agent, the
Syndicate Agent, the Guarantor, any Lender or any affiliate of any of
them, or their respective properties or creditors, or any action taken
by any court, trustee, receiver or liquidating agent in any such
proceeding, including, without limitation, any termination or rejection
of this Charter or any assignment of either thereof by any court,
trustee, receiver or liquidating agent of Charterer or Owner or of any
of their respective properties in any such proceeding; (v) limitation on
the liability or obligations of Charterer under this Charter or any
termination, or cancellation (except as expressly provided in this
Charter), frustration, invalidity, irregularity or unenforceability, in
whole or in part, of this Charter or any term hereof or any lack of
power or authority of Charterer or Owner to enter into this Charter;
(vi) any assignment or other transfer of this Charter by Owner (whether
pursuant to Section 30 hereof or otherwise) or any lien, charge or
encumbrance, from whatever source arising, on or affecting Charterer's
estate in, or any subchartering of, all or any part of the Vessel
(whether or not pursuant to the express provisions of this Charter or
otherwise); (vii) any damage to, or loss, destruction, requisition,
seizure, forfeiture or marshal's or other sale of, the Vessel or any
exercise of rights with respect to the Vessel under the Mortgage[s];
(viii) any libel, attachment, levy, detention, sequestration or taking
into custody of the Vessel, or any interruption or prevention of or
restriction on or interference with the use or possession of the Vessel;
(ix) any title defect or encumbrance or any dispossession from the
Vessel by title paramount or otherwise; (x) any act, omission,
misrepresentation or breach on the part of Owner under this Charter or
any other agreement at any time existing between Owner and Charterer, or
under any statute, law or governmental regulation; (xi) any other
circumstance whatsoever which might otherwise constitute a legal or
equitable discharge or defense of a charterer and irrespective of any
other circumstance which might otherwise limit the recourse against
Charterer; (xii) any defect in the seaworthiness, condition, design,
operation or fitness for use of the Vessel or the ineligibility of the
Vessel for any particular trade; or (xiii) any other occurrence or
condition whatsoever, foreseen or unforeseen, whether similar or
dissimilar to the foregoing, now existing or hereafter occurring.
Even though Charterer shall be deprived of or limited in
the use of the Vessel in any respect or for any length of time, whether
or not by reason of some act, omission or breach on the part of Owner,
Charterer or any other party, whether or not resulting from accident and
whether or not without fault on the part of Charterer, Charterer will
continue to make all payments required of Charterer by the terms of this
Charter, whether for Charter Hire, Supplemental Charter Hire or
otherwise, without interruption or abatement, unless and until this
Charter shall have terminated with respect to the Vessel in accordance
with the express provisions hereof. If, for any reason whatsoever, this
Charter shall be terminated in whole or in part by operation of law or
otherwise, except as specifically provided herein, Charterer nonetheless
agrees to pay an amount equal to each payment of Charter Hire,
Supplemental Charter Hire or other amounts, at the time such payment
would have become due and payable in accordance with the terms hereof
had this Charter not been terminated in whole or in part.
Nothing contained in this clause (c) shall be construed
to be a waiver, modification, alteration or release of any claims which
Charterer may have at any time during the Charter Period or subsequent
thereto for damages or equitable relief, for breach by Owner or APL of
any provisions in any of the Charter Documents or the Loan Documents, or
by the Vessel Lender of any provisions in any of the Loan Documents, or
for any loss due to any acts taken by any of the parties hereto or
thereto.
(d) As supplemental charter hire ("Supplemental Charter
Hire"), Charterer shall pay as and when due any and all amounts (other
than principal and interest on the [HDW] [Daewoo] Notes, including
interest at the Default Interest Rate) payable by Owner pursuant to the
Loan Agreement with respect to the Subportion relating to each Vessel,
at the times and places, and in the manner and to the parties set forth
in such agreements.
3. DELIVERY AND ACCEPTANCE.
Owner hereby lets, demises and delivers the Vessel to
Charterer and Charterer hereby accepts delivery of the Vessel, pursuant
to the terms of this Charter. IT IS AGREED THAT OWNER MAKES NO WARRANTY
OR REPRESENTATION, EITHER EXPRESSED OR IMPLIED, AS TO TITLE TO, AS TO
THE DESIGN, CONDITION, MERCHANTABILITY OR SEAWORTHINESS OF, AS TO THE
QUALITY OF THE MATERIAL, EQUIPMENT OR WORKMANSHIP IN OR AS TO THE
CONSUMABLE STORES ON BOARD THE VESSEL, OR AS TO THE FITNESS OF THE
VESSEL FOR ANY PARTICULAR PURPOSE OR AS TO THE ELIGIBILITY OF THE VESSEL
FOR ANY PARTICULAR TRADE, OR ANY OTHER WARRANTY OR REPRESENTATION
WHATSOEVER.
4. REDELIVERY.
At the expiration of its Charter Period, the Vessel
(unless lost) shall be redelivered by Charterer to Owner at the end of
the voyage then in progress at a safe berth to be selected by Owner at a
port to be designated by Owner or another mutually agreed port.
5. OPERATING LIMITS.
Charterer shall have the full use of the Vessel, and may
operate the Vessel throughout the world, for the carriage of any lawful
cargoes in any lawful trade on voyages for which the Vessel is suitable
and for which insurance is procured by Charterer and in effect prior to
entering such trades. All necessary insurance required for the trades
in which the Vessel is engaged will be procured by Charterer pursuant to
Section 17 hereof and paid for by Charterer.
6. CONDITION OF VESSEL ON DELIVERY.
(a) The Vessel, upon its delivery hereunder, shall be
documented under the laws of the Republic of The Marshall Islands. No
change will be made in the registry of the Vessel without the approval
of Owner and compliance by Owner with the terms of Section (20)(b) of
the applicable [Mortgage] [Mortgages].
(b) On its delivery, the Vessel is classed _________. On
its delivery, the Vessel shall be in good running order and repair, and
will be, insofar as due diligence shall make it so, strong and well and
sufficiently tackled, apparelled, furnished, equipped and in good
operating condition, ordinary wear and tear and depreciation excepted.
(c) By its acceptance of delivery of the Vessel,
Charterer acknowledges that the Vessel is in all respects satisfactory
to Charterer and such delivery shall constitute full performance by
Owner of all of Owner's obligations hereunder, relating to the condition
of the Vessel, required to be performed by Owner prior to the delivery.
7. INSPECTIONS.
(a) Owner and Charterer shall agree on a single surveyor
appointed for the purpose of determining and stating in writing the
condition of the Vessel at the time of redelivery. If not less than ten
(10) days prior to redelivery, Owner and Charterer shall fail to have
agreed on the surveyor to be appointed for such purpose, either party
may request The American Bureau of Shipping, New York, to make such
appointment, and the surveyor so appointed shall perform such survey.
The expense of the aforesaid surveyor shall be shared equally by Owner
and Charterer. Owner and Charterer may have their own representative in
attendance at all surveys.
(b) Prior to redelivery of the Vessel, the auxiliary
machinery, generators, main propulsion units and boilers may be opened
for inspection only by mutual agreement between Owner and Charterer, in
which event any damage disclosed shall be repaired as may be required
prior to redelivery. The expense of repair shall be paid by Charterer.
If no repairs are found necessary as a result of opening said machinery,
the cost of opening will be borne by the party requesting the opening.
8. MAINTENANCE AND CLASSIFICATION.
Charterer shall be charged with full responsibility for
maintenance and repair of the Vessel throughout the Charter Period and
shall at all times, without expense to Owner, maintain and preserve the
Vessel in good running order and repair, so that the Vessel shall be,
insofar as due diligence can make it so, strong and well and
sufficiently tackled, apparelled, furnished, equipped and supplied and
in every respect seaworthy and good operating condition, ordinary wear
and tear excepted. Furthermore, Charterer shall maintain the Vessel so
as to enable it to the highest classification and rating of The American
Bureau of Shipping for vessels of the same age and type. On redelivery,
any outstanding requirements shall be taken care of by Charterer, or as
Charterer may otherwise mutually agree with Owner in respect thereto.
Owner will authorize The American Bureau of Shipping to release all
records to Charterer relating to the Vessel.
9. INVENTORY.
A complete inventory of the Vessel's entire outfit,
equipment, furniture, furnishings, appliances, spare and replacement
parts whether owned, pooled or shared with other operators, and of all
unbroached consumable stores and slop chest is warranted by Owner at
delivery. An inventory shall be taken and mutually agreed upon by
representatives of Charterer and Owner at the time of redelivery. The
cost of taking such inventory shall be borne equally by Charterer and
Owner. Charterer shall pay all shortfalls from the delivery inventory at
the current market prices at the port of redelivery, except as may be
otherwise mutually agreed.
10. FUEL AND LUBRICANTS.
Charterer shall accept and pay for all fuel and
lubricants in storage tanks on board at the time of the Vessel's
delivery hereunder and, correspondingly, Owner shall accept and pay for
all such fuel and lubricants in storage tanks left on board at the time
of redelivery. Each shall pay for fuel and lubricants in storage tanks
at the last invoiced price paid therefor.
11. USE OF EQUIPMENT.
(a) Charterer shall have the use of the Vessel and its
outfit, equipment (including cabin, crew, galley and container lashing
equipment), furniture, furnishings, appliances, spare and replacement
parts on board the Vessel or ashore as available and shown in the
inventory at delivery under this Charter, and Charterer shall at all
times, and at its own expense, comply with and discharge Owner's
obligations, and shall be entitled to all the benefits and rights of
Owner, under Section (25)(a) of the [Mortgage] [Mortgages] as to
maintenance of the Vessel and its classification and compliance with all
applicable laws, treaties, conventions, rules and regulations of
[state/country of flag], all in accordance with the terms of said
Section (25)(a).
(b) Charterer furnished outfit, equipment (including
cabin, crew, galley and container lashing equipment), furniture,
furnishings, appliances, spare and replacement parts on board the Vessel
and not shown in the inventory or supplemental inventories as Owner
furnished at the time of delivery shall remain the property of
Charterer, and Charterer at the time of redelivery shall have the right
to remove such items or at its option may leave such items on board the
Vessel. All items left aboard the Vessel at the termination of the
Charter with respect to the Vessel shall be deemed abandoned to Owner.
(c) Charterer shall be at liberty to fit any additional
equipment required for the services of Charterer, beyond what is on
board at commencement of Charter with respect to the Vessel, such work
to be done at its time and expense, and such equipment to be considered
its property, and Charterer shall be at liberty to remove such equipment
at its time and expense during or prior to the expiry of this Charter
with respect to the Vessel; provided that such removal shall in no way
significantly alter the condition of the Vessel at the time of its
redelivery to Owner. All additional equipment left aboard the Vessel at
the termination of the Charter shall be deemed abandoned to Owner.
Charterer shall make no substantial change in the structure, type or
speed of the Vessel or change its rig without first obtaining the
written approval of Owner and the Vessel Lender; provided, however, that
no such approval need be obtained in respect of any change which shall
be necessary to comply with the requirements of the United States Coast
Guard, [state/country of flag], or The American Bureau of Shipping in
order to entitle the Vessel to the classification and rating required
above.
12. WARRANTY CLAIMS.
Charterer has retained, and not assigned to Owner, its
rights under the [HDW] [Daewoo] Shipbuilding Agreement with respect to
the Vessel with [Howaldtswerke-Deutsche Werft AG] [Daewoo Shipbuilding &
Heavy Machinery Ltd.] (the "Shipyard") relating to the condition and
performance of the Vessel, including its replacement and repair warranty
rights under said contract, and its rights with respect to the standby
letter of credit relating to such warranty rights, and it is agreed
that:
(a) Charterer may negotiate and process all warranty
claims directly with the Shipyard and shall provide Owner with prior
notice of all warranty claims whenever reasonably practicable;
(b) Owner will cooperate with Charterer in processing
all Vessel warranty claims against the Shipyard if requested by
Charterer; and
(c) All fees and expenses incurred to prosecute or
litigate Vessel warranty claims against the Shipyard shall be borne by
Charterer.
13. OWNER AND VESSEL LENDER INSPECTIONS.
Charterer shall at all reasonable times afford Owner and
the Vessel Lender, or their respective authorized representatives, full
and complete access to the Vessel for the purpose of inspecting or
surveying the same and its papers and, at the request and expense of
Owner or the Vessel Lender, Charterer shall deliver for inspection by
such requesting party copies of any and all contracts and documents
relating to the Vessel, whether on board or not on board.
14. LAY-UP.
Notwithstanding anything to the contrary in this Charter,
Charterer may at any time during the period of this Charter, lay-up the
Vessel at a safe place so long as permitted by the applicable Mortgage
in which case Charterer's obligations under this Charter shall include,
during the period of lay-up, taking the customary precautions for the
maintenance and safety of the Vessel and of paying, in addition to all
other amounts required under this Charter, all other expenses
attributable to such precautions and to the laying-up of the Vessel.
15. CHARTERER TO MAN.
During the period of this Charter, Charterer shall at its
expense, and by its own procurement, man, victual, navigate, operate,
supply, and fuel the Vessel and shall pay all charges and expenses of
every kind and nature whatsoever incident to the use and operation of
the Vessel under this Charter.
16. CONDITION ON REDELIVERY OF VESSEL.
(a) The Vessel shall be redelivered to Owner (unless
lost) pursuant to the terms of this Charter in all respects in the same
condition of operation and repair as when delivered, except as otherwise
provided herein or mutually agreed, ordinary wear and tear not affecting
class excepted. Unless otherwise agreed between the parties and, except
as provided in paragraph (b) of this Section 16, Charterer shall repair
all damages to the Vessel occurring during the Charter Period, and shall
replace all lost, worn out or otherwise non-operating items, to the
extent necessary to put each Vessel in all respects in the same
condition of operation and repair as when delivered, ordinary wear and
tear not affecting class excepted. If, at the time of redelivery,
repairs, renewals, replacements or other obligations for which Charterer
is liable remain to be accomplished and it is mutually agreed between
the parties that such items need not be accomplished before redelivery,
Charterer shall pay the agreed upon cost of such items. At the
redelivery survey provided for in Section 7 hereof, the surveyor
representing both Charterer and Owner shall determine and state the
repairs or work necessary to place the Vessel on the date of redelivery
in the condition and class required in this Charter, which statement
shall include all repairs or work required by outstanding classification
requirements of The American Bureau of Shipping or marine inspection
requirements of the United States Coast Guard, if applicable, in effect
with respect to the Vessel as of the date of the redelivery to place it
in such condition.
(b) Owner agrees that upon the redelivery Charterer
shall have no obligation to renew or repair the Vessel's cell guides,
which shall be returned in "as is, where is" condition.
17. RISK OF LOSS, INSURANCE.
Charterer hereby assumes all of the risks and liability
resulting from or arising out of Charterer's possession, use, operation
or storage of the Vessel, and Charterer shall at all times, at its own
expense, comply with and discharge Owner's obligations under Section
(29) of the [Mortgage] [Mortgages] as to the maintenance of insurance on
the Vessel, and shall be entitled to all the benefits and rights of
Owner under said section, during the Charter Period (and shall, along
with Owner and the Vessel Lender, be named as an assured, additional
assured, and loss payee, as applicable), all in accordance with the
provisions of said section. In any case where Charterer shall be
obligated to give notice to the Vessel Lender pursuant to this Section
17, Charterer shall also give simultaneous notice to Owner.
18. ACTUAL OR CONSTRUCTIVE TOTAL LOSS.
If an Event of Loss shall occur, Charterer shall (i) give
prompt written notice thereof to Owner and the Vessel Lender, (ii)
deposit with the Vessel Lender for the account of Owner, on or before
the Redemption Date, all amounts required to be paid by Owner to the
Vessel Lender on such date pursuant to Section 5.04(b)(ii) of the Loan
Agreement, (iii) pay to Owner any insurance proceeds or other
compensation, in excess of its payment obligations pursuant to subclause
(ii) hereof, and (iv) be entitled to the credit referred to in Section
5.04(b)(iii) with respect to its payment obligations pursuant to
subclause (ii) hereof. Upon Charterer's payment pursuant to subclause
(ii) hereof (to the extent modified by subclause (iv) hereof), this
Charter shall terminate.
19. BILLS OF LADING.
Charterer shall utilize its customary contracts of
affreightment, including its long form and short form bills of lading,
the standard form of Military Sealift Command Shipping Agreement, and
cargo charter parties all of which foregoing documents shall include
Clause Paramount, Liberties Clause, General Average Clause, New Jason
Clause, and Both-to-Blame Collision Clause.
20. GENERAL AND PARTICULAR AVERAGE.
Average adjusters, appointed by Charterer from a list of
adjusters satisfactory to Owner, shall attend to the settlement and
collection of both general and particular average losses subject to the
customary charges. Charterer agrees to assist the adjuster in preparing
the average statement and to take all other possible measures to protect
the interests of the Vessel and Owner.
21. SALVAGE.
All earned salvage will be for Charterer's account.
22. LIENS.
(a) Neither Charterer nor the Master of the Vessel nor
any other Person shall have the right, power, or authority to create,
incur or permit to be placed upon the Vessel any liens whatsoever other
than those permitted by Section 14 of the Mortgage, and shall hold
harmless and indemnify Owner and the Vessel Lender against the claims
and demands of all Persons whomsoever arising as a result of any
mortgage, security interest, lien or charge whatsoever on the Vessel,
except that such undertaking by Charterer shall not apply to the lien of
the [Mortgage] [Mortgages].
(b) Charterer shall at all times, at its own cost and
expense, comply with and discharge Owner's obligations under Sections
(15), (16) and (22) of the [Mortgage] [Mortgages] with respect to the
release and discharge of any lien or levy against the Vessel, and shall
give notice to Owner if it shall be required to give notice to the
Vessel Lender pursuant to said Section (16).
(c) Charterer agrees to carry a properly certified copy
of this Charter and the [Mortgage] [Mortgages] with the ship's papers on
board the Vessel, and agrees to exhibit the same to any person having
business with such Vessel and to any representative of the Vessel
Lender, and agrees also to exhibit the same to any representative of
Owner on demand.
(d) Charterer further agrees to fasten in the Vessel in
a prominent place, and to maintain during the Charter Period a framed
printed or typewritten notice in plain type and which shall cover a
space of not less than six (6) inches wide by nine (9) inches high (or
of such other dimensions as may be required by law) reading
substantially as follows:
"NOTICE OF FIRST [AND SECOND] PREFERRED
SHIP MORTGAGE[S] AND CHARTER
THIS VESSEL IS OWNED BY APL NEWBUILDINGS, LTD., A NEVADA
CORPORATION (THE "SHIPOWNER"), AND IS CHARTERED BY AMERICAN
PRESIDENT LINES, LTD., A DELAWARE CORPORATION, AND IS COVERED BY
A FIRST PREFERRED SHIP MORTGAGE IN FAVOR OF [KREDITANSTALT FUR
WIEDERAUFBAU] [SYNDICATE AGENT OR SYNDICATE MEMBERS] [AND A
SECOND PREFERRED SHIP MORTGAGE IN FAVOR OF KREDITANSTALT FUR
WIEDERAUFBAU], UNDER AUTHORITY OF THE REPUBLIC OF THE MARSHALL
ISLANDS. UNDER THE TERMS OF SAID MORTGAGE[S] AND CHARTER,
NEITHER THE SHIPOWNER, ANY CHARTERER, THE MASTER OF THE VESSEL
NOR ANY OTHER PERSON, HAS ANY RIGHT, POWER OR AUTHORITY TO
CREATE, INCUR OR PERMIT TO BE PLACED OR IMPOSED UPON THIS VESSEL
ANY LIEN WHATSOEVER OTHER THAN THE LIEN OF SAID MORTGAGE[S] AND
LIENS FOR WAGES OF A STEVEDORE WHEN EMPLOYED DIRECTLY BY THE
SHIPOWNER, OPERATOR, MASTER, OR ANY AGENT OF THE VESSEL, FOR
CREW'S WAGES, FOR GENERAL AVERAGE, FOR SALVAGE, AND, TO THE
EXTENT SUBORDINATE TO THE LIEN OF SAID MORTGAGE[S], FOR CERTAIN
LIENS INCIDENT TO CURRENT OPERATIONS OR FOR REPAIRS OR CHANGES
PERMITTED BY THE MORTGAGE[S]."
23. TRANSFER OF ASSIGNMENT.
Charterer shall not, without Owner's and the Vessel
Lender's prior written consent, sell, demise, charter, transfer, or
assign this Charter or any interest therein, or, without such consent,
make any arrangement whereby the maintenance, management, or operation
of the Vessel is to be performed by any other person, except with
respect to requisition or other governmental taking, and except that
Charterer may subcharter the Vessel on a time basis as long as Charterer
shall, at its own cost and expense, comply with Section 9.02(b) of the
Loan Agreement; provided that, notwithstanding such subcharter,
Charterer remains fully liable for all of its obligations under the
Charter Documents. Charterer shall have the right to voyage charter the
Vessel, or to arrange for space or slot charters of a portion of the
Vessel in connection with Charterer's normal liner service.
24. EVENTS OF DEFAULT AND REMEDIES.
(a) The following shall constitute an event of default
under this Charter (hereinafter called a "Event of Default"):
(i) An Event of Default shall have occurred under the
Loan Agreement or [the Mortgage] [or the Second
Mortgage]; or
(ii) Charterer's failure to duly and punctually observe
and perform any of the covenants of Charterer herein and
the continuance of such failure for thirty (30) days
after written notice thereof from Owner to Charterer; or
(iii) Any representation or warranty made by or on
behalf of Charterer in this Charter or in any of the
Charter Documents, or by Charterer in any certificate,
statement or other document issued by or on behalf of
Charterer pursuant to this Charter shall prove to have
been incorrect or misleading in any material respect when
made or deemed made; or
(iv) Any license, authorization, consent or approval at
any time necessary to enable Charterer to comply with its
obligations under this Charter and/or any of the Charter
Documents with respect to the Vessel is revoked or not
granted or fails to remain in full force and effect for a
period of thirty (30) days after notice thereof from the
Vessel Lender.
(b) If an Event of Default shall have occurred and be
continuing:
(i) If the Vessel Lender shall have declared or shall
have been deemed to have declared the whole or any part
of the outstanding principal amount of the [HDW] [Daewoo]
Notes to be immediately due and payable by Owner pursuant
to Section 12.01 of the Loan Agreement and Section (31)
of the Mortgage[s], Charterer shall be immediately
obligated to pay Charter Hire in an amount equal to such
principal amount and interest thereon and interest
thereafter on overdue principal at the Default Interest
Rate;
(ii) Upon such declaration or deemed declaration of
acceleration pursuant to clause (i) hereof, Owner may:
(A) Institute and prosecute any judicial, extra-
judicial, or administrative proceedings as it may
consider appropriate to recover any or all sums due, or
declared due, with respect to Charter Hire and with
respect to any Supplemental Charter Hire due, with the
right to enforce payment of said sums against any assets
of Charterer;
(B) Owner may take possession of the Vessel, with
or without legal proceedings, at any place where the
Vessel may be found (and Charterer shall forthwith
surrender possession of the Vessel to Owner on demand);
and
(C) Owner may terminate Charterer's rights under
this Charter.
(c) In case there shall be pending proceedings for the
bankruptcy or for the reorganization of Charterer under any applicable
law or in connection with the insolvency of Charterer or in case a
receiver or trustee shall have been appointed for its property or its
creditors, Owner or the Vessel Lender as assignee of the Owner,
irrespective of whether Charter Hire shall then be due and payable as
herein expressed or by declaration of acceleration or otherwise, shall
be entitled and empowered to intervene in such proceedings or otherwise,
to file and prove a claim or claims for the whole amount of Charter Hire
or Supplemental Charter Hire owing and unpaid, and to file such other
papers or documents as may be necessary or advisable in order to have
the claims of Owner allowed in any judicial proceeding relative to
Charterer, its creditors, or its property, and to collect and receive
any money or other property payable or deliverable on any such claims,
and to have the same applied pursuant to Section 5.09 [(a)] [(b)] of the
Loan Agreement. Nothing contained in this Charter shall be deemed to
give Owner any right to accept or consent to any plan of reorganization
or otherwise by action of any character in any such proceeding to waive
or change in any way any right of any Holder.
(d) Any monies collected by Owner pursuant to
enforcement of any of its rights hereunder or under any other Charter
Document on account of the occurrence of an Event of Default by or on
behalf of Owner shall be payable to the Vessel Lender and distributed in
accordance with Section 5.09[(a)] [(b)] of the Loan Agreement.
(e) No right or remedy herein conferred upon or reserved
to Owner 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 other Charter Documents 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.
(f) No delay or omission of Owner to exercise any right
or remedy accruing upon any Event of Default nor any course of dealings
between Owner and Charterer shall impair any such right or remedy or
constitute a waiver of any Event of Default or an acquiescence therein
nor shall any single exercise or partial exercise of any such right or
remedy preclude any other exercise thereof or any exercise of any other
or further right or remedy; nor shall the acceptance by Owner of any
security or any payment of any part of Charter Hire or Supplemental
Charter Hire maturing after any Event of Default or of any payment on
account of any past default be construed to be a waiver of any right to
take advantage of any future Event of Default or of any past Event of
Default not completely cured thereby. Every right or remedy given by
this Charter or any other Charter Document or by law to Owner may be
exercised from time-to-time, and as often and in such order as may be
deemed expedient, by Owner.
(g) In case Owner shall have proceeded to enforce any
right, power or remedy under this Charter or under any other Charter
Document, and such proceeding shall have been discontinued or abandoned
for any reason or shall have been adversely determined to Owner, then,
and in every such case, Charterer and Owner shall be restored to their
former positions and rights hereunder with respect to the property
subject or intended to be subject to this Charter or any other Charter
Documents, as the case may be, and all rights, remedies and powers of
Owner shall continue as if no such proceedings had been taken.
(h) Subject to the provisions of Section 24(b) hereof,
Owner shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to Owner under this
Charter or any other Charter Document.
(i) Charterer hereby expressly waives demand and
presentment for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor, bringing of suit, and diligence in taking
any action to collect amounts called for under this Charter at any time
in connection herewith.
(j) No right or remedy herein conferred upon or reserved
to Owner is intended to be exclusive, but cumulative and in addition to
any other right and remedy given hereunder or under the other Charter
Documents.
25. SPECIAL CONDITIONS; SUBORDINATION TO THE LIEN OF THE
MORTGAGE[S].
(a) During the period of this Charter, Charterer may
substitute its own stack marks and insignia for those of Owner on the
Vessel.
(b) Owner shall effect initial registry of the Vessel in
the official name designated by Charterer.
(c) This Charter and each and every provision hereof
shall be subject and subordinate to each and every provision of the
Mortgage[s] in each and every right and any remedy of any party hereto
is subject and subordinate to each and every right and remedy of any
party to the Mortgage[s]. Any lien of the Charterer against the Vessel
for breach of this Charter (whether pleaded and proved as a tort or
otherwise) shall be subject and subordinate to the lien of the
Mortgage[s]. Charterer agrees not to take any action under this Charter
or otherwise which would violate, or cause Owner to violate, any
provisions of the [Mortgage] [Mortgages]. Without limiting the
generality of the foregoing, and in addition to all other obligations
assumed by Charterer hereunder, Charterer will at all times, and at its
own expense, comply with and discharge Owner's obligations, and shall be
entitled to all the benefits and rights of Owner, under the following
sections of the [Mortgage] [Mortgages], all in accordance with the
provisions of said sections: (i) Section (18) with respect to notice of
Events of Default, (ii) Section (21) with respect to operation of the
Vessel in accordance with law, (iii) Section (23) with respect to the
maintenance of the [Mortgage] [Mortgages], (iv) Section 25(c) with
respect to dealing with the Vessel's equipment (in connection with which
Charterer may act without Owner's consent whenever Mortgagee consent is
not required), and (v) Sections (28), (50)(a) and (b) and (51) with
respect to the payment or reimbursement of expenses.
26. OWNERSHIP.
So long as this Charter shall be in effect, Charterer's
interest in the Vessel shall be solely that of a bareboat charterer.
There shall be no option to purchase or other right to acquire a legal
or equitable ownership interest in the Vessel permitted or impled so
long as this Charter shall be in effect. Any contract or implied right
of Charterer to a legal or equitable interest in the Vessel made or
given while this Charter is in effect shall be void and unenforceable.
27. AMENDMENT.
This Charter shall be binding upon, in or to the benefit
of and enforceable by the parties hereto and their respective successors
and assigns. Neither this Charter nor any provision hereof may be
amended, modified, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement
of the amendment, modification, waiver, discharge or termination is
sought; provided that no such amendment, modification, waiver, discharge
or termination shall be made without the prior written consent of the
Vessel Lender.
28. APPLICABLE LAW.
This Charter shall be construed and governed in
accordance with the admiralty and maritime law of the United States of
America and where applicable the law of the State of New York (other
than the law of the State of New York governing choice of law).
29. NOTICES.
All notices or other communications by either party to
the other shall be in writing. If such notice is to the Charterer, it
shall be addressed to:
American President Lines, Ltd.
1111 Broadway
Oakland, CA 94607
Telephone: (510) 272-8000
Facsimile: (510) 272-8932
Telex: 671 4840
Answerback: APL OAK
Attention: Treasurer
If to Owner, it shall be addressed to:
APL Newbuildings, Ltd.
1111 Broadway
Oakland, CA 94607
Telephone: (510) 272-8000
Facsimile: (510) 272-8932
Telex: 671 4840
Answerback: APL OAK
Attention: Treasurer
Any notices or communications provided for herein shall
be deemed to have been given, unless otherwise expressly provided
herein, at the time of mailing when (in the case of telex) the
addressee's answerback shall have been received at the end of the
transmission thereof or (in the case of any letter) when
delivered to that address by facsimile or personally) or when
actually received by the relevant party after being deposited in
the post, first class, postage prepaid, in an envelope addressed
as above. Any party shall have the right to change the address
at which it is to receive notices upon fifteen (15) days prior
written notice.
30. CONSENT TO ASSIGNMENT.
Charterer hereby consents to the assignment of all of
Owner's rights, title and interest in and to this Charter to
[KfW] [Syndicate Agent or Syndicate Members] pursuant to the
[HDW] [Daewoo] Charter Assignment as security for the payment and
performance of the Owner Obligations with respect to the Vessel [and the
second priority security assignment of all such right, title and
interest in this KfW pursuant to the Second Charter Assignment, as
security for certain obligations of Owner to KfW under the Loan
Agreement] and agrees to make all payments due hereunder to the accounts
specified and otherwise in accordance with Section [5.06][5.07] of the
Loan Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Charter to be executed the day and year first above written.
OWNER
APL NEWBUILDINGS,
LTD.
By:
_________________________
Its:
_________________________
CHARTERER
AMERICAN PRESIDENT
LINES, LTD.
By:
_________________________
Its:
_________________________
RECEIPT OF ORIGINAL EXECUTED
COUNTERPART ACKNOWLEDGED:
[Name]
By:__________________________
EXHIBIT B-1 TO
THE AGREEMENT TO
ACQUIRE AND CHARTER
Kreditanstalt fur Wiederaufbau
Palmengartenstrasse 5-9
D - 60325 Frankfurt am Main
Date: 19
Re.: Container Vessel identified by Howaldtswerke-Deutsche Werft AG
(the "Builder") as Yard No. (297) (298) (299) ("the Vessel") -
B IV a F(W) 753
Dear Sirs,
We refer to an agreement ("the Acquisition Agreement") dated ( )
199_ and made between yourselves as Agent and Lender and ourselves as
Transferee. Terms defined in the Acquisition Agreement have the same
meanings herein.
In relation to the Vessel, we hereby confirm that we are ready to take
delivery of and accept the Vessel under the [Acquisition Agreement]
[Shipbuilding Agreement].
We also confirm that the Vessel is recommended for class " " with
The American Bureau of Shipping as per the photocopy or duplicate
provisional certificate attached hereto, and that there is no lien nor
encumbrance on the Vessel other than the lien in favor of the Builder in
respect of the final installment of the Contract Price under the
Shipbuilding Agreement in the amount of DM( ) for the
Vessel payable on delivery under the [Acquisition
Agreement][Shipbuilding Agreement].
Yours faithfully,
for and on behalf of
APL NEWBUILDINGS, LTD.
EXHIBIT B-2
TO THE AGREEMENT TO
ACQUIRE AND CHARTER
Commerzbank AG
Ness 7-9
D-20457 Hamburg
Date: 19
Re.: Container Vessel identified by Daewoo Shipbuilding & Heavy
Machinery, Ltd. (the "Builder") as Yard No. ( ) ( ) (
) ("the Vessel")
Dear Sirs,
We refer to an agreement ("the Acquisition Agreement") dated ( )
199_ and made between yourselves as Syndicate Agent and ourselves as
Transferee. Terms defined in the Acquisition Agreement have the same
meanings herein.
In relation to the Vessel, we hereby confirm that we are ready to take
delivery of and accept the Vessel under the [Acquisition
Agreement][Shipbuilding Agreement].
We also confirm that the Vessel is recommended for class " " with
The American Bureau Shipping as per the photocopy or duplicate
provisional certificate attached hereto, and that there is no lien nor
encumbrance on the Vessel other than the lien in favor of the Builder in
respect of the final installment of the Contract Price under the
Shipbuilding Agreement in the amount of USD( ) for the
Vessel payable on delivery under the Shipbuilding Agreement.
Yours faithfully,
for and on behalf of
APL NEWBUILDINGS, LTD.
Exhibit C to
Agreement to
Acquire and Charter
[HDW] [DAEWOO] [SECOND] CHARTER ASSIGNMENT
FROM
APL NEWBUILDINGS, LTD., the Assignor
TO
[KREDITANSTALT FUR WIEDERAUFBAU, the Assignee]
[COMMERZBANK AG, HAMBURG, as Syndicate Agent, the Assignee]
Dated: __________, 19__
[HDW] [DAEWOO] [SECOND] CHARTER ASSIGNMENT
This [Second] Charter Assignment dated __________ __, 199_ is
made between (i) APL NEWBUILDINGS, LTD., a Nevada corporation (the
"Assignor") and (ii) KREDITANSTALT FUR WIEDERAUFBAU, a public law
company incorporated in the Federal Republic of Germany. [(ii)
COMMERZBANK AG, Hamburg, a banking corporation incorporated in the
Federal Republic of Germany.
W I T N E S S E T H:
WHEREAS, American President Lines, Ltd. ("APL") has
heretofore entered into that certain Loan Agreement dated ________, 1994
(the "Loan Agreement"), by and among APL, as Borrower, Kreditanstalt fur
Wiederaufbau ("KfW"), Commerzbank AG (Hamburg) (the Syndicate Agent),
and the banks listed on Schedule I thereto (each, a "Syndicate Member"
and, collectively, the "Syndicate"), as Lenders, with respect to the
purchase financing of six (6) container vessels, including the Vessel
described below, and American President Companies, Ltd. ("APC") has
heretofore entered into that certain Guarantee dated _______, 199_ (the
"Guarantee"), relating to APL's obligations under the Loan Agreement and
the Assignor's obligations under the Loan Agreement as established
pursuant to the below-defined Acquisition Agreement.
WHEREAS, the date hereof is the Delivery Date of the
below-described [HDW] [Daewoo] Vessel pursuant to the Loan Agreement;
WHEREAS, as contemplated by Section 7(k) of the Loan
Agreement, APL has entered into that certain Agreement to Acquire and
Charter (the "Acquisition Agreement") among the Assignor and the parties
to the Loan Agreement, pursuant to which APL has transferred to the
Assignor, and the Assignor has accepted title to, and is currently the
disponent owner of, the Republic of The Marshall Islands flag vessel
PRESIDENT _______________, Official Number __________ (the "Vessel"),
and the Assignor has undertaken all of the payment and certain of the
performance obligations relating to Vessel Indebtedness in respect of
the Vessel under the Loan Agreement, (the "Owner Obligations");
WHEREAS, pursuant to the Acquisition Agreement, APL is
permitted, at its option, to transfer to the Assignor, and the Assignor
has agreed, at its option, to accept, title to any and all of the other
[HDW] [Daewoo] Vessels (each of such other [HDW] [Daewoo] Vessels which
is so transferred together with the above-referenced Vessel, referred to
individually herein as a "Vessel" and collectively as the "Vessels", on
their respective Delivery Dates pursuant to the Loan Agreement;
WHEREAS, the Assignor has simultaneously herewith entered
into a First Mortgage on the Vessel in favor of [KfW] the Syndicate
and/or Agent or the Syndicate Members (the "Vessel Lender") [and has
also entered into a Second Mortgage on the Vessel in favor of KfW], as
security for the Owner Obligations in respect of the Vessel, and the
Assignor shall, upon their respective Delivery Dates, enter into a First
Mortgage in such form in favor of the Vessel Lender [and a Second
Mortgage thereon in favor of KfW with respect to each of the other
Vessels];
WHEREAS, as contemplated by Section 9.02(h) of the Loan
Agreement and by the Acquisition Agreement, as a condition to the
transfer of the Vessel and any other Vessels pursuant to the Acquisition
Agreement, the Assignor has let and demised the Vessel to American
President Lines, Ltd. as charterer, ("the Charterer") and Charterer has
hired the Vessel from the Assignor on the terms and conditions set forth
in the [HDW] [Daewoo] Charter, dated the date hereof, such charter of
the Vessel being effective upon the execution and delivery of the
Charter;
WHEREAS, as further contemplated by the Acquisition
Agreement, as further conditions to the transfer of the Vessel and the
other Vessels pursuant to the Acquisition Agreement the Assignor is
entering into this [Second] Charter Assignment relating to the [HDW]
[Daewoo] Charter in favor of the Vessel Lender [and the Second Charter
Assignment of the Daewoo Charter in favor of KfW], and the Charterer is
consenting to such Charter Assignment and such Second Charter Assignment
pursuant to the [HDW] [Daewoo] Charter;
WHEREAS, capitalized terms used herein but not defined
herein shall have the meanings assigned to them in the Loan Agreement
and the Acquisition Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Assignor hereby sells, pledges, hypothecates, assigns,
transfers and sets over unto the Assignee and unto the Assignee's
successors and assigns, not absolutely but as security only for the
performance by the Assignor of the Owner Obligations, and grants to the
Assignee a first priority security interest [second priority security
interest] in all right, title and interest of the Assignor in and to the
[HDW] [Daewoo] Charter, all monies due and to become due and claims for
monies due and to become due, and all claims for damages arising out of
the breach of, the [HDW] [Daewoo] Charter, together with any extensions,
renewals, modifications, changes or amendments of the
[HDW] [Daewoo] Charter and any and all proceeds of the foregoing.
2. The Assignor hereby agrees, represents and warrants that:
(a) The [HDW] [Daewoo] Charter is in full force and
effect and enforceable in accordance with its terms;
(b) The Assignor is not in default of any of the terms
of the [HDW] [Daewoo] Charter;
(c) Neither the whole nor any part of the right, title
and interest hereby assigned are the subject of any present assignment
or pledge other than the assignment contained herein [and the Second
Charter Assignment in favor of KfW], and so long as this Charter
Assignment [Second Charter Assignment] shall remain in effect, the
Assignor will not, without the prior written consent thereto of the
Assignee and, assign or pledge the whole or any part of the right, title
and interest hereby assigned to anyone other than the Assignee, its
successors or assigns;
(d) The Assignor will not take or omit to take any
action, the taking or omission of which might result in any alteration
or impairment of the [HDW] [Daewoo] Charter or this Charter Assignment
[Second Charter Assignment] or any of the rights created by the [HDW]
[Daewoo] Charter or this Charter Assignment [Second Charter Assignment];
(e) To the knowledge of the Assignor, the Charterer is
not in default of any of the terms of the [HDW] [Daewoo] Charter;
(f) [Subject to the rights of the Assignee under the
Charter Assignment] [The] Assignor will not enter into or consent to any
amendment, modification or other alteration of the [HDW] [Daewoo]
Charter without first obtaining the prior written consent of the
Assignee. Any amendment, modification or other alteration made without
the written consent of the Assignee shall be null and void.
3. Notwithstanding this Assignment, it is acknowledged,
understood and agreed that:
(a) The Assignor will remain liable to perform all of
the owner's obligations and duties under the [HDW] [Daewoo] Charter.
(b) The Assignor will be deemed the owner under the
[HDW] [Daewoo] Charter except as expressly set forth herein.
(c) The Assignee shall have no obligation or liability
under or pursuant to the [HDW] [Daewoo] Charter by reason of or arising
out of this Assignment, nor to present or file any claim, nor to take
any other action to collect or enforce the performance obligations of
the Charterer or payment of any amounts which have been assigned to them
or to which they may be entitled under this Charter Assignment [Second
Charter Assignment] at any time or times;
(d) So long as no Event of Default (as that term is
defined in the Loan Agreement and the First Mortgage [the Second
Mortgage]) has occurred, is continuing and shall not have been cured and
waived, neither the Assignee, the Assignor nor any successor thereof
shall interfere with the Charterer's possession and its peaceful and
quiet enjoyment of the Vessel.
4. The Assignor confirms to the Assignee its authorization and
direction to the Charterer in the [HDW] [Daewoo] Charter to make payment
of all monies due and to become due under or arising out of the [HDW]
[Daewoo] Charter at the time and in the manner set forth in Section 2(b)
of the [HDW] [Daewoo] Charter.
5. The Assignor does hereby constitute the Assignee, its
successors and assigns, the Assignor's true and lawful attorneys,
irrevocably, with full power (in the name of the Assignor or otherwise),
upon an Event of Default under the Loan Agreement or the First Mortgage
[the Second Mortgage], and in accordance therewith, to ask, require,
demand, receive, compound and give acquittance for any and all monies,
and claims for monies and rights hereby assigned, to endorse any checks
or other instruments or orders in connection therewith and to file any
claims or take any action or institute any proceedings which the
Assignee may deem to be necessary or advisable in the premises.
6. The Assignor hereby irrevocably authorizes the Assignee, at
the Assignor's expense, to file such financing and continuation
statements relating to this Charter Assignment [Second Charter
Assignment] without the Assignor's signature, as the Assignee at its
option may deem appropriate and appoints the Assignee as the Assignor's
attorney-in-fact to execute any such statements in the Assignor's name
and to perform all other acts which the Assignee may deem appropriate to
perfect and continue the security interest conferred hereby.
7. The assignment of the [HDW] [Daewoo] Charter to the Assignee
provided for herein shall take effect immediately upon the execution
hereof and the powers and authorities granted to the Assignee, its
successors or assigns herein, having been given for valuable
consideration, are hereby declared to be irrevocable.
8. The Assignor hereby agrees that at any time and from time to
time, upon the written request of the Assignee, its successors and
assigns, it will promptly and duly execute and deliver any and all such
further instruments and documents as the Assignee, its successors or
assigns, may reasonably require in order to obtain the full benefits of
this Second Charter Assignment and of the rights and powers herein
granted.
9. This [Second] Charter Assignment shall be governed by the
laws of the State of New York (other than the law of the State of New
York governing choice of law) and may not be amended or changed except
by an instrument in writing signed by the party against whom enforcement
is sought.
10. The Assignor hereby authorizes the Assignee to execute and file
financing statements and amendments thereto as provided in Article 9 of
the Uniform Commercial Code.
IN WITNESS WHEREOF, the Assignor has caused this
instrument to be duly executed as of the day and year first above
written.
By:
__________________________
Title:
_______________________________
1 Insert in HDW Vessel Charter only.
U.S.-MEXICO SLOT CHARTER
AGREEMENT
page
U.S. - MEXICO
SLOT CHARTER AGREEMENT
April 26, 1994
U.S.-MEXICO SLOT CHARTER
AGREEMENT
TABLE OF CONTENTS
PAGE
GENERAL PROVISIONS
1. Purpose 1
2. Effective Date 2
3. Implementation Date 2
4. Loops 2
5. Mexico Service Loop Ports of
Call and Rotation 4
6. Basic Slot Allocation 4
7. Compensation 5
8. TEU Entitlement 5
9. Slot Release/Assignment 5
10. Over-Utilization of Deadweight and Space 6
11. Service Disruptions; Drydocking 7
12. Scheduling 8
13. Ship Operation 9
14. Terminals 10
15. Accounting Procedure 10
16. Duration and Termination 11
CHARTER PROVISIONS
17. Charter Definitions 13
18. Vessel Operation and Maintenance 13
19. Delivery 15
20. Trading Limits 15
21. Redelivery 16
22. Master's Responsibility 16
23. Permissible Cargo 16
-i-
U.S.-MEXICO SLOT CHARTER
AGREEMENT
PAGE
24. Restricted Cargo 17
25. Cargo Operations 18
26. Bills of Lading 19
27. Responsibility for Claims 20
28. Indemnity 23
29. General Exceptions 24
30. Epidemics 24
31. Liens 25
32. Salvage 25
33. War 25
34. Requisition 28
35. General Average 28
36. Funnels and Markings 29
37. Super Cargo 29
38. Victualling 29
39. Lights 30
40. Damage 30
41. Certificates 30
42. Protection Clauses 30
43. Sea Carrier Initiative Agreement 30
MISCELLANEOUS PROVISIONS
44. No Assignment 31
45. No Brokers 31
46. Integration/Supersession 31
47. Arbitration 31
48. Applicable Law 33
49. Notices 33
50. Amendment 34
51. Signature Page 34
-ii-
U.S.-MEXICO SLOT CHARTER
AGREEMENT
APPENDICES
Appendix I-A APL Vessels
Appendix I-B TMM Vessels
Appendix II BSA
Appendix III Excess Slot Schedule
Appendix IV Bills of Lading
Appendix V Protection Clauses
-iii-
U.S. - MEXICO
SLOT CHARTER AGREEMENT
AGREEMENT made this 26th day of April, 1994, by and between American
President Lines, Ltd. ("APL"), a Delaware corporation, and Transportacion
Maritima Mexicana, S.A. de C.V. ("TMM"), a Mexico corporation, to implement in
part Federal Maritime Commission ("FMC") Agreement No.203-011435, a space
charter agreement (the "TASCA") filed with the FMC on the 10th day of November,
1993.
APL and TMM hereby agree as follows:
GENERAL PROVISIONS
1. PURPOSE
a. The purpose of this agreement is to set forth the manner in
which the parties hereto (collectively, the "Parties" and singularly, a "Party")
shall charter container slots on vessels performing the Loops described in
Section 4.a. hereof.
b. Nothing contained in this agreement shall be deemed to
permit (i) the carriage by TMM aboard APL vessels of any U.S. military or other
cargo reserved by law or contract with the United States of America for carriage
by U.S.-flag vessels, or (ii) employment of any non-U.S. flag vessel in
violation of U.S. law or any contract with the United States of America.
2. EFFECTIVE DATE
The effective date ("Effective Date") of this agreement shall be
the latest of (a) the date on which all approvals or waivers in respect of this
agreement by the United States Maritime Administration ("Marad"), as required by
law, shall have been granted in form and substance acceptable to the Parties and
shall have become final; (b) the date of the agreement by which the Parties
shall have agreed upon the terms and conditions of an Operating Manual (as
hereinafter defined), the use of marine terminals, and the respective
conference/non-conference status of the Parties in the range of ports covered by
the Loops described in Section 4(a); or (c) the date the President or Managing
Director of each Party notifies the other, in a writing sent to the address set
forth herein, of its readiness to implement this agreement following approval or
ratification of this agreement by the Board of Directors of American President
Companies, Ltd. and TMM, respectively.
3. IMPLEMENTATION DATE
The implementation date ("Implementation Date") of this agreement
shall be the date following the Effective Date on which the Parties agree that
the slot charter herein provided for shall commence.
4. LOOPS
a. The services ("Loops") on which slots shall be chartered
between the Parties are:
(i) The five line-
haul Loops--the PSX, PIX, PNX, SJX and SIX Loops--as
established and hereafter modified pursuant to the
July 24, 1991 Master Slot Charter agreement ("APL-
OOCL MSCA Agreement") between APL and Orient Overseas
Container Line, Inc. ("OOCL") as set forth in
Appendix I-A attached hereto, and
(ii) the Mexico - Asia Service Loop of TMM (the "Max Loop"),
which shall be operated by TMM with seven vessels of
approximately 1750 TEU capacity on a 49-day sailing
with a weekly frequency, on a port rotation
Manzanillo/Lazaro Cardenas/SanPedro-Long
Beach/Yokohama/Kobe/Hong Kong/Kaohsiung/Pusan/
Kobe -
Osaka/Yokohama/Ensenada with eastbound calls at San
Pedro to load/discharge TMM cargo and empty
containers and APL cargo moving other than in U.S.
commerce and APL empty containers. TMM's vessels
deployed in the Max Loop are intended to be in
accordance with the specifications set forth in
Appendix I-B.
(iii) The Parties also agree that APL may use chartered
slots aboard TMM's vessels in the Max Loop making
calls at Long Beach or San Pedro, California to load
or discharge APL cargo moving in U.S. foreign
commerce; provided however, no such use shall occur
unless and until APL shall have first (i) obtained
any approvals or waivers in respect of U.S. foreign
commerce cargo movements from the United States
Maritime Administration as may be required by law,
and (ii) the Parties shall have filed an amendment to
the scope of the TASCA permitting such operations and
such amendment shall have become effective in
accordance with the Shipping Act of 1984.
b. The Parties may by agreement from time to time extend the
application of this agreement to additional Loops, including both Loops
established pursuant to the APL-OOCL MSCA Agreement and Loops beyond the Trade
defined in the APL-OOCL MSCA Agreement. Such modifications shall be set forth
in amendments to Sections 4.a. of this agreement.
c. This agreement shall not apply to vessels operated or
services performed by a Party other than in the Loops described in Section 4(a)
hereof, including vessels operated or services performed by a Party within the
range of ports covered by a Loop described in Section 4.a. which are in addition
to said Loops.
5. MEXICO SERVICE LOOP PORTS OF CALL AND ROTATION
Any addition to or deletion of ports of call, or any changes in
the rotation of ports of call, in the Max Loop shall be the subject of prior
consultation between the Parties.
6. BASIC SLOT ALLOCATION
The allocation of slots from one Party to the other on the Loops
described in Section 4.a. hereof, as well as the deadweight entitlement
associated with such slots and the limitations as to type and size of container
equipment, shall be set forth in a basic slot allocation ("BSA") contained in
Appendix II, which may be amended from time to time by agreement of the Parties.
7. COMPENSATION
Charterer shall compensate Owner for Charterer's use of container
slots on Owner's vessels under this agreement by the payment of slot charter
rates specified in Appendix II and in accordance with the provisions of Section
15. The terms "Charterer" and "Owner" as used in this agreement shall have the
meaning stated in Section 17.
8. TEU ENTITLEMENT
a. As used herein and in Appendices II and III, the term "TEU,"
an acronym for "twenty foot equivalent unit," shall for accounting purposes
mean a container 20' in length, or one-half of a container 40' or 45' in length.
b. Subject always to the allocation of slots, container or type
and size, and deadweight entitlement under Appendix II, the minimum and maximum
allocation of 20', 40', 40' high cube, 45', and refrigerated container slots
between the Parties shall be as set forth from time to time in the Operating
Manual.
9. SLOT RELEASE/ASSIGNMENT
a. A Party not requiring the use of all slots allocated to it
under the BSA for any sailing or portion thereof, shall declare such unused
slots to be available for release to the other by giving notice as mutually
agreed or as may be provided in the Operating Manual. Similarly, a Party
desiring to use slots in excess of the number of slots allocated to it for any
sailing or portion thereof under the BSA shall advise the other of its
requirements.
b. Unless otherwise specifically agreed, upon the release of
any slot subject to the BSA or the charter of any slot in excess of the BSA
pursuant to this Section, the deadweight tonnage allowance pertaining to such
slot shall also be released or transferred.
c. Except as may be provided in Subsection 9a. hereof or in the
Operating Manual, neither Party shall utilize slots in excess of the number of
slots allocated to it under the BSA without having obtained the prior agreement
of the other Party. Nothing contained herein, however, shall be deemed to
preclude the Party providing the vessel from utilizing any slots not included in
the BSA.
d. All slots chartered by one Party to the other in excess of
the BSA shall be compensated for at the rates set forth in the excess slot
schedule specified in Appendix III and shall be settled between the Parties in
accordance with Section 15 hereof. There shall be no compensation or credit for
the use of slots released from the BSA as provided in subsection 9a. to the
Party providing those slots, unless otherwise agreed.
e. Both Parties agree that they shall not slot charter or
subcharter any of the space on the Max Loop, or conclude transshipment
arrangements using such space, with any other ocean common carrier in the Asia -
Mexico trade without mutual agreement.
10. OVER-UTILIZATION OF DEADWEIGHT AND SPACE
In the event a Party utilizes deadweight tonnage or space in
excess of its deadweight tonnage or space entitlement stated in Appendix II and
in the Operating Manual and the amount of such over-utilized deadweight tonnage
or space entitlement exceeds any remaining unutilized deadweight or space
allocation of the other Party, the Parties shall consult concerning adjustment
of their respective entitlements. In making such adjustment, the shut out or
discharge of cargo shall be made first on the basis of the BSA allocation
expressed in TEUs, and if that shall not be sufficient to overcome the over-
utilization, then the deadweight or space allocation shall be enforced against
the other Party by the Party providing the slots.
11. SERVICE DISRUPTIONS; DRYDOCKING
a. In the event of service disruption due to the inability of a
vessel consistently to meet the established schedule, vessel breakdown or
casualty, or other similar causes, the Party responsible shall use its best
efforts to alleviate the cause of the disruption, including providing
replacement tonnage or service as necessary. Where a service disruption
continues for more than 60 days, the other party may, as hereinafter provided,
demand that the party responsible cure the disruption. The Parties shall, upon
the giving of such demand, promptly endeavor in good faith to agree upon a
cure. If within three (3) months of the date of such demand there shall have
been no cure effected, or the Parties fail to reach agreement upon a cure, the
Party having made the demand may withdraw from this agreement upon three (3)
months' prior written notice.
b. The projected drydock plans of the Parties have been
previously exchanged for the first year following the effective date hereof.
Thereafter, each Party shall give 365 days' notice prior to projected drydocking
any of its vessels in a Loop and shall confirm and/or amend, as applicable, the
scheduled dates for such projected drydocking 270 days, 180 days and 90 days
before the scheduled drydocking date. During the drydocking of its vessel, each
Party shall be responsible for providing a mutually acceptable alternative
service or a replacement vessel in the Loop which shall be compatible with the
other vessels serving the same Loop in terms of capacity and speed. If a
replacement vessel is provided, Owner shall give prior notice of the identity of
the replacement vessel sufficient that the other Party will have the opportunity
to make known its views on the suitability of the replacement vessel selected.
c. Any deficit in the number of slots actually provided, as
compared with the number required to have been provided under the BSA, because
of a service disruption or drydocking shall be adjusted and compensated for in
accordance with the provisions of Section 15 hereof.
12. SCHEDULING
a. The schedule of vessels operating in the PSX, PIX, PNX, SJX
and SIX Loops shall be that established pursuant to the APL-OOCL MSCA Agreement.
Such schedule shall be reflected in the Operating Manual defined in Section 13.
b. By the Implementation Date, the Parties shall establish a
long-term schedule (the "Long Term Schedule") covering the operation of the
vessels in the Max Loop for a period of at least 365 days. The Parties shall
update the Long Term Schedule each month during the term of this agreement.
c. The closing time for any particular scheduled sailing in the
above Loops, that is, the time advertised as the latest time at which cargo must
be tendered for such sailing, shall be jointly determined by the Parties.
d. Each Party shall advertise the same schedule of vessel
sailings and closing times as the other Party for any particular sailing in a
Loop.
13. SHIP OPERATION
a. A standard operating manual ("Operating Manual") shall be
mutually established in respect of the Loops and may include, without
limitation, the following:
1) Vessel Performance Criteria
2) Vessel Movement Procedures
3) Slot Allocation Management
4) Scheduling Criteria
5) Loading Procedures
6) Documentation
7) Discharging Procedures
8) Message Formats
9) Instructions to Terminal Operators
10) Dangerous/Non-Standard/Reefer Cargo Procedures
11) Accounting and Administrative Matters
b. The Parties undertake to initially deploy in the Loops their
respective vessels having the specifications set forth in Appendix I (A and B)
and in the Operating Manual. Initial acquisition of and changes in the vessels
of the Parties or material changes in the capacity or operating specifications
of vessels in a Loop shall require the mutual agreement of the Parties.
14. TERMINALS - When acting as Charterer, TMM shall use the terminal
used by APL for loading and discharging of APL vessels at all ports called by
the PSX, PIX, PNX, SJX and SIX Loops. For the Max Loop, the Parties will use
APL's terminals at Kobe, Pusan, San Pedro (eastbound direction) and Kaohsiung
and will use the terminals at which TMM vessels call for the other ports in the
Loop, except as otherwise agreed.
15. ACCOUNTING PROCEDURE
a. Every accounting month, as defined in the Operating Manual,
the Parties shall calculate and agree on the aggregate amounts owing between the
Parties in respect of the slots chartered by each Party to the other in
accordance with Appendix II, whether or not used. Slots used in excess of the
number of slots each Party was required to have provided to the other under the
BSA during such period, shall be calculated as provided in Appendix III. If,
for the reasons stated in subsection 11. c., Owner provides Charterer with less
than the number of slots to which Charterer is entitled under the BSA for any
accounting month, Charterer shall receive a credit for each such under-provided
slot at the Appendix II rate which would have been applicable if used. Any net
balance owing by one Party to the other shall be settled within 10 days of the
termination or close of the relevant accounting month and paid not later than 30
days after invoice receipt. Invoicing procedure will be included in the
Operating Manual.
b. Any other payments due under this agreement shall be made by
such due dates as may be specified therein.
c. In the event that any amount due hereunder is not paid when
due, a late payment penalty shall accrue on such amount at an annualized rate
equivalent to the prime rate charged by the Chase Manhattan Bank, New York, from
time to time, plus 2%. Such penalty shall be calculated on a daily basis on the
outstanding amount and shall be assessed from the due date to the date that the
payment is received and shall be payable on demand.
16. DURATION AND TERMINATION
a. This agreement shall continue in effect for three years
following the Effective Date determined under Section 2, subject to termination
as provided in Section 11 hereof, and, if earlier, concurrently with any
termination of the TASCA, and if earlier, as follows:
i. This agreement shall terminate effective upon the
termination of Agreement No. 203-011340 between APL and Orient Overseas
Container Line, Inc.; provided however, APL shall immediately notify TMM of any
notice of termination given or received by APL, or event which, with the lapse
of time, would cause termination, of Agreement No. 203-011340. After such
notification by APL, the Parties shall enter into discussions in an attempt to
renegotiate this agreement to take into account the service changes necessitated
by such termination.
ii. If the Parties are unable to agree (to the extent
permitted under the laws of Mexico) from time to time upon rate policies or
actions reflected in rates charged and services provided in the trade between
ports and points in Asia, the Indian Subcontinent and the Middle East and ports
and points in Mexico, either Party may request consultation and the Parties
shall thereafter promptly endeavor in good faith to resolve their differences.
If, within three (3) months of the date of such request for consultation, the
Parties fail to reach agreement as to the rate or service item in dispute, the
Party having requested consultation may withdraw from this Agreement upon three
(3) months prior written notice.
iii. In the event that the implementation of this agreement
causes a substantial adverse financial effect on either Party, the Parties, on
the demand of the adversely affected Party, shall consult and endeavor to adapt
this agreement to remove or mitigate such adverse effect, which shall be subject
to any required governmental approvals. If such adaptation is not reached
within three (3) months of the adversely affected Party's demand for
consultation, that Party may terminate this agreement upon three (3) months'
prior written notice; provided, however, such termination may not occur during
the first twelve (12) months after the implementation Date.
iv. In the event that APL's Operating-Differential Subsidy
Agreement (Contract No. MA/MSB 417) is (i) revoked or canceled by unilateral
action of the United States Government without the timely receipt of acceptable
compensation to APL, pursuant to said revocation or cancellation, or (ii)
unilaterally revised, which revision, after giving effect to all compensation
timely received or to be timely received by APL from the United States
Government, shall have a material adverse effect upon APL's financial condition,
the effect of which shall not be cured by any good faith remedial action under
any agreement between the Parties, then the Parties, each acting in good faith,
shall promptly consult to adapt their services to the new situation created
thereby to the extent commercially practicable, If within three (3) months of
the commencement of consultations, the Parties fail to reach agreement as to any
such adaptation, APL may thereafter terminate this agreement upon not less than
three (3) months prior written notice.
b. Marad shall be promptly notified in writing of the Effective
Date and Termination Date of this agreement.
CHARTER PROVISIONS
17. CHARTER DEFINITIONS
As used in this agreement, the term "Vessel" shall refer to each
vessel employed in the Loops. With respect to each Vessel, the term "Owner"
shall refer to the Party operating the Vessel used to provide containers slots
to another Party, and the term "Charterer" shall refer to each Party provided
with and responsible for the utilization of such container slots.
18. VESSEL OPERATION AND MAINTENANCE
a. The Owner shall be fully responsible for the operation of the
Vessel, and shall maintain the Vessel in the highest class of its classification
society for vessels of such type throughout the period of the TASCA and this
agreement. The Owner shall be bound, before and at the beginning of the
voyage, to exercise due diligence to (i) make the Vessel seaworthy; (ii)
properly man, equip, and supply the Vessel; and (iii) make the holds and all
other parts of the Vessel in which containerized cargo is carried fit and safe
for their reception, carriage and preservation. In particular, the Owner shall
exercise due diligence to provide electrical power to refrigerated containers
and to monitor the performance of all such units while on board Owner's Vessel,
and to repair and rectify any breakdown, fault or deficiency which may occur to
such units using the resources on board the Vessel. If such resources are
insufficient, Owner shall, at Charterer's expense, use all reasonable endeavors
to promptly obtain any required spares or specialized repair facilities unless
such breakdown, fault or deficiency is attributable to the Vessel or its
personnel, in which case Owner shall remain obligated to use all reasonable
endeavors to acquire any necessary parts or facilities and to make necessary
repairs, but at its own expense. The Owner shall also properly and carefully
stow, carry, keep, and care for such cargo.
b. Except as otherwise expressly provided in this agreement,
the Owner shall provide and pay for all fuel and lubricating diesel oil; all
wages of the Master, officers and crew; all consular shipping and discharging
fees of and port services pertaining to the Master, officers and crew; all
provisions including galley fuel, fresh water, deck, engine room and other
necessary stores; all port charges; pilotage; towage; agencies; hull and
machinery insurance and any form of insurance required for working the Vessel
and all other usual expenses associated with the operation and maintenance of
the Vessel.
c. Unless otherwise agreed by Charterer, Owner shall not
place in linehaul service vessels over 20 years old unless approved by the Cargo
Reinsurance Association, it being the intent of the Parties that the customers
of Charterer shall not suffer the payment of overage premiums in connection with
cargo insurance.
19. DELIVERY
Delivery of a Vessel into service shall take place at the
Vessel's arrival at a Loop port, unless otherwise agreed, when the Vessel is
safely alongside the berth, and when it is in all respects fit and ready to load
containers and cargo. Delivery of the Vessel into service shall not constitute
a waiver of the Charterer's rights under this agreement.
20. TRADING LIMITS
a. Each Vessel shall be employed in lawful trade for the
carriage of lawful merchandise within a Loop as may, from time to time, be
designated, by the Parties at safe ports and berths where the Vessel can safely
lie always afloat, and always in accordance with the TASCA and within London
insurance market trade warranties and war risk trading warranties.
b. The Owner and Charterer may agree to breach such
warranties to the extent permitted by law and by contract with the United States
of America and/or Mexico, provided they agree as to the proportion in which any
extra insurance and costs thereby incurred shall be shared.
c. A Vessel may deviate from a Loop by agreement of the
Owner and Charterer. Any deviation, however, for purposes of assisting vessels
in distress, in saving or attempting to save life or property at sea, or any
other such reasonable deviation, including one relating to the operating needs
of the Vessel, e.g., vessel breakdown, shall not be deemed a breach of this
agreement.
21. REDELIVERY
Unless otherwise agreed between Owner and Charterer, all slots
allocated to the Charterer pursuant to this agreement shall be redelivered free
of Charterer's containers to the Owner on the completion of deployment of
Owner's Vessels hereunder.
22. MASTER'S RESPONSIBILITY
a. Except as otherwise expressly provided in this agreement,
the Master of the Vessel shall receive all necessary sailing instructions and
orders regarding employment, and all other management arrangements, from the
Owner to the extent permitted by law.
b. The Master shall prosecute all voyages with due dispatch and
render all customary assistance with the Vessel's crew. It is understood that
the Master will perform all voyages in good faith, avoiding all unnecessary
and/or unusual delays and/or deviations.
c. The Master is to ensure that full and correct logs are
kept in the English language which logs shall be accessible at all reasonable
times to the Charterer or its agents; provided however, where the law of the
Vessel's flag requires the logs to be in another language, voyage log abstracts
shall be maintained in English.
23. PERMISSIBLE CARGO
Containerized cargo is to be carried on or under deck at the
Owner's discretion and shall be properly packed and stowed by the Charterer in
seaworthy containers and under such stowage limits and conditions as may be set
forth in the Operating Manual or as may be usual or customary in the Trade.
Unless otherwise prohibited by Section 24 below, the Charterer shall have the
option to load "Nonstandard Cargo" (as defined in the Operating Manual) not
affecting deck fittings but always at the Master's discretion as to stability
and seaworthiness and always subject to the BSA and the limits and conditions of
the Operating Manual and proper practices in the Trade. Charterer's Nonstandard
Cargo shall always be carried under deck unless otherwise agreed by Charterer
before loading.
24. RESTRICTED CARGO
a. Goods which are of a dangerous, obnoxious, inflammable,
explosive, radio-active, corrosive or damaging nature ("Dangerous Cargo"), or
goods the carriage of which is otherwise restricted or excluded by applicable
law, or by Owner's customary practices in the Trade as set out in the Operating
Manual, if any, ("Restricted Commodities"), whether or not shipped by Charterer
without full disclosure in writing to the Owner as to their nature and
character, may at any time before discharge, be landed at any place, thrown
overboard, destroyed or rendered innocuous without liability on the part of the
Owner if they shall, in the sound opinion of the Master or Owners ashore, become
dangerous or noxious to the Vessel or its cargo or to persons. Charterer shall
indemnify Owner for all losses, damages, liabilities, fines, civil penalties and
expenses (including attorneys' fees) suffered by the Owner, caused in whole or
in part by omission of full disclosure as to their nature and character.
b. From time to time the Parties may provide in the Operating
Manual for procedures with respect to the exclusion, loading, carriage and
discharge of Dangerous Cargo or Restricted Commodities.
25. CARGO OPERATIONS
a. The Charterer shall be responsible for properly stuffing
its own containers and for properly and sufficiently packaging, cradling and
otherwise preparing for shipment its own non-containerized cargo which may be
carried under this agreement. The Charterer shall keep and care for its own
containers and cargo at loading and discharging ports, arrange for any
transshipment and deliver its own containers and cargo at destination.
b. The Owner shall be responsible for properly stowing,
lashing, and securing the Charterer's containers and cargo on the Vessel under
the supervision of the Master. The crew shall periodically check the lashing
condition of containers on deck and when necessary re-lash same at sea without
cost to the Charterer.
c. The Charterer shall promptly furnish the Master with,
and be responsible for, all information with regard to the gross weight and
other particulars of the individual containers necessary for stowing, lashing,
unlashing, trimming and calculation of deadweight purposes as may be further set
forth in the Operating Manual.
d. Unless otherwise agreed by the Owner and the Charterer,
each Party shall bear all costs related to the loading, stowing, lashing by
stevedores, unlashing, handling and discharge of its own containers and cargo as
well as all associated terminal costs (including, but not limited to, restows,
empty equipment moves, drayage costs and similar terminal activities costs)
relating to its own containers and cargo. For purposes of this agreement,
stevedores and ocean terminal operators shall be considered the agents of the
Party bearing such costs. If a Party is in privity of contract with such
stevedore or ocean terminal operator on behalf of the other Party, the terms
and conditions of such contracts affecting liability shall apply to Owner and
Charterer equally.
e. Each Party shall be responsible for the payment of
Customs' or other fines or penalties whether or not lawfully levied or imposed,
relating to its own containers and cargo unless the liability arises from the
acts or omissions of the other Party.
f. The Charterer shall be responsible for any fines
whatsoever in the event of smuggling, either by the Charterer's employees or by
Charterer's supercargo, but the Owner shall be responsible for any such acts of
its own Master, officers and/or crew.
g. As used in this provision, containers and cargo will be
deemed to be the containers and cargo of the respective Party which issues the
bill of lading for those containers and that cargo as provided in Section 26
below.
26. BILLS OF LADING
a. The Charterer shall issue bills of lading in its own
regular bill of lading form for cargo occupying the container slots utilized by
Charterer aboard Owner's Vessels. Each Party's regular long form of bill of
lading has been reviewed by the other. Copies of each Party's regular long form
bill of lading are appended hereto as Appendix IV. Neither Party shall revise
its form of bill of lading during the effectiveness of this agreement without
the written consent of the other.
b. The Owner's bill of lading and the Charterer's bill of
lading are each to provide that general average is to be adjusted according to
the York-Antwerp Rules, 1974, as amended 1990, at any port or place at the
option of the Owner and shall apply to containers and goods loaded either on
deck or under deck. The Charterer hereby agrees to abide by Owner's decision as
to such port or place.
27. RESPONSIBILITY FOR CLAIMS
a. Claims for death and personal injury arising from
incidents on board the Vessel shall be borne by the Owner unless caused by the
act, neglect or default of the Charterer, its servants or agents, and all others
for which the Charterer is responsible under this agreement including shippers
of cargo shipped under bills of lading issued by the Charterer.
b. Each of the Owner and Charterer shall process, pay,
compromise, deny and defend claims brought with respect to cargo carried under
its own bills of lading.
c. For all purposes under this agreement, pilots or tugboats
shall be deemed to be the servants of the Owner and under its instructions.
d. Owner shall indemnify Charterer for claims properly
settled under its bill of lading only when such claims arise from:
(i) A breach by
Owner of its obligations under clause 18.a.;
(ii) The
negligence of Owner or its servants or agents;
(iii) A deviation
not permitted under clause 20.c.;
This indemnity undertaking will include all costs and expenses reasonably
incurred in the handling of the claims for which Owner is liable hereunder.
e. Charterer shall promptly notify Owner of any claim or
potential claim it may have under sub-paragraph d. above.
f. Any claim by Charterer under subparagraph d. must be
brought against Owner within 12 months of the date of settlement of the bill of
lading claim, failing which it will be time-barred.
g. Owner and Charterer shall promptly furnish any documents
or information required for the handling of any claims under bills of lading
issued by either Party.
h. Where Owner accepts liability for claims under
subparagraph d., Owner agrees that, if requested by Charterer, it shall take
over the handling of the claims under the bills of lading.
i. Where Owner is presented with claims under bills of
lading issued by Charterer, Owner will immediately notify Charterer of the claim
and Charterer will thereafter take over the handling of it unless, at
Charterer's request, Owner agrees to deal with the claim in accordance with the
provisions of subparagraph h.
j. With respect to containers:
(1) The Owner shall defend, indemnify and hold
harmless the Charterer from and against all liability, claims, loss and expense,
including reasonable attorneys' fees the Charterer may incur, which in any way
may arise from or be connected with any loss or damage to containers of or
booked by the Charterer occurring while such containers are in the possession or
custody of the Owner pursuant to this agreement, except such liability, claims,
loss and expense which is caused by the negligence of the Charterer, its agents
(including, but not limited to, stevedores and ocean terminal operators),
employees or shippers or by latent defects in such containers.
(2) The Charterer shall defend, indemnify and hold
harmless the Owner from and against all liability, claims, loss and expense,
including reasonable attorneys' fees, caused by defects in containers of or
booked by the Charterer or by a failure in service of such containers which is
the proximate result of the negligence of the Charterer, its agents, employees
or shippers.
(3) For purposes of this subsection j., a Party
obligated to indemnify another party for the total or constructive total loss of
a container owned or leased by the latter shall compensate the latter at the
depreciated replacement cost thereof or, in the case of leased containers, at
the loss value stipulated in the leasing Party's lease.
(4) As used in subsection j.(3) above, the term
"depreciated replacement cost" shall mean the then current replacement cost of
containers of the same type and specification, depreciated on a straight line
basis at the rate of 5% for dry containers of aluminum and steel construction,
and 6.6% for refrigerated containers and dry containers of all steel
construction, for each year
lapsing between the date of manufacture and delivery of the equipment until the
date of loss. Notwithstanding the foregoing, in no event shall the compensation
paid be less than 35% of replacement cost. Fractions of years shall be
prorated.
(5) As used in subsection j.(3) hereof, the
term "constructive total loss" shall mean a condition of damage to a unit of
container equipment which, if repaired by a competent repairman at prevailing
rates to good working order, would result in an expense exceeding the
depreciated replacement cost of the unit or, in the case of a leased container,
its stipulated loss value.
k. Notwithstanding anything in this agreement to the
contrary, this section shall not be deemed to be for the benefit of any third
party or to confer any rights thereon.
l. Notwithstanding anything in this agreement to the
contrary, it is expressly agreed that the Owner shall remain responsible for all
insurance liability cover for, but not limited to, personal injury and cargo
claims for which Owner is responsible hereunder to the extent of Shipowners' P &
I cover as per the Owner's P & I Club rules and conditions including Owner's
normal deductibles with a reputable P & I Club. Both the Owner and the Charterer
guarantee to maintain such P & I cover for the duration of this agreement and
will provide evidence of such cover upon request.
28. INDEMNITY
a. If for any reason the Owner or the Charterer is obliged
to pay any claims, Customs or other fines or penalties for which the other Party
has assumed liability under this agreement, such other Party hereby agrees to
indemnify the Owner or the Charterer as the case may be against all loss, damage
or expenses arising or resulting from such claims.
b. The Owner and Charterer agree that notwithstanding the
existence of this agreement, the TASCA or any other agreement entered into by
the Parties to implement the TASCA, or of any provision herein or therein to the
contrary, the Owner shall have the benefit of all limitations of, and exemptions
from, liability accorded to an owner or chartered owner by any statute or rule
of law, including but not limited to The U.S. Limitation of Liability Act, 46
U.S.C. App. 181 et seq. to the extent applicable.
29. GENERAL EXCEPTIONS
a. As between the Owner and the Charterer, the
responsibility for any loss, damage, delay or failure in performance of this
agreement (other than for loss, damage, delay or misdelivery of cargo or
containers and as otherwise provided in this agreement) shall be subject to the
following mutual exceptions: act of God, act of war, perils of the seas, civil
commotion, strikes, lockouts, restraint of princes and rulers, errors of
navigation, and quarantine
restrictions. Restraint of princes and rulers shall extend to any requisition
of a vessel by a national government under statute or contract.
30. EPIDEMICS
The vessel shall not be ordered to and shall not be bound to
enter any place where fever or epidemics are prevalent or to which the Master,
officers and crew, by law, are not bound to go. Each Owner shall cause its
Masters, officers and crew to be vaccinated, if necessary, against smallpox,
cholera and yellow fever and the necessary valid international certificates to
be available on
board the vessel for each crew member at any time.
31. LIENS
a. The Owner shall have a lien upon all subfreights
belonging to the Charterer and any bill of lading freight for all claims and
amounts due it under this agreement, including general average contributions.
b. Except to the extent that Charterer's performance
hereunder may result in such liens or encumbrances, the Charterer will not
cause, and if caused will timely remove, any lien or encumbrance incurred by
itself or its agents upon Owner's Vessel, which might have priority over the
title and interest of the Owner or any mortgagee in the vessel.
32. SALVAGE
All salvage and assistance to other vessels shall be for the
benefit of the Owner and the Charterer in proportion to the applicable BSA ratio
for eastbound voyages after deducting the Master's and crew's proportion and all
legal and other expenses and repairs of damage and fuel consumed. The Charterer
shall be bound by all measures taken by the Owner in order to secure payment of
salvage and to fix its amount.
33. WAR
a. In the event of the outbreak of hostilities or similar
circumstances as hereinafter described, (1) with respect to any voyage then in
progress, unless otherwise agreed by the Owner and the Charterer, and (2) with
respect to any subsequent voyage, unless directed by the Owner, the vessel shall
not be ordered or continue to any place which would bring it within a zone which
is dangerous as the result of any actual or threatened act of war, hostilities,
warlike operations, acts of piracy or of hostility or malicious damage against
any vessel or its cargo by any person, body or state, revolution, civil
commotion or the operation of international law, or be exposed in any way to any
risks or penalties whatsoever consequent upon the imposition of sanctions, or
carry any goods that may in any way risk exposure to seizure, capture, penalties
or any other interference of any kind whatsoever by the belligerent or fighting
powers or parties or by any government or ruler.
b. Should the Vessel approach or be brought or be ordered
within such zones, or be exposed in any way to the said risks, the Owner shall
be entitled from time to time to insure its interest in the vessel against any
of the risks likely to be involved thereby on such terms as the Owner shall
think fit. So long as the vessel remains in service hereunder, any existing war
risk insurance and any war bonus to officers or crew shall be borne by the Owner
and the Charterer in proportion to the applicable BSA ratio for eastbound
voyages. Notwithstanding the foregoing, Charterer will have the option to
withdraw from participation in any Loop which would bring the Vessel within such
zones. In such case, Charterer shall have no obligation to perform under this
agreement in respect of such Loop unless and until the hostilities or threatened
hostilities come to an end. In such event, the Charterer's right to receive
credits for under-provided slots referred to in subsection 15.a. shall not
apply.
c. The Vessel shall have the liberty to comply with any
orders or directions as to departure, arrival, routes, ports of call, stoppages,
destination, delivery or in any other way whatsoever given by the government of
the nation under whose flag the vessel sails or any other government or any
person (or body acting or purporting to act with the authority of such
government) or by any committee or persons having under the terms of the war
risks insurance on the vessels the right to give any such orders or directions.
d. In the event of the outbreak of warlike hostilities
(whether there is a declaration of war or not) between any two or more of the
following countries: the United States of America, the Republic of China
(Taiwan), territories or nations formerly comprising the Union of Soviet
Socialist Republics, the People's Republic of China, Japan and any other major
Pacific maritime nations, the Owner or the Charterer may agree to cancel this
agreement, whereupon the Charterer shall effect redelivery as provided herein,
and the Owner shall phase out the Vessel as provided in this agreement. If the
Vessel has cargo on board after discharge thereof at destination or if barred
under this section 33 from reaching or entering a near, open and safe port as
directed by the Owner, or if vessel has no cargo on board, in the ports at which
it is berthed, or if at sea, near an open and safe port as directed by the
Owner, all provisions of this agreement shall apply until redelivery.
e. If in compliance with the provisions of this section
anything is done or is not done, such action shall not be deemed a deviation.
34. REQUISITION
The responsibility and obligations of the Parties in the case of
any sequestration or requisition of a vessel by any government or charter by
such government pursuant to any manner of agreement existing as of the Effective
Date, or renewals thereof or successors thereto, with the Owner shall be the
same as in the case of a casualty under section 11 hereof except that the period
of time for the provision by the Owner of a replacement vessel shall be 180
days; provided, however, in the event of a partial sequestration of a vessel for
a consecutive term of less than one year, the parties agree their sole remedy
shall be a proportionate reduction of their respective BSA shares on the
affected vessel(s).
35. GENERAL AVERAGE
a. General average shall be settled according to the York-
Antwerp Rules 1974, as amended in 1990. If Owner charters its Vessel, the
charter hire paid shall not be included in contributions to general average.
The Owner authorizes and empowers the Charterer to act as the agent of the Owner
in settlement of general average with, and in obtaining adequate security from:
1) cargo interests for goods for which the Charterer
acts as carrier under a bill of lading or contract of
affreightment unless delivered to the consignee prior
to notice being given by the Owner to the Charterer
that general average security is required, and
2) owners of containers owned or hired by the Charterer.
b. Containers and cargo shall contribute to general average
whether carried on or under deck.
c. If the Owner charters its Vessels from others, the
charter party shall provide that general average shall be settled in accordance
with paragraph a.
36. FUNNELS AND MARKINGS
Unless otherwise agreed, the Vessel and its funnels shall bear the
colors, markings and logos of the Owner. One vessel in the Max Loop shall bear
the name provided by APL.
37. SUPER CARGO
The Charterer shall have the option of placing a super cargo on
board at any port at its risk and expense. If the Charterer requests, its super
cargo shall be furnished by Owner with accommodations and the same fare as
provided for the Master's table. Any such person placed on board shall remain
under the Charterer's responsibility and shall be fully insured by the
Charterer. It is understood that a super cargo shall have no authority to issue
orders or instructions to the Vessel's master or crew.
38. VICTUALLING
The Owner to victual pilots, customs officers, immigration and
quarantine officials at the Owner's expense.
39. LIGHTS
The Owner shall supply light on deck and in holds, and on board
at all times, free of expense to the Charterer, unless electrical clusters from
shore are compulsory, in which case same to be for the account of the Owner.
40. DAMAGE
The Owner shall instruct Master to notify the Charterer or the
Charterer's agent in writing at the port involved concerning any damage caused
to Charterer' containers and/or cargo while on board the vessel. The Master
shall immediately obtain a signed damage report from the responsible party or
state the reasons why the responsible party has refused to sign such a report.
41. CERTIFICATES
The Owner shall undertake that all of the vessel's certificates are
valid and will be maintained so at Owner's time and expense throughout the
duration of this agreement.
42. PROTECTION CLAUSES
Modified New Jason Clause, Modified New Both-to-Blame Collision
Clause, U.S. Trade - Unique Bill of Lading Identifier Clause and Modified U.S.
Oil Pollution Clause as set forth in Appendix V hereto are deemed to be fully
incorporated into this agreement.
43. SEA CARRIER INITIATIVE AGREEMENT
The Owner confirms that it has signed a Sea Carrier Initiative
Agreement with the U.S. Customs.
MISCELLANEOUS PROVISIONS
44. NO ASSIGNMENT
Unless otherwise agreed by the Parties, neither Party shall assign
this agreement, or sublet container slots allocated to it under the BSA.
45. NO BROKERS
No brokers were involved with the negotiation or conclusion of
this agreement and no commissions are payable by the Parties hereunder.
46. INTEGRATION/SUPERSESSION
To the extent possible, this agreement including any amendments,
addenda, and appendices hereto and any other agreement entered into by the
parties to implement the TASCA shall be read in conjunction with and interpreted
as consistent with the TASCA. In the event of any conflict or inconsistencies,
first, the terms of the TASCA shall always prevail and be paramount over this
agreement and any other document and/or agreement and second, the terms of this
agreement shall prevail over any bill of lading or other documents and/or
agreement except the TASCA.
47. ARBITRATION
a. Except as otherwise provided herein, any dispute or claim
arising under or in connection with this agreement which is not amicably settled
by the parties shall be settled by arbitration. Such arbitration shall be held
in New York, New York by a panel of three arbitrators familiar with ocean
container shipping, unless the parties can agree on a single arbitrator, no
member of which shall have any interest in or with either party. Upon agreement
of the parties, arbitration may be held in any other place. Arbitration shall
be conducted under the Title 9 of the United States Code and otherwise in
accordance with the Maritime Arbitration Rules of the Society of Maritime
Arbitrators, Inc.
b. Either Party hereto may call for such arbitration by
service upon the other at the address referenced in Section 49 hereof of a
written notice specifying the name and address the arbitrator chosen by the
first moving Party and a brief description of the disputes or differences which
such Party desires to put to arbitration. If the other Party shall not, by
notice served upon the first moving party at the address referenced in Section
49 hereof within twenty days of the service of such first notice, appoint its
arbitrator to arbitrate the dispute or differences specified, then the first
moving Party shall have the right without further notice to appoint a second
arbitrator, who shall be a disinterested person with precisely the same force
and effect as if said second arbitrators had been appointed by the other Party.
In the event that the two arbitrators fail to appoint a third arbitrator within
twenty days of the appointment of the second arbitrator, either arbitrator may
apply to a Judge of any court of competent maritime jurisdiction in New York,
New York for the appointment of a third arbitrator, and the appointment of such
arbitrator by such Judge on such application shall have precisely the same force
and effect as if such arbitrator had been appointed by the two arbitrators.
Until such time as the arbitrators finally close the hearings, either Party
shall have the right by written notice served on the arbitrators and on the
other Party to specify further disputes or differences under this agreement for
hearings and determination.
c. The arbitrators, by majority vote in writing, may award
damages and expenses which they deem proper. In addition, the arbitrators shall
assess the costs of the arbitration including interest, prejudgment interest,
their fees and reasonable attorney's fees, against either Party, or both, in
such manner as they shall set forth in their written findings of facts and
conclusions. Such decision shall be final and conclusive, shall be rendered
within 90 days of the final submissions of the Parties, including briefs, and
may be enforced in any court of competent jurisdiction. The arbitrators may not
award exemplary or punitive damages nor may they order specific performance. A
copy of such decision shall be served by the arbitrators on the parties.
48. APPLICABLE LAW
The interpretation, construction and enforcement of this
agreement shall be governed by the laws of the State of New York, without
reference to the laws of New York respecting conflict of laws, and, to the
extent applicable, by the law of the United States including general maritime
law.
49. NOTICES
All notices and other communications under this agreement shall be given as
provided in Article 13 of the TASCA.
50. AMENDMENT
This agreement may not be amended except in writing and duly signed by
authorized officers of the parties, and any amendment so signed shall constitute
part and parcel of this agreement.
IN WITNESS WHEREOF the parties have caused this agreement to be executed
by their duly authorized signatories on the day and year first above written.
AMERICAN PRESIDENT LINES, LTD.
By: John M. Lillie
Name: John M. Lillie
Title:Chairman of the Board of
Directors
TRANSPORTACION MARITIMA
MEXICANA, S.A. de C.V.
By: _Jose Francisco Serrano
Name: Jose Francisco Serrano
Title: Chairman of the Board of
Directors
DA940426LCon-bb-US-MexSlotChrtr
TITLE PAGE
AGREEMENT NAME: AMERICAN PRESIDENT LINES, LTD. ("APL")
TRANSPORTACION MARITIMA MEXICANA,
S.A. DE C.V. ('TMM'")
SPACE CHARTER AGREEMENT
FMC NUMBER: _______________________________
CLASSIFICATION: The generic classifications of this Agreement
within the meaning of 46 C.F.R. 572.104
is Space Charter Agreement
DATE LAST REPUBLISHED: Not Applicable
EXPIRATION DATE: _____________________________
Substitute
TITLE PAGE
AGREEMENT NAME: AMERICAN PRESIDENT LINES, LTD. ("APL")
TRANSPORTACION MARITIMA MEXICANA,
S.A. DE C.V. ('TMM'")
SPACE CHARTER AGREEMENT
FMC NUMBER: _______________________________
CLASSIFICATION: The generic classifications of this Agreement
within the meaning of 46 C.F.R. 572.104
are Space Charter Agreement
and Cooperative Working Arrangement
DATE LAST REPUBLISHED: Not Applicable
EXPIRATION DATE: _____________________________
APL/TMM SPACE CHARTER AGREEMENT Original Page
No. 2
FMC AGREEMENT NO. ___________________
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C>
ARTICLE 1 FULL NAME OF THE AGREEMENT 3
ARTICLE 2 PURPOSE OF THE AGREEMENT 3
ARTICLE 3 PARTIES TO THE AGREEMENT 3 - 4
ARTICLE 4 GEOGRAPHIC SCOPE OF THE AGREEMENT 4
ARTICLE 5 AGREEMENT AUTHORITY 4 - 8
ARTICLE 6 OFFICIALS OF THE AGREEMENT AND
DELEGATIONS OF AUTHORITY 8
ARTICLE 7 MEMBERSHIP AND READMISSION 8 - 9
ARTICLE 8 VOTING 9
ARTICLE 9 DURATION AND TERMINATION OF AGREEMENT 9 - 10
ARTICLE 10 APPLICABLE LAW 10
ARTICLE 11 ARBITRATION 11 - 13
ARTICLE 12 NON-ASSIGNMENT 13
ARTICLE 13 NOTICES 13
ARTICLE 14 ENFORCEABILITY 14 - 15
ARTICLE 15 SIGNATURE PAGE 15
</TABLE>
APL/TMM SPACE CHARTER AGREEMENT Original Page No.
3
FMC AGREEMENT NO. ___________________
ARTICLE 1: FULL NAME OF THE AGREEMENT
The full name of this Agreement is the APL/TMM SPACE CHARTER AGREEMENT
(the "Agreement").
ARTICLE 2: PURPOSE OF THE AGREEMENT
The purpose of this Agreement is to permit each of the Parties to it to
achieve efficiencies and economies in their respective services offered in the
Trade (as hereinafter defined) covered by the Agreement, all to the benefit of
the Parties and the shipping public.
ARTICLE 3: PARTIES TO THE AGREEMENT
The parties to the Agreement (hereinafter "Party" or "Parties") are:
1. AMERICAN PRESIDENT LINES, LTD.
1111 Broadway
Oakland, California 94607
APL/TMM SPACE CHARTER AGREEMENT Original Page No.
4
FMC AGREEMENT NO. ___________________
2. TRANSPORTACION MARITIMA MEXICANA, S.A. DE C.V.
Av. de la Cuspide No. 4755 - 10th Floor
14010 Mexico, D. F.
ARTICLE 4: GEOGRAPHIC SCOPE OF THE AGREEMENT
The Agreement covers the trades and various subtrades between ports and
points in the Far East, the Indian Subcontinent and the Middle East, and ports
in the states of California and Washington in the United States and interior and
coastal points in the United States via such U.S. ports (collectively, the
"Trade"). The "Far East, Indian Subcontinent and Middle East" is defined to
include Japan, Siberia, Korea, People's Republic of China, Taiwan, Hong Kong,
Macao, Thailand, Democratic Kampuchea (Cambodia), Vietnam, Singapore, Malaysia,
Laos, Burma, Brunei, Philippines, Sri Lanka, Indonesia, Australia, New Zealand,
India, Pakistan, Bangladesh, the United Arab Emirates, and Saudi Arabia.
"United States" means the several states thereof, its commonwealths, territories
and possessions.
ARTICLE 5: AGREEMENT AUTHORITY
5. (a) Limited Grant. Notwithstanding any other provision of this
Agreement, APL shall not be authorized by this Agreement to charter space to TMM
in its individual services, if any, between the continental United States and
Hawaii; between
APL/TMM SPACE CHARTER AGREEMENT Original Page No.
5
FMC AGREEMENT NO. ___________________
the United States (including Hawaii) and Guam; and between any other ports or
points in the U.S. domestic trade. Nor shall this Agreement be construed as
granting a right to TMM to carry aboard APL vessels cargoes shipped from, to, or
on behalf of, any U.S. government agency which shipments are subject to cargo
preference laws requiring transportation aboard vessels documented under the
laws of the United States. TMM shall not slot-charter or sub-charter any of the
space on APL vessels granted to TMM pursuant to this Agreement to any other
ocean common carrier or non-vessel-operating common carrier without the prior
written consent of APL; provided however, that TMM may enter into bills of
lading for the transportation of shipments of non-vessel-operating common
carriers pursuant to TMM tariffs on file with the Federal Maritime Commission.
5. (b) Space Charter. The Parties may discuss and agree upon the terms
and conditions pursuant to which APL may charter space to TMM in the Trade on
APL vessels sailing from or to ports in the states of California and Washington
and on the vessels of third party carriers on which vessels APL has chartered
space to and from such ports. The parties may from time to time agree on the
number of containers or amount of space to be so chartered and the rates,
charges or other compensation to be paid or otherwise exchanged for said
transportation.
5. (c) TMM Withdrawal. The Parties may discuss and agree upon the
withdrawal, in whole or in part, and on a temporary or seasonal basis, of TMM
vessel calls at U.S. Pacific Coast ports in TMM's services between ports in Asia
and Mexico
APL/TMM SPACE CHARTER AGREEMENT Original Page No.
6
FMC AGREEMENT NO. ___________________
and U.S. Pacific Coast ports. With respect to any TMM vessel calls to U.S.
Pacific Coast ports from time to time, the Parties may discuss and agree upon
the compensation, schedule, terms and conditions of carriage of empty APL
containers aboard TMM vessels.
5. (d) Feeders. The Parties may discuss and agree upon any and all
aspects of feeder operations in the Far East in connection with and ancillary to
their services in the Trade, including, without limitation, the deployment and
utilization of feeder vessels, feeder vessel sailing schedules, service
frequency, ports to be serviced, port rotation, the number, type and capacity of
feeder vessels, the terms and conditions under which the Parties shall share
the capacity of feeder vessels, and the terms and conditions of addition or
withdrawal of feeder vessel capacity.
5. (e) Equipment Interchange and Services. The Parties may interchange
empty containers, chassis related equipment to provide for the efficient use of
such equipment on such terms as they may agree. The Parties may also jointly
contract with or coordinate in contracting with stevedores, terminals, ports,
and suppliers of equipment, land or services or may designate the other to
provide such services on the designating Party's behalf.
5. (f) No Joint Service. The space chartering contemplated hereby and the
cooperative use of equipment, terminals, stevedores, ports, and suppliers to
the extent provided hereunder do not create a joint service or permit the
Parties to
APL/TMM SPACE CHARTER AGREEMENT lst Revised Page No.
6
FMC AGREEMENT NO. ___________________
and U.S. Pacific Coast ports. With respect to any TMM vessel calls to U.S.
Pacific Coast ports from time to time, the Parties may discuss and agree upon
the compensation, schedule, terms and conditions of carriage of containerized
cargo and empty APL containers aboard TMM vessels.
5. (d) Feeders. The Parties may discuss and agree upon any and all
aspects of feeder operations in the Far East in connection with and ancillary to
their services in the Trade, including, without limitation, the deployment and
utilization of feeder vessels, feeder vessel sailing schedules, service
frequency, ports to be serviced, port rotation, the number, type and capacity of
feeder vessels, the terms and conditions under which the Parties shall share
the capacity of feeder vessels, and the terms and conditions of addition or
withdrawal of feeder vessel capacity.
5. (e) Equipment Interchange and Services. The Parties may interchange
empty containers, chassis related equipment to provide for the efficient use of
such equipment on such terms as they may agree. The Parties may also jointly
contract with or coordinate in contracting with stevedores, terminals, ports,
and suppliers of equipment, land or services or may designate the other to
provide such services on the designating Party's behalf.
5. (f) No Joint Service. The space chartering contemplated hereby and the
cooperative use of equipment, terminals, stevedores, ports, and suppliers to
the extent provided hereunder do not create a joint service or permit the
Parties to
APL/TMM SPACE CHARTER AGREEMENT Original Page No.
7
FMC AGREEMENT NO. ___________________
pool cargo or revenue except as may be permitted under agreements to which the
Parties may subscribe from time to time which agreements are filed with the FMC
and effective pursuant to the Shipping Act of 1984. Each party shall utilize
and maintain its own marketing and sales organizations. TMM shall issue its
own bills of lading for cargo moving on APL vessels.
5. (g) Pricing. The Parties shall discuss and may agree on a common
position as to their conference/non-conference status in the Trade. The Parties
may, on a voluntary basis and subject to the terms and conditions of any
conference, rate, discussion or other agreement to which either may subscribe
from time to time, discuss and agree upon any rates, rules, service items, or
other terms and conditions of service contracts or tariffs maintained or
contemplated by either Party or by a conference in their behalf in their
respective services offered in the Trade.
5. (h) Systems. The Parties may discuss and agree on terms and conditions
of joint development, implementation, and interchange of documentation, data
systems, information and data, other operating systems, and computerization and
joint communication, including any joint negotiations, leasing or contracting
relating thereto.
5. (i) Administrative Matters. The Parties may also discuss and agree
upon such general administrative matters and other terms and conditions
concerning the implementation of this Agreement as may be necessary or
convenient from
APL/TMM SPACE CHARTER AGREEMENT Original Page No.
8
FMC AGREEMENT NO. ___________________
time to time, including, but not limited to, performance procedures and
penalties, procedures for allocating space, forecasting, terminal operations,
stowage planning, schedule adjustments, record-keeping, responsibility for loss
or damage of cargo and equipment, the terms and conditions for force majeure
relief, insurance, liabilities, claims, indemnification, consequences for
delays, and treatment of hazardous and dangerous cargoes.
ARTICLE 6: OFFICIALS OF THE AGREEMENT AND
DELEGATIONS OF AUTHORITY
The following are authorized to subscribe to and file this Agreement and
any accompanying materials and any subsequent modifications to this Agreement
with the Federal Maritime Commission:
(i) Any authorized officer of each of the Parties; and
(ii) Legal counsel for each of the Parties.
ARTICLE 7:
MEMBERSHIP AND READMISSION
Membership is limited to the Parties hereto except that additional carriers
may be admitted or readmitted by unanimous consent of the Parties and by
APL/TMM SPACE CHARTER AGREEMENT Original Page No.
9
FMC AGREEMENT NO. ___________________
amendment of the Agreement pursuant to the Shipping Act of 1984 and subject to
the approval of MarAd, if required.
ARTICLE 8: VOTING
All actions taken pursuant to this Agreement shall require mutual agreement
of the Parties.
ARTICLE 9: DURATION AND TERMINATION OF AGREEMENT
(a) Effective Date and Term
This Agreement shall take effect as of the date the Agreement may
become effective pursuant to the Shipping Act of 1984 and shall continue for a
period of three (3) years. Upon the expiration of such three-year period, this
Agreement shall continue in effect unless or until this Agreement is terminated
upon not less than three (3) months prior written notice.
(b) Termination
(1) A Party, may, as hereinafter provided, withdraw from
this Agreement in the event that, after consultation as required hereinafter,
the Parties are unable to agree from time to time upon rate policies or actions
reflected in the publication of tariff rates and service items in the Trade.
Either
APL/TMM SPACE CHARTER AGREEMENT Substitute
FMC AGREEMENT NO. ___________________ Original Page No. 9
amendment of the Agreement pursuant to the Shipping Act of 1984 and subject to
the approval of MarAd, if required.
ARTICLE 8: VOTING
All actions taken pursuant to this Agreement shall require mutual agreement
of the Parties.
ARTICLE 9: DURATION AND TERMINATION OF AGREEMENT
(a) Effective Date and Term
This Agreement shall take effect as of the date the Agreement may
become effective pursuant to the Shipping Act of 1984 and shall continue for a
period of three (3) years. Upon the expiration of such three-year period, this
Agreement shall continue in effect unless or until this Agreement is terminated
upon not less than three (3) months prior written notice.
(b) Termination
(1) A Party may, as hereinafter provided, withdraw from this
Agreement in the event that, after consultation as required provided for
hereinafter, the Parties are unable to agree from time to time upon rate
policies or actions reflected in the publication of tariff rates and service
items in the Trade.
APL/TMM SPACE CHARTER AGREEMENT Original Page No.
10
FMC AGREEMENT NO. ___________________
Party may demand consultation and the Parties shall thereafter promptly endeavor
in good faith to resolve their differences. If, within three (3) months of the
date of such demand, the Parties fail to reach agreement as to the tariff rate
or service item in dispute, or to exceptions therefrom, the Party having made
demand for consultation may withdraw from this Agreement upon three (3) months
prior written notice.
(2) If any government or agency thereof imposes upon APL or TMM
any restriction or fails to grant or withdraws any required approval, which
restriction, or the absence of which approval, would have a material adverse
effect upon either Party, then either Party may terminate the Agreement upon not
less than three (3) months prior written notice.
(3) Either Party may terminate the Agreement at any time
immediately by serving written notice thereof on the other Party if the other
Party files, or has filed against it, proceedings under bankruptcy, insolvency
or other similar laws.
(4) The FMC shall be promptly notified in writing following the
termination date of this Agreement.
ARTICLE 10: APPLICABLE LAW
The interpretation, construction and enforcement of this Agreement shall be
governed by (i) the laws of the State of New York without reference to the laws
of New York respecting conflicts of laws, and (ii) to the extent applicable, the
laws of the United States.
APL/TMM SPACE CHARTER AGREEMENT Substitute
FMC AGREEMENT NO. ___________________ Original Page No. 10
Either Party may demand seek consultation and the Parties shall thereafter
promptly endeavor in good faith to resolve their differences. If, within three
(3) months of the date of such demand request, the Parties fail to reach
agreement as to the tariff rate or service item in dispute, or to exceptions
therefrom, the Party having made demand for requested consultation may withdraw
from this Agreement upon three (3) months prior written notice.
(2) If any government or agency thereof imposes upon APL or TMM
any restriction or fails to grant or withdraws any required approval, which
restriction, or the absence of which approval, would have a material adverse
effect upon either Party, then either Party may terminate the Agreement upon not
less than three (3) months prior written notice.
(3) Either Party may terminate the Agreement at any time
immediately by serving written notice thereof on the other Party if the other
Party files, or has filed against it, proceedings under bankruptcy, insolvency
or other similar laws.
(4) The FMC shall be promptly notified in writing following the
termination date of this Agreement.
ARTICLE 10: APPLICABLE LAW
The interpretation, construction and enforcement of this Agreement shall be
governed by (i) the laws of the State of New York without reference to the laws
of New York respecting conflicts of laws, and (ii) to the extent applicable, the
laws of the United States.
APL/TMM SPACE CHARTER AGREEMENT Original Page No.
11
FMC AGREEMENT NO. ___________________
ARTICLE 11: ARBITRATION
(a) Except as otherwise provided herein, any dispute or claim arising
hereunder which is not amicably settled by the Parties shall be settled by
arbitration. Unless otherwise agreed, arbitration shall be held in New York,
N.Y. by a panel of three arbitrators familiar with ocean container shipping,
unless the Parties can agree on a single arbitrator, none of which shall have
any interest in or with either Party. Arbitration shall be conducted under
title 9 of the United States Code and otherwise in accordance with the
arbitration Rules of the Society of Maritime Arbitrators, Inc.
(b) Either Party hereto may call for such arbitration by service upon
the other at the address specified in Article 13 hereof of a written notice
specifying the name and address of the arbitrator it chooses and a brief
description of the disputes or differences which such party desires to put to
arbitration. If the other party shall not,
by notice served upon the first moving party at the address specified in
Article 13 hereof within twenty days of the service of such first notice,
appoint its arbitrator to arbitrate the dispute or differences specified, then
the party calling for arbitration shall have the right without further notice to
appoint a second arbitrator, who shall be a disinterested person with precisely
the same force and effect as if said second arbitrator had been appointed by the
other Party. In the event that the two arbitrators fail to appoint a third
arbitrator
APL/TMM SPACE CHARTER AGREEMENT Original Page No.
12
FMC AGREEMENT NO. ___________________
within twenty days of the appointment of the second arbitrator, either
arbitrator may apply to a judge of any court of competent jurisdiction in New
York, N.Y. for the appointment of a third arbitrator, and the appointment of
such arbitrator by such judge on such application shall have precisely the same
force and effect as if such arbitrator had been appointed by the two
arbitrators. Until such time as the arbitrators finally close the hearings,
either Party shall have the right by written notice served on the arbitrators
and on the other Party to specify further disputes or differences under this
Agreement for hearing and determination.
(c) The arbitrators, by majority vote in writing, may award damages and
expenses which they deem proper. In addition, the arbitrators shall assess the
costs of the arbitration including interest, pre-judgment interest, their fees
and reasonable attorney's fees, against either party, or both, in such manner as
they shall set forth in their written findings of facts and conclusions. Such
decision
shall be final and conclusive, shall be rendered within 90 days of the
final submissions of the Parties, including briefs, and may be enforced in a
court of competent jurisdiction. The arbitrators may not award exemplary or
punitive damages nor may they order specific performance. A copy of such
decision shall be served by the arbitrators on the Parties.
APL/TMM SPACE CHARTER AGREEMENT Original Page No.
13
FMC AGREEMENT NO. ___________________
ARTICLE 12: NON-ASSIGNMENT
Neither Party shall assign its rights or delegate its duties under this
Agreement to any other person or entity without the prior written consent of the
other Party.
ARTICLE 13: NOTICES
All notices pertaining to the Agreement, except as the Parties may
otherwise provide, shall be sent by telex or facsimile transmission and
confirmed by first class mail, postpaid. Mail shall be addressed as follows:
1. AMERICAN PRESIDENT LINES, LTD.
1111 Broadway
Oakland, California 94607
Attn: Vice President - Logistics
2. TRANSPORTACION MARITIMA MEXICANA, S.A. DE C.V.
Av. de la Cuspide No. 4755 - l0th Floor
14010 Mexico, D.F.
Attn: Executive Director
APL/TMM SPACE CHARTER AGREEMENT Original Page No.
14
FMC AGREEMENT NO. ___________________
ARTICLE 14: ENFORCEABILITY
(a) If at any time during the performance of the Agreement, any non-
material term, covenant, condition or proviso contained in the Agreement or the
application thereto to any person or circumstances shall be held to be invalid,
illegal or unenforceable, the remainder of the Agreement or the application of
such term, covenant, condition or proviso to persons or circumstances other than
those to which it is invalid, illegal or unenforceable shall not be affected
thereby and each term, covenant, proviso or condition of the Agreement shall be
valid and be enforceable to the full extent permitted by law.
(b) If during the effective period of this Agreement the Shipping Act
of 1984 is amended, repealed, or authoritatively interpreted by the Federal
Maritime Commission or a court of competent jurisdiction in such a manner as to
result in (i) the prohibition of conferences or the loss of antitrust immunity
in respect of activities encompassed by this Agreement, or (ii) inability on the
part of the parties to limit APL's grant of space hereunder to non-cargo
preference shipments, and such amendment, repealed provision or interpretation
is not replaced by any other law, regulation or judicial or administrative
action authorizing the continuation thereof, any provision of this Agreement
that is invalid, illegal or unenforceable shall immediately be severed and all
other terms and conditions shall remain in full force and effect and be valid
and enforceable to the full extent provided by law. As soon as possible
thereafter, the parties agree to meet to consult and explore opportunities to
conform the arrangement
APL/TMM SPACE CHARTER AGREEMENT Original Page No.
15
FMC AGREEMENT NO. ___________________
between them contemplated hereby to a mutually satisfactory arrangement which
permits the same or substantially similar practices provided for herein to be
continued in compliance with all federal and state antitrust, shipping and other
laws. If, after full consultation, this objective cannot be met in the good
faith opinion of either party, that party may terminate this Agreement upon not
less than three (3) months prior written notice.
ARTICLE 15: SIGNATURE PAGE
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized officers or agents.
AMERICAN PRESIDENT LINES, LTD. TRANSPORTACION MARITIMA
MEXICANA, S.A. DE C.V.
By: John G. Burgess___ By: _ Mario Mohar P.
John G. Burgess Mario Mohar P.
Its:Executive Vice President Its: Executive Director
Dated: November 9, 1993
A931025Lcont-noonbb-TMM SpChrtr
APL/TMM SPACE CHARTER AGREEMENT lst Revised Page No. 15
FMC AGREEMENT NO. ___________________
between them contemplated hereby to a mutually satisfactory arrangement which
permits the same or substantially similar practices provided for herein to be
continued in compliance with all federal and state antitrust, shipping and other
laws. If, after full consultation, this objective cannot be met in the good
faith opinion of either party, that party may terminate this Agreement upon not
less than three (3) months prior written notice.
ARTICLE 15: UNDERTAKING WITH RESPECT TO STOCK TRANSACTIONS
(a) Both of the parties to this Agreement agree that, during the term of
this Agreement and for a period of one (1) year after the expiration of such
term, neither it nor any subsidiary or affiliate, acting alone or as part of a
group, will acquire, or offer to agree to acquire, directly or indirectly, by
option or otherwise, more than one percent (1%) of the outstanding voting
securities of the other party to this Agreement or its direct or indirect
parent, or otherwise seek to influence or control in any manner the management
or policies of any such other party or its direct or indirect parent (other than
in connection with the matters contemplated by this Agreement), without the
prior written consent of such other party.
APL/TMM SPACE CHARTER AGREEMENT Original Page No.
15 a.
FMC AGREEMENT NO. _____________________
(b) If there is a change in control of a party, or any person or entity
that directly or indirectly controls that party, such change of control shall be
deemed a breach of that party's obligations under this Agreement permitting the
other party to terminate the Agreement for cause under Article 9.2.b. A change
in control is defined for these purposes as the acquisition by a person or
entity, other than a subsidiary or an affiliate of the party that has not itself
undergone a change in control, or control of 30% or more of the beneficial
ownership of the party. An affiliate is defined as a person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with the party.
ARTICLE 16: SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers or agents.
AMERICAN PRESIDENT TRANSPORTACION MARITIMA
LINES, LTD. MEXICANA, S.A. DE C.V.
By: J. Hayashi______ By: Francisco Lopez Barredo
J. Hayashi Francisco Lopez Barredo
Its:President Its: President
Amendment No. 1
to
APL/TMM SPACE CHARTER AGREEMENT
This Amendment of the APL/TMM Space Charter Agreement dated November 9,
1993 between American President Lines, Ltd. and Transportacion Maritima
Mexicana, S.A. de C.V. (FMC Agreement No. 203-011435) is entered into as of the
26th day of April, 1994 by the same parties, each in its same capacity.
WHEREAS, the parties to said Agreement wish to amend their Agreement to
provide for certain undertakings with respect to the reciprocal purchase of
stock and changes in control;
The parties agree as follows:
I. Original Page No. 6 of the Agreement is hereby amended by
substituting lst Revised Page No. 6 in place thereof.
II. Original Page No. 15 of the Agreement is hereby amended by
substituting lst Revised Page No. 15 and Original Page No. 15 a.
in place of Original Page 15.
III. Except as expressly amended hereby, the Agreement shall continue
in full force and effect.
IV. This Amendment No. 1 shall be filed with the Federal Maritime
Commission and shall become effective pursuant to the Shipping
Act of 1984.
AMERICAN PRESIDENT TRANSPORTACION MARITIMA
LINES, LTD. MEXICANA, S.A. DE C.V.
By: J. Hayashi By: Francisco Lopez Barredo
J. Hayashi Francisco LopezBarredo
Title: President Title President
--
EMPLOYMENT AGREEMENT
THIS AGREEMENT, entered into as of the 28th day of April, 1994,
by and between MARYELLEN B. CATTANI (the "Employee") and AMERICAN
PRESIDENT COMPANIES, LTD., a Delaware corporation (the "Company"),
W I T N E S S E T H:
Whereas the Company is the parent corporation in a group of
affiliated corporations (the "Affiliated Group") which consists of the
Company and all of its direct or indirect subsidiaries;
Whereas the Company wishes to secure the services of the Employee
for the benefit of the Affiliated Group; and
Whereas the Employee is willing to continue employment with
members of the Affiliated Group upon the terms and conditions set forth
below;
N o w, T h e r e f o r e, in consideration of the mutual
covenants herein contained, the parties agree as follows:
1. Term of Employment.
(a) Basic Rule. The Company agrees to cause the Employee's
employment with the Affiliated Group to continue, and the Employee
agrees to remain in employment with the Affiliated Group, from the date
hereof until the earlier of (i) the first day of the month coinciding
with or next following the Employee's 65th birthday (the "Normal
Retirement Date") or (ii) the date when the Employee's employment
terminates pursuant to Subsections (b), (c) or (d) below. In no event
shall a transfer (whether voluntary or involuntary) of the Employee from
one member of the Affiliated Group to another member be treated as a
termination of employment for any purpose under this Agreement.
(b) Early Termination. Subject to Sections 6 and 7, the Company
may terminate the Employee's employment with the Affiliated Group by
giving the Employee 30 days' advance notice in writing. The Employee
may terminate her employment with the Affiliated Group by giving the
Company 30 days' advance notice in writing. The Employee's employment
shall terminate automatically in the event of her death. Any waiver of
notice shall be valid only if it is made in writing and expressly refers
to the applicable notice requirement of this Section 1.
(c) Cause. Subject to Section 6, the Company may cause the
Employee's employment with the Affiliated Group to terminate at any time
for Cause by giving the Employee written notice. For all purposes under
this Agreement, "Cause" shall mean (i) a willful failure by the Employee
to substantially perform her duties hereunder, other than a failure
resulting from the Employee's complete or partial incapacity due to
physical or mental illness or impairment, or (ii) a willful act by the
Employee which constitutes gross misconduct and which is materially
injurious to a member of the Affiliated Group. No act, or failure to
act, by the Employee shall be considered "willful" unless committed
without good faith and without a reasonable belief that the act or
omission was in such member's best interest.
(d) Disability. Subject to Section 6, the Company may cause the
Employee's employment with the Affiliated Group to terminate for
Disability by giving the Employee 30 days' advance notice in writing.
For all purposes under this Agreement, "Disability" shall mean that the
Employee, at the time notice is given, has been unable to carry out any
of her duties under this Agreement for a period of not less than six
consecutive months as the result of her incapacity due to physical or
mental illness. In the event that the Employee resumes the performance
of her duties hereunder on a full-time basis before the termination of
her employment under this Subsection (d) becomes effective, the notice
of termination shall automatically be deemed to have been revoked.
(e) Termination of Agreement. This Agreement shall terminate
when all obligations of the parties hereunder have been satisfied.
2. Duties and Scope of Employment.
(a) Position. The Employee shall hold the position of Senior
Vice President, General Counsel and Secretary of the Company or such
other position or positions with any member of the Affiliated Group as
the Company may from time to time assign to her.
(b) Obligations. During the term of her employment under this
Agreement, the Employee shall devote her full business efforts and time
to the Affiliated Group and shall not render services to any other
person or entity without the prior written consent of the Company's
Chief Executive Officer. The foregoing, however, shall not preclude the
Employee from engaging in appropriate civic, charitable or religious
activities or from devoting a reasonable amount of time to private
investments which do not interfere or conflict with her responsibilities
under this Agreement.
3. Base Compensation.
During the term of her employment under this Agreement, the
Employee shall receive as compensation for her services a base salary at
the annual rate of $276,040, or at such higher rate as the Company may
determine from time to time. Such salary shall be payable in
approximately equal biweekly installments. Once the Company has
increased such salary, it thereafter shall not be reduced. (The annual
compensation specified in this Section 3, together with any increases in
such compensation which the Company may grant from time to time, is
referred to in this Agreement as "Base Compensation.")
4. Employee Benefits.
During the term of her employment under this Agreement, the
Employee shall be eligible to participate in the employee benefit plans
and executive compensation programs maintained by the Company, including
(without limitation) pension plans, thrift or profit-sharing plans,
excess-benefit plans, stock purchase, stock option, restricted stock or
phantom stock plans, incentive or other bonus plans, life, disability,
health, accident and other insurance programs, paid vacations and
similar plans or programs, subject in each case to the generally
applicable terms and conditions of the plan or program in question and
to the determinations of any committee administering such plan or
program; provided, however, that the Employee's rights with respect to
severance pay upon termination of employment shall be governed
exclusively by this Agreement, and the Employee shall not be eligible to
participate in any severance plan maintained by the Company.
5. Business Expenses.
During the term of her employment under this Agreement, the
Employee shall be authorized to incur necessary and reasonable travel,
entertainment and other business expenses in connection with her duties
hereunder. The Employee shall be reimbursed for such expenses upon
presentation of an itemized account and appropriate supporting
documentation, all in accordance with the Company's generally applicable
policies.
6. Change in Control.
(a) Definition. For all purposes under this Agreement, "Change
in Control" shall mean the occurrence of any of the following events:
(i) A change in control required to be reported pursuant
to Item 6(e) of Schedule 14A of Regulation 14A under the
Securities Exchange Act of 1934 (the "Exchange Act");
(ii) A change in the composition of the Company's Board
of Directors, as a result of which fewer than two-thirds of the
incumbent directors are directors who either (A) had been
directors of the Company 24 months prior to such change or (B)
were elected, or nominated for election, to the Company's Board
of Directors with the affirmative votes of at least a majority of
the directors who had been directors of the Company 24 months
prior to such change and who were still in office at the time of
the election or nomination; or
(iii) Any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the beneficial
owner, directly or indirectly, of securities of the Company
representing 20 percent or more of the combined voting power of
the Company's then outstanding securities ordinarily (and apart
from rights accruing under special circumstances) having the
right to vote at elections of directors (the "Base Capital
Stock"); provided, however, that any change in the relative
beneficial ownership of securities of any person resulting solely
from a reduction in the aggregate number of outstanding shares of
Base Capital Stock, and any decrease
thereafter in such person's ownership of securities, shall be
disregarded until such person increases in any manner, directly
or indirectly, such person's beneficial ownership of any
securities of the Company.
(b) Severance Payment. If, (i) during the term of this
Agreement and at any time after the occurrence of a Change in Control, a
member of the Affiliated Group terminates the Employee's employment for
any reason or no reason, or (ii) during the term of this Agreement and
within one year after a Change in Control, the Employee resigns as a
result of a material change in her responsibilities or the relocation of
her place of employment by more than 20 miles from Oakland, California,
or (iii) during the term of this Agreement and within the 30-day period
commencing one year after the occurrence of a Change in Control, the
Employee resigns her employment for any reason, then the Employee shall
be entitled to receive a severance payment from the Company (the
"Severance Payment"). The Severance Payment shall be made in a lump sum
not less than 31 days nor more than 60 days following the date of the
employment termination and shall be in an amount determined under
Subsection (c) below. The Severance Payment shall be in lieu of any
further payments to the Employee and any further accrual of benefits
under Sections 3 and 4 with respect to periods subsequent to the date of
the employment termination and any termination benefits under Section 7.
The foregoing notwithstanding, in the event of the Employee's
termination or resignation as provided in Clauses (i) or (ii) of this
Subsection (b), the Employee may elect to receive, in lieu of the
Severance Payment, all of the termination benefits described in Section
7, as if her termination or resignation were a termination without
Cause. In the event of the Employee's resignation as provided in Clause
(iii) of this Subsection (b), the Employee may elect to receive, in lieu
of the Severance Payment, the termination benefits described in
Subsections 7(b) and (c), as if her resignation were a termination
without Cause; provided, however, that the Continuation Period to be
counted as employment shall be determined by substituting "18 months
after the date of such employment termination" for Clause (i) of
Subsection 7(a), and the insurance coverage provided during the
Continuation Period pursuant to Subsection 7(c) shall be limited to
medical, dental and life insurance plans. The Employee shall advise the
Company of her election in writing within 30 days after her resignation
or after receiving the Company's notice of termination.
(c) Amount. The amount of the Severance Payment shall be equal
to the product of the following:
(i) 142.5 percent of the Employee's monthly rate of Base
Compensation, as in effect on the date of the employment
termination; times
(ii) The lesser of (A) 36 months or (B) the number of
months between the date of the employment termination and the
Employee's Normal Retirement Date; provided, however, that in the
event of the Employee's resignation as provided in Clause (iii)
of Subsection (b) above, the amount of the Severance Payment
shall be determined by substituting "18 months" for Clause (A).
For this purpose, a partial month shall be counted as the
appropriate fraction of a full month.
(d) Incentive Programs. If, during the term of this Agreement,
a Change in Control occurs with respect to the Company, the Employee
shall become fully vested in all awards heretofore or hereafter granted
to her under all stock option, stock appreciation rights, restricted
stock, phantom stock or similar plans maintained by the Company, any
contrary provisions of such plans notwithstanding.
(e) No Mitigation. The Employee shall not be required to
mitigate the amount of any payment contemplated by this Section 6
(whether by seeking new employment or in any other manner), nor shall
any such payment be reduced by any earnings that the Employee may
receive from any other source.
7. Involuntary Termination Without Cause.
(a) Continuation Period. In the event that, during the term of
this Agreement, a member of the Affiliated Group terminates the
Employee's employment for any reason other than Cause or Disability or
for no reason, the Employee shall be entitled to receive all of the
payments and benefit coverage described in the succeeding subsections of
this Section 7. Such payments and benefit coverage shall continue for
the period commencing on the date when the employment termination is
effective and ending on the earliest of (i) 36 months after the date of
such employment termination, (ii) the Employee's Normal Retirement Date
or (iii) the date of the Employee's death (the "Continuation Period").
Any other provision of this Agreement notwithstanding, if the Employee
is entitled and elects to receive a severance payment pursuant to
Section 6, then no payments or benefit coverage shall be provided to the
Employee under this Section 7.
(b) Base Compensation. During the Continuation Period, the
Employee shall receive biweekly payments of 142.5 percent of her
biweekly rate of Base Compensation, as in effect on the date of the
employment termination.
(c) Insurance Coverage. During the Continuation Period, the
Employee (and, where applicable, her dependents) shall be entitled to
continue participation in all insurance or similar plans maintained by
the Company, including (without limitation) life, disability, health and
accident insurance programs, as if she were still an employee of the
Company. Where applicable, the Employee's salary for purposes of such
plans shall be deemed to be equal to her Base Compensation. To the
extent that the Company finds it impossible to cover the Employee under
its group insurance policies during the Continuation Period, the Company
(at its own expense) shall provide the Employee with the same level of
coverage under individual policies.
(d) Incentive Programs. The Continuation Period shall be
counted as employment with the Affiliated Group for purposes of
determining the expiration date of all options on the Company's stock
and for purposes of vesting under all executive compensation programs in
which the Employee participated (any contrary provisions of option
agreements or such programs notwithstanding), including (without
limitation) stock purchase, stock option, restricted stock or phantom
stock plans, incentive or other bonus plans and similar programs, but
not including any pension, thrift or profit-sharing plan intended to
qualify under section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). The preceding sentence shall not be construed to
require the grant of any new awards to the Employee under such executive
compensation programs during the Continuation Period.
(e) Supplemental Benefit. In lieu of accruing additional
pension benefits under the Retirement Plan for Non-Bargaining Unit
Employees of American President Companies, Ltd. (the "Retirement Plan"),
the Excess-Benefit Plan of American President Companies, Ltd. and any
other qualified or nonqualified defined-benefit pension plan maintained
by the Company, and any successor to any of such plans (collectively,
the "Retirement Program"), during the Continuation Period, the Employee
and her surviving spouse (if any) shall be entitled to receive an
unfunded supplemental retirement benefit (the "Supplemental Benefit").
The amount of the Supplemental Benefit shall be determined under
Subsection (f) below. Supplemental Benefit payments shall be made in
monthly installments, commencing with the month for which the first
pension payment is made to the Employee or her surviving spouse under
the Retirement Plan and ending with the month for which the last pension
payment is made to the Employee or her surviving spouse under the
Retirement Plan.
(f) Amount of Supplemental Benefit. The amount of the
Supplemental Benefit shall be equal to the difference between:
(i) The amount of the pension benefits actually paid to
the Employee or to her surviving spouse, as the case may be,
under the Retirement Program; and
(ii) The amount of the hypothetical pension benefits
that would be payable to the Employee or to her surviving spouse,
as the case may be, under the Retirement Program if the following
assumptions are made:
(A) The projected Continuation Period, determined
without regard to the possibility of the Employee's
death, is counted as employment with the Affiliated Group
for all purposes (including, without limitation, benefit
accrual) under the Retirement Program; and
(B) 142.5 percent of the projected Base
Compensation to be received by the Employee during the
Continuation Period is counted as compensation for
purposes of determining benefits under the Retirement
Program.
The Supplemental Benefit shall be payable in the same form as the
pension benefit under the Retirement Plan, unless such pension benefit
is paid in the form of a single lump sum. In that event, the
Supplemental Benefit shall be payable in the normal form of benefit
provided under the Retirement Plan and shall be computed and paid as if
the pension benefits actually paid under the Retirement Plan were also
payable in the normal form. The amount of the Supplemental Benefit
shall be recalculated each year in accordance with any provisions of the
Retirement Plan which are applicable to the Employee and which provide
for the adjustment of pension benefits to reflect changes in the cost of
living.
(g) Equivalency. Subsections (e) and (f) above shall be
construed, to the greatest extent possible, so as to place the Employee
in the position in which she would have been if her active participation
in the Retirement Program had continued during the Continuation Period.
However, any incremental tax costs or benefits associated with the
Supplemental Benefit shall be disregarded for this purpose.
(h) No Mitigation. The Employee shall not be required to
mitigate the amount of any payment or benefit contemplated by this
Section 7, nor shall any such payment or benefit be reduced by any
earnings or benefits that the Employee may receive from any other
source.
8. Limitation on Payments.
(a) Basic Rule. Any provision of this Agreement to the contrary
notwithstanding, in the event that the independent auditors most
recently selected by the Board of Directors of the Company (the
"Auditors") determine that any payment, transfer or acceleration of
vesting by the Affiliated Group to or for the benefit of the Employee,
whether pursuant to the terms of this Agreement or any other plan or
agreement (a "Payment"), would be nondeductible by the Affiliated Group
for federal income tax purposes because of section 280G of the Code,
then the aggregate present value of all Payments shall be reduced (but
not below zero) to the Reduced Amount. For purposes of this Section 8,
the "Reduced Amount" shall be the amount, expressed as a present value,
which maximizes the aggregate present value of the Payments without
causing any Payment to be nondeductible by the Affiliated Group because
of section 280G of the Code.
(b) Reduction of Payments. If the Auditors determine that any
Payment would be nondeductible by the Affiliated Group because of
section 280G of the Code, then the Company, within five business days
after being notified by the Auditors, shall give the Employee notice to
that effect and a copy of the detailed calculation thereof and of the
Reduced Amount. The Employee may then elect, in her sole discretion,
which and how much of the Payments shall be eliminated or reduced (as
long as after such election the aggregate present value of the Payments
equals the Reduced Amount) and shall advise the Company in writing of
her election within 30 days of her receipt of notice. If no such
election is made by the Employee within such 30-day period, then the
Company may elect which and how much of the Payments shall be eliminated
or reduced (as long as after such election the aggregate present value
of the Payments equals the Reduced Amount) and shall notify the Employee
promptly of such election. For all purposes under this Section 8,
present value shall be determined in accordance with section 280G(d)(4)
of the Code. All determinations made by the Auditors under this Section
8 shall be binding upon the Affiliated Group and the Employee and shall
be made within 60 days of the date when a Payment becomes payable or
transferable. Within five business days following the completion of
such determinations and the elections hereunder, the Affiliated Group
shall pay or transfer to or for the benefit of the Employee such amounts
as are then due to her under this Agreement. It shall, as promptly as
possible, pay or transfer to or for the benefit of the Employee in the
future such amounts as become due to her under this Agreement.
(c) Overpayments and Underpayments. As a result of uncertainty
in the application of section 280G of the Code at the time of an initial
determination by the Auditors hereunder, it is possible that Payments
will have been made by the Affiliated Group which should not have been
made (an "Overpayment") or that additional Payments which will not have
been made by the Affiliated Group could have been made (an
"Underpayment"), consistent in each case with the calculation of the
Reduced Amount hereunder. In the event that the Auditors, based upon
the assertion of a deficiency by the Internal Revenue Service against
the Affiliated Group or the Employee which the Auditors believe has a
high probability of success, determine that an Overpayment has been
made, such Overpayment shall be treated for all purposes as a loan to
the Employee which she shall repay to the Affiliated Group, together
with interest at the applicable federal rate provided for in section
7872(f)(2)(A) of the Code; provided, however, that no amount shall be
payable by the Employee to the Affiliated Group if and to the extent
that such payment would not reduce the amount which is subject to
taxation under section 4999 of the Code. In the event that the Auditors
determine that an Underpayment has occurred, such Underpayment shall
promptly be paid or transferred by the Affiliated Group to or for the
benefit of the Employee, together with interest at the applicable
federal rate provided for in section 7872(f)(2)(A) of the Code.
9. Protection of Trade Secrets.
(a) Trade Secrets. The parties acknowledge and agree that
during the term of this Agreement and in the course of her employment
hereunder, the Employee will have access to and become acquainted with
information concerning the operations of members of the Affiliated
Group, including without limitation financial, personnel, customer,
sales, systems and other information that is owned by members of the
Affiliated Group and regularly used in the operation of their business,
and that such information constitutes the trade secrets of the members
of the Affiliated Group. The Employee specifically agrees that she
shall not misuse, misappropriate or disclose any such trade secrets,
directly or indirectly, to any other person or use them in any way,
either during the term of this Agreement or at any time thereafter,
except as required in the course of her employment hereunder.
(b) Unfair Competition. The Employee acknowledges and agrees
that the unauthorized use or disclosure of any of the trade secrets
obtained by the Employee during the course of her employment under this
Agreement, including information concerning the Affiliated Group's
current, future or proposed work, services or products, the facts that
any such work, services or products are planned, under consideration or
in production, as well as any descriptions thereof, constitute unfair
competition. The Employee promises and agrees not to engage in any
unfair competition with any member of the Affiliated Group, either
during the term of this Agreement or at any time thereafter.
(c) Return of Documents. The Employee further agrees that
all files, records, documents, computer disks, drawings, specifications,
equipment and similar items relating to the business of members of the
Affiliated Group, whether prepared by the Employee or others, are and
shall remain exclusively the property of the members of the Affiliated
Group and shall be returned to the Affiliated Group upon the termination
of her employment hereunder.
10. Successors.
(a) Company's Successors. The Company shall require any
successor (whether direct or indirect and whether by purchase, lease,
merger, consolidation, liquidation or otherwise) to all or substantially
all of the Company's business and/or assets, by an agreement in
substance and form satisfactory to the Employee, to assume this
Agreement and to agree expressly to perform this Agreement in the same
manner and to the same extent as the Company would be required to
perform it in the absence of a succession. The Company's failure to
obtain such agreement prior to the effectiveness of a succession shall
be a breach of this Agreement and shall entitle the Employee to all of
the compensation and benefits to which she would have been entitled
hereunder if the Company had involuntarily terminated her employment
without Cause on the date when such succession becomes effective. For
all purposes under this Agreement, the term "Company" shall include any
successor to the Company's business and/or assets which executes and
delivers the assumption agreement described in this Subsection (a) or
which becomes bound by this Agreement by operation of law.
(b) Employee's Successors. This Agreement and all rights of the
Employee hereunder shall inure to the benefit of, and be enforceable by,
the Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
11. Notice.
Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or when mailed by U.S. registered mail,
return receipt requested and postage prepaid. In the case of the
Employee, mailed notices shall be addressed to her at the home address
which she most recently communicated to the Company in writing. In the
case of the Company, mailed notices shall be addressed to its corporate
headquarters, and all notices shall be directed to the attention of its
Chief Executive Officer.
12. Miscellaneous Provisions.
(a) Waiver. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by the Employee and by the Company's
Chief Executive Officer. No waiver by either party of any breach of, or
of compliance with, any condition or provision of this Agreement by the
other party shall be considered a waiver of any other condition or
provision or of the same condition or provision at another time.
(b) Whole Agreement. No agreements, representations or
understandings (whether oral or written and whether express or implied)
which are not expressly set forth in this Agreement have been made or
entered into by either party with respect to the subject matter hereof.
Effective as of the date hereof, this Agreement supersedes any prior
employment agreement between the Employee and any member of the
Affiliated Group.
(c) Choice of Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the
State of California.
(d) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity
or enforceability of any other provision hereof, which shall remain in
full force and effect.
(e) Arbitration. Except as otherwise provided in Section 8, any
controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled by arbitration in Oakland,
California, in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, and judgment on the award rendered by
the arbitrator may be entered in any court having jurisdiction thereof.
(f) No Assignment. The rights of any person to payments or
benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by
operation of law, including (without limitation) bankruptcy,
garnishment, attachment or other creditor's process, and any action in
violation of this Subsection (f) shall be void.
IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by its duly authorized officer, as
of the day and year first above written.
/s/ Maryellen B. Cattani
Maryellen B. Cattani
AMERICAN PRESIDENT COMPANIES,
LTD.
By /s/ J. M. Lillie
J. M. Lillie
Chairman of the Board,
President and Chief Executive
Officer
TW940330Cemp-1600tw
--
EMPLOYMENT AGREEMENT
THIS AGREEMENT, entered into as of the 4th day of March, 1994, by
and between WILL M. STOREY (the "Employee") and AMERICAN PRESIDENT
COMPANIES, LTD., a Delaware corporation (the "Company"),
W I T N E S S E T H:
Whereas the Company is the parent corporation in a group of
affiliated corporations (the "Affiliated Group") which consists of the
Company and all of its direct or indirect subsidiaries;
Whereas the parties entered into an employment agreement as of
March 4, 1991, securing the services of the Employee for the benefit of
the Affiliated Group;
Whereas the parties wish to continue the services of the Employee
for the benefit of the Affiliated Group upon the terms and conditions
set forth below; and
Whereas the parties wish to have this Agreement supersede all
prior employment agreements between the Employee and any member of the
Affiliated Group;
N o w, T h e r e f o r e, in consideration of the mutual
covenants herein contained, the parties agree as follows:
1. Term of Employment.
(a) Basic Rule. The Company agrees to cause the Employee's
employment with the Affiliated Group to continue, and the Employee
agrees to remain in employment with the Affiliated Group, from the date
hereof until the earlier of (i) the first day of the month coinciding
with or next following the Employee's 65th birthday (the "Normal
Retirement Date") or (ii) the date when the Employee's employment
terminates pursuant to Subsections (b), (c) or (d) below. In no event
shall a transfer (whether voluntary or involuntary) of the Employee from
one member of the Affiliated Group to another member be treated as a
termination of employment for any purpose under this Agreement.
(b) Early Termination. Subject to Sections 6 and 7, the Company
may terminate the Employee's employment with the Affiliated Group by
giving the Employee 30 days' advance notice in writing. The Employee
may terminate his employment with the Affiliated Group by giving the
Company 30 days' advance notice in writing. The Employee's employment
shall terminate automatically in the event of his death. Any waiver of
notice shall be valid only if it is made in writing and expressly refers
to the applicable notice requirement of this Section 1.
(c) Cause. Subject to Section 6, the Company may cause the
Employee's employment with the Affiliated Group to terminate at any time
for Cause by giving the Employee written notice. For all purposes under
this Agreement, "Cause" shall mean (i) a willful failure by the Employee
to substantially perform his duties hereunder, other than a failure
resulting from the Employee's complete or partial incapacity due to
physical or mental illness or impairment, or (ii) a willful act by the
Employee which constitutes gross misconduct and which is materially
injurious to a member of the Affiliated Group. No act, or failure to
act, by the Employee shall be considered "willful" unless committed
without good faith and without a reasonable belief that the act or
omission was in such member's best interest.
(d) Disability. Subject to Section 6, the Company may cause the
Employee's employment with the Affiliated Group to terminate for
Disability by giving the Employee 30 days' advance notice in writing.
For all purposes under this Agreement, "Disability" shall mean that the
Employee, at the time notice is given, has been unable to carry out any
of his duties under this Agreement for a period of not less than six
consecutive months as the result of his incapacity due to physical or
mental illness. In the event that the Employee resumes the performance
of his duties hereunder on a full-time basis before the termination of
his employment under this Subsection (d) becomes effective, the notice
of termination shall automatically be deemed to have been revoked.
(e) Termination of Agreement. This Agreement shall terminate
when all obligations of the parties hereunder have been satisfied.
2. Duties and Scope of Employment.
(a) Position. The Employee shall hold the position of Executive
Vice President, Chief Financial Officer and Treasurer of the Company or
such other position or positions with any member of the Affiliated Group
as the Company may from time to time assign to him.
(b) Obligations. During the term of his employment under this
Agreement, the Employee shall devote his full business efforts and time
to the Affiliated Group and shall not render services to any other
person or entity without the prior written consent of the Company's
Chief Executive Officer. The foregoing, however, shall not preclude the
Employee from engaging in appropriate civic, charitable or religious
activities or from devoting a reasonable amount of time to private
investments which do not interfere or conflict with his responsibilities
under this Agreement.
3. Base Compensation.
During the term of his employment under this Agreement, the
Employee shall receive as compensation for his services a base salary at
the annual rate of $365,040, or at such higher rate as the Company may
determine from time to time. Such salary shall be payable in
approximately equal biweekly installments. Once the Company has
increased such salary, it thereafter shall not be reduced. (The annual
compensation specified in this Section 3, together with any increases in
such compensation which the Company may grant from time to time, is
referred to in this Agreement as "Base Compensation.")
4. Employee Benefits.
(a) Employee Plans. During the term of his employment under
this Agreement, the Employee shall be eligible to participate in the
employee benefit plans and executive compensation programs maintained by
the Company, including (without limitation) pension plans, thrift or
profit-sharing plans, excess-benefit plans, stock purchase, stock
option, restricted stock or phantom stock plans, incentive or other
bonus plans, life, disability, health, accident and other insurance
programs, paid vacations and similar plans or programs, subject in each
case to the generally applicable terms and conditions of the plan or
program in question and to the determinations of any committee
administering such plan or program; provided, however, that the
Employee's rights with respect to severance pay upon termination of
employment shall be governed exclusively by this Agreement, and the
Employee shall not be eligible to participate in any severance plan
maintained by the Company.
(b) Retiree Health Care. Upon the termination of the Employee's
employment with the Company for any reason, the Company shall provide
the Employee with health insurance coverage comparable to the health
insurance coverage being provided to the Company's retirees on March 4,
1991. The Employee shall be required to contribute to the cost of such
coverage on the same basis as retirees are contributing at the time the
Employee is receiving such coverage (or last contributed, if such
coverage is no longer being provided to retirees).
(c) Entitlement to Minimum Pension. If, upon the termination of
his employment with the Company for any reason, the Employee is not
entitled to a benefit under the Retirement Plan for Non-Bargaining Unit
Employees of American President Companies, Ltd. (the "Retirement Plan"),
then the Employee and his surviving spouse (if any) shall be entitled to
an unfunded retirement benefit under this Agreement (the "Minimum
Pension"). The amount of the Minimum Pension shall be determined under
Subsection (d) below. No Minimum Pension shall be payable if the
Employee is vested under the Retirement Plan.
(d) Amount of Minimum Pension. The amount of the Minimum
Pension shall be equal to the amount of the pension benefits that would
be payable to the Employee or his surviving spouse, as the case may be,
under the Retirement Plan, the Excess-Benefit Plan of American President
Companies, Ltd. and any other qualified or nonqualified defined-benefit
pension plan maintained by the Company, and any successor to any of such
plans (collectively, the "Retirement Program") if the Employee were
vested under the Retirement Program.
(e) Form of Minimum Pension. Minimum Pension payments shall be
made in monthly installments, commencing with the first month for which
a pension payment could be made to the Employee or his surviving spouse
under the Retirement Plan and ending with the last month for which a
pension payment would be made to the Employee or his surviving spouse
under the Retirement Plan, if the employee were vested under the
Retirement Plan. The Minimum Pension shall be payable in the normal
form of benefit provided under the Retirement Plan. The amount of the
Minimum Pension shall be recalculated each year in accordance with any
provisions of the Retirement Plan which would be applicable to the
Employee if he were vested and which provide for the adjustment of
pension benefits to reflect changes in the cost of living.
5. Business Expenses.
During the term of his employment under this Agreement, the
Employee shall be authorized to incur necessary and reasonable travel,
entertainment and other business expenses in connection with his duties
hereunder. The Employee shall be reimbursed for such expenses upon
presentation of an itemized account and appropriate supporting
documentation, all in accordance with the Company's generally applicable
policies.
6. Change in Control.
(a) Definition. For all purposes under this Agreement, "Change
in Control" shall mean the occurrence of any of the following events:
(i) A change in control required to be reported pursuant
to Item 6(e) of Schedule 14A of Regulation 14A under the
Securities Exchange Act of 1934 (the "Exchange Act");
(ii) A change in the composition of the Company's Board
of Directors, as a result of which fewer than two-thirds of the
incumbent directors are directors who either (A) had been
directors of the Company 24 months prior to such change or (B)
were elected, or nominated for election, to the Company's Board
of Directors with the affirmative votes of at least a majority of
the directors who had been directors of the Company 24 months
prior to such change and who were still in office at the time of
the election or nomination; or
(iii) Any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the beneficial
owner, directly or indirectly, of securities of the Company
representing 20 percent or more of the combined voting power of
the Company's then outstanding securities ordinarily (and apart
from rights accruing under special circumstances) having the
right to vote at elections of directors (the "Base Capital
Stock"); provided, however, that any change in the relative
beneficial ownership of securities of any person resulting solely
from a reduction in the aggregate number of outstanding shares of
Base Capital Stock, and any decrease thereafter in such person's
ownership of securities, shall be disregarded until such person
increases in any manner, directly or indirectly, such person's
beneficial ownership of any securities of the Company.
(b) Severance Payment. If, (i) during the term of this
Agreement and at any time after the occurrence of a Change in Control, a
member of the Affiliated Group terminates the Employee's employment for
any reason or no reason, or (ii) during the term of this Agreement and
within one year after a Change in Control, the Employee resigns as a
result of a material change in his responsibilities or the relocation of
his place of employment by more than 20 miles from Oakland, California,
or (iii) during the term of this Agreement and within the 30-day period
commencing one year after the occurrence of a Change in Control, the
Employee resigns his employment for any reason, then the Employee shall
be entitled to receive a severance payment from the Company (the
"Severance Payment"). The Severance Payment shall be made in a lump sum
not less than 31 days nor more than 60 days following the date of the
employment termination and shall be in an amount determined under
Subsection (c) below. The Severance Payment shall be in lieu of any
further payments to the Employee and any further accrual of benefits
under Sections 3 and 4 with respect to periods subsequent to the date of
the employment termination and any termination benefits under Section 7.
The foregoing notwithstanding, the Employee may elect to receive, in
lieu of the Severance Payment, all of the termination benefits described
in Section 7, as if his resignation or termination as provided in this
Subsection (b) were a termination without Cause. The Employee shall
advise the Company of his election in writing within 30 days after his
resignation or after receiving the Company's notice of termination.
(c) Amount. The amount of the Severance Payment shall be equal
to the product of the following:
(i) 147.5 percent of the Employee's monthly rate of Base
Compensation, as in effect on the date of the employment
termination; times
(ii) The number of months between the date of the
employment termination and the Employee's Normal Retirement Date.
For this purpose, a partial month shall be counted as the
appropriate fraction of a full month.
(d) Incentive Programs. If, during the term of this Agreement,
a Change in Control occurs with respect to the Company, the Employee
shall become fully vested in all awards heretofore or hereafter granted
to him under all stock option, stock appreciation rights, restricted
stock, phantom stock or similar plans maintained by the Company, any
contrary provisions of such plans notwithstanding.
(e) No Mitigation. The Employee shall not be required to
mitigate the amount of any payment contemplated by this Section 6
(whether by seeking new employment or in any other manner), nor shall
any such payment be reduced by any earnings that the Employee may
receive from any other source.
7. Involuntary Termination Without Cause.
(a) Continuation Period. In the event that, during the term of
this Agreement, a member of the Affiliated Group terminates the
Employee's employment for any reason other than Cause or Disability or
for no reason, the Employee shall be entitled to receive all of the
payments and benefit coverage described in the succeeding subsections of
this Section 7. Such payments and benefit coverage shall continue for
the period commencing on the date when the employment termination is
effective and ending on the earlier of (i) the Employee's Normal
Retirement Date or (ii) the date of the Employee's death (the
"Continuation Period"). Any other provision of this Agreement
notwithstanding, if the Employee is entitled and elects to receive a
severance payment pursuant to Section 6, then no payments or benefit
coverage shall be provided to the Employee under this Section 7.
(b) Base Compensation. During the Continuation Period, the
Employee shall receive biweekly payments of 147.5 percent of his
biweekly rate of Base Compensation, as in effect on the date of the
employment termination.
(c) Insurance Coverage. During the Continuation Period, the
Employee (and, where applicable, his dependents) shall be entitled to
continue participation in all insurance or similar plans maintained by
the Company, including (without limitation) life, disability, health and
accident insurance programs, as if he were still an employee of the
Company. Where applicable, the Employee's salary for purposes of such
plans shall be deemed to be equal to his Base Compensation. To the
extent that the Company finds it impossible to cover the Employee under
its group insurance policies during the Continuation Period, the Company
(at its own expense) shall provide the Employee with the same level of
coverage under individual policies.
(d) Incentive Programs. The Continuation Period shall be
counted as employment with the Affiliated Group for purposes of
determining the expiration date of all options on the Company's stock
and for purposes of vesting under all executive compensation programs in
which the Employee participated (any contrary provisions of option
agreements or such programs notwithstanding), including (without
limitation) stock purchase, stock option, restricted stock or phantom
stock plans, incentive or other bonus plans and similar programs, but
not including any pension, thrift or profit-sharing plan intended to
qualify under section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). The preceding sentence shall not be construed to
require the grant of any new awards to the Employee under such executive
compensation programs during the Continuation Period.
(e) Supplemental Benefit. In lieu of accruing additional
pension benefits under the Retirement Program during the Continuation
Period, the Employee and his surviving spouse (if any) shall be entitled
to receive an unfunded supplemental retirement benefit (the
"Supplemental Benefit"). The amount of the Supplemental Benefit shall
be determined under Subsection (f) below. Supplemental Benefit payments
shall be made in monthly installments, commencing with the month for
which the first pension payment is made to the Employee or his surviving
spouse under Section 4(e) or under the Retirement Plan and ending with
the month for which the last pension payment is made to the Employee or
his surviving spouse under Section 4(e) or under the Retirement Plan, as
the case may be. For purposes of this Section 7, the term "Retirement
Program" shall also include the Minimum Pension described in Section 4.
(f) Amount of Supplemental Benefit. The amount of the
Supplemental Benefit shall be equal to the difference between:
(i) The amount of the pension benefits actually paid to
the Employee or to his surviving spouse, as the case may be,
under the Retirement Program; and
(ii) The amount of the hypothetical pension benefits
that would be payable to the Employee or to his surviving spouse,
as the case may be, under the Retirement Program if the following
assumptions are made:
(A) The projected Continuation Period, determined
without regard to the possibility of the Employee's
death, is counted as employment with the Affiliated Group
for all purposes (including, without limitation, benefit
accrual) under the Retirement Program; and
(B) 147.5 percent of the projected Base
Compensation to be received by the Employee during the
Continuation Period is counted as compensation for
purposes of determining benefits under the Retirement
Program.
If the Employee receives the Minimum Pension, the Supplemental Benefit
shall be payable in the same form as the Minimum Pension. If the
Employee receives a benefit under the Retirement Plan, the Supplemental
Benefit shall be payable in the same form as the pension benefit under
the Retirement Plan, unless such pension benefit is paid in the form of
a single lump sum. In that event, the Supplemental Benefit shall be
payable in the normal form of benefit provided under the Retirement Plan
and shall be computed and paid as if the pension benefits actually paid
under the Retirement Plan were also payable in the normal form. The
amount of the Supplemental Benefit shall be recalculated each year in
accordance with any provisions of the Retirement Plan which are
applicable to the Employee (or would be applicable if the Employee were
vested) and which provide for the adjustment of pension benefits to
reflect changes in the cost of living.
(g) Equivalency. Subsections (e) and (f) above shall be
construed, to the greatest extent possible, so as to place the Employee
in the position in which he would have been if his active participation
in the Retirement Program had continued during the Continuation Period.
However, any incremental tax costs or benefits associated with the
Supplemental Benefit shall be disregarded for this purpose.
(h) No Mitigation. The Employee shall not be required to
mitigate the amount of any payment or benefit contemplated by this
Section 7, nor shall any such payment or benefit be reduced by any
earnings or benefits that the Employee may receive from any other
source.
8. Limitation on Payments.
(a) Application. This Section 8 shall apply to the Employee
only if, after the application of this Section 8, the present value of
his aggregate payments or property transfers from the Affiliated Group
will be greater than the present value of his payments or property
transfers from the Affiliated Group would have been if (i) this Section
8 did not apply and (ii) such present value had been reduced by the
amount of the excise tax described in section 4999 of the Code. In all
other cases, this Section 8 shall not apply to the Employee. All
determinations under this Subsection (a) shall be made by Arthur
Andersen & Co. (the "Auditors").
(b) Basic Rule. Any provision of this Agreement other than
Subsection (a) above notwithstanding, in the event that the Auditors
determine that any payment, transfer or acceleration of vesting by the
Affiliated Group to or for the benefit of the Employee, whether pursuant
to the terms of this Agreement or any other plan or agreement (a
"Payment"), would be nondeductible by the Affiliated Group for federal
income tax purposes because of section 280G of the Code, then the
aggregate present value of all Payments shall be reduced (but not below
zero) to the Reduced Amount. For purposes of this Section 8, the
"Reduced Amount" shall be the amount, expressed as a present value,
which maximizes the aggregate present value of the Payments without
causing any Payment to be nondeductible by the Affiliated Group because
of section 280G of the Code.
(c) Reduction of Payments. If the Auditors determine that any
Payment would be nondeductible by the Affiliated Group because of
section 280G of the Code, then the Company, within five business days
after being notified by the Auditors, shall give the Employee notice to
that effect and a copy of the detailed calculation thereof and of the
Reduced Amount. The Employee may then elect, in his sole discretion,
which and how much of the Payments shall be eliminated or reduced (as
long as after such election the aggregate present value of the Payments
equals the Reduced Amount) and shall advise the Company in writing of
his election within 30 days of his receipt of notice. If no such
election is made by the Employee within such 30-day period, then the
Company may elect which and how much of the Payments shall be eliminated
or reduced (as long as after such election the aggregate present value
of the Payments equals the Reduced Amount) and shall notify the Employee
promptly of such election. For all purposes under this Section 8,
present value shall be determined in accordance with section 280G(d)(4)
of the Code. All determinations made by the Auditors under this Section
8 shall be binding upon the Affiliated Group and the Employee and shall
be made within 60 days of the date when a Payment becomes payable or
transferable. Within five business days following the completion of
such determinations and the elections hereunder, the Affiliated Group
shall pay or transfer to or for the benefit of the Employee such amounts
as are then due to him under this Agreement. It shall, as promptly as
possible, pay or transfer to or for the benefit of the Employee in the
future such amounts as become due to him under this Agreement.
(d) Overpayments and Underpayments. As a result of uncertainty
in the application of section 280G of the Code at the time of an initial
determination by the Auditors hereunder, it is possible that Payments
will have been made by the Affiliated Group which should not have been
made (an "Overpayment") or that additional Payments which will not have
been made by the Affiliated Group could have been made (an
"Underpayment"), consistent in each case with the calculation of the
Reduced Amount hereunder. In the event that the Auditors, based upon
the assertion of a deficiency by the Internal Revenue Service against
the Affiliated Group or the Employee which the Auditors believe has a
high probability of success, determine that an Overpayment has been
made, such Overpayment shall be treated for all purposes as a loan to
the Employee which he shall repay to the Affiliated Group, together with
interest at the applicable federal rate provided for in section
7872(f)(2)(A) of the Code; provided, however, that no amount shall be
payable by the Employee to the Affiliated Group if and to the extent
that such payment would not reduce the amount which is subject to
taxation under section 4999 of the Code. In the event that the Auditors
determine that an Underpayment has occurred, such Underpayment shall
promptly be paid or transferred by the Affiliated Group to or for the
benefit of the Employee, together with interest at the applicable
federal rate provided for in section 7872(f)(2)(A) of the Code.
9. Compensating Payments.
(a) Basic Rule. If the Auditors determine that any Payment
would be nondeductible by the Affiliated Group for federal income tax
purposes because of section 280G of the Code, and if any Payment is
subject to reduction as a result of a provision in any plan or agreement
limiting nondeductible Payments (other than Section 8 of this Agreement)
then the Affiliated Group shall pay the amount of such reduction (the
"Compensating Amount") to the Employee under this Agreement. The
Compensating Amount shall be paid in a lump sum in cash within five
business days after the date when a Payment otherwise would have been
made. All determinations made by the Auditors for purposes of this
Section 9 shall be binding upon the Affiliated Group and the Employee.
(b) Waiver. To the extent that a Compensating Amount is paid
under this Agreement with respect to the value of any Payment, such
Payment shall be forfeited permanently and shall under no circumstances
be paid to the Employee or to any person deriving rights from the
Employee at any future time (whether or not any part of such Payment
would be nondeductible at such future time). The Employee hereby waives
any right to, or interest in, any Payment with respect to which he has
received a Compensating Amount.
(c) Equivalency. Subsection (a) above shall be construed, to
the greatest extent possible, so as to place the Employee in the
economic position in which he would have been if none of the plans and
agreements to which the Employee and the Affiliated Group are a party
provided for the reduction of Payments because of the effects of section
280G of the Code. However, any incremental tax costs or tax benefits
associated with Payments or Compensating Amounts shall be disregarded
for this purpose.
10. Protection of Trade Secrets.
(a) Trade Secrets. The parties acknowledge and agree that
during the term of this Agreement and in the course of his employment
hereunder, the Employee will have access to and become acquainted with
information concerning the operations of members of the Affiliated
Group, including without limitation financial, personnel, customer,
sales, systems and other information that is owned by members of the
Affiliated Group and regularly used in the operation of their business,
and that such information constitutes the trade secrets of the members
of the Affiliated Group. The Employee specifically agrees that he shall
not misuse, misappropriate or disclose any such trade secrets, directly
or indirectly, to any other person or use them in any way, either during
the term of this Agreement or at any time thereafter, except as required
in the course of his employment hereunder.
(b) Unfair Competition. The Employee acknowledges and agrees
that the unauthorized use or disclosure of any of the trade secrets
obtained by the Employee during the course of his employment under this
Agreement, including information concerning the Affiliated Group's
current, future or proposed work, services or products, the facts that
any such work, services or products are planned, under consideration or
in production, as well as any descriptions thereof, constitute unfair
competition. The Employee promises and agrees not to engage in any
unfair competition with any member of the Affiliated Group, either
during the term of this Agreement or at any time thereafter.
(c) Return of Documents. The Employee further agrees that
all files, records, documents, computer disks, drawings, specifications,
equipment and similar items relating to the business of members of the
Affiliated Group, whether prepared by the Employee or others, are and
shall remain exclusively the property of the members of the Affiliated
Group and shall be returned to the Affiliated Group upon the termination
of his employment hereunder.
11. Successors.
(a) Company's Successors. The Company shall require any
successor (whether direct or indirect and whether by purchase, lease,
merger, consolidation, liquidation or otherwise) to all or substantially
all of the Company's business and/or assets, by an agreement in
substance and form satisfactory to the Employee, to assume this
Agreement and to agree expressly to perform this Agreement in the same
manner and to the same extent as the Company would be required to
perform it in the absence of a succession. The Company's failure to
obtain such agreement prior to the effectiveness of a succession shall
be a breach of this Agreement and shall entitle the Employee to all of
the compensation and benefits to which he would have been entitled
hereunder if the Company had involuntarily terminated his employment
without Cause on the date when such succession becomes effective. For
all purposes under this Agreement, the term "Company" shall include any
successor to the Company's business and/or assets which executes and
delivers the assumption agreement described in this Subsection (a) or
which becomes bound by this Agreement by operation of law.
(b) Employee's Successors. This Agreement and all rights of the
Employee hereunder shall inure to the benefit of, and be enforceable by,
the Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
12. Notice.
Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or when mailed by U.S. registered mail,
return receipt requested and postage prepaid. In the case of the
Employee, mailed notices shall be addressed to him at the home address
which he most recently communicated to the Company in writing. In the
case of the Company, mailed notices shall be addressed to its corporate
headquarters, and all notices shall be directed to the attention of its
Secretary.
13. Miscellaneous Provisions.
(a) Waiver. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by the Employee and by the Company's
Chief Executive Officer. No waiver by either party of any breach of, or
of compliance with, any condition or provision of this Agreement by the
other party shall be considered a waiver of any other condition or
provision or of the same condition or provision at another time.
(b) Whole Agreement. No agreements, representations or
understandings (whether oral or written and whether express or implied)
which are not expressly set forth in this Agreement have been made or
entered into by either party with respect to the subject matter hereof.
Effective as of the date hereof, this Agreement supersedes all prior
employment agreements between the Employee and any member of the
Affiliated Group.
(c) Presumption. The Company shall make a payment or transfer
described in this Agreement at the time specified herein upon receiving
written notice from the Employee describing such payment or transfer,
referring to the provision of this Agreement under which such payment or
transfer is claimed and certifying that all conditions for such payment
or transfer, as set forth in this Agreement, have been satisfied. The
information so furnished to the Company by the Employee shall be
presumed to be correct, subject to rebuttal by the Company after making
the payment or transfer claimed by the Employee. The Company may seek a
refund of such payment or transfer in accordance with Subsection (g)
below.
(d) No Setoff. There shall be no right of setoff or
counterclaim, with respect to any claim, debt or obligation, against
payments to the Employee under this Agreement.
(e) Choice of Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the
State of California.
(f) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity
or enforceability of any other provision hereof, which shall remain in
full force and effect.
(g) Arbitration. Except as otherwise provided in Sections 8 and
9, any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration in
Oakland, California, in accordance with the Commercial Arbitration Rules
of the American Arbitration Association, and judgment on the award
rendered by the arbitrator may be entered in any court having
jurisdiction thereof. All fees and expenses of the arbitrator and such
Association shall be paid by the Company.
(h) No Assignment. The rights of any person to payments or
benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by
operation of law, including (without limitation) bankruptcy,
garnishment, attachment or other creditor's process, and any action in
violation of this Subsection (h) shall be void.
IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by its duly authorized officer, as
of the day and year first above written.
/s/ Will M.
Storey
Will M. Storey
AMERICAN PRESIDENT COMPANIES, LTD.
By /s/ J. M. Lillie
J. M. Lillie
Chairman of the Board, President
and Chief Executive Officer
TW940324Cemp-0900tw
