UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
For the fiscal year ended December 29, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
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, CA 94607
(Address of principal executive offices)
Registrant's telephone number: (510) 272-8000
Securities registered pursuant to Section 12(b) of the
Act:
Name of each exchange on
Title of each class which registered
Common Stock, Par New York Stock Exchange
Value $.01 Pacific Stock Exchange
Rights to Purchase Series A New York Stock Exchange
Junior Participating Preferred Stock Pacific Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act:
None
______________
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( )
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 ( )
______________
At March 1, 1996 the number of shares of Common Stock outstanding
was 25,696,015. Based solely upon the closing price of the New
York Stock Exchange on such date, the aggregate market value of
Common Stock held by non-affiliates of the registrant was
approximately $533.2 million.
Documents Incorporated by Reference
Portions of registrant's Proxy Statement for its 1996 Annual
Meeting of Stockholders are incorporated by reference into Part
III hereof.
______________
<PAGE>
TABLE OF CONTENTS
Page
PART I
Items 1. and 2. BUSINESS AND PROPERTIES 3-13
Item 3. LEGAL PROCEEDINGS 14-15
Item 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS 15
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED STOCKHOLDER MATTERS 15
Item 6. SELECTED FINANCIAL DATA 15-16
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND
RESULTS OF OPERATIONS 17-28
Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA 28-52
Item 9. DISAGREEMENTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE 53
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS
OF THE REGISTRANT 53
Item 11. EXECUTIVE COMPENSATION 54
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT 54
Item 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS 54
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K 54-61
SIGNATURES 62-63
PART I
<PAGE>
ITEMS 1. AND 2. BUSINESS AND PROPERTIES
American President Companies, Ltd. and its subsidiaries (the
"company") provide container transportation and related services
in the Americas, Asia, the Middle East and Europe, through an
intermodal system combining ocean, rail and truck transportation.
The company's international transportation operations are
conducted through American President Lines, Ltd., an ocean common
carrier with operations in the Pacific Basin, Europe and Latin
America. Another operating unit, American Consolidation
Services, Ltd., provides cargo distribution, warehousing and
freight consolidation services. Stevedoring and terminal
operations on the U.S. West Coast are conducted through Eagle
Marine Services, Ltd. American President Business Logistics
Services, Ltd. provides logistical consulting and management
services. The company's North America transportation operations
are conducted through APL Land Transport Services, Inc., which
provides intermodal transportation, freight brokerage and over-
the-road truck transportation. The company was engaged in real
estate operations through Natomas Real Estate Company until 1994,
when its remaining real estate holdings were sold.
TRANSPORTATION
International
The company provides ocean-going containerized cargo
transportation services primarily in the trans-Pacific market, as
well as in the intra-Asia, Asia-Europe and Asia-Latin America
markets. The company offers six scheduled trans-Pacific services
per week between key ports in Asia and four U.S. ports and one
Canadian port.
The company provides scheduled service between over 60 ports
in the Pacific and Indian Oceans and in the Arabian Gulf. In the
intra-Asia market, the company provides service between over 400
Asian cities and commercial centers. The companyOs trans-Pacific
services are provided between Asia and over 3,300 cities in North
America via eight West Coast ports and three East Coast ports.
In addition, service is provided between Asia and Europe to over
2,500 cities in Europe which are served through five northern
European ports. Also, in the market between Asia and the
Caribbean, Latin America, Central and South America, over 50
ports and cities are served. The company's ocean transportation
business maintains 333 offices and agencies located in 13
countries in North and South America, 26 countries in Asia and
the Middle East, 13 countries in Europe, two countries in Africa,
and in Australia.
Since 1991, the company and Orient Overseas Container Line
("OOCL") have been parties to agreements enabling them to
exchange vessel space and coordinate vessel sailings through
2005. These agreements permit both companies to offer faster
transit times and more frequent sailings between key markets in
Asia and the U.S. West Coast, and to share terminals and several
feeder operations within Asia. In September 1994, the company,
Mitsui OSK Lines, Ltd. ("MOL"), and OOCL signed an agreement to
exchange vessel space, coordinate vessel sailings and cooperate
in the use of port terminals and equipment for ocean
transportation services in the Asia-U.S. West Coast trade through
2005. The carriers commenced service under this agreement in
January 1996. The agreement between the company and OOCL is
suspended so long as the agreement between the company, OOCL and
MOL is in effect.
<PAGE>
The three carriers and Nedlloyd Lines B.V. ("NLL") are also
parties to a separate agreement to exchange vessel space,
coordinate vessel sailings and cooperate in the use of port
terminals and equipment in an all-water service in the Asia-Latin
America trade for a minimum of three years. The four carriers
initiated service under this agreement in March 1995.
Additionally, the four carriers and Malaysian International
Shipping Corporation BHD ("MISC") have an agreement to exchange
vessel space, coordinate vessel sailings and cooperate in the use
of port terminals and equipment for ocean transportation services
in the Asia-Europe trade through 2001, with early termination
rights upon six months notice to the other parties beginning
January 1, 1998. The carriers commenced service under the
agreement in January 1996. The company entered the Asia-Europe
trade in March 1995 by chartering vessel space through MOL.
The Asia-U.S. West Coast, Asia-Latin America and Asia-Europe
alliance agreements are all currently scheduled to be fully
operational by the end of the first quarter of 1996.
In 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 between major Asian ports and certain
ports on the Pacific Coast of the U.S. and Mexico. This
agreement was terminated in September 1995, and the company and
TMM have entered into a memorandum of understanding with respect
to negotiation of a new three-year agreement for reciprocal
charters of lesser amounts of vessel space beginning in March or
April 1996 and a possible joint service. However, no assurances
can be given as to whether those negotiations will be successful.
The company and TMM have agreed to continue to exchange vessel
space pending finalization of a new agreement.
In October 1995, the company and Matson Navigation Company,
Inc. ("Matson") signed an agreement for a 10-year alliance, which
commenced in February 1996. Pursuant to the terms of this
alliance, the company sold Matson six of its ships (three C9-
class vessels and three C8-class vessels) and certain of its
assets in Guam for approximately $163 million in cash. One of
the ships was sold in December 1995, and the remaining five
vessels were sold in January 1996. Four of these vessels,
together with a fifth Matson vessel, are being used in the
alliance. Matson is operating the vessels in the alliance, which
serves the U.S. West Coast, Hawaii, Guam, Korea and Japan, and
has the use of substantially all the westbound capacity. The
company has the use of substantially all the vessels' eastbound
capacity.
The following tables show the company's line haul capacity
provided to and available from alliance partners (OOCL, MOL,
Nedlloyd, MISC, TMM and Matson) under the company's alliance
agreements for 1995 and as estimated for 1996, in thousands of
twenty-foot equivalent units ("TEUs"):
<PAGE>
Capacity provided by the company
to the alliances: 1995 1996(1)(2)
Trans-Pacific
Eastbound 472.7 615.1
Westbound 345.1 371.6
Capacity available to the company
from the alliances: 1995 1996(1)(2)
Trans-Pacific
Eastbound 491.4 521.8
Westbound 352.8 311.0
Asia-Europe
Eastbound 21.4 42.8
Westbound 30.4 53.5
Asia-Latin America
Eastbound 16.1 27.9
Westbound 9.5 19.8
(1)Capacity for 1996 is based upon the current schedule for
delivery and deployment of newly constructed vessels and
implementation of the alliances and assumes currently
allocated vessel space which is subject to adjustment.
(2)Excludes TMM, pending finalization of a new agreement.
Under the alliance agreements, alliance partners contribute
and are allocated vessel space, which may be adjusted from time
to time. The agreements provide for, among other things,
settlement of the difference between the value of vessel space
provided by each partner and the value of vessel space available
to that partner, at specified vessel costs per TEU per day. The
value of vessel space provided by the company to the alliances is
less than the value of the total capacity allocated to it through
the alliances, resulting in an annual net cash payment from the
company to its alliance partners. The amount paid to alliance
partners was $45 million in 1995, and currently is estimated to
be $32 million in 1996. Agreements covering terminal and
equipment sharing among the alliance partners have not been
finalized, and the commitment of the alliance partners, including
the company, for these services cannot be determined at this
time.
International container transportation operations are
seasonal and subject to economic cycles and the growth of local
economies in the markets served, fluctuations in the relative
values of the U.S. dollar and various foreign currencies and
resulting changes in demand for transportation of import and
export products. The second and third quarters of each year
generally have been the company's strongest in terms of volume,
primarily due to the export of seasonal refrigerated goods from
the U.S. in both of these quarters and increased imports of
consumer goods to the U.S. in the third quarter for the Christmas
buying season.
The following table sets forth the amount and source of the
company's ocean shipping revenues for the past five years, in
millions of dollars.
1995 1994 1993 1992 1991
U.S. Import (1) $ 843 $ 896 $ 880 $ 829 $ 775
U.S. Export (1) 560 494 498 500 498
Intra-Asia (2) 369 352 329 296 280
Asia-Europe 49
Desert Storm 103
Total $1,821 $1,742 $1,707 $1,625 $1,656
<PAGE>
(1) Includes Asia-Latin America revenues in 1995.
(2) Includes Desert Storm revenues in 1991, which were not
segregated from normal operations in this market.
The company transports imports into North America that
include higher value goods such as clothing, electronics,
automotive and manufacturing components and other consumer items.
Generally, higher value cargo is transported at higher rates due
to its value, time sensitivity or need for specialized services.
U.S. export cargoes transported by the company include
refrigerated goods, military shipments and lower value, semi-
processed and raw materials, as well as auto parts, oil field
supplies and other higher value finished products.
In the intra-Asia market, the industrialized economies
import food, raw materials and semi-processed goods from
developing Asian nations and export auto parts, electronics and
other technological and capital-intensive finished products.
The Asia-Europe trade is similar in cargo mix to the trades
between North America and Asia. Shipments from Asia to Northern
Europe include higher value goods such as electronic goods.
Trade from Europe to Asia includes many lower value, semi-
processed and raw materials, as well as carpet and floor
coverings and chemicals.
Exports from Asia to Latin America and the Caribbean include
consumer products, auto parts, motorcycles and other high value
goods. Cargoes moving from Latin America to Asia include raw
materials such as coffee and cocoa, resins, chemicals, and
processed goods including foods and beverages.
The single largest customer of the company's international
transportation operations is the U.S. government, which ships
military and other cargo and accounted for approximately 2%, 3%
and 3% of consolidated revenues in 1995, 1994 and 1993,
respectively. Historically, the company has bid competitively
for contracts to transport military and other cargo for the U.S.
government. In recent years, the U.S. military has been closing
bases and reducing the number of U.S. military personnel
overseas. The extent to which future U.S. military base closures
and rollback of personnel may impact shipments of U.S. military
cargo by the company cannot be estimated.
In 1991, the company transported military cargo related to
Operation Desert Storm. Export shipments of Desert Storm cargo
began in the fourth quarter of 1990 and continued through the
first quarter of 1991 during the build-up of U.S. military
equipment and supplies. The company also returned military
equipment from this region to the U.S. during the second and
third quarters of 1991. In addition to military freight
revenues, the company collected detention charges from the U.S.
government for containers transported for Operation Desert Storm
and held beyond an allowed time, which contributed $10 million,
$6 million and $41 million to operating income in 1994, 1993 and
1992, respectively. All detention claims were settled during
1994.
<PAGE>
The following table shows the company's total international
transportation volumes in forty-foot equivalent units ("FEU") for
the past five years:
Year Volumes
1995 570,000
1994 558,000
1993 543,000
1992 501,000
1991 513,000
The company is a participant in freight conferences, which
are groups of carriers that may jointly establish common tariffs
and common rate levels in certain markets. Conferences in trades
from and to the U.S. are exempt from U.S. anti-trust laws under
the Shipping Act of 1984 (the "Shipping Act"). Conferences have
historically been effective in establishing and maintaining a
stable rate environment for their members. Recently, however,
carriers which are members of freight conferences, including the
company, have been losing market share to carriers which are not
members of the conferences. The company's share of the trans-
Pacific market was approximately 8%, 9% and 11% in 1995, 1994 and
1993, respectively. Non-conference carriers have been increasing
their capacity, improving their services and charging rates for
transporting cargo at increasingly lower levels than conference
carriers. In the fourth quarter of 1995, independent pricing
actions which reduced shipping rates were taken by conference
carriers, including the company, as a means to recapture market
share in the U.S. import market. These actions have resulted in
rate instability in this market. The company is unable to
predict the extent to which this rate instability will continue
or its magnitude; however, such instability could have a material
adverse impact on carriers in the U.S. import market, including
the company.
Since 1989, the company and 13 other shipping companies,
representing approximately 83% of total trans-Pacific U.S. import
capacity, have been parties to the Trans-Pacific Stabilization
Agreement. Among other things, the agreement limits import
capacity of participating companies by amounts mutually
determined from time to time in an attempt to improve the balance
of supply and demand in the U.S. import market. The agreement
may be terminated upon the unanimous written consent of the
companies. The company's ability to be a party to this agreement
is based upon the Shipping Act.
During 1995, legislation was introduced in the U.S. House of
Representatives that would have substantially modified the
Shipping Act, which, in its present form, among other things,
provides the company with certain immunity from anti-trust laws
and requires the company and other carriers in the U.S. foreign
commerce to file tariffs. Changes proposed in the legislation as
originally drafted, if enacted, would have eliminated government
tariff filing and enforcement, allowed confidential and
independent contracts between shippers and ocean carriers and
strengthened provisions that prohibit predatory activities by
foreign carriers. While the legislation was not enacted, it
would not have affected the anti-trust immunity provided by the
Shipping Act.
<PAGE>
The company is unable to predict whether this or other
proposed legislation will be introduced in 1996 or enacted or
whether, if enacted, it will contain terms similar to those
originally proposed. Depending on its terms, enactment of such
legislation modifying the Shipping Act could have a material
adverse impact on the competitive environment in which the
company operates and on the company's results of operations.
The following table shows the company's utilization of its
containership capacity during the past five years, which for 1991
includes the effects of shipments related to Operation Desert
Storm:
1995 1994 1993 1992 1991
U.S. Import 80% 89% 89% 89% 93%
U.S. Export 93% 94% 92% 90% 95%
The company provides cargo distribution and warehousing
services in the U.S. and freight consolidation services in Asia,
the Middle East, Europe, Mexico and Africa through its
subsidiary, American Consolidation Services, Ltd. ("ACS"). ACS
also provides freight deconsolidation services in several U.S.
locations and acts as a non-vessel operating common carrier in
the intra-Asia market and from Asia to Europe and Australia.
Freight consolidators combine various shipments from multiple
vendors into a single container load for delivery to a single
destination. The company also serves shippers of less-than-
containerload cargoes by combining their shipments with others
bound for the same or proximate geographic locations.
The company has port terminal facilities in Oakland and Los
Angeles, California, Seattle, Washington and Dutch Harbor, Alaska
and major inland terminal facilities at Chicago, Illinois,
Atlanta, Georgia and South Kearny, New Jersey. Each port
terminal facility is operated under a long-term use agreement
providing for preferential, although non-exclusive, use of the
facility by the company. The company also operates major port
terminal facilities in Asia under long-term lease agreements in
Kobe and Yokohama, Japan and Kaohsiung, Taiwan.
The company incurred incremental operating expenses and a
loss of ocean freight revenues during the first half of 1995
resulting from the earthquake in Kobe, Japan, in January 1995, in
which the ocean terminal leased by the company was extensively
damaged. The company expects substantially all of these expenses
and lost revenues to be recovered through its business
interruption insurance and is in the process of finalizing its
claim. Management has recorded its best estimate of the
recovery. The company and OOCL have resumed service to Kobe and
have adjusted their shared trans-Pacific schedule to and from
Japan.
In 1993, the company entered into a contract with the Port
of Los Angeles to lease a new 226-acre terminal facility for 30
years. Occupancy of the new facility is scheduled for 1997 upon
completion of construction. Additionally, in 1994, the company
and the Port of Seattle signed a lease amendment for the
improvement and expansion of its existing terminal facility.
Under the amended lease, the facility will be expanded from 83
acres to approximately 160 acres. The expansion is expected to
be completed during 1997, and the lease term will be 30 years
from completion. In addition, the company has the option to
expand the terminal by an additional 30 acres.
<PAGE>
In March 1995, the company and a Philippine terminal
developer and operator entered into a letter of intent with an
agency of the Republic of Pakistan regarding the possible
construction and operation of a container terminal at the Port of
Karachi. The parties are negotiating the terms for the
implementation of the project. In January 1996, the company,
together with a major U.S. engineering and construction firm and
MOL and NLL, entered into a memorandum of understanding with an
agency of the Republic of Indonesia to cooperate in exploring the
feasibility of developing an international container terminal to
be located in Kabil, Batam Island, Indonesia, for operations by
the company and its partners under a long-term concession. The
company is unable to predict whether negotiations on the Port of
Karachi project will be successful or such project will be
completed, or whether the proposed Batam project is feasible or
will be completed.
In addition to performing stevedoring and terminal services
for the company's own operations, Eagle Marine Services, Ltd., a
subsidiary of the company, provides these services to third
parties at the company's U.S. port facilities.
On December 29, 1995, the company operated 19 U.S.-flag
containerships and five foreign-flag containerships. Of the U.S.-
flag containerships, six were chartered under operating lease
agreements and the remainder were owned by the company. In
addition, the company owned three U.S.-flag vessels that were
chartered to another carrier. The following table sets forth the
vessels deployed by the company in its trans-Pacific and intra-
Asia services at December 29, 1995:
Maximum
Type of Number of Date Placed Capacity Service Speed
Vessel Vessels in Service (in TEUs)
(in knots)
C-11 5 1995 4,800 24.6
C-10 5 1988 4,300 24.0
C-9* 3 1982-1983 2,900 23.5
L-9 4 1987 2,800 21.0
J-9 2 1984 2,700 22.5
C-8* 4 1979 & 1986 2,000 22.0
Pacesetter 1 1973 1,400 23.5
* In December 1995, one C-8 was sold to Matson and chartered
back through the end of 1995. In January 1996, the three C-9s
and two C-8s were sold to Matson.
The company has the authority from the United States
Maritime Administration ("MarAd") to operate up to 28 foreign-
flag-feeder vessels in its intra-Asia service. At December 29,
1995, the company operated 21 such vessels, which are leased by
it for terms of up to three years.
The company took delivery of and made final payments on five
C11-class vessels in 1995 and one C11-class vessel in 1996, built
pursuant to construction contracts with Howaldtswerke-Deutsche
Werft AG, of Germany and Daewoo Shipbuilding and Heavy Machinery,
Ltd. of Korea. The total cost of the six C11-class vessels was
$529 million, including total payments to the shipyards of $503
million, of which $62 million was paid in January 1996.
<PAGE>
OOCL has placed orders to purchase six vessels similar in
size and speed to the company's C11-class vessels. Four of
OOCLOs vessels have been delivered, and the final two vessels are
scheduled to be delivered in March 1996. The company and OOCL
have agreed to operate six and five of their C11-class vessels,
respectively, under their Asia-U.S. West Coast alliance agreement
with MOL. The deployment of the 11 new C11-class vessels by the
company and OOCL, replacing 14 older vessels, will increase the
combined trans-Pacific capacity of the company and OOCL by
approximately 15%. The company currently expects growth in
demand in the trans-Pacific market in the foreseeable future but
believes that, because a number of other competing ocean carriers
are also constructing significant numbers of new vessels, growth
in capacity in that market will be significantly greater than
growth in demand. No assurances can be given with respect to
anticipated growth in demand, utilization of the company's
increased capacity or the potential negative impact of the
increased capacity on rates or the company's market share. Such
growth and utilization will depend upon demand for U.S. import
and U.S. export cargo in this market, economic conditions in the
U.S. and other Pacific Basin countries, the effects of
implementation of the company's alliances, and whether and when
additional new vessels are delivered to competing carriers, among
other factors. Additionally, modification of the Shipping Act,
which is under consideration as referred to above, could have a
material adverse impact on the company's rates and volumes.
In September 1995, the company sold its construction
contract for three K10-class vessels, which it had entered into
in 1993, and recognized a pre-tax gain of $1.6 million. In
conjunction with the sale, the company, MOL, OOCL and NLL formed
a joint venture company, in which their respective shares are
each 25%, and agreed to charter back these vessels, when
delivered, for seven years for use in the Asia-Europe trade.
Prior to the sale of the construction contract, the company made
progress payments of $30 million for these vessels, including
payments of $12 million in 1995, for which it received
reimbursement.
At December 29, 1995, the company operated 129,200 dry
containers consisting of 20-, 40-, 45-, 48-, and 53-foot
containers, 43,700 of which were owned and 85,500 leased under
operating lease agreements. At that date, the company also
operated 8,900 refrigerated containers, 3,700 of which were owned
and 5,200 leased under operating leases. In addition, the
company operated 54,500 chassis for the carriage of containers,
35,100 of which were owned and 19,400 leased under capital and
operating leases.
North America
The company provides intermodal transportation and freight
brokerage services to North American and international shippers,
as well as time-critical cargo transportation and just-in-time
delivery (principally to the automotive manufacturing industry).
These services are provided through an integrated system of
contracted rail and truck transportation, the primary element of
which is a train system utilizing double-stack rail cars.
The company's double-stack train system principally serves
the North American long-haul truck and piggyback rail freight
markets, and the international (export-import) intermodal market,
through more than 30 U.S., Canadian and Mexican inland terminal
facilities. The company has agreements with certain railroads
under which those railroads serve as the company's rail carriers,
providing locomotive power, rail cars, trackage, terminal
services and labor to transport the company's containers on
individual double-stack rail cars and on dedicated unit trains.
<PAGE>
The following table shows the company's total North America
stacktrain volumes (in FEUs):
Year Volumes
1995 599,000
1994 594,000
1993 538,000
1992 508,000
1991 509,000
A stacktrain comprises up to 28 double-stack rail cars and
has a capacity of up to 280 FEUs. At December 29, 1995, the
company controlled 390 such rail cars, 220 of which were owned
and 170 of which were leased. In addition, as part of agreements
with certain railroads, the company utilizes additional rail cars
owned or leased and operated by the railroads. The company
controlled 930 and 1,100 double-stack rail cars in 1994 and 1993,
respectively. The significant reduction in the number of rail
cars under direct company control in 1995 was made pursuant to
the companyOs agreement with the railroads.
Information Systems
The company manages its fleet of containers and chassis
using its computer systems and specialized software, linked
through a telecommunications network with the company's ships and
offices. The company's cargo and container management system
processes cargo bookings, generates bills of lading, expedites
U.S. customs clearance and facilitates the management of rail
cars, containers and other equipment. The company has also
developed computer systems designed to optimize the loading of
containers onto ships and to facilitate the planning of ship,
rail and truck moves. The company's communications system
permits its customers to access information regarding the
location and status of their cargo via touch-tone telephone,
personal computer or computer-facsimile link.
Real Estate
In 1994, the company sold its remaining 86 acres of land.
COMPETITION AND REGULATION
International Transportation
The company is a U.S.-flag and foreign-flag carrier. It
faces vigorous competition, principally on the basis of price and
service, on all of its trade routes from approximately 19 major
U.S.-flag and foreign-flag operators, some of which are owned by
foreign governments. Foreign-flag competitors generally have
cost and operating advantages over U.S.-flag carriers. The
timing of increases in capacity in the ocean transportation
industry can result in imbalances in industry-wide supply and
demand, which causes volatility in rates.
The carriage of U.S. military cargo is reserved for U.S.-
flag shipping companies, and this trade is also subject to
vigorous competition among such carriers. The carriage of this
cargo is awarded in accordance with competitive bidding
procedures under which the low bidder wins the right to carry a
substantial portion of such cargo for a period of up to 12
months. The process by which military cargo is awarded to
shippers is in the process of being revised. Under a new proposed
program, the company would share equally in military cargo
volumes with one competitor. No assurances can be given that
this program will become effective.
<PAGE>
In July 1995, legislation was introduced in the U.S. House
of Representatives that would substantially modify the Shipping
Act, which, among other things, provides the company with certain
immunity from antitrust laws and requires the company and other
carriers in U.S. foreign commerce to file tariffs. The
legislation, which was not enacted in 1995, would have been
phased in during 1997 and 1998 and would have eliminated
government tariff filing and enforcement, allowed confidential
and independent contracts between shippers and ocean carriers and
strengthened provisions that prohibit predatory activities by
foreign carriers. The company is unable to predict whether this
or other proposed legislation will be introduced in 1996 or
enacted or, whether, if enacted, it will contain terms similar to
those proposed. Enactment of legislation modifying the Shipping
Act, depending upon its terms, could have a material adverse
impact on the competitive environment in which the company
operates and on the company's results of operations.
A substantial portion of the company's transportation
operations is subject to regulation by agencies of the U.S.
government that have jurisdiction over shipping practices,
maintenance and safety standards and other matters. The
company's wholly-owned subsidiary, American President Lines, Ltd.
("APL") and MarAd are parties to a 20-year Operating-Differential
Subsidy Agreement ("ODS Agreement") expiring December 31, 1997.
This agreement provides for payments by the U.S. government to
partially compensate APL for the greater expense of operating
vessels under U.S. rather than foreign registry. Under APL's ODS
Agreement, APL must be controlled by U.S. citizens and its
vessels must be registered and built in the U.S. (except as noted
below) and manned by U.S. crews. Under its ODS Agreement, APL
also is required, among other things, to operate vessels on
designated trade routes in the foreign commerce of the U.S. and
to replace the capacity of its existing vessels as they reach the
end of their statutory lives (generally 25 years) if construction
differential subsidy, provided by the U.S. government, is made
available. This subsidy has not been made available since 1981.
In addition, APL is required to serve such trade routes within
designated minimum and maximum numbers of annual sailings, and,
except for over-age vessels, APL may not, without prior
government approval, remove any of its vessels from operation
under its ODS agreement.
Since 1981, Congress has twice passed legislation permitting
U.S.-flag carriers to acquire a limited number of foreign-built
vessels and thereafter to operate such vessels under existing
subsidy agreements under U.S. flag. Under such laws, APL had
five C10-class vessels constructed in Germany which are currently
operated under this legislation.
In June 1993, MarAd awarded APL contracts to manage 12 Ready
Reserve Force vessels for a period of five years. APL receives a
per diem fee based upon the operating status of each vessel.
In June 1992, the Bush Administration announced that no new
ODS agreements would be entered into and existing ODS agreements
would be allowed to expire. The Clinton Administration and
Congress have been reviewing U.S. maritime policy. Proposed
maritime support legislation introduced in 1994, referred to as
the Maritime Security Program, was not enacted. The
Administration's proposal included a 10-year subsidy program with
up to $100 million in annual payments to be requested and
appropriated on a year-to-year basis. Congress has appropriated
$46 million for fiscal 1996, or $2.3 million per vessel. This
compares with subsidy of approximately $3.1 million per vessel
under ODS. Maritime support legislation incorporating the
Administration's program has recently passed the U.S. House of
Representatives and is currently awaiting consideration before
the U.S. Senate, but has not yet been approved. The company is
not able to predict whether or when maritime support legislation
will be enacted or what terms such legislation may have, if
enacted.
<PAGE>
While the company continues to encourage efforts to enact
maritime support legislation, prospects for passage of a program
acceptable to the company are unclear. Accordingly, in July
1993, the company filed applications with MarAd to operate under
foreign flag its six C11-class containerships, delivered to the
company in 1995 and January 1996, and to transfer to foreign flag
seven additional U.S.-flag containerships in its trans-Pacific
fleet. In 1994, MarAd issued a waiver to allow the company to
operate its six C11-class vessels under foreign registry on the
condition that the vessels be returned to U.S.-flag in the event
acceptable maritime reform legislation is enacted. The remaining
application is still pending and no assurances can be given as to
whether, or when, the authority will be granted.
Management of the company believes that, in the absence of
ODS or an equivalent government support program, it will be
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
vessels. The company continues to evaluate its strategic
alternatives in light of the pending expiration of its ODS
agreement and the uncertainties as to whether an acceptable new
U.S. government maritime support program will be enacted, whether
sufficient labor efficiencies can be achieved through the
collective bargaining process, and whether the company's
remaining application 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.
In January 1995, the company and Columbia Shipmanagement
Ltd., a Cyprus company ("Columbia"), entered into an agreement
under which Columbia has agreed to provide crewing, maintenance,
operations and insurance for the company's six C11-class vessels
for a per diem fee per vessel. The agreement may be terminated
at any time by either party with notice.
North America Transportation
The company's stacktrain operations compete with eight trans-
Pacific containership companies and three West Coast railroads
offering double-stack train service. In addition, the company's
stacktrain operations, together with its contracted trucking
services, compete with long-haul trucking companies for truckload
shipments. The company's brokerage operations compete for
available business with over 150 shippers' agents. Competition
among shippers' agents is based principally on the types and
timeliness of services provided.
EMPLOYEES
At December 29, 1995, the company and its subsidiaries
employed 464 seagoing and 4,710 shoreside personnel. The
seagoing personnel and 274 of the shoreside personnel were
employed under collective bargaining agreements with several
unions. Certain of the company's collective bargaining
agreements covering seagoing and shoreside unions in the U.S.
expire in June and July 1996. The company currently expects that
new agreements will be negotiated with the respective unions
prior to the expiration of the current contracts, although no
assurances can be given to that effect. Failure to reach
agreement with a union on an acceptable labor contract could
result in a strike or other labor difficulties, which could have
a material adverse effect on the company's operating results.
<PAGE>
ITEM 3. 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 2,290 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.
The company insures its potential liability for bodily
injury to seamen through mutual insurance associations. Industry-
wide resolution of asbestos-related claims and resolutions of
claims against bankrupt shipping companies at higher than
expected amounts could result in additional contributions to
those associations by the company and other association members.
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 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 have been concluded and an initial decision
by the FMC administrative law judge is expected in June 1996.
In April 1994, a lawsuit, Hockert Pressman & Flohr Money
Purchase Plan, et. al. vs. American President Companies, Ltd.,
et. al., was filed against the company and certain of its
officers in United States District Court for the Northern
District of California. The suit alleged that the company and
certain officers made false and misleading statements about the
company's operating and financial performance in violation of
federal securities laws, and sought 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
March 30, 1994. The action was voluntarily dismissed without
prejudice to the purported class and without payment of
consideration, and the dismissal was approved by the Court on
November 22, 1995.
In October 1991, the California Department of Motor Vehicles
(the "DMV") assessed the company approximately $4.2 million in
additional chassis registration fees. The company was required
to pay the assessment and, in 1993, filed a mandamus action, as
well as a suit for refund. The company prevailed in the mandamus
action, but was denied a summary judgment motion in the refund
action. The parties appealed both decisions to the California
Court of Appeals. In October 1995, the California Court of
Appeals ordered the DMV to repay $4.2 million plus interest to
the company, and payment has been received.
In 1995, lawsuits were filed against the company and the
U.S. Department of Transportation by certain of the company's
unions and union members challenging MarAd's November 15, 1994
action granting the company the waiver allowing it to operate the
C11-class vessels under foreign flag. On June 29, 1995, the U.S.
District Court granted summary judgment in favor of MarAd and the
company, which the unions have appealed. While no assurances can
be given, management believes the unions' appeal will not be
successful.
<PAGE>
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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the company's security
holders during the fourth quarter of 1995.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The company's Common Stock is listed on the New York and
Pacific Stock Exchanges using the symbol APS. The reported high
and low closing sales prices per share of the company's Common
Stock and cash dividends declared for the preceding eight fiscal
quarters are set forth in Note 13 to the consolidated financial
statements, Part II, Item 8, on page 51 and are incorporated
herein by reference.
On March 1, 1996, the company had 3,409 common stockholders
of record.
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data for the ten years
ending December 29, 1995 are derived from the consolidated
financial statements of the company, which have been examined and
reported upon by the company's independent public accountants as
set forth in their report included elsewhere herein. This
information should be read in conjunction with the Consolidated
Financial Statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations.
<PAGE>
<TABLE>
TEN-YEAR FINANCIAL REVIEW
<CAPTION>
(Dollars in millions, except per share amounts) 1995 1994 1993 1992 1991
Results of Operations (1)
Revenues
Transportation
<S> <C> <C> <C> <C> <C>
International $2,133 $2,017 $1,930 $1,878 $1,791
North America 763 761 660 632 645
Real Estate 16 16 6 17
Total Revenues 2,896 2,794 2,606 2,516 2,453
Operating Income (Loss)
Transportation 68 114 123 137 131
Real Estate 9 10 3 12
Total Operating Income (Loss) 68 123 133 140 143
Income (Loss) Before Taxes 53 110 131 122 107
Income (Loss) Before Cumulative Effect
of Accounting Changes 30 74 80 78 66
Net Income (Loss) 30 74 80 56 56
Earnings (Loss) Per Common Share, Fully Diluted Before
Cumulative Effect of Accounting Changes (2) 0.99 2.30 2.50 2.34 1.85
Earnings (Loss) Per Common Share,
Fully Diluted (2) 0.99 2.30 2.50 1.69 1.56
Cash Dividends Per Common Share (2) 0.40 0.40 0.30 0.30 0.30
Financial Position
Cash, Cash Equivalents
& Short-Term Investments $ 136 $ 255 $ 84 $ 132 $179
Working Capital 65 206 51 (16) 159
Total Assets 1,879 1,664 1,454 1,436 1,541
Net Capital Expenditures 456 128 156 66 20
Long-Term Debt 686 373 250 222 251
Capital Lease Obligations 1 13 17 20 193
Redeemable Preferred Stock 75 75 75 75
Stockholders' Equity 469 541 475 397 426
Capital 1,168 1,007 822 829 955
Book Value Per Common Share (2) 18.28 19.82 17.72 15.25 14.48
Financial Ratios
Return on Equity (3) 5.6% 12.7% 15.7% 11.6% 10.7%
Cash Flow to Average Total Debt (4) 30.1% 53.3% 53.7% 43.4% 44.0%
Return on Average Assets 1.7% 4.8% 5.5% 3.8% 3.5%
Total Debt to Equity (3) 149.0% 63.4% 49.4% 75.5% 90.4%
Total Debt to Capital (3) 59.8% 38.8% 33.0% 43.0% 47.5%
Current Ratio 1.1 1.5 1.1 1.0 1.5
</TABLE>
<TABLE>
TEN-YEAR FINANCIAL REVIEW
<CAPTION>
(Dollars in millions, except per share amounts) 1990 1989 1988 1987 1986
Results of Operations (1)
Revenues
Transportation
<S> <C> <C> <C> <C> <C>
International $1,590 $1,579 $1,436 $1,271 $ 945
North America 669 637 650 540 469
Real Estate 15 21 45 14 26
Total Revenues 2,274 2,237 2,131 1,825 1,440
Operating Income (Loss)
Transportation (64) 51 129 162 50
Real Estate 8 9 33 7 13
Total Operating Income (Loss) (56) 60 162 169 63
Income (Loss) Before Taxes (93) 22 136 149 41
Income (Loss) Before Cumulative Effect
of Accounting Changes (62) 13 81 79 18
Net Income (Loss) (62) (16) 81 79 18
Earnings (Loss) Per Common Share, Fully Diluted Before
Cumulative Effect of Accounting Changes (2) (1.78) 0.16 1.63 1.62 0.35
Earnings (Loss) Per Common Share,
Fully Diluted (2) (1.78) (0.57) 1.63 1.62 0.35
Cash Dividends Per Common Share (2) 0.30 0.29 0.25 0.25 0.25
Financial Position
Cash, Cash Equivalents
& Short-Term Investments $ 118 $ 127 $ 186 $ 287 $276
Working Capital 112 128 178 261 237
Total Assets 1,608 1,683 1,711 1,599 1,343
Net Capital Expenditures 39 111 379 155 75
Long-Term Debt 279 303 317 138 151
Capital Lease Obligations 202 208 224 234 244
Redeemable Preferred Stock 75 75 75
Stockholders' Equity 459 567 617 705 641
Capital 1,022 1,169 1,254 1,089 1,049
Book Value Per Common Share (2) 12.44 14.18 15.26 14.44 12.98
Financial Ratios
Return on Equity (3) (10.5%) (2.4%) 11.6% 11.8% 3.0%
Cash Flow to Average Total Debt (4) 21.0% 20.3% 38.6% 50.9% 36.0%
Return on Average Assets (3.7%) (1.0%) 4.9% 5.4% 1.5%
Total Debt to Equity (3) 91.3% 82.2% 81.2% 54.5% 63.8%
Total Debt to Capital (3) 47.7% 45.1% 44.8% 35.3% 38.9%
Current Ratio 1.3 1.4 1.6 2.0 2.0
</TABLE>
(1) The company's fiscal year ends on the last Friday
in December. All years presented above were 52 weeks,
except for 1993 and 1988 which were 53-week years.
(2)Earnings Per Common Share, Cash Dividends Per Common
Share and Book Value Per Common Share have been
computed for all periods retroactively reflecting the
effect of a 3-for-2 stock split effected on May 30,
1985, and a 2-for-1 stock split effected on December
31, 1993. Earnings Per Common Share also reflect the
1995 conversion of the Redeemable Preferred Stock into
4.0 million shares of Common Stock and the repurchase
of 6.0 million, 3.7 million, 7.8 million, 2.9 million,
1.0 million and 8.8 million shares of the company's
common stock during 1995, 1992, 1991, 1990, 1989 and
1988, respectively, on a post-split basis. In 1989,
2.0 million shares of the company's Series B Preferred
Stock were converted into common stock.
(3)Redeemable Preferred Stock, which was converted into
Common Stock in 1995, is included in Equity for the
purpose of calculating these ratios.
(4)Cash Flow represents Cash Flows from Operating
Activities.
<PAGE>
ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
(In millions) 1995 Change 1994 Change 1993
Revenues
International Transportation $ 2,133 6% $ 2,017 4% $ 1,930
North America Transportation 763 0% 761 15% 660
Real Estate (100%) 16 1% 16
Operating Income $ 68 (44%) $ 123 (7%) $ 133
Pretax Income $ 53 (52%) $ 110 (15%) $ 131
In 1995, the company recorded a pretax restructuring charge
of $48 million related to the accelerated completion of its
reengineering program and other organizational changes.
Operating income for 1995 was $105 million, excluding the
restructuring charge, $6 million in gains from vessel sales and
$5 million in liquidated damages from delayed vessel deliveries.
This compares with operating income of $98 million in 1994,
excluding $10 million related to the collection of Desert Storm
detention charges, $9 million in gains from the sale of the
company's remaining real estate holdings and $6 million in gains
from crane and container sales. In 1993, operating income was
$107 million, excluding $6 million of Desert Storm detention
collections, $11 million in gains from real estate sales and $9
million in gains from the sales of vessels and containers.
In 1995, the company's earnings were impacted by a decline
in volumes in the company's U.S. import market, which resulted
from continuing competitive pressure and a significant reduction
in demand for U.S. imports compared with 1994. This decline was
offset by growth in volumes in the companyOs U.S. export market
and an improvement in average revenue per forty-foot equivalent
unit ("FEU") in the company's U.S. import, U.S. export and intra-
Asia markets, and lower land transportation costs per FEU in 1995
compared with 1994.
In 1994, the company benefited from improvements in its
North America stacktrain volumes and increased volumes of the
company's U.S. import and intra-Asia cargo, all as compared with
1993. Additionally, the company's 1993 income and volumes were
positively impacted by the 1993 fiscal year having 53 weeks,
compared with 52 weeks in 1994 and 1995. These improvements were
partially offset by higher transportation operating expenses per
FEU in 1994 compared with 1993, primarily due to higher
stevedoring and fuel costs and an unfavorable currency exchange
rate in Japan.
INTERNATIONAL TRANSPORTATION (1) 1995 Change 1994 Change 1993
(Volumes in thousands of FEUs)
Import
Volumes 200.8 (8%) 217.8 2% 214.3
Average Revenue per FEU $4,198 2% $4,112 0% $4,107
Export
Volumes 169.2 9% 155.5 0% 155.5
Average Revenue per FEU $3,310 4% $3,174(1%) $3,200
Intra-Asia
Volumes 179.7 (3%) 184.6 6% 173.3
Average Revenue per FEU $2,054 8% $1,909 1% $1,899
Asia-Europe
Volumes 19.9
Average Revenue per FEU $2,467
(1) Volumes and average revenue per FEU data are based upon
shipments originating during the period, which differs from
the percentage-of-completion method used for financial
reporting purposes.
<PAGE>
The company's U.S. import volumes declined in 1995 compared
with last year due to increased competitive pressure from non-
conference carriers and lower demand in this market. Volumes of
the company's U.S. export cargo increased in 1995 compared with
1994, primarily due to increased shipments of commercial dry and
refrigerated cargo. Partially offsetting the increase in U.S.
export volume was a 33% decrease in the company's military
volumes in this market. The company carried approximately 75% of
the military cargo in the Pacific from January to June 1994, and
approximately 25% for the remainder of 1994 and throughout 1995.
The overall amount of military cargo has declined in recent
years, which has also contributed to the decline in military
cargo volumes carried by the company. The company's intra-Asia
volumes declined in 1995 compared with 1994 because of fewer
shipments to and from Kobe, Japan as a result of the earthquake
in January 1995, poor cotton harvests in India and Pakistan, and
efforts by the company to reduce its shipments of lower-margin
cargo in this market. Volumes of refrigerated cargo carried by
the company in its intra-Asia market increased, which partially
offset the decline in commercial dry cargo.
Asia-Europe service by the company began in March 1995 with
shipments to Denmark, the United Kingdom and the Netherlands
primarily from Hong Kong, the People's Republic of China and
Taiwan. Shipments from the Netherlands, Belgium and Germany to
Asia began in April 1995.
The company's U.S. import volumes increased in 1994 compared
with 1993 primarily due to service enhancements in the People's
Republic of China that resulted in higher volumes from that
country, and higher volumes of refrigerated and military cargo.
Volumes of U.S. export cargo were unchanged in 1994 from 1993.
Volumes of refrigerated cargo in the company's U.S. export market
improved, but were offset by a decline in military dry volumes.
Intra-Asia volumes in 1994 increased compared with 1993 as a
result of the company's expanded service to and from China and
the growing economies in Southeast and West Asia and the Middle
East. Additionally, volumes of refrigerated cargo in this market
grew substantially from 1993 to 1994.
Utilization of the company's containership capacity in 1995
was 80% and 93% for import and export shipments, respectively,
compared with 89% and 94% in 1994, and 89% and 92% in 1993.
Changes in utilization rates in 1995 as compared to 1994 are
related to changes in volumes carried by the company in these
markets due to competitive and market factors. Import capacity
was increased in 1994 by additional vessel space purchased by the
company from Orient Overseas Container Line ("OOCL"), a Hong Kong
shipping company.
Average revenue per FEU for the company's U.S. import
shipments increased in 1995 compared with 1994 primarily due to a
general rate increase established by conference carriers that
became effective May 1, 1995, and currency adjustments in Japan
and Singapore. In late 1995, the company initiated pricing
actions for specific commodities in specific trade lanes in
response to competitive conditions and loss of market share in
its U.S. import market. Subsequently, competitors and the
company have lowered rates, and considerable rate instability in
the U.S. import market continues to exist. The company cannot
predict whether additional pricing actions may be taken by the
company or its competitors. Destabilization of rates, if
extensive, could have a material adverse impact on carriers,
including the company.
Average revenue per FEU in the company's U.S. export market
increased in 1995 from last year due to rate increases and an
increase in the proportion of higher-rated refrigerated cargo
carried by the company. Average revenue per FEU in the company's
intra-Asia market increased in 1995 compared with 1994,
attributable to a general rate increase and an increase in the
proportion of higher-rated refrigerated cargo carried by the
company.
<PAGE>
Average revenue per FEU for the company's U.S. import
shipments was relatively unchanged in 1994 compared with 1993,
reflecting competitive pressures. In 1994, average revenue per
FEU in the company's U.S. export market was lower than 1993 due
to reduced rates in the first half of the year resulting from
weak market conditions and increased competition. Average
revenue per FEU in the company's intra-Asia market increased
slightly in 1994 compared with 1993, primarily attributable to an
increase in higher-rated refrigerated cargo, partially offset by
competitive rate pressures in this market.
Other international transportation revenues, which include
cargo handling, freight consolidation, logistics services and
charter hire revenues, totaled $319 million, $281 million and
$254 million in 1995, 1994 and 1993, respectively. Included in
the amounts for 1994 and 1993 were collections of Desert Storm
detention charges of $10 million and $6 million, respectively.
The increase in other transportation revenues in 1995 compared
with 1994 resulted from increased cargo handling revenues in Asia
and increased charter hire revenues. In addition, freight
consolidation and logistics services revenues increased due to
higher volumes. The increase in other international
transportation revenues in 1994 compared with 1993 was primarily
due to increases in Asia cargo handling related to the OOCL and
Transportacion Maritima Mexicana ("TMM") alliance agreements and
an increase in feeder services in Asia provided to other
carriers.
The company incurred incremental operating expenses and a
loss of ocean freight revenues during the first half of 1995
resulting from the earthquake in Kobe, Japan, in January 1995, in
which the ocean terminal leased by the company was extensively
damaged. The company expects substantially all of these expenses
and lost revenues to be recovered through its business
interruption insurance and is in the process of finalizing its
claim. Management has recorded its best estimate of the
recovery. The company and OOCL have resumed service to Kobe and
have adjusted their shared trans-Pacific schedule to and from
Japan.
In October 1995, Lykes Steamship Company, Inc. ("Lykes")
filed a petition seeking protection from its creditors under
Chapter 11 of the U.S. Bankruptcy laws. At present, the company
charters its four L9-class vessels from Lykes under charters that
expire in early 1996. The L9-class vessels are used in the
company's West Asia/Middle East service. In addition, the
company charters to Lykes three of its Pacesetter vessels under
charters that also expire in early 1996. The potential
consequences of Lykes' petition on the company's operations and
financial condition, and possible steps the company may take to
mitigate any resulting adverse effects, are being evaluated by
management. The company is currently unable to predict the
extent of such consequences.
Since 1991, the company and OOCL have been parties to
agreements enabling them to exchange vessel space and coordinate
vessel sailings through 2005. These agreements permit both
companies to offer faster transit times and more frequent
sailings between key markets in Asia and the U.S. West Coast, and
to share terminals and several feeder operations within Asia. In
September 1994, the company, Mitsui OSK Lines, Ltd. ("MOL"), and
OOCL signed an agreement to exchange vessel space, coordinate
vessel sailings and cooperate in the use of port terminals and
equipment for ocean transportation services in the Asia-U.S. West
Coast trade through 2005. The carriers commenced service under
this agreement in January 1996. The agreement between the
company and OOCL is suspended so long as the agreement between
the company, OOCL and MOL is in effect.
<PAGE>
The three carriers and Nedlloyd Lines B.V. ("NLL") are also
parties to a separate agreement to exchange vessel space,
coordinate vessel sailings and cooperate in the use of port
terminals and equipment in an all-water service in the Asia-Latin
America trade for a minimum of three years. The four carriers
initiated service under this agreement in March 1995.
Additionally, the four carriers and Malaysian International
Shipping Corporation BHD have an agreement to exchange vessel
space, coordinate vessel sailings and cooperate in the use of
port terminals and equipment for ocean transportation services in
the Asia-Europe trade through 2001, with early termination rights
upon six months notice to the other parties beginning January 1,
1998. The carriers commenced service under the agreement in
January 1996. The company entered the Asia-Europe trade in March
1995 by chartering vessel space through MOL.
Under the alliance agreements, alliance partners contribute
and are allocated vessel space, which may be adjusted from time
to time. The agreements provide for, among other things,
settlement of the difference between the value of vessel space
provided by each partner and the value of vessel space available
to that partner, at specified vessel costs per TEU per day. The
value of vessel space provided by the company to the alliances is
less than the value of the total capacity allocated to it through
the alliances, resulting in an annual net cash payment from the
company to its alliance partners. The amount paid to alliance
partners was $45 million in 1995, and is currently estimated to
be $32 million in 1996. Agreements covering terminal and
equipment sharing among the alliance partners have not been
finalized, and the commitment of the alliance partners, including
the company, for these services cannot be determined at this
time.
In 1994, the company and TMM entered into an agreement
enabling them to reciprocally charter vessel space for a period
of three years between major Asian ports and certain ports on the
Pacific Coast of the U.S. and Mexico. This agreement was
terminated in September 1995, and the company and TMM have
entered into a memorandum of understanding with respect to the
negotiation of a new three-year agreement for reciprocal charters
of lesser amounts of vessel space beginning in March or April
1996 and a possible joint service. However, no assurances can be
given as to whether those negotiations will be successful. The
company and TMM have agreed to continue to exchange vessel space
pending finalization of a new agreement.
In October 1995, the company and Matson Navigation Company,
Inc. ("Matson") signed an agreement for a 10-year alliance, which
commenced in February 1996. Pursuant to the terms of this
alliance, the company sold Matson six of its ships (three C9-
class vessels and three C8-class vessels) and certain of its
assets in Guam for approximately $163 million in cash. One of
the ships was sold in December 1995 and resulted in a gain of $2
million. The remaining five vessels were sold in January 1996.
Four of these vessels, together with a fifth Matson vessel, are
being used in the alliance. The net gain on the sale of the four
vessels used in the alliance and the assets in Guam, after
deducting costs associated with the agreement, is estimated to be
$6 million, and will be deferred and amortized over the 10-year
term of the alliance. Matson is operating the vessels in the
alliance, which serves the U.S. West Coast, Hawaii, Guam, Korea
and Japan, and has the use of substantially all the westbound
capacity. The company has the use of substantially all the
vessels' eastbound capacity. The gain on the sale of the fifth
vessel was $2 million.
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 $62 million, $61
<PAGE>
million and $65 million in 1995, 1994 and 1993, respectively.
The company expects ODS payments in 1996 to be between $30
million and $35 million as a result of its sale of six vessels to
Matson.
In June 1992, the Bush Administration announced that no new
ODS agreements would be entered into and existing ODS agreements
would be allowed to expire. The Clinton Administration and
Congress have been reviewing U.S. maritime policy. Proposed
maritime support legislation introduced in 1994, referred to as
the Maritime Security Program, was not enacted. The
Administration's proposal included a 10-year subsidy program with
up to $100 million in annual payments to be requested and
appropriated on a year-to-year basis. Congress has appropriated
$46 million in fiscal 1996, or $2.3 million per vessel. This
compares with subsidy of approximately $3.1 million per vessel
under ODS. Maritime support legislation incorporating the
Administration's program has recently passed the U.S. House of
Representatives and is currently awaiting consideration before
the U.S. Senate, but has not yet been approved. The company is
not able to predict whether or when maritime support legislation
will be enacted or what terms such legislation may have, if
enacted.
While the company continues to encourage efforts to enact
maritime support legislation, prospects for passage of a program
acceptable to the company are unclear. Accordingly, in July
1993, the company filed applications with the United States
Maritime Administration ("MarAd") to operate under foreign flag
its six C11-class containerships, delivered to the company in
1995 and January 1996, and to transfer to foreign flag seven
additional U.S.-flag containerships in its trans-Pacific fleet.
In 1994, MarAd issued a waiver to allow the company to operate
its six C11-class vessels under foreign registry on the condition
that the vessels be returned to U.S.-flag in the event acceptable
maritime reform legislation is enacted. The remaining
application is still pending and no assurances can be given as to
whether, or when, the authority will be granted.
Management of the company believes that, in the absence of
ODS or an equivalent government support program, it will be
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
vessels. The company continues to evaluate its strategic
alternatives in light of the pending expiration of its ODS
agreement and the uncertainties as to whether an acceptable new
U.S. government maritime support program will be enacted, whether
sufficient labor efficiencies can be achieved through the
collective bargaining process, and whether the company's
remaining application 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.
In July 1995, legislation was introduced in the U.S. House
of Representatives that would substantially modify the Shipping
Act, which, among other things, provides the company with certain
immunity from antitrust laws and requires the company and other
carriers in U.S. foreign commerce to file tariffs. The
legislation, which was not enacted in 1995, would have been
phased in during 1997 and 1998 and would have eliminated
government tariff filing and enforcement, allowed confidential
and independent contracts between shippers and ocean carriers and
strengthened provisions that prohibit predatory activities by
foreign carriers. The company is unable to predict whether this
or other proposed legislation will be introduced in 1996 or
enacted or, whether, if enacted, it will contain terms similar to
those proposed. Enactment of legislation modifying the Shipping
Act, depending upon its terms, could have a material adverse
impact on the competitive environment in which the company
operates and on the company's results of operations.
<PAGE>
The company currently expects challenging conditions for the
company and the shipping industry in 1996. Whether these
conditions materialize, and the severity of the challenge the
company faces, depends upon developments such as, but not limited
to, the timing and extent of industry deregulation, the changes
in market growth rates, the amount and timing of the anticipated
significant increase in industry capacity, the extent of rate
cutting in its markets and successful implementation of the
company's alliances.
NORTH AMERICA TRANSPORTATION (1)
(Volumes in
thousands of FEUs) 1995 Change 1994 Change 1993
Revenues (2) (In millions)
Stacktrain $ 525 0% $ 523 15% $ 455
Non-Stacktrain 238 0% 238 16% 205
Stacktrain Volumes
North America 413.2 4% 398.5 15% 345.6
International 186.2 (5%) 195.5 2% 192.6
Stacktrain Average
Revenue per FEU (2) $1,271 (3%) $1,313 (0%) $1,315
(1)Volumes and revenue per FEU data are based upon shipments
originating during the period, which differs from the
percentage-of-completion method used for financial reporting
purposes.
(2)In addition to third party business, which is referred to
above as North America Volumes, the transportation of
containers for the company's international customers is a
significant component of its stacktrain operations. These
shipments are referred to above as International Stacktrain
Volumes and, since they are eliminated in consolidation, are
excluded from Revenues and Stacktrain Average Revenue per
FEU.
North America transportation revenues were relatively
unchanged in 1995 compared with 1994, primarily as a result of
higher stacktrain volumes from increased automotive shipments
between the U.S. and Mexico, offset by a decline in stacktrain
average revenue per FEU due primarily to lower rates as a result
of increased competition. The company's North America non-
stacktrain revenues were unchanged in 1995 compared with last
year, primarily due to an increase in automotive volumes and
rates from lanes added to this market since 1994, offset by lower
volumes in the company's other non-stacktrain markets as a result
of increased competition from trucking companies and the loss of
several major customers.
Revenues from the company's North America transportation
operations increased in 1994, compared with 1993, as a result of
higher North America stacktrain volumes. The increase in
stacktrain volumes in 1994 was due to the improvement in the U.S.
economy, increases in Mexican and Canadian shipments,
particularly automotive shipments between the U.S. and Mexico,
and competitor equipment shortages. The company added 1,800
containers to its fleet during 1994, which enabled it to meet
increasing demand. The company's North America non-stacktrain
revenues also improved in 1994 compared with 1993, primarily due
to increased volumes resulting from an improved U.S. economy.
In June 1995, the company and Burlington Motor Carriers,
Inc. ("BMC") signed an agreement whereby the company's U.S.
trucking operations, including related employees and leased
equipment and facilities, were transferred to BMC in
consideration of the sublease by BMC (and, in certain instances,
a third party) of such equipment and facilities. In connection
with the transfer, the company entered into a service agreement
with BMC, expiring in December 1997, whereby BMC agreed to
provide trucking services to the company and the company agreed
to provide certain minimum cargo volumes to BMC through October
1, 1997. The transaction did not have a material effect on the
company's other operations or operating results. In December
1995, Burlington Motor Holdings, Inc., the parent company of BMC,
filed a petition seeking protection from its
<PAGE>
creditors under Chapter 11 of the U.S. Bankruptcy laws. The
company currently cannot assess the impact of this filing, if
any, on its operations, but does not expect the impact to be
material.
In 1996, the company expects modest growth in demand in the
North America stacktrain market. Demand for automotive shipments
is expected to remain strong but is dependent upon conditions in
the U.S. and Mexican economies and the extent to which U.S.
automakers continue to operate in Mexico, among other factors.
No assurances can be given that growth in these markets will
materialize.
TRANSPORTATION OPERATING EXPENSES
(In millions, except
Operating Cost per FEU) 1995 Change 1994 Change 1993
Land Transportation $1,010 0% $1,010 8% $ 934
Cargo Handling 602 9% 552 7% 516
Vessel, Net 390 16% 335 9% 308
Transportation Equipment 214 6% 202 9% 184
Information Systems 49 1% 48 (2%) 49
Other 325 (2%) 332 10% 303
Total $2,590 4% $2,479 8% $2,294
Operating Cost Per FEU (1) $2,635 2 $2,592 0% $2,581
Percentage of Transportation Revenues 89% 89% 89%
(1)Operating expenses used in this calculation include costs
associated with certain International and North America
revenues that are not volume related.
Land transportation expenses were unchanged in 1995 from
1994. North America conventional rail expenses declined in 1995,
due to the company's lower volumes in these markets. This
decline was offset by higher third party intermodal, rail and
truck costs in the company's international business. Cargo
handling expenses increased in 1995 compared with 1994 due to
higher stevedoring labor rates in Asia, increased cargo handling
volumes in Asia, and the start-up of the Europe and Latin America
services in 1995. In 1995, cargo handling expenses were also
impacted by the weakness of the U.S. dollar relative to the
Japanese yen in the first half of the year. Vessel expenses
increased in 1995 compared with last year primarily due to
increased charter hire costs in the Asia-Latin America and Asia-
Europe markets, in which the company purchases vessel space
through alliance partners. Additionally, vessel fuel costs
increased in 1995 compared with 1994 due to the five C11-class
vessels placed in service during 1995 and an increase in the
average fuel price per barrel from $13.75 in 1994 to $15.63 in
1995. Transportation equipment costs increased in 1995 compared
with 1994 due to increased container leasing and repair and
maintenance costs. The increase in information systems costs for
1995 compared with 1994 was due to increased telecommunications
costs. Other operating expenses are net of $6 million of gains
from sales of vessels and $5 million in liquidated damages from
delayed vessel deliveries in 1995, and gains of $6 million from
sales of a crane and certain containers in 1994. Partially
offsetting these gains in 1995, was a 23% increase in agency fees
incurred by the company from 1994, primarily as a result of the
company's entrance into the Asia-Europe market.
Land transportation expenses increased in 1994 from 1993,
due to higher North America stacktrain volumes in 1994. The
increase in cargo handling expenses in 1994 compared with 1993 is
attributable to increased stevedoring costs, which were impacted
by higher labor rates in Asia and the U.S. and handling of
increased cargo to and from China, West Asia and Southeast Asia.
The weakening of the U.S. dollar relative to Asian currencies,
particularly the Japanese yen, also resulted in higher cargo
handling expenses in 1994. These increases were partially offset
by a favorable land rent reduction in Taiwan. Vessel expenses
increased in 1994 compared with 1993 due to increased
<PAGE>
charter hire activity resulting from expanded service to China,
an increase in Latin American activity and additional vessel
space purchased from OOCL and TMM in 1994. Vessel expenses were
also impacted by a 6% increase in fuel cost in 1994 and the
collision of one of the company's vessels during 1994, the self-
insured portion of the cost of which was approximately $2
million. Transportation equipment costs increased in 1994
compared with 1993 due to the addition of 1,800 leased containers
during 1994 for use in North America stacktrain operations, and
increased repair and maintenance costs. Other operating expenses
increased in 1994 compared with 1993 due to an increase of $9
million in the provision for potentially uncollectible accounts
receivable, primarily in the People's Republic of China. Also
contributing to the increase in other operating expenses were
higher employee and telecommunications costs, particularly in
Asia. Other operating expenses for 1994 are net of gains of $6
million from sales of a crane and certain containers, and for
1993, are net of gains of $9 million from sales of three vessels
and certain containers.
Certain of the company's collective bargaining agreements
covering seagoing and shoreside unions in the U.S. expire in June
and July 1996. The company currently expects that new agreements
will be negotiated with the respective unions prior to the
expiration of the current contracts, although no assurances can
be given to that effect. Failure to reach agreement with a union
on an acceptable labor contract could result in a strike or other
labor difficulties, which could have a material adverse effect on
the company's operating results.
General and administrative expenses decreased 1% in 1995
compared with 1994. The decrease was due primarily to lower
spending on corporate initiatives to improve the company's
processes in 1995 compared with 1994. Expenditures for corporate
initiatives were approximately $25 million for 1995 and $31
million for 1994. The decline in initiative spending in 1995
compared with 1994 was partially offset by higher employee
relocation expenses and ongoing support costs related to new
financial systems. General and administrative expenses increased
21% in 1994 compared with 1993, primarily due to expenditures of
$31 million in 1994 on corporate initiatives.
During the fourth quarter of 1995, the company recorded a
pretax restructuring charge of $48 million for the accelerated
completion of its reegineering program and other organizational
changes. The charge includes $36 million in costs associated
with the elimination of approximately 950 positions in company
operations which are being reorganized or reduced in size. The
remainder of the charge represents costs associated with office
closures and projects that were eliminated as a result of the
acceleration of the reengineering program. The company estimates
that it will realize savings in operating expenses of
approximately $48 million in 1996 as a result of its reegineering
program and organizational changes. The company also expects
significant incremental savings in future years and anticipates
that the savings it realizes will offset the total costs of the
reengineering program and organizational changes of $58 million
by mid-1997. Whether and to what extent the company realizes
such savings in 1996 and beyond, and the timing of such savings,
will depend upon the actual timing of position eliminations and
office closures, among other factors. No assurances can be given
as to the timing or amount of these savings or as to whether they
will be realized in 1996 or thereafter.
Depreciation and amortization expense increased 6% in 1995
compared with 1994 primarily as a result of the delivery of five
of the six C11-class vessels during the year, and other capital
spending. Depreciation and amortization expense decreased 3% in
1994 from 1993 as certain assets reached the end of their
depreciable lives in 1994.
<PAGE>
Net interest expense increased to $15 million in 1995 from
$13 million in 1994, primarily due to interest expense on the
debt related to the C11-class vessels purchased during 1995,
which was partially offset by higher interest income resulting
from higher interest rates in 1995. Net interest expense
increased to $13 million in 1994 from $11 million in 1993, due to
interest expense on two public debt offerings totaling $300
million in November 1993 and January 1994, which was partially
offset by increased interest income on higher cash balances and
higher interest rates in 1994.
The effective tax rates applicable to the company were 43%,
33% and 39% in 1995, 1994 and 1993, respectively. The 1995
effective tax rate includes the increased effect of nondeductible
items on lower income. The 1994 effective tax rate includes the
effect of revisions of prior years' estimated tax liabilities.
The 1993 effective tax rate includes an adjustment of $2.7
million to reflect the effect of an increase in the maximum
corporate federal income tax rate to 35%. The effective tax rate
for 1996 is expected to be approximately 38%, depending upon the
level of actual earnings and changes, if any, in the tax laws,
among other factors.
LIQUIDITY AND CAPITAL RESOURCES
(In millions) 1995 1994 1993
Cash, Cash Equivalents and
Short-term Investments $ 136 $ 255 $ 84
Working Capital 65 206 51
Total Assets 1,879 1,664 1,454
Long-term Debt and Capital
Lease Obligations (1) 699 391 272
Cash Provided by Operations 164 177 169
Net Capital Expenditures
Ships $ 392 $ 38 $ 93
Containers, Chassis and Rail Cars 23 57 41
Leasehold Improvements and Other 41 33 22
Total $ 456 $ 128 $ 156
Financing Activities
Borrowings $ 340 $ 147 $ 664
Repayment of Debt and Capital Leases (32) (28) (748)
Common Stock Repurchases (170)
Dividend Payments (14) (18) (15)
(1) Includes current and long-term portions.
The company took delivery of and made final payments on five
C11-class vessels in 1995 and one C11-class vessel in 1996, built
pursuant to construction contracts with Howaldtswerke-Deutsche
Werft AG, of Germany and Daewoo Shipbuilding and Heavy Machinery,
Ltd. of Korea. The total cost of the six C11-class vessels was
$529 million, including total payments to the shipyards of $503
million, of which $62 million was paid in January 1996.
To finance a portion of the purchase of the five vessels
delivered in 1995, the company borrowed approximately $340
million in the form of vessel mortgage notes under a loan
agreement with European banks. The company borrowed $62 million
under this agreement to finance a portion of the vessel delivered
in January 1996. During 1995, the company entered into three
interest rate swap agreements to exchange the variable interest
rates on certain vessel mortgage notes for fixed rates for
periods of 10 and 12 years.
<PAGE>
OOCL has placed orders to purchase six vessels similar in
size and speed to the company's C11-class vessels. Four of
OOCLOs vessels have been delivered, and the final two vessels are
scheduled to be delivered in March 1996. The company and OOCL
have agreed to operate six and five of their C11-class vessels,
respectively, under their Asia-U.S. West Coast alliance agreement
with MOL. The deployment of the 11 new C11-class vessels by the
company and OOCL, replacing 14 older vessels, will increase the
combined trans-Pacific capacity of the company and OOCL by
approximately 15%. The company currently expects growth in
demand in the trans-Pacific market in the foreseeable future but
believes that, because a number of other competing ocean carriers
are also constructing significant numbers of new vessels, growth
in capacity in that market will be significantly greater than
growth in demand. No assurances can be given with respect to
anticipated growth in demand, utilization of the company's
increased capacity or the potential negative impact of the
increased capacity on rates or the company's market share. Such
growth and utilization will depend upon demand for U.S. import
and U.S. export cargo in this market, economic conditions in the
U.S. and other Pacific Basin countries, the effects of
implementation of the company's alliances, and whether and when
additional new vessels are delivered to competing carriers, among
other factors. Additionally, modification of the Shipping Act,
which is under consideration as referred to above, could have a
material adverse impact on the company's rates and volumes.
In September 1995, the company sold its construction
contract for three K10-class vessels, which it had entered into
in 1993, and recognized a pretax gain of $1.6 million. In
conjunction with the sale, the company, MOL, OOCL and NLL formed
a joint venture company, in which their respective shares are
each 25%, and agreed to charter back these vessels, when
delivered, for seven years for use in the Asia-Europe trade.
Prior to the sale of the construction contract, the company made
progress payments of $30 million for these vessels, including
payments of $12 million in 1995, for which it received
reimbursement.
In addition to vessel expenditures of $392 million, the
company made capital expenditures in 1995 of $64 million
primarily for purchases of chassis, containers and terminal and
leasehold improvements. In 1994, in addition to vessel progress
payments of $31 million, the company's capital expenditures
totaled $97 million and were primarily for purchases of chassis
and terminal and leasehold improvements. In 1993, the company
made $70 million in progress payments on the C11s and K10s.
Additionally, the company purchased the remaining two vessels
previously leased under leveraged leases and retired the related
debt guaranteed by MarAd, eliminating MarAd's restrictions on the
payment of dividends to the company by its wholly-owned
subsidiary, American President Lines, Ltd. The purchase price of
these vessels was $131 million, $110 million of which retired the
related capital lease obligations.
Capital expenditures in 1996 are expected to be
approximately $235 million, including $62 million related to the
final payment for the last C11-class vessel which was delivered
in January 1996. The balance will be spent primarily on terminal
equipment in North America and Asia, terminal improvements in
North America and chassis and computer systems. The company has
outstanding purchase commitments to acquire cranes, facilities,
equipment and services totaling $72.9 million.
In July 1995, the company issued a notice of redemption for
all $75 million of its 9% Series C Cumulative Convertible
Preferred Stock ("Series C Preferred Stock"). At the election of
the holders, the 1.5 million shares of Series C Preferred Stock
were converted into approximately 4 million shares of common
stock.
<PAGE>
Also in July 1995, the Board of Directors authorized the
repurchase of up to 6 million shares of the company's common
stock. In August 1995, the company repurchased 2 million shares
from the former holders of the Series C Preferred Stock at a
purchase price of $27 per share. In addition, in September 1995,
the company repurchased 2.8 million shares through a Dutch
Auction self-tender offer at a purchase price of $30 per share,
plus expenses. The company repurchased an additional 1.2 million
shares of its common stock through open market transactions at an
average price of $25.81 per share, plus expenses, which completed
the repurchase of the 6 million shares authorized. All
repurchased shares were retired.
In November 1993, the company issued $150 million of 10-year
Senior Notes and, in January 1994, issued $150 million of 30-year
Senior Debentures. A portion of the proceeds from the issuance
of this debt was used to repay $72 million of bank borrowings
from 1993, and the remainder was used to finance vessel
purchases, other capital expenditures and for general corporate
purposes. Also, in January 1993, the company retired $95 million
of 11% Notes.
The company has a credit agreement with a group of banks
which provides for an aggregate commitment of $200 million
through March 1999. 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 of its accounts receivable
to the banks.
The company believes its existing resources, cash flows from
operations and borrowing capacity under its existing credit
facilities will be adequate to meet its liquidity needs for the
foreseeable future.
Certain Factors That May Affect Operating Results
Statements prefaced with "expects", "anticipates",
"estimates", "believes" and similar words are forward looking
statements based on the company's current expectations as to
prospective events, circumstances and conditions over which it
may have little or no control and as to which it can give no
assurances. All forward looking statements, by their nature,
involve risks and uncertainties that could cause actual results
to differ materially from those projected.
The severity of the challenging conditions expected for the
company and the shipping industry generally, and the impact of
those conditions on the company's operating results, will depend
on factors such as the timing and extent of an anticipated
slowing of market growth in certain markets served by the
company, the amount and timing of an anticipated significant
increase in industry capacity due to new vessel deliveries to
competing carriers, rate cutting in some market segments due to
this additional capacity and other factors, successful
implementation and continuation of the company's alliances, which
comprise a significant factor in the company's long-term strategy
to remain competitive, and the pace and degree of industry
deregulation, including whether an acceptable maritime support
program and proposed amendments to the Shipping Act of 1984 are
enacted.
Demand in the trans-Pacific market is dependent on factors
such as the quantity of available import and export cargo in this
market and economic conditions in the U.S. and other Pacific
Basin countries. The magnitude of the impact on the company of
any growth or contraction in the trans-Pacific market will depend
on whether and when new vessels ordered by competing carriers are
delivered and where they are ultimately deployed and further
vessel orders, if any, by competing carriers. Because a number
of competing ocean carriers have placed orders for the
construction of a significant number of new vessels, growth in
capacity in the trans-Pacific market is expected to be
significantly greater than growth in demand.
<PAGE>
Growth in demand in the North America stacktrain market and
demand for automotive shipments will depend on conditions in the
U.S. and Mexican economies, including the relative values of the
U.S. Dollar and the Mexican Peso, and the extent to which U.S.
automakers continue to operate in Mexico, among other factors.
Savings in operating expenses, if any, in connection with
the company's reengineering program and organizational changes
will depend on the ultimate future effectiveness and results of
those efforts. There can be no assurance that the company will
be able to realize these savings, and changes in the timing of
any anticipated savings by the company, or the failure to realize
some or all of these savings, could materially and adversely
affect the company's operating results.
Other risks and uncertainties include the degree and rate of
market growth or contraction in other markets served by the
company and the company's ability to respond in mitigation of any
contraction or to take advantage of such growth, changes in the
cost of fuel, the status of labor relations, the amplitude of
recurring seasonal business fluctuations and the continuation and
effectiveness of the Trans-Pacific Stabilization Agreement and
the various shipping conferences to which the company belongs.
The inability of the company to negotiate acceptable labor
agreements could result in work stoppages, strikes or other labor
difficulties or in higher labor costs, which could have a
material adverse affect on the company's operating results. The
company has in the past experienced such difficulties and there
can be no assurance that any such difficulties will not occur in
the future.
Also, the company is subject to inherent risks of conducting
business internationally, including unexpected changes in, or
imposition of, legislative or regulatory requirements,
fluctuations in the relative values of the U.S. Dollar and the
various foreign currencies with which the company is paid and
funds its local operations, tariffs and other trade barriers and
restrictions affecting its customers, potentially longer payment
cycles, potentially greater difficulty in accounts receivable
collection, potentially adverse taxes and the burden of complying
with a variety of foreign laws. In addition, in connection with
its international operations, the company is subject to general
geopolitical risks, such as political and economic instability
and changes in diplomatic and trade relationships affecting it or
its customers.
The company expressly disclaims any obligation or
undertaking to update any forward looking statements contained
herein in the event of any change in the company's expectations
with regard thereto or with regard to current or prospective
conditions or circumstances on which any such statement is based.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
INDEX TO FINANCIAL STATEMENTS
Report of Management 29
Report of Independent Public Accountants 30
Consolidated Financial Statements
Statement of Income 31
Balance Sheet 32
Statement of Cash Flows 33
Statement of Changes in Stockholders' Equity 34
Notes to Consolidated Financial Statements 35-51
Financial Statement Schedule
Schedule II 52
<PAGE>
REPORT OF MANAGEMENT
To the Stockholders of American President Companies, Ltd.:
The financial statements have been prepared by the company,
and we are responsible for their content. They are prepared in
accordance with generally accepted accounting principles, and in
this regard we have undertaken to make informed judgments and
estimates, where necessary, of the expected effect of future
events and transactions. The other financial information in the
annual report is consistent with that in the consolidated
financial statements.
The company maintains and depends upon a system of internal
controls designed to provide reasonable assurance that our assets
are safeguarded, that transactions are executed in accordance
with management's intent and the law, and that the accounting
records fairly and accurately reflect the transactions of the
company. The company has an internal audit program which reviews
the adequacy of the internal controls and compliance with them.
The company engaged Arthur Andersen LLP as independent
public accountants to provide an objective, independent audit of
our financial statements.
There is an Audit Committee of the Board of Directors which
is composed solely of outside directors. The committee meets
whenever necessary to monitor and review with management, the
internal auditors and the independent public accountants, the
company's financial statements and accounting controls. Both the
independent public accountants and the internal auditors have
access to the Audit Committee, without management being present,
to discuss internal controls, auditing and financial reporting
matters.
To help assure that its affairs are properly conducted,
management has established policies regarding standards of
corporate behavior. The company regularly reminds its key
employees of significant policies and requires them to confirm
their compliance.
/s/ Timothy J. Rhein
Timothy J. Rhein
President and Chief Executive Officer
/s/ L. Dale Crandall
L. Dale Crandall
Executive Vice President and
Chief Financial Officer
/s/ William J. Stuebgen
William J. Stuebgen
Vice President, Controller and
Chief Accounting Officer
Oakland, California
February 9, 1996
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of American President Companies, Ltd.:
We have audited the accompanying consolidated balance sheet
of American President Companies, Ltd. (a Delaware corporation)
and subsidiaries as of December 29, 1995 and December 30, 1994,
and the related consolidated statements of income, cash flows and
changes in stockholders' equity for each of the three years in
the period ended December 29, 1995. These consolidated financial
statements and the schedule referred to below are the
responsibility of the company's management. Our responsibility
is to express an opinion on these consolidated financial
statements and the schedule based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of American President Companies, Ltd. and subsidiaries as of
December 29, 1995 and December 30, 1994, and the results of their
operations and their cash flows for each of the three years in
the period ended December 29, 1995, in conformity with generally
accepted accounting principles.
Our audit was made for the purpose of forming an opinion on
the basic financial statements taken as a whole. The schedule
listed in the index to financial statements is presented for
purposes of complying with the Securities and Exchange
Commission's rules and is not a required part of the basic
financial statements. This information has been subjected to the
auditing procedures applied in our audit of the basic financial
statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a
whole.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
San Francisco, California
February 9, 1996
<PAGE>
American President Companies, Ltd.
CONSOLIDATED STATEMENT OF INCOME
Year Ended December 29 December 30 December 31
(In thousands, except 1995 1994 1993
per share amounts)
Revenues $2,895,982 $2,793,468 $2,606,220
Expenses
Operating, Net of Operating-
Differential Subsidy 2,589,924 2,486,360 2,299,872
General and Administrative 76,895 77,686 64,281
Depreciation and Amortization 112,418 106,274 109,127
Restructuring Charge 48,372
Total Expenses 2,827,609 2,670,320 2,473,280
Operating Income 68,373 123,148 132,940
Interest Income 23,098 16,150 6,290
Interest Expense (38,318) (28,994) (17,663)
Gain on Sale of Investment 8,934
Income Before Taxes 53,153 110,304 130,501
Federal, State and Foreign
Tax Expense 22,856 36,106 50,392
Net Income $ 30,297 $ 74,198 $ 80,109
Less Dividends on
Preferred Stock 3,375 6,750 6,750
Net Income Applicable to
Common Stock $ 26,922 $ 67,448 $ 73,359
Earnings Per Common Share
Primary $ 0.95 $ 2.38 $ 2.65
Fully Diluted $ 0.99 $ 2.30 $ 2.50
Dividends Per Common Share $ 0.40 $ 0.40 $ 0.30
See notes to consolidated financial statements.
<PAGE>
American President Companies, Ltd.
CONSOLIDATED BALANCE SHEET
December 29 December 30
(In thousands, except share amounts) 1995 1994
ASSETS
Current Assets
Cash and Cash Equivalents $ 76,564 $ 39,754
Short-Term Investments 59,086 214,898
Trade and Other Receivables, Net 245,490 280,736
Fuel and Operating Supplies 40,358 36,549
Prepaid Expenses and Other Current Assets 80,840 37,135
Total Current Assets 502,338 609,072
Property and Equipment
Ships 1,091,991 678,453
Containers, Chassis and Rail Cars 801,274 781,100
Leasehold Improvements and Other 284,850 260,699
Construction in Progress 25,333 116,845
2,203,448 1,837,097
Accumulated Depreciation and Amortization (961,971) (896,802)
Property and Equipment, Net 1,241,477 940,295
Investments and Other Assets 134,968 114,590
Total Assets $1,878,783 $1,663,957
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current Liabilities
Current Portion of Long-Term Debt
and Capital Leases $ 11,810 $ 4,797
Accounts Payable and Accrued Liabilities 425,378 397,969
Total Current Liabilities 437,188 402,766
Deferred Income Taxes 157,480 139,955
Other Liabilities 127,858 118,603
Long-Term Debt 685,954 373,142
Capital Lease Obligations 1,133 13,108
Total Long-Term Debt and
Capital Lease Obligations 687,087 386,250
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 75,000
Stockholders' Equity
Common Stock $.01 Par Value, Stated at $1.00
Authorized-60,000,000 Shares
Shares Issued and Outstanding-25,669,000 in
1995 and 27,318,000 in 1994 25,669 27,318
Additional Paid-In Capital 1,943 70,853
Retained Earnings 441,558 443,212
Total Stockholders' Equity 469,170 541,383
Total Liabilities, Redeemable Preferred
Stock and Stockholders' Equity $1,878,783 $1,663,957
See notes to consolidated financial statements.
<PAGE>
American President Companies, Ltd.
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
Year Ended December 29 December 30 December 31
(In thousands) 1995 1994 1993
Cash Flows from Operating Activities
<S> <C> <C> <C>
Net Income $30,297 $ 74,198 $ 80,109
Adjustments to Reconcile Net Income to Net
Cash Provided by (Used in) Operating Activities:
Depreciation and Amortization 112,418 106,274 109,127
Noncash Restructuring Charge 43,510
Deferred Income Taxes (13,134) 14,865 6,633
Change in Receivables 4,118 (42,216) (37,915)
Issuance of Notes Receivable on Sales
of Real Estate (7,470) (4,170)
Change in Fuel and Operating Supplies (3,809) (1,195) (469)
Change in Prepaid Expenses and Other
Current Assets (4,116) 8,335 3,055
Gain on Sale of Assets (5,660) (5,583) (17,577)
Change in Accounts Payable and
Accrued Liabilities (11,456) 18,844 18,543
Other 11,941 10,519 11,285
Net Cash Provided by Operating Activities 164,109 176,571 168,621
Cash Flows from Investing Activities
Capital Expenditures (455,721) (127,757) (156,270)
Proceeds from Sale of Long-Term Investment 11,310
Proceeds from Sales of Property and Equipment 44,937 9,297 8,955
Purchase of Short-Term Investments (99,975) (453,870)
Proceeds from Sales of Short-Term Investments 255,787 238,972 38,846
Transfer from Capital Construction Fund 8,843
Deposits to Capital Construction Fund (6,140)
Other 2,261 1,649 5,036
Net Cash Used in Investing Activities (252,711) (331,709) (89,420)
Cash Flows from Financing Activities
Repurchase of Common Stock (170,364)
Issuance of Debt 339,897 147,348 663,571
Repayments of Capital Lease Obligations (3,877) (3,278) (113,465)
Repayments of Debt (28,357) (24,897) (634,932)
Dividends Paid (14,359) (17,651) (14,725)
Debt Issue Costs (4,980)
Other 7,213 9,383 12,841
Net Cash Provided by (Used in)
Financing Activities 125,173 110,905 (86,710)
Effect of Exchange Rate Changes on Cash 239 (66) (1,273)
Net Increase (Decrease) in Cash
and Cash Equivalents 36,810 (44,299) (8,782)
Cash and Cash Equivalents at Beginning of Year 39,754 84,053 92,835
Cash and Cash Equivalents at End of Year $76,564 $ 39,754 $ 84,053
SUPPLEMENTAL DATA:
Cash Paid for:
Interest, Net of Capitalized Interest $34,570 $ 24,158 $ 26,232
Income Taxes, Net of Refunds $31,459 $ 15,848 $ 32,370
Noncash Investing Activities:
Change in Trade Receivables Invested in the
Capital Construction Fund $27,178 $ 37,773
Noncash Financing Activities:
Conversion of Redeemable Preferred Stock $75,000
</TABLE>
See notes to consolidated financial statements.
<PAGE>
American President Companies, Ltd.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Year Ended December 29 December 30 December 31
(In thousands, except share amounts) 1995 1994 1993
Common Stock
Beginning Balance $27,318 $ 26,837 $ 13,022
Stock Awards and Options Exercised, Net 390 481 397
Stock Split 13,418
Conversion of Redeemable Preferred Stock 3,962
Repurchase and Retirement of Common Stock (6,001)
Ending Balance 25,669 27,318 26,837
Additional Paid-In Capital
Beginning Balance 70,853 61,656 62,023
Stock Awards and Options Exercised, Net 6,837 9,197 13,051
Stock Split (13,418)
Conversion of Redeemable Preferred Stock 71,038
Repurchase and Retirement of Common Stock (146,785)
Ending Balance 1,943 70,853 61,656
Retained Earnings
Beginning Balance 443,212 386,960 322,183
Net Income 30,297 74,198 80,109
Cash Dividends
Common (10,984) (10,901) (7,975)
Series C Redeemable Preferred (3,375) (6,750) (6,750)
Repurchase and Retirement of Common Stock (17,578)
Other (14) (295) (607)
Ending Balance 441,558 443,212 386,960
Total Stockholders' Equity $469,170 $541,383 $475,453
See notes to consolidated financial statements.
<PAGE>
American President Companies, Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Fiscal Year
The consolidated financial statements include the accounts
of American President Companies, Ltd. and its majority-owned
subsidiaries (the "company"), after eliminating intercompany
accounts and transactions. The company's fiscal year ends on the
last Friday in December. The company's 1995 and 1994 fiscal
years were 52 weeks, and the 1993 fiscal year was 53 weeks.
Nature of Operations
The company provides transportation services for
containerized cargo in the trans-Pacific, intra-Asia, Asia-
Europe, Asia-Latin America and North American markets. Certain
of the services are provided through alliances with other
transportation companies. In addition, the company provides
cargo distribution and warehousing services in the U.S. and
freight consolidation services in Mexico, Asia, the Middle East,
Europe and Africa. The company also provides freight
deconsolidation services in several U.S. locations and acts as a
non-vessel operating common carrier in the intra-Asia market and
from Asia to Europe and Australia. The company provides
intermodal transportation and freight brokerage services to North
American and international shippers as well as time-critical
cargo transportation and just-in-time delivery (principally to
the automotive manufacturing industry). These services are
provided through an integrated system of rail and truck
transportation, the primary element of which is a train system
utilizing double-stack rail cars. The operations of the company
in any one country, type of cargo or customer are not significant
in relation to the companyOs overall operations.
In late 1995, the company initiated pricing actions for
specific commodities in specific trade lanes in response to
competitive conditions and loss of market share in its U.S.
import market. Subsequently, competitors and the company have
lowered rates, and considerable rate instability in the U.S.
import market continues to exist. The company cannot predict
whether additional pricing actions may be taken by the company or
its competitors. Destabilization of rates, if extensive, could
have a material adverse impact on carriers, including the
company.
Preparation of Financial Statements
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
Revenues and Expenses
The company recognizes revenues on a percentage-of-
completion basis and expenses as incurred. Detention revenue is
recognized when cash is received.
<PAGE>
Foreign Currency Transactions
The company's primary functional currency is the U.S.
dollar. Foreign entities translate monetary assets and
liabilities at period-end exchange rates while nonmonetary items
are translated at historical rates. Income and expense accounts
are translated at the average rates in effect during the year.
Net gains or (losses) from changes in exchange rates are included
in Operating Income on the accompanying Consolidated Statement of
Income and for 1995, 1994 and 1993 were $(1.7) million, $0.5
million and $(1.1) million, respectively.
Cash, Cash Equivalents and Short-Term Investments
Cash and Cash Equivalents comprise cash balances and
investments with maturities of three months or less at the time
of purchase. Short-Term Investments consist of commercial paper,
auction rate preferred stock and other cash instruments and are
carried at cost, which approximates fair value.
Allowance for Doubtful Accounts
The provision for doubtful accounts, included in Operating
Expenses on the accompanying Consolidated Statement of Income,
for 1995, 1994 and 1993 was $14.9 million, $13.2 million and $4.3
million, respectively. At December 29, 1995 and December 30,
1994 the allowance for doubtful accounts, included in Trade and
Other Receivables on the accompanying Consolidated Balance Sheet,
was $22.5 million and $21.9 million, respectively.
Property and Equipment
Property and Equipment are recorded at historical cost. For
assets financed under capital leases, the present value of the
future minimum lease payments is recorded at the date of
acquisition as Property and Equipment with a corresponding amount
recorded as a capital lease obligation. Depreciation and
amortization are computed using the straight-line method based
upon the following estimated useful lives:
Classification Estimated Useful Life
Ships 15 to 25 Years
Containers, Chassis and Accessories 5 to 15 Years
Rail Cars 5 to 10 Years
Other Property and Equipment Various
Assets Under Capital Lease Arrangements Term of Lease
Maintenance and repair expenditures of $126.3 million,
$117.3 million and $110.3 million have been charged to expense in
1995, 1994 and 1993, respectively, as they were incurred. At
December 29, 1995 and December 30, 1994, the balance of deferred
costs for major periodic dry dockings and rail car overhauls,
which are amortized over two to five years, was $6.3 million and
$12.6 million, respectively.
Long-Term Investments
The company has certain investments, long-term deposits and
receivables, which are included in Investments and Other Assets
on the accompanying Consolidated Balance Sheet. The fair value
of these assets approximates their carrying value at December 29,
1995.
Software Costs
Costs related to internally developed software are charged
to expense as incurred. Purchases of major integrated software
systems are capitalized and amortized using the straight-line
method over five years.
Capitalized Interest
Interest costs of $8.4 million, $6.3 million and $1.5
million relating primarily to cash paid for the construction of
vessels were capitalized in 1995, 1994 and 1993, respectively.
<PAGE>
Insurance Reserves
The company is self-insured for a significant portion of its
cargo, vessel, and personal injury exposures. Insurance reserves
are determined using actuarial estimates. These estimates are
based on historical information along with certain assumptions
about future events.
NOTE 2. UNITED STATES MARITIME AGREEMENTS AND LEGISLATION
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. The ODS amounts for 1995, 1994 and
1993 were $61.5 million, $60.8 million and $64.7 million,
respectively, and have been included as a reduction of operating
expenses.
In June 1992, the Bush Administration announced that no new
ODS agreements would be entered into and existing ODS agreements
would be allowed to expire. The Clinton Administration and
Congress have been reviewing U.S. maritime policy. Proposed
maritime support legislation introduced in 1994, referred to as
the Maritime Security Program, was not enacted. The
Administration's proposal included a 10-year subsidy program with
up to $100 million in annual payments to be requested and
appropriated on a year-to-year basis. Congress has appropriated
$46 million in fiscal 1996, or $2.3 million per vessel. This
compares with subsidy of approximately $3.1 million per vessel
under ODS. Maritime support legislation incorporating the
Administration's program has recently passed the U.S. House of
Representatives and is currently awaiting consideration before
the U.S. Senate, but has not yet been approved. The company is
not able to predict whether or when maritime support legislation
will be enacted or what terms such legislation may have, if
enacted.
While the company continues to encourage efforts to enact
maritime support legislation, prospects for passage of a program
acceptable to the company are unclear. Accordingly, in July
1993, the company filed applications with MarAd to operate under
foreign flag its six C11-class containerships, delivered to the
company in 1995 and January 1996, and to transfer to foreign flag
seven additional U.S.-flag containerships in its trans-Pacific
fleet. In 1994, MarAd issued a waiver to allow the company to
operate its six C11-class vessels under foreign registry on the
condition that the vessels be returned to U.S.-flag in the event
acceptable maritime reform legislation is enacted. The remaining
application is still pending and no assurances can be given as to
whether or when the authority will be granted.
Management of the company believes that, in the absence of
ODS or an equivalent government support program, it will be
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
vessels. The company continues to evaluate its strategic
alternatives in light of the pending expiration of its ODS
agreement and the uncertainties as to whether an acceptable new
U.S. government maritime support program will be enacted, whether
sufficient labor efficiencies can be achieved through the
collective bargaining process, and whether the company's
remaining application 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.
<PAGE>
Capital Construction Fund
The company also has an agreement with MarAd pursuant to
which the company has established a Capital Construction Fund
("CCF") to which the company makes contributions to provide
funding for certain U.S.-built assets and for the repayment of
certain vessel acquisition debt. In 1995 and 1994, the company
made deposits, which were concurrently invested in the company's
trade accounts receivable, of $23.3 million and $36.9 million,
respectively, to its CCF. At December 29, 1995 and December 30,
1994, the CCF, consisted of an investment of $71.1 million and
$40.0 million, respectively, in the company's trade accounts
receivable and is included in Investments and Other Assets on the
accompanying Consolidated Balance Sheet.
The company receives a federal income tax deduction for
deposits made to the CCF, subject to certain restrictions.
Withdrawals from the CCF for investment in vessels or related
assets do not give rise to a tax liability, but reduce the
depreciable bases of the assets for income tax purposes. At
December 29, 1995, the total tax basis of assets purchased with
CCF funds was approximately $44.7 million less than net book
value. Deferred income taxes have been provided for CCF amounts
on deposit or invested in vessels or related equipment.
Shipping Act of 1984
In July 1995, legislation was introduced in the U.S. House
of Representatives that would substantially modify the Shipping,
which, among other things, provides the company with certain
immunity from antitrust laws and requires the company and other
carriers in U.S. foreign commerce to file tariffs. The
legislation, which was not enacted in 1995, would have been
phased in during 1997 and 1998 and would have eliminated
government tariff filing and enforcement, allowed confidential
and independent contracts between shippers and ocean carriers and
strengthened provisions that prohibit predatory activities by
foreign carriers. The company is unable to predict whether this
or other proposed legislation will be introduced in 1996 or
enacted or, whether, if enacted, it will contain terms similar to
those proposed. Enactment of legislation modifying the Shipping
Act, depending upon its terms, could have a material adverse
impact on the competitive environment in which the company
operates and on the company's results of operations.
NOTE 3. RESTRUCTURING CHARGE
During the fourth quarter of 1995, the company recorded a
one-time charge of $48.4 million related to the accelerated
completion of its reengineering program and other organizational
changes. The charge includes $36.4 million related to the
elimination of approximately 950 positions in company operations
that are being reorganized or reduced in size. Of this amount,
$4.9 million related to payments to approximately 147 employees
terminated in the fourth quarter of 1995, when the acceleration
of the company's reengineering program began. Additionally,
equipment and leasehold improvements totaling $4.6 million were
written off in the fourth quarter of 1995 for closed offices and
projects that were eliminated as a result of the acceleration of
the reengineering program.
NOTE 4. INCOME TAXES
The company records income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes", which requires the company to compute deferred
taxes based upon the amount of taxes payable in future years,
after considering known changes in tax rates and other statutory
provisions that will be in effect in those years.
<PAGE>
The reconciliation of the company's effective tax rate to
the federal statutory tax rate is as follows:
1995 1994 1993
U.S. Federal Statutory Rate 35% 35% 35%
Increases (Decreases) in Rate Resulting from:
State Taxes, Net of Federal Benefit 3% 3% 3%
Effect of Federal Tax Rate Change on
Prior Years 2%
Revisions of Prior Years' Tax Estimate s (6%)
Permanent Book/Tax Differences and Other 5% 1% (1%)
Net Effective Tax Rate 43% 33% 39%
The following is a summary of the company's provision for
income taxes:
(In thousands) 1995 1994 1993
Current
Federal $24,798 $20,441 $30,164
State 2,455 2,865 3,291
Foreign 8,008 6,746 6,684
35,261 30,052 40,139
Deferred
Federal (11,108) 5,358 7,664
State (1,297) 696 (160)
Change in Federal Tax Rate 2,749
(12,405) 6,054 10,253
Total Provision $22,856 $36,106 $50,392
The following table shows the tax effect of the company's
cumulative temporary differences and carryforwards included on
the company's Consolidated Balance Sheet at December 29, 1995 and
December 30, 1994:
(In thousands) 1995 1994
Excess of Tax Over Book Depreciation $(128,147) $(111,613)
Tax Deductions for CCF Deposits in Excess of
Book Depreciation of CCF Assets (39,734) (48,756)
Net Tax Deduction for Rent Differential
on Capital Leases (28,190) (26,879)
Pension and Postretirement Benefits 23,297 20,692
Excess Insurance Reserves Over Claims Paid 18,566 20,340
Restructuring Charge Accrual 16,379
Allowance for Doubtful Accounts 8,998 8,664
Accrued Liabilities 6,024 6,440
Other 6,700 1,871
Total Net Deferred Tax Liability $(116,107) $(129,241)
The amount of deferred tax assets and liabilities at
December 29, 1995 and December 30, 1994 were as follows:
(In thousands) 1995 1994
Deferred Tax Assets $ 85,032 $ 67,339
Deferred Tax Liabilities (201,139) (196,580)
Total Net Deferred Tax Liability (116,107) (129,241)
Less Net Current Deferred Tax Asset (41,373) (10,714)
Deferred Income Taxes $(157,480) $(139,955)
The net current deferred tax asset is included in Prepaid
Expenses and Other Current Assets on the accompanying
Consolidated Balance Sheet.
<PAGE>
NOTE 5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts Payable and Accrued Liabilities at December 29,
1995 and December 30, 1994 were as follows:
(In thousands) 1995 1994
Accounts Payable $ 58,144 $ 54,009
Accrued Liabilities 243,228 259,933
Current Portion of Insurance Claims 19,564 24,468
Income Taxes 5,855 2,883
Unearned Revenue 59,722 56,676
Restructuring Charge 38,865
Total Accounts Payable and Accrued Liabilities $ 425,378 $397,969
NOTE 6. LONG-TERM DEBT
Long-term debt at December 29, 1995 and December 30, 1994
consisted of the following:
(In thousands) 1995 1994
Vessel Mortgage Notes Due Through 2007 (1) $ 338,044
8% Senior Debentures $150 Million Face Amount,
Due on January 15, 2024 (2) 147,169 $147,144
7 1/8% Senior Notes $150 Million Face Amount,
Due on November 15, 2003 (2) 148,227 148,065
Series I 8% Vessel Mortgage Bonds, Due Through 1997 (3) 33,353 57,176
8% Refunding Revenue Bonds, Due on November 1, 2009 (4) 12,000 12,000
Other 7,161 9,842
Total Debt 685,954 374,227
Current Portion (1,085)
Long-Term Debt $ 685,954 $373,142
(1)In 1995, the company took delivery of five of the six new C11-
class vessels. To finance a portion of the purchase of these
vessels, the company borrowed approximately $340 million
under a loan agreement with European banks pursuant to vessel
mortgage notes due through 2007. Principal payments are due
in semiannual installments over a 12-year period commencing
six months after the delivery of the respective vessels. The
interest rates on the notes are based upon various margins
over LIBOR or the banks' cost of funds, as elected by the
company. Until the sixth anniversary of the delivery date,
the company may defer up to four principal payments.
Aggregate deferred payments are due at the end of the term of
the notes. Principal payments on this debt are classified as
long-term on the basis that the company has the ability to
defer at least two payments. The notes issued under this
loan agreement are collateralized by the C11-class vessels,
which had a net book value of $437.2 million at December 29,
1995.
<PAGE>
In 1995, the company entered into interest rate swap
agreements on three of the vessel mortgage notes with a
notional amount of $213.7 million to exchange the variable
interest rates on certain of the vessel mortgage notes for
fixed rates for periods of 10 and 12 years. The current
variable interest rates for all the vessel mortgage notes
range between 6.615% and 6.84%. As a result of the swaps,
the effective interest rates range between 6.81% and 7.531%
for the first five years after inception, and 6.935% and
7.656% for the remaining terms of the swaps. Net payments or
receipts under the agreements will be included in interest
expense. The company is exposed to credit losses in the
event of counterparty nonperformance, but does not anticipate
any such losses. Based on quoted dealer prices, immediate
termination of the interest rate swaps would result in a loss
of approximately $6.0 million.
(2)Pursuant to a shelf registration statement the company issued
7 1/8% Senior Notes and 8% Senior Debentures in November 1993
and January 1994, respectively. Interest payments are due
semiannually. The Senior Notes had an effective interest
rate of 7.325%, and an unamortized discount of $1.8 million
and $1.9 million at December 29, 1995 and December 30, 1994,
respectively. The Senior Debentures had an effective
interest rate of 8.172%, and an unamortized discount of $2.8
million and $2.9 million at December 29, 1995 and December
30, 1994, respectively. Fair value of the Senior Notes and
Senior Debentures was approximately $152 million and $151
million, respectively, at December 29, 1995 based on quoted
dealer prices for similar issues.
(3)Principal payments are due in equal semiannual installments
totaling $23.8 million per year. 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 three of the remaining cash payments, which it has
not yet exercised. Principal amounts are classified as long-
term debt based on the company's ability to issue Series II
Bonds in lieu of the remaining semiannual cash payments. The
bonds issued under this loan agreement are collateralized by
the five C10-class vessels, which had a net book value of
$168 million at December 29, 1995. Fair value of this debt
is approximately $48 million at December 29, 1995 assuming a
current interest rate of 6.15%.
(4)The Bonds are redeemable on or after November 1, 1999 at a
redemption price of 102% of the principal amount, reducing to
100% of the principal amount on or after November 1, 2001.
Carrying value of significant issues of long-term debt,
other than the Series I Bonds, Senior Notes and Senior
Debentures, approximates fair value because the interest rates on
outstanding debt approximate current interest rates that would be
offered to the company for similar debt.
Principal payments scheduled on long-term debt during the
next five years, assuming the company exercises its options to
defer payments on the Vessel Mortgage Notes and Series I Bonds,
are as follows:
(In thousands)
1996 $ 0
1997 26,243
1998 35,234
1999 22,672
2000 24,488
<PAGE>
The company has a credit agreement with a group of banks
which provides for an aggregate commitment of $200 million
through March 1999. The credit agreement, as amended in 1995,
contains, among other things, various financial covenants that
require the company to meet certain levels of interest and fixed
charge coverage, leverage and net worth. The borrowings bear
interest at rates based upon various indices as elected by the
company. There have been no borrowings under this agreement.
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 of its accounts receivable to the banks. This
alternative is subject to less restrictive financial covenants
than the borrowing option.
NOTE 7. LEASES
The company leases equipment under capital leases expiring
in one to five years. Assets under capital lease included in
Property and Equipment on the accompanying Consolidated Balance
Sheet at December 29, 1995 and December 30, 1994 are as follows:
(In thousands) 1995 1994
Containers, Chassis and Rail Cars $ 37,982 $ 38,003
Other Property and Equipment 938 938
38,920 38,941
Accumulated Depreciation (36,578) (32,955)
Total $ 2,342 $ 5,986
The following is a schedule of future minimum lease payments
required under the company's leases that have initial
noncancelable terms in excess of one year at December 29, 1995:
Capital Operating
(In thousands) Leases Leases
1996 $ 12,543 $222,427
1997 414 124,072
1998 414 113,149
1999 414 100,915
2000 45 91,918
Later Years 1,468,278
Total Minimum Payments Required $ 13,830 $2,120,759
Amount Representing Interest (887)
Present Value of Minimum Lease Payments 12,943
Current Portion (11,810)
Long-Term Portion $ 1,133
The above schedule of operating leases includes minimum
payments under 30 year leases for terminal facilities in Los
Angeles and Seattle, which are scheduled for occupancy upon
completion of construction in 1997.
Total rental expense for operating leases and short-term
rentals was $328.2 million, $334.3 million and $289.5 million in
1995, 1994 and 1993, respectively.
<PAGE>
NOTE 8. EMPLOYEE BENEFIT PLANS
Pension Plans
The company has defined benefit pension plans covering most
of its employees, which generally call for benefits to be paid to
eligible employees at retirement based on years of credited
service and average monthly compensation during the five years of
employment with the highest rate of pay. The company's general
policy is to fund pension costs at no less than the statutory
requirement. Certain non-qualified plans are secured through a
grantor trust. The investment in this trust at December 29, 1995
was $16.6 million and is included in Investments and Other Assets
on the accompanying Consolidated Balance Sheet. The investments
in the trust consist of life insurance policies and other cash
instruments, which are carried at fair value.
The following table sets forth the pension plans' funded
status and amounts recognized in the accompanying Consolidated
Balance Sheet at December 29, 1995 and December 30, 1994:
1995 1994
Assets in Accumulated Assets in Accumulated
Excess of Benefits Excess of Benefits
Accumulated in Excess Accumulated in Excess
(In thousands) Benefits of Assets Benefits of Assets
Actuarial Present Value of:
Vested Benefit Obligation $(108,061) $ (10,149) $ (94,408) $ (8,082)
Accumulated Benefit Obligation (116,458) (10,932) (103,079) (8,837)
Actuarial Present Value of
Projected Benefit Obligation $(161,224) $ (17,922) $(139,993) $ (13,252)
Plan Assets at Fair Value 152,169 765 131,590
Funded Status (9,055) (17,157) (8,403) (13,252)
Unrecognized Net Loss (Gain) 10,438 330 15,422 (1,631)
Unrecognized Prior Service
(Credit) Cost (14,998) 3,528 (16,049) 3,915
Unrecognized Transition
(Asset) Obligation (8,850) 829 (9,940) 829
Net Pension Liability $ (22,465) $ (12,470) $ (18,970) $ (10,139)
The following assumptions were made in determining the
company's net pension liability:
(Weighted Average of All Plans) 1995 1994 1993
Discount Rate 7.5% 7.9% 7.1%
Rate of Increase in Compensation Levels 5.2% 5.2% 5.2%
Expected Long-Term Rate of Return
on Plan Assets 8.2% 8.2% 8.2%
Net pension cost related to the company's pension plans
included the following components:
(In thousands) 1995 1994 1993
Service Cost $ 8,333 $ 9,144 $ 7,858
Interest Cost on Projected
Benefit Obligation 12,357 11,228 10,138
Actual Return on Plan Assets (25,019) 414 (14,354)
Net Amortization and Deferral 12,648 (12,971) 2,453
Net Pension Cost $ 8,319 $ 7,815 $ 6,095
<PAGE>
The company also participates in collectively bargained,
multi-employer plans that provide pension and other benefits to
certain union employees. The company contributed $5.8 million in
1995, $5.3 million in 1994, and $5.2 million in 1993 to such
plans. These contributions are determined in accordance with the
provisions of negotiated labor contracts and generally are based
on the number of hours worked and are expensed as incurred.
Under certain of the multi-employer pension plans in which the
company participates, the company has withdrawal liabilities of
$12.5 million for unfunded vested benefits at December 31, 1994,
the latest valuation date. However, the company has no present
intention of withdrawing from the plans, nor has the company been
informed that there is any intention to terminate the plans.
There are no other significant withdrawal liabilities
attributable to the company for multi-employer pension plans.
Postretirement Benefits Other than Pensions
The company shares the cost of its health care benefits with
the majority of its domestic shoreside retired employees and
recognizes the cost of providing health care and other benefits
to retirees over the term of employee service.
Postretirement benefit costs in the accompanying
Consolidated Statement of Income were as follows:
(In thousands) 1995 1994 1993
Interest Cost $ 1,266 $ 1,380 $ 1,573
Service Cost 795 1,117 1,033
Amortization of Gains (477) (117) (117)
Total Postretirement Benefit Cost $ 1,584 $ 2,380 $ 2,489
The following table sets forth the postretirement benefit
obligation recognized in the accompanying Consolidated Balance
Sheet at December 29, 1995 and December 30, 1994:
(In thousands) 1995 1994
Accumulated Postretirement Benefit Obligation
Retirees $ 7,489 $6,975
Active Employees - Fully Eligible 604 462
Active Employees - Not Fully Eligible 8,483 7,925
Unrecognized Net Gain 7,505 7,671
Unamortized Prior Service Cost 1,834 1,952
Total $25,915 $24,985
The expected cost of the company's postretirement benefits
is assumed to increase at an annual rate of 9.3% in 1996. This
rate is assumed to decline approximately 1% per year to 5% in the
year 1999 and remain level thereafter. The health care cost
trend rate assumption has a significant impact on the amounts
reported. An increase in the rate of 1% in each year would
increase the accumulated postretirement benefit obligation at
December 29, 1995 by $2.7 million and the aggregate of the
service and interest cost for 1995 by $0.5 million. The weighted
average discount rate used to determine the accumulated
postretirement benefit obligation was 7.5%. The company has not
funded the liability for these benefits.
Profit-Sharing Plans
The company has defined contribution profit-sharing plans
covering certain non-union employees. Under the terms of these
plans, the company has agreed to make matching contributions
equal to those made by the participating employees up to a
maximum of 6% of each employee's base salary. The company's
total contributions to the plans amount to $6.3 million for 1995
and 1994, and $6.0 million for 1993.
<PAGE>
NOTE 9. REDEEMABLE PREFERRED STOCK
On July 14, 1995, the company issued a notice of redemption
for all $75 million of its 9% Series C Cumulative Convertible
Preferred Stock ("Series C Preferred Stock"). On July 28, 1995,
at the election of the holders, the 1,500,000 shares of Series C
Preferred Stock were converted into 3,961,498 shares of common
stock, or 2.641 shares of common stock for each share of Series C
Preferred Stock (a conversion price of $18.93 per share of common
stock).
NOTE 10. STOCKHOLDERS' EQUITY
Common Stock Repurchase
On July 21, 1995, the Board of Directors authorized the
repurchase of up to 6 million shares of the company's common
stock. On August 8, 1995, the company repurchased 2 million
shares from the former holders of the Series C Preferred Stock at
a purchase price of $27 per share. In addition, on September 18,
1995, the company repurchased 2,820,499 shares through a Dutch
Auction self-tender offer at a purchase price of $30 per share,
plus expenses. The company repurchased an additional 1,180,000
shares of its common stock through open market transactions at an
average price of $25.81 per share, plus expenses, which on
October 25, 1995, completed the repurchase of the 6 million
shares authorized. All repurchased shares were retired. The
excess of the purchase price of the common stock over its stated
value has been reflected as a decrease in Additional Paid-In
Capital and Retained Earnings on the accompanying Consolidated
Balance Sheet.
Earnings Per Common Share
For the years presented, primary earnings per common share
were computed by dividing net income, reduced by the amount of
preferred stock dividends, by the weighted average number of
common shares and common equivalent shares outstanding during the
year. Common equivalent shares consist of stock options granted.
Fully diluted earnings per common share were computed based on
the assumption that the Series C Preferred Stock was converted at
the beginning of the year. The number of shares used in these
computations was as follows:
Weighted Average Number of Common and Common Equivalent Shares
(In millions) 1995 1994 1993
Primary 28.2 28.3 27.7
Fully Diluted 30.6 32.3 32.1
Supplementary Earnings Per Common Share Data
On July 28, 1995, the Series C Preferred Stock was converted
into 3,961,498 shares of common stock. The effect of the
conversion of the Series C Preferred Stock on primary and fully
diluted earnings per share, assuming the conversion occurred at
the beginning of each year, is as follows:
1995 1994 1993
Primary Earnings per Common Share
As Stated $0.95 $ 2.38 $2.65
Assuming Shares Converted at
the Beginning of the Period $0.99 $ 2.30 $2.53
Fully Diluted Earnings per Common Share
As Stated (1) $0.99 $ 2.30 $2.50
Assuming Shares Converted at
the Beginning of the Period $0.99 $ 2.30 $2.50
<PAGE>
(1)Fully diluted earnings per share "As Stated" reflects the
conversion of the Series C Preferred Stock as though such
conversion occurred at the beginning of each period.
Stockholder Rights Plan
The company's stockholder rights agreement provides that
rights become exercisable when a person acquires 20% or more of
the companyOs common stock or announces a tender offer which
would result in the ownership of 20% or more of the companyOs
common stock, or if a person who has been declared "adverse" by
the independent directors of the company exceeds a threshold
stock ownership established by the Board, which may not be less
than 10%. The rights will be attached to all common stock. Once
exercisable, each right entitles its holder to purchase two one-
hundredths of a share ("unit") of Series A Junior Participating
Preferred Stock at a purchase price of $130 per unit, subject to
adjustment.
Upon the occurrence of certain other events related to
changes in the ownership of the company's outstanding common
stock, each holder of a right would be entitled to purchase
shares of the company's common stock or an acquiring
corporation's common stock having a market value of two times the
exercise value of the right. Rights that are, or were,
beneficially owned by an acquiring or adverse person will be null
and void. In addition, the Board of Directors may, in certain
circumstances, require the exchange of each outstanding right for
common stock or other consideration with a value equal to the
exercise price of the rights. The company has reserved 500,000
shares of preferred stock for issuance pursuant to the exercise
of the rights in the future. The rights expire November 29, 1998
and, subject to certain conditions, may be redeemed by the Board
of Directors at any time at a price of $0.025 per right.
Stock Incentive Plans
The Compensation Committee of the Board of Directors
approved stock option grants under the company's 1989 Stock
Incentive Plan (the "Plan") for shares of the company's common
stock beginning in July 1993 to key employees of the company.
The options have an exercise price of the greater of the fair
market value on the date of grant or $22.38 per share, a term
expiring July 26, 2003 and vest between 1996 and 2002 based upon
the achievement of stock price appreciation targets. The
percentage of the options that vest during specified time periods
will depend on the amount of stock price appreciation in those
time periods. In 1998, the options will vest as to 60% of the
covered shares if not otherwise vested, and in 2002, the options
will vest as to the remaining 40% if not otherwise vested.
Previous stock option grants under the Plan become
exercisable in three to four equal annual installments commencing
one year after grant. The Plan also provides for awards of
restricted shares of common stock to officers and other key
employees. All restricted shares were vested at December 29,
1995.
<PAGE>
The 1992 Directors Stock Option Plan provides for the
granting of options to purchase shares of common stock to non-
employee members of the company's Board of Directors. The
aggregate number of options which may be granted under this plan
is 200,000. Options become exercisable in three equal
installments on the first three anniversaries of the date of
grant.
In 1995, the Board of Directors adopted the companyOs 1995
Stock Bonus Plan ("Stock Bonus Plan"). The Stock Bonus Plan
permits executives and key employees, as selected by the
Compensation Committee of the Board of Directors, to receive all
or part of their bonuses in the form of shares of common stock or
phantom shares. In addition, non-employee directors may elect to
receive all or part of their annual retainers and/or meeting fees
in the form of shares of common stock or phantom shares.
Participants receive a premium in the form of additional shares
equal to 17.6% which vest over a two year period. The Stock
Bonus Plan is effective for amounts payable in 1996.
The following is a summary of the transactions in the plans
during 1995:
Stock Options Restricted Shares
Average
Shares Price
Outstanding at December 30, 1994 4,920,871 $ 19.63 3,000
Granted 292,447 23.32
Exercised (390,932) 13.68
Vested (3,000)
Canceled (373,373) 22.29
Outstanding at December 29, 1995 4,449,013 $ 20.17 0
Exercisable at December 29, 1995 1,219,624 $ 14.29
Exercised in 1994 516,614 $ 12.07
Exercised in 1993 833,834 $ 11.54
At December 29, 1995, a total of 983,862 shares were
available for future grants of stock options, restricted shares
and stock units under these plans.
NOTE 11. COMMITMENTS AND CONTINGENCIES
Commitments
Ship Purchases and Ship Management
The company took delivery of and made final payments on five
C11-class vessels in 1995 and one C11-class vessel in 1996, built
pursuant to construction contracts with Howaldtswerke-Deutsche
Werft AG, of Germany and Daewoo Shipbuilding and Heavy Machinery,
Ltd., of Korea. The total cost of the six C11-class vessels was
$529 million, including total payments to the shipyards of $503
million, of which $62 million was paid in January 1996. In
connection with the construction and purchase of the ships from
HDW, the company entered into foreign currency contracts to buy
Deutsche marks to lock in the U.S. dollar cost of the Deutsche-
mark denominated price of the vessels. Gains or losses on these
contracts were recognized as adjustments to the cost basis of the
ships when the related payments were made. At December 29, 1995,
all contracts were settled.
On January 5, 1995, the company and Columbia Shipmanagement
Ltd., a Cyprus company ("Columbia"), entered into an agreement
under which Columbia would provide crewing, maintenance,
operations and insurance for the company's six C11-class vessels
for a per diem fee per vessel. The agreement may be terminated
at any time by either party with notice.
<PAGE>
Alliances
Since 1991, the company and Orient Overseas Container Line
("OOCL") have been parties to agreements enabling them to
exchange vessel space and coordinate vessel sailings through
2005. These agreements permit both companies to offer faster
transit times and more frequent sailings between key markets in
Asia and the U.S. West Coast, and to share terminals and several
feeder operations within Asia. In September 1994, the company,
Mitsui OSK Lines, Ltd.("MOL"), and OOCL signed an agreement to
exchange vessel space, coordinate vessel sailings and cooperate
in the use of port terminals and equipment for ocean
transportation services in the Asia-U.S. West Coast trade through
2005. The carriers commenced service under this agreement in
January 1996. The agreement between the company and OOCL is
suspended so long as the agreement between the company, OOCL and
MOL is in effect.
The three carriers and Nedlloyd Lines B.V. ("NLL") are
parties to a separate agreement to exchange vessel space,
coordinate vessel sailings and cooperate in the use of port
terminals and equipment in an all-water service in the Asia-Latin
America trade for a minimum of three years. The four carriers
initiated service under this agreement in March 1995.
Additionally, the four carriers and Malaysian International
Shipping Corporation BHD have an agreement to exchange vessel
space, coordinate vessel sailings and cooperate in the use of
port terminals and equipment for ocean transportation services in
the Asia-Europe trade through 2001, with early termination rights
upon six months notice to the other parties beginning January 1,
1998. The carriers commenced service under the agreement in
January 1996. The company entered the Asia-Europe trade in March
1995 by chartering vessel space through MOL.
Under the alliance agreements, alliance partners contribute
and are allocated vessel space, which may be adjusted from time
to time. The agreements provide for, among other things,
settlement of the difference between the value of vessel space
provided by each partner and the value of vessel space available
to that partner, at specified vessel costs per TEU per day. The
value of vessel space provided by the company to the alliances is
less than the value of the total capacity allocated to it through
the alliances, resulting in an annual net cash payment from the
company to its alliance partners. The amount paid to alliance
partners was $45 million in 1995, and is currently estimated to
be $32 million in 1996. Agreements covering terminal and
equipment sharing among the alliance partners have not been
finalized, and the commitment of the alliance partners, including
the company, for these services cannot be determined at this
time.
In September 1995, the company sold a construction contract
for three K10-class vessels, which it had entered into in 1993,
and recognized a pretax gain of $1.6 million. In conjunction
with the sale, the company, MOL, OOCL and NLL, formed a joint
venture company, in which their respective shares are each 25%,
and agreed to charter back these vessels, when delivered, for
seven years for use in the Asia-Europe trade. Prior to the sale
of the construction contract, the company made progress payments
of $30 million for these vessels, including payments of $12
million in 1995, for which it received reimbursement.
<PAGE>
In October 1995, the company and Matson Navigation Company,
Inc. ("Matson") signed an agreement for a 10-year alliance, which
commenced in February 1996. Pursuant to the terms of this
alliance, the company sold Matson six of its ships (three C9-
class vessels and three C8-class vessels) and certain of its
assets in Guam for approximately $163 million in cash. One of
the ships was sold in December 1995 and resulted in a gain of
$2.4 million. The remaining five vessels were sold in January
1996. Four of these vessels, together with a fifth Matson
vessel, are being used in the alliance. The net gain on the sale
of the four vessels used in the alliance and the assets in Guam,
after deducting costs associated with the agreement, is estimated
to be $6 million, and will be deferred and amortized over the 10-
year term of the alliance. Matson is operating the vessels in
the alliance, which serves the U.S. West Coast, Hawaii, Guam,
Korea and Japan, and has the use of substantially all the
westbound capacity. The company has the use of substantially all
the vessels' eastbound capacity. The gain on the sale of the
fifth vessel was $1.6 million.
Facilities, Equipment and Services
The company had outstanding purchase commitments to acquire
cranes, facilities, equipment and services totaling $72.9 million
at December 29, 1995. 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 December 29, 1995, the company had
outstanding letters of credit totaling $27.3 million, which
guarantee the company's performance under certain of its
commitments.
In June 1995, the company and Burlington Motor Carriers,
Inc. ("BMC") signed an agreement whereby the company's U.S.
trucking operations, including related employees and leased
equipment and facilities, were transferred to BMC in
consideration of the sublease by BMC (and, in certain instances,
a third party) of such equipment and facilities. In connection
with the transfer, the company entered into a service agreement
with BMC, expiring in December 1997, whereby BMC agreed to
provide trucking services to the company and the company agreed
to provide certain minimum cargo volumes to BMC through October
1, 1997. The transaction did not have a material effect on the
company's other operations or operating results. In December
1995, Burlington Motor Holdings, Inc., the parent company of BMC,
filed a petition seeking protection from its creditors under
Chapter 11 of the U.S. Bankruptcy laws. The company currently
cannot assess the impact of this filing, if any, on its
operations, but does not expect the impact to be material.
Employment Agreements
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 $13.4 million at December 29, 1995.
Certain of the company's collective bargaining agreements
covering seagoing and shoreside unions in the U.S. expire in June
and July 1996. The company currently expects that new agreements
will be negotiated with the respective unions prior to the
expiration of the current contracts, although no assurances can
be given to that effect. Failure to reach agreement with a union
on an acceptable labor contract could result in a strike or other
labor difficulties, which could have a material adverse effect on
the company's operating results.
<PAGE>
Contingencies
In October 1995, Lykes Steamship Company, Inc. ("Lykes")
filed a petition seeking protection from its creditors under
Chapter 11 of the U.S. Bankruptcy laws. At present, the company
charters its four L9-class vessels from Lykes under charters that
expire in early 1996. The L9-class vessels are used in the
company's West Asia/Middle East service. In addition, the
company charters to Lykes three of its Pacesetter vessels under
charters that also expire in early 1996. The potential
consequences of Lykes' petition on the company's operations and
financial condition, and possible steps the company may take to
mitigate any resulting adverse effects, are being evaluated by
management. The company is currently unable to predict the
extent of such consequences.
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 potential
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 12. BUSINESS SEGMENT INFORMATION
The company provides container transportation services in
North America, Asia and the Middle East through an intermodal
system combining ocean, rail and truck transportation. In
addition, the company was engaged in real estate operations until
1994, when its remaining real estate holdings were sold.
(In millions) 1995 1994 1993
Revenues
Transportation $ 2,896.0 $2,777.3 $ 2,590.2
Real Estate 16.2 16.0
Total $ 2,896.0 $2,793.5 $ 2,606.2
Operating Income
Transportation $ 68.4 $ 114.2 $ 122.9
Real Estate 9.0 10.0
Total $ 68.4 $ 123.2 $ 132.9
Identifiable Assets
Transportation $ 1,877.6 $1,658.0 $ 1,442.0
Real Estate 1.2 6.0 12.4
Total $ 1,878.8 $1,664.0 $ 1,454.4
Depreciation expense and capital expenditures were related
only to transportation operations in 1995, 1994 and 1993.
<PAGE>
The following table shows the percentage of ocean
transportation revenues by country:
1995 1994 1993
Origin Destination Origin Destination Origin Destination
United States 27% 41% 26% 44% 27% 44%
Hong Kong 13 5 14 4 12 4
People's Republic
of China 10 3 10 3 8 1
Japan 8 10 9 11 10 12
Taiwan 8 3 9 3 9 4
India 5 3 5 2 5 3
Korea 4 3 4 3 5 2
Indonesia 4 2 4 1 4 1
Philippines 4 3 3 3 4 2
Other 17 27 16 26 16 27
Operating income, net income and identifiable assets cannot
be allocated on a geographic basis due to the nature of the
companyOs business.
NOTE 13. QUARTERLY RESULTS (Unaudited)
(In millions, except per share amounts)
<TABLE>
<CAPTION>
1995 1994
Quarter December September June April December September July April
Ended 29 22 30 7 30 23 1 8
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 769.9 $ 711.1 $ 674.3 $ 740.7 $ 764.7 $ 672.1 $ 653.6 $ 703.1
Operating Income (Loss)
Transportation (13.4) 53.5 24.7 3.6 34.3 37.2 26.1 16.6
Real Estate 6.4 2.6
Total Operating
Income (Loss) (1),(2) (13.4) 53.5 24.7 3.6 34.3 37.2 32.5 19.2
Income (Loss)Before Taxes (21.3) 49.8 23.0 1.7 32.2 34.0 28.8 15.3
Net Income (Loss) $ (15.9) $ 30.9 $ 14.2 $ 1.1 $ 22.5 $ 22.5 $ 19.0 $ 10.2
Earnings (Loss)
Per Common Share
Primary $(0.61) $ 1.02 $ 0.45 $(0.02) $ 0.74 $ 0.74 $ 0.62 $ 0.30
Fully Diluted $(0.61) $ 0.97 $ 0.44 $(0.02) $ 0.69 $ 0.70 $ 0.60 $ 0.30
Cash Dividends
Per Common Share $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.10
Market Price
Per Common Share
High $29 3/4 $31 1/2 $24 3/8 $24 1/4 $26 7/8 $27 1/8 $23 1/8 $34
Low 22 1/4 23 1/2 22 1/4 21 1/8 21 1/4 20 7/8 19 22 1/8
</TABLE>
(1)Collections of detention charges related to the company's
containers used to transport Operation Desert Storm cargo
contributed $0.7 million, $0.5 million, $0.7 million and $8.3
million to Operating Income for the fourth, third, second and
first quarters of 1994, respectively.
(2)In the fourth quarter of 1995, the company recorded a
restructuring charge of $48.4 million. Additionally, in the
fourth and third quarters of 1995, the company received
liquidated damages from the delayed delivery of two of its
C11-class vessels of $2 million and $3.5 million,
respectively, and sold ships for gains of $2.5 million and
$3.7 million, respectively.
<PAGE>
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Description Balance at Charged To Charged To Deductions- Balance at
Beginning Cost and Other Describe (1) End of Year
of Year Expense Accounts-
Describe (2)
Allowance for Doubtful Accounts
December 29, 1995 $21,908 14,937 (14,314) $22,531
December 30, 1994 $10,359 13,217 2,295 (3,963) $21,908
December 31, 1993 $13,237 4,324 (764) (6,438) $10,359
(1)Uncollectible receivables written off, net of recoveries.
(2)Reclassifications from/(to) other Balance Sheet accounts.
<PAGE>
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information with respect to Directors and certain
executive officers of the company appearing under the caption
"Election of Directors - Information With Respect to Nominees and
Directors" and in footnote 2 on page 6 in the company's
definitive proxy statement for the annual meeting of stockholders
to be held on April 30, 1996 is hereby incorporated herein by
reference.
The following sets forth certain information with respect to the
remaining executive officers of the company:
John G. Burgess, age 51, was elected Executive Vice President of
the company in May 1995. He has also served as Executive Vice
President of American President Lines, Ltd. ("APL") since
December 1992. Prior to that, he served as Executive Vice
President and Chief Operating Officer APL from May 1990 to
November 1992.
Maryellen B. Cattani, age 52, was elected Executive Vice
President of the company in March 1995. She has also served as
General Counsel and Secretary of the company since July 1991 and
as a Senior Vice President from July 1991 to March 1995. Prior
to joining the company, she was a partner in the law firm of
Morrison & Foerster from 1989 to 1991.
L. Dale Crandall, age 54, was elected Executive Vice President
and Chief Financial Officer of the company in March 1995 and
Treasurer of the company in September 1995. Prior to that, Mr.
Crandall was managing partner of Price Waterhouse Los Angeles
office since 1990.
Michael Diaz, age 47, was elected Executive Vice President of the
company in May 1995. He has also served as Executive Vice
President of APL since December 1992. Prior to that, he served
as President, Asia Division of APL from August 1992 to November
1992, and Executive Vice President and Chief Operating Officer of
APL Land Transport Services, Inc. from July 1990 to July 1992.
Michael Goh, age 46, was elected Senior Vice President of the
company in March 1996. Prior to that, he served as Senior Vice
President of APL from January 1996 and in various capacities with
APL Land Transport Services, Inc., including Senior Vice
President from May 1992 to July 1994 and Vice President from May
1989 to April 1992.
James S. Marston, age 62, was elected Executive Vice President
and Chief Information Officer of the company in May 1995. He
served as Senior Vice President and Chief Information Officer of
the company from September 1987 to May 1995.
William J. Stuebgen, age 48, has served as Vice President,
Controller of the company since October 1990.
The executive officers of the company are elected by the Board of
Directors. Each officer holds office until his or her successor
has been duly elected and qualified, or until the earliest of his
or her death, resignation, retirement or removal by the Board.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The information appearing under the caption "Compensation of
Executive Officers and Directors" and in the company's definitive
proxy statement for the annual meeting of stockholders to be held
on April 30, 1996, is hereby incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information appearing under the captions "Election of
Directors-Stock Ownership of Directors and Executive Officers"
and "Certain Beneficial Ownership of Securities" in the company's
definitive proxy statement for the annual meeting of stockholders
to be held on April 30, 1996, is hereby incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information appearing under the captions "Compensation
of Executive Officers and Directors -- Employment Agreements,
Termination of Employment and Change-in-Control Arrangements and
Certain Transactions" in the company's definitive proxy statement
for the annual meeting of stockholders to be held on April 30,
1996, is hereby incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report:
1. Financial Statements and Schedules
The following report of independent public accountants,
consolidated financial statements and notes to the
consolidated financial statements of American President
Companies, Ltd. and subsidiaries are contained in Part II,
Item 8:
a. Report of Independent Public Accountants
b. Consolidated Statement of Income
c. Consolidated Balance Sheet
d. Consolidated Statement of Cash Flows
e. Consolidated Statement of Changes in Stockholders' Equity
f. Notes to Consolidated Financial Statements
2. The following schedules are contained in Part II, Item 8:
a. Schedule II - Valuation and Qualifying Accounts
3.Exhibits required by Item 601 of Regulation S-K
The following documents are exhibits to this Form 10-K
Exhibit No. Description of Document
3.1* Integrated copy of the amended Certificate of
Incorporation, filed as Exhibit 3.1 to the company's Form
10-Q (File No. 1-8544), dated November 1, 1995.
3.2 Integrated copy of the amended By-Laws, dated December 27, 1995.
<PAGE>
4.1* Amended and Restated Rights Agreement dated October 22,
1991, between the company and The First National Bank of
Boston, as Rights Agent, filed as Exhibit 4.1 to the
company's Form SE (File No. 1-8544), dated October 22,
1991.
4.2* Trust Indenture between American President Lines, Ltd.,
Issuer, and Security Pacific National Bank, Trustee, dated
as of April 22, 1988, President Truman Issue, filed as
Exhibit 4.1 to the company's Form SE (File No. 1-8544),
dated July 26, 1988.
4.3* Forms of Series I and Series II Bonds, filed as part of
Exhibit 4.1 to the company's Form SE (File No. 1-8544),
dated July 26, 1988.
4.4* Registration Rights Agreement, among the company, Hellman
& Friedman Capital Partners, Hellman & Friedman Capital
Partners International (BVI), and APC Partners; dated as
of August 3, 1988, as amended (without exhibits), filed as
Exhibit 4.2 to the company's Form SE (File No. 1-8544),
dated February 17, 1989.
4.5* Indenture, dated as of November 1, 1993, between American
President Companies, Ltd. and The First National Bank of
Boston as Trustee, filed as Exhibit 4.1 to the company's
Form 8K (File No. 1-8544), dated November 29, 1993.
4.6* Form of 7-1/8% Senior Note Due 2003 of American President
Companies, Ltd., filed as Exhibit 4.2 to the company's
Form 8K (File No. 1-8544) dated November 29, 1993.
4.7* Form of 8% Senior Debentures Due 2024 of American
President Companies, Ltd., filed as Exhibit 4.20 to the
company's Form 10K (File No. 1-8544), dated March 9, 1994.
10.1* Operating-Differential Subsidy Agreement (No. MA/MSB-417),
effective as of January 1, 1978, between the United States
and American President Lines, Ltd., filed as Exhibit 10.1
to the company's Form SE (File No. 1-8544), dated March
17, 1992.
10.2* Lease Agreement, dated June 1, 1988, between Monsanto
Company and American President Intermodal Company, Ltd.,
filed as Exhibit 10.14 to the company's Form SE (File No.
1-8544), dated July 26, 1988.
10.3* Lease Agreement, dated June 1, 1988, between Consolidated
Rail Corporation and American President Intermodal
Company, Ltd., filed as Exhibit 10.2 to the company's Form
SE (File No. 1-8544), dated March 14, 1990.
10.4* Lease and Preferential Assignment Agreement dated January
6, 1971, and First Supplemental Agreement dated February
24, 1971, between the City of Oakland and Seatrain
Terminals of California, Inc., filed as Exhibit 10.32 to
the company's Registration Statement on Form S-l,
Registration No. 2-93718, which became effective on
November 1, 1984.
10.5* Second Supplemental Agreement to Lease and Preferential
Assignment Agreement, dated May 3, 1988, filed as Exhibit
10.3 to the company's Form SE (File No. 1-8544), dated
March 14, 1990.
10.6* Preferential Assignment dated February 23, 1972, between
the City of Oakland and Seatrain Terminals of California,
Inc., filed as Exhibit 10.33 to the company's Registration
Statement on Form S-l, Registration No. 2-93718, which
became effective on November 1, 1984.
<PAGE>
10.7* Assignment, Designation of Secondary Use and Consent,
dated December 11, 1974, among Seatrain Terminals of
California, Inc., American President Lines, Ltd., the City
of Oakland and Seatrain Lines, Inc., filed as Exhibit
10.34 to the company's Registration Statement on Form S-l,
Registration No. 2-93718, which became effective on
November 1, 1984.
10.8* Acknowledgment of Termination of Consent to Secondary Use
and Sublease and Assumption of Entire Combined Premises
and Cranes dated December 18, 1981, between the City of
Oakland and American President Lines, Ltd., filed as
Exhibit 10.35 to the company's Registration Statement on
Form S-l, Registration No. 2-93718, which became effective
on November 1, 1984.
10.9* Supplemental Agreement dated July 6, 1982, between the
City of Oakland and American President Lines, Ltd., filed
as Exhibit 10.36 to the company's Registration Statement
on Form S-l, Registration No. 2-93718, which became
effective on November 1, 1984.
10.10*Permit No. 441, dated November 26, 1980, Second Amendment
to Permit No. 441, dated February 7, 1983, and Third
Amendment to Permit No. 441, dated May 10, 1984, between
the City of Los Angeles and American President Lines,
Ltd., filed as Exhibit 10.37 to the company's Registration
Statement on Form S-l, Registration No. 2-93718, which
became effective on November 1, 1984.
10.11*Fourth Amendment to Permit No. 441, dated as of October
29, 1986 between the City of Los Angeles and American
President Lines, Ltd., filed as Exhibit 10.4 to the
company's Form SE (File No. 1-8544), dated March 23, 1987.
10.12 Sixth Amendment to Permit No. 441, dated as of August 30,
1993, between the City of Los Angles and American
President Lines, Ltd.
10.13*Financing and Security Agreement, dated March 27, 1984,
between American President Lines, Ltd. and the City of Los
Angeles, California, filed as Exhibit 10.38 to the
company's Registration Statement on Form S-1, Registration
No. 2-93718, which became effective on November 1, 1984.
10.14*Lease, dated July 31, 1972, Lease Agreement, dated
September 1, 1980, Memorandum, dated September 1, 1980,
and two letters dated July 3, 1981 and July 14, 1981,
respectively, between Hanshin Port Development Authority
and American President Lines, Ltd., filed as Exhibit 10.39
to the company's Registration Statement on Form S-1,
Registration No. 2-93718, which became effective on
November 1, 1984.
10.15*Pre-engagement Agreement for Lease dated March 17, 1983,
Supplemental Agreement dated March 17, 1983 and form of
Wharf Lease Agreement between Yokohama Port Terminal
Corporation and American President Lines, Ltd., filed as
Exhibit 10.41 to the company's Registration Statement on
Form S-l, Registration No. 2-93718, which became effective
on November 1, 1984.
10.16*Lease Contract of Wharves Nos. 68 & 69 of Container
Terminal No. 3 Kaohsiung Harbor, Taiwan, Republic of
China, dated December 31, 1987 and Equipment Agreement
between the Kaohsiung Harbor Bureau and APL, dated
December 31, 1987, filed as Exhibit 10.4 to the company's
Form SE (File No. 1-8544), dated March 11, 1988.
<PAGE>
10.17*Lease dated April 28, 1978, Memorandum of Understanding,
Addendum to Lease dated May 9, 1978, Addendum No. 2 to
Lease dated July 28, 1978, and Addendum No. 3 to Lease
dated March 27, 1984, between Sunset Cahuenga Building, a
Joint Venture, and American President Lines, Ltd., filed
as Exhibit 10.44 to the company's Registration Statement
on Form S-l, Registration No. 2-93718, which became
effective on November 1, 1984.
10.18*Addendum No. 4 dated April 19, 1985 to Lease dated April
28, 1978, between Sunset Cahuenga Building, a Joint
Venture, and American President Lines, Ltd., filed as
Exhibit 10.1 to the company's Form SE (File No. 1-8544),
dated December 12, 1985.
10.19*Addendum No. 5 dated July 25, 1986 to Lease dated April
28, 1978, between Sunset Cahuenga Building, a Joint
Venture, and American President Lines, Ltd., filed as
Exhibit 10.5 to the company's Form SE (File No. 1-8544),
dated March 11, 1988.
10.20*Addendum No. 6, dated May 1, 1988, to Lease dated April
28, 1978, between Sunset Cahuenga Building, a Joint
Venture, and American President Lines, Ltd., filed as
Exhibit 10.13 to the company's Form SE (File No. 1-8544),
dated July 26, 1988.
10.21*Lease Agreement between Port of Seattle and American
President Lines, Ltd. at Terminal 5 dated September 26,
1985, filed as Exhibit 10.5 to the company's Form SE (File
No. 1-8544), dated December 12, 1985.
10.22*Amendment No. 6 to the Lease Agreement between Port of
Seattle and American President Lines, Ltd. at Terminal 5,
and assignment of the lease from American President Lines,
Ltd. to Eagle Marine Services, Ltd. dated June 1, 1994,
excluding exhibits and other related agreements, filed as
Exhibit 10.1 to the company's Form 10-Q (File No. 1-8544),
dated August 12, 1994.
10.23*Lease Agreement between the company and Bramalea Pacific,
Inc. dated April 18, 1988, and Amendments 1 through 5,
filed as Exhibit 10.3 to the company's Form SE (File No. 1-
8544), dated March 27, 1991.
10.24*Grantor Trust Agreement with U.S. Trust Company of
California, N.A., effective April 10, 1989, filed as
Exhibit 10.1 to the company's Form SE (File No. 1-8544),
dated August 1, 1989.
10.25*Assignment Agreement from United States Lines, Inc. to
American President Lines, Ltd. with attached supplements,
dated September 16, 1987, filed as Exhibit 10.8 to the
company's Form SE (File No. 1- 8544), dated March 14,
1990.
10.26*Permit No. 733, dated September 10, 1993, between the City
of Los Angeles and Eagle Marine Services, Ltd., and the
Guaranty of Agreement made by American President Lines,
Ltd., excluding exhibits, filed as Exhibit 10.1 to the
company's Form 10-Q (File No. 1-8544), dated November 18,
1993.
<PAGE>
10.27*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, filed as Exhibit 10.4 to
the company's Form 10-Q (File No. 1-8544), dated May 20,
1994 and as Exhibit 10.4a to the company's Form 10-K/A
(file No. 1-8544), dated December 6, 1994.
10.28 Amendment No. 1 dated May 19, 1995 to the 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).***
10.29 Amendment No. 2 dated September 1, 1995 to the Loan
Agreement dated March 14, 1994, as amended by Amendment
No. 1 to the Loan Agreement dated May 19, 1995, 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 exhibits thereto or a description
thereof.***
10.30 Amended and Restated Guarantee dated as of May 19, 1995 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).
10.31 Acknowledgment and Consent of Guarantor dated September 1,
1995 by the company (as Guarantor) in favor of
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).
10.32 Amendment No. 1 to the First Preferred Ship Mortgage dated
September 1, 1995 given by M.V. President Kennedy, Ltd.
(as Shipowner) to Kreditanstalt fur Wiederaufbau (as
Mortgagee).***
10.33 Amendment No. 1 to the Bareboat Charter Party dated
September 1, 1995 by M.V. President Kennedy, Ltd. (as
Shipowner) and American President Lines, Ltd. (as
Charterer).***
<PAGE>
10.34 Second Amended and Restated Agreement to Acquire and
Charter dated September 1, 1995 by and among American
President Companies, Ltd. (as Transferor), of M.V.
President Kennedy, Ltd., of M.V. President Adams, Ltd., of
M.V. President Kennedy, Ltd., of M.V. President Kennedy,
Ltd. and of M.V. President Kennedy, Ltd. (Transferees),
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);
including exhibits thereto or a description thereof.***
10.35 Charter Hire Guarantee dated as of May 19, 1995 by
American President Companies, Ltd. (as Guarantor); in
favor of M.V. President Kennedy, Ltd. (as the Obligee).
10.36*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, filed as
Exhibit 10.1 to the company's Form 10-Q (File No. 1-8544),
dated May 20, 1994.
10.37*Amendments Nos. 1 and 2 dated May 10, 1995 and July 12,
1995, respectively, to the Credit Agreement among American
President Companies, Ltd., borrower, and Morgan Guaranty
Trust Company of New York (as agent and participant), Bank
of America National Trust and Savings Association, The
First National Bank of Boston, The Industrial Bank of
Japan, Limited, ABN AMRO Bank N.V. and The First National
Bank of Chicago, filed as Exhibit 10.1 to the company's
Form 10-Q (File No. 1-8544), dated August 4, 1995.
10.38*Deferred Compensation Plan For Directors of the company,
filed as Exhibit 10.49 to the company's Registration
Statement on Form S-l, Registration No. 2-93718, which
became effective on November 1, 1984.**
10.39*Executive SurvivorsO Benefits Plan, dated November 29,
1988, filed as Exhibit 10.4 to the company's Form SE (File
No. 1-8544), dated March 17, 1992.**
10.40*Amendment No. 1 to the Executive SurvivorsO Benefits Plan,
effective December 4, 1992, filed as Exhibit 10.10 to the
company's Form SE (File No. 1-8544), dated March 24,
1993.**
10.41*1988 Deferred Compensation Plan dated November 29, 1988,
filed as Exhibit 10.5 to the company's Form SE (File No. 1-
8544), dated February 17, 1989.**
10.42*Amendment No. 1 to the 1988 Deferred Compensation Plan,
effective January 1, 1992, filed as Exhibit 10.3 to the
company's Form SE (File No. 1-8544), dated March 24,
1993.**
10.43*1992 DirectorsO Stock Option Plan, dated March 17, 1992,
filed as Exhibit 10.06 to the company's Form SE (File No.
1-8544), dated May 5, 1992.**
10.44*Amended and Restated Retirement Plan for the Directors of
American President Companies, Ltd., dated September 15,
1992, filed as Exhibit 10.01 to the company's Form SE
(File No. 1-8544), dated October 20, 1992.**
<PAGE>
10.45*American President Companies, Ltd. Retirement Plan, second
amendment and restatement effective January 1, 1993, filed
as Exhibit 10.2 to the company's Form 10-Q (File No. 1-
8544), dated May 17, 1995.**
10.46*First Amendment to the American President Companies, Ltd.
Retirement Plan (Second Amendment and Restatement
Effective January 1, 1993), effective January 1, 1993,
filed as Exhibit 10.1 to the company's Form 10-Q (File No.
1-8544), dated November 1, 1995.**
10.47*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.**
10.48*American President Companies, Ltd. SMART Plan, second
amendment and restatement effective January 1, 1993, filed
as Exhibit 10.45 to the company's Form 10-K (File No. 1-
8544), dated March 10, 1995.**
10.49*Excess-Benefit Plan of the company, amended and restated
effective December 31, 1994, filed as Exhibit 10.46 to the
company's Form 10-K (File No. 1-8544), dated March 10,
1995.**
10.50*1995 Deferred Compensation Plan of the company, effective
January 1, 1995, filed as Exhibit 10.47 to the company's
Form 10-K (File No. 1-8544), dated March 10, 1995.**
10.51 1995 Supplemental Executive Retirement Plan of the
company, amended and restated effective January 1, 1996.**
10.52*1995 Stock Bonus Plan of the company, effective January 1,
1996, filed with the company's Proxy Statement (File No. 1-
8544) for the Annual Meeting of Shareholders held on May
2, 1995.**
10.53*Employment Agreement between the company and Maryellen B.
Cattani dated April 28, 1994, filed as Exhibit 10.10 to
the company's Form 10-Q (File No. 1-8544), dated May 20,
1994.**
10.54*Employment Agreement between the company and Timothy J.
Rhein dated July 28, 1992, filed as Exhibit 10.1 to the
company's Form 10-Q (File No. 1-8544), dated November 4,
1994.**
10.55*Employment Agreement between the company and Joji Hayashi
dated July 28, 1992, filed as Exhibit 10.2 to the
company's Form 10-Q (File No. 1-8544), dated November 4,
1994.**
10.56*Amendment No. 1 dated September 7, 1995 to the Employment
Agreement as amended, between the company and Joji
Hayashi, filed as Exhibit 10.2 to the company's Form 10-Q
(File No. 1-8544), November 1, 1995.**
10.57*Employment Agreement between the company and James S.
Marston dated July 28, 1992, filed as Exhibit 10.3 to the
company's Form 10-Q (File No. 1-8544), dated November 4,
1994.**
10.58*Employment Agreement between the company and John G.
Burgess dated July 28, 1992, filed as Exhibit 10.4 to the
company's Form 10-Q (File No. 1-8544), dated November 4,
1994.**
10.59*Employment Agreement between the company and Michael Diaz
dated July 28, 1992, filed as Exhibit 10.5 to the
company's Form 10-Q (File No. 1-8544), dated November 4,
1994.**
<PAGE>
10.60*Employment Agreement between the company and L. Dale
Crandall dated February 1, 1995, filed as Exhibit 10.3 to
the company's Form 10-Q (File No. 1-8544), May 17, 1995.**
10.61 Agreement between the company and John M. Lillie dated
October 13, 1995.**
10.62*Form of Indemnity Agreements dated March 11, 1988 between
the company and Charles S. Arledge, John H. Barr, J.
Hayashi, Forrest N. Shumway and Barry L. Williams, filed
as Exhibit 10.3 to the company's Form SE (File No. 1-
8544), dated February 17, 1989.**
10.63*Form of Indemnity Agreements dated April 25, 1991 between
the company and F. Warren Hellman and Timothy J. Rhein,
filed as Exhibits 10.3 and 10.5 to the company's Form SE
(File No. 1-8544), dated May 8, 1991.**
10.64*Indemnity Agreement dated October 5, 1993 between the
company and Toni Rembe, filed as Exhibit 10.74 to the
company's Form 10K (File No. 1-8544), dated March 9,
1994.**
10.65*Form of Indemnity Agreement dated April 28, 1994 between
the company and G. Craig Sullivan, filed as Exhibit 10.62
to the company's Form 10-K (File No. 1-8544), dated March
10, 1995.**
10.66*Form of Indemnity Agreement dated June 20, 1994 between
the company and Tully M. Friedman, filed as Exhibit 10.63
to the company's Form 10-K (File No. 1-8544), dated March
10, 1995.**
11.1 Computation of Earnings Per Share.
21.1 Subsidiaries of the company.
23.1 Consent of Independent Public Accountants.
24.1 Powers of Attorney.
27 Financial Data Schedules filed under Article 5 of
Regulation S-X for the year ended December 29, 1995.
* Incorporated by Reference
** Denotes management contract or compensatory plan.
*** 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.
Pursuant to Item 601 (b)(4)(iii)(A) of Regulation S-K,
certain instruments defining the rights of holders of the long-
term debt of the company and its consolidated subsidiaries have
not been filed because the amount of securities authorized under
each such instrument does not exceed ten percent of the total
assets of the company and its subsidiaries on a consolidated
basis. A copy of any such instrument will be furnished to the
Commission upon request.
(b) Reports on Form 8-K during the fourth quarter:
No current report on Form 8-K was filed during the quarter
for which this report on Form 10-K is filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the registrant has
duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMERICAN PRESIDENT COMPANIES, LTD.
(Registrant)
By /s/ William J. Stuebgen
William J. Stuebgen
Vice President,
Controller and
Chief Accounting Officer
March 14, 1996
Pursuant to the requirements of the Securities and Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
/s/ Joji Hayashi* March 14, 1996
Joji Hayashi
Chairman of the Board
/s/ Timothy J. Rhein* March 14, 1996
Timothy J. Rhein
President, Chief Executive
Officer and Director
/s/ Charles S. Arledge* March 14, 1996
Charles S. Arledge
Director
/s/ John H. Barr* March 14, 1996
John H. Barr
Director
/s/ Tully M. Friedman* March 14, 1996
Tully M. Friedman
Director
/s/ F. Warren Hellman* March 14, 1996
F. Warren Hellman
Director
/s/ Toni Rembe* March 14, 1996
Toni Rembe
Director
<PAGE>
/s/ Forrest N. Shumway* March 14, 1996
Forrest N. Shumway
Director
/s/ G. Craig Sullivan* March 14, 1996
G. Craig Sullivan
Director
/s/ Barry L. Williams* March 14, 1996
Barry L. Williams
Director
*By: /s/ Maryellen B. Cattani March 14, 1996
Maryellen B. Cattani
Attorney-in-fact
BY-LAWS
of
AMERICAN PRESIDENT COMPANIES, LTD.
ARTICLE I
Offices
Section 1. Registered Office. The registered office of the Company in the
State of Delaware and the name of the resident agent in charge thereof is The
Prentice-Hall Corporation System, Inc., 32 Loockerman Square, Suite L-100,
Dover, Delaware 19901.
Section 2. Other Offices. The Company shall have its principal office
at 1111 Broadway, Oakland, California 94607 and shall also have offices at such
other places as the President and the Board of Directors may from time to time
designate or appoint, or as the business of the Company may require.
ARTICLE II
Directors
Section 1. Powers. The corporate powers, business and property of the
Company shall be vested in and exercised, conducted and controlled by the Board
of Directors which may exercise all said powers of the Company and do all such
lawful acts and things as are not by statute or by the Certificate of
Incorporation or by these By-Laws directed or required to be exercised or done
by the stockholders.
Section 2. Determination of Number. The exact number of Directors who
shall constitute the Board of Directors shall be determined by resolution
adopted by the affirmative vote of a majority of the entire Board of Directors
at any regular or special meeting of said Board; provided, that notice of such
proposed action shall have been given in the notice for such regular or special
meeting; and provided, further, however, that in no event shall the number of
directors be less than five. No decrease in the number of Directors shall have
the effect of shortening the term of any incumbent Director.
Section 3. Nominations. Nominations for election to the Board of Directors
of the Company at a meeting of stockholders may be made by the Board or on
behalf of the Board by the Nominating Committee appointed by the Board, or by
any stockholder of the Company entitled to vote for the election of Directors at
such meeting. Such nominations, other than those made by or on behalf of the
Board, shall be made by notice in writing delivered or mailed by first class
United States mail, postage prepaid, to the Secretary of the Company, and
received by him not less than thirty (30) days nor more than sixty (60) days
prior to any meeting of stockholders called for the election of Directors;
provided, however, that if less than thirty-five (35) days' notice of the
meeting is given to stockholders, such nomination shall have been mailed or
delivered to the Secretary of the Company not later than the close of business
on the seventh (7th) day following the day on which the notice of meeting was
mailed. Such notice shall set forth as to each proposed nominee who is not an
incumbent Director (i) the name, age, business address and, if known, residence
address of each nominee proposed in such notice, (ii) the principal occupation
or employment of each such nominee, (iii) the number of shares of stock of the
Company which are beneficially owned by each such nominee and by the nominating
stockholder, and (iv) any other information concerning the nominee that must be
disclosed of nominees in proxy solicitations Regulation 14A of the Securities
Exchange Act of 1934.
The Chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
ARTICLE III
Meetings of Directors
Section 1. Place of Meetings. Meetings of the Board of Directors of the
Company whether regular, special or adjourned shall be held at the principal
office of the Company, as specified in Section 2 of Article I hereof, or at any
other place within or without the State of Delaware which has been designated
from time to time by resolution of the Board or by written consent of all
members of the Board. Any meeting shall be valid wherever held, if held upon the
written consent of all members of the Board of Directors given either before or
after the meeting and filed with the Secretary of the Company.
Section 2. Regular Meetings. Regular meetings of the Board of Directors
shall be held immediately following the adjournment of each annual meeting of
the stockholders, every second month thereafter and at such other times as may
be designated from time to time by resolution of the Board of Directors.
Section 3. Special Meetings. Special meetings of the Board of
Directors may be called at any time by the Chairman or the President of the
Company or by any four Directors.
Section 4. Notice of Meetings. Written notice of the time and place of
special meetings of the Board of Directors shall be delivered at least two (2)
days before the meeting personally to each Director, or sent in writing, by mail
addressed to such Director, at his address as it appears on the records of the
Company, with postage thereon prepaid; such notice shall be deemed to be given
at the time when the same shall be deposited in the United States mail;
provided, however, that if a special meeting is called by the Chairman or the
President or by any four Directors because the need for urgent action exists,
then each Director shall be given not less than three (3) hours' notice, and
such notice shall be deemed given once it has been conveyed to a Director in
person or by telephone or an attempt has been made to give such notice by
telephoning a Director at his home telephone number and his business office
telephone number as such numbers are shown in the Secretary's records. Notice
to Directors may also be given by telex or telegram.
Whenever any such notice is required to be given, a waiver thereof in
writing, signed by the person or persons entitled to said notice, whether before
or after the time stated therein, shall be deemed equivalent thereto. If the
address of a Director is not shown on the records and is not readily
ascertainable, notice shall be addressed to him at the city or place in which
the meetings of the Directors are regularly held. Notice of the time and place
of holding an adjourned meeting need not be given to absent Directors if the
time and place be fixed at the meeting adjourned.
Section 5. Quorum. A majority of the authorized number of Directors shall
constitute a quorum of the Board of Directors for the transaction of business.
Every act or decision done or made by a majority of the Directors present at a
meeting duly held at which a quorum is present shall be regarded as the act of
the Board of Directors. In the absence of a quorum, a majority of the Directors
present may adjourn from time to time, without notice other than an announcement
at the meeting, until a quorum shall be present.
Section 6. Action Without a Meeting. Any action required or permitted to
be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if all members of the Board or committee, as the
case may be, consent thereto in writing and the writing or writings are filed
with the minutes of proceedings of the Board or committee.
Section 7. Telephone Meetings. Members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
such Board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
ARTICLE IV
Officers
Section 1. Officers. The officers of the Company shall consist of a
Chairman of the Board, a President, one or more Vice Presidents, a Secretary,
one or more Assistant Secretaries, a Treasurer, one or more Assistant Treasurers
and a Controller. The salary which each said officer shall receive, and the
manner and times of its payment, shall be fixed and determined by the Board of
Directors upon the advice of the Compensation Committee and may be altered by
said Board from time to time at its discretion.
The Board of Directors may appoint such other officers and agents as it
shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board.
The officers of the Company shall hold office until their successors are
chosen and qualify. Any officer elected or appointed by the Board of Directors
may be removed at any time by the affirmative vote of a majority of the Board of
Directors. Any vacancy occurring in any office of the Company shall be filled by
the Board of Directors.
Section 2. Chairman of the Board. The Chairman of the Board shall,
when present, preside at all meetings of the Board of Directors and the
stockholders and shall do and perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
Section 3. President. The President shall be the Chief Executive
Officer of the Company. He shall be a member of the Board of Directors and of
the Executive Committee thereof and, except for the Compensation Committee and
the Audit Committee, an ex officio member of all other committees thereof, and
he shall have responsibility for the general management and direction of the
business of the Company, subject to control and direction of the Board of
Directors. In the absence or disability of the Chairman, he shall perform the
duties of the Chairman of the Board and, when so acting, shall have all of the
powers of and be subject to all the restrictions upon the Chairman of the Board.
The President shall, in the absence of the Chairman of the Board, preside at
meetings of the Board of Directors and the stockholders, and shall perform such
other duties and have such other powers as the Board of Directors may from time
to time prescribe.
Section 4. Vice Presidents. In the event of the absence or disability
of the Chairman of the Board and the President, the Vice Presidents, in the
order designated by the Directors or, in the absence of any designation, then in
the order of their election, shall perform the duties of the Chairman of the
Board and the President and, when so acting, shall have all the powers of and be
subject to all the restrictions upon the Chairman of the Board and the
President. The Vice Presidents shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
Section 5. The Secretary and Assistant Secretary. The Secretary shall
attend all meetings of the Board of Directors and all meetings of the
stockholders and record all the proceedings of the meetings of the Company and
of the Board of Directors in a book to be kept for that purpose and shall
perform similar duties for the committees of the Board when required. The
Secretary shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the Board of Directors, and shall perform
such other duties as may be prescribed by the Board of Directors, or the
President, under whose supervision such officer shall be.
The Secretary shall have custody of the corporate seal of the Company and
shall have authority to affix the same to any instrument requiring it and when
so affixed, it may be attested by the Secretary's signature. The Board of
Directors may give general authority to any other officer to affix the seal of
the Company and to attest the affixing by his signature.
The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board of Directors (or if there be no
such determination, then in the order of their election) shall, in the absence
of the Secretary or in the event of the Secretary's inability or refusal to act,
perform the duties and exercise the powers of the Secretary and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
Section 6. The Treasurer and Assistant Treasurers. The Treasurer shall
have the custody of the corporate funds and securities and shall deposit all
moneys and other valuable effects in the name and to the credit of the Company
in such depositories as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the Company as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and shall
render to the President and the Board of Directors, at its regular meetings, or
when the Board of Directors so requires, an account of all his transactions as
Treasurer.
The Assistant Treasurer, or if there shall be more than one, the Assistant
Treasurers in the order determined by the Board of Directors (or if there be no
such determination, then in the order of their election), shall, in the absence
of the Treasurer or in the event of the Treasurer's inability or refusal to act,
perform the duties and exercise the powers of the Treasurer and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
Section 7. Controller. The Controller shall have charge of the Company's
books of accounts, records and auditing, and generally do and perform all such
other duties as pertain to such office, and as may be required by the Board of
Directors. The Controller shall render to the President and the Board of
Directors, at its regular meetings, or when the Board of Directors so requires,
a report on the financial condition of the Company.
Section 8. Powers of Attorney. Whenever an applicable statute, decree,
rule or regulation requires a document to be subscribed by a particular officer
of the Company, such document may be signed on behalf of such officer by a duly
appointed attorney-in-fact, except as otherwise directed by the Board of
Directors or limited by law.
ARTICLE V
Meetings of Stockholders
Section 1. Meetings. Annual meetings of stockholders shall be held in the
City of Oakland, State of California, at the principal office of the Company, as
specified in Section 2 of Article I hereof, or at such other place either within
or without the State of Delaware as shall be designated from time to time by
resolution of the Board of Directors and stated in the notice of the meeting.
Meetings of stockholders for any other purpose may be held at such time and
place, within or without the State of Delaware, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. Annual meetings of stockholders shall be
held at such date and time as shall be designated from time to time by the Board
of Directors and stated in the notice of meeting. At the annual meeting the
stockholders shall elect by a plurality vote the number of Directors equal to
the number of Directors of the class whose term expires at such meeting (or, if
fewer, the number of Directors properly nominated and qualified for election) to
hold office until the third succeeding annual meeting of stockholders after
their election and shall transact such other business as may properly be brought
before the meeting.
To be properly brought before an annual meeting, business must be (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (b) otherwise properly brought before
the meeting by or at the direction of the Board of Directors or (c) otherwise
properly brought before the meeting by a stockholder. For business to be
properly brought before the meeting by a stockholder, the Secretary of the
Company must have received notice in writing from the stockholder not less than
thirty (30) days nor more than sixty (60) days prior to the meeting; provided,
however, that if less than thirty-five (35) days' notice of the meeting is given
to stockholders, such notice shall have been received by the Secretary of the
Company not later than the close of business on the seventh (7th) day following
the day on which the notice of meeting was mailed.
Such written notice to the Secretary shall set forth, as to each matter
the stockholder proposes to bring before the annual meeting: (i) a brief
description of the business, (ii) the name and address, as they appear on the
Company's books, of the stockholder proposing such business, (iii) the class and
number of shares of stock of the Company beneficially owned by such stockholder,
and (iv) any material interest of such stockholder in such business.
Notwithstanding any other provision in these By-Laws to the contrary, no
business shall be conducted at an annual meeting except in accordance with the
procedures set forth in this Section 2.
Section 3. Stockholder List. The officer who has charge of the stock
ledger of the Company shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 4. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, may be called by the Board of Directors or by the
President.
Section 5. Notice of Meeting. Written notice of any annual or special
meeting stating the place, date and hour of the meeting and, in the case of a
special meeting, stating the purpose or purposes for which the meeting is
called, shall be given not less than ten (l0) nor more than sixty (60) days
before the date of the meeting, to each stockholder entitled to vote at such
meeting. Business transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice.
Whenever notice is required to be given to any stockholder, such notice
shall be given in writing, by mail, addressed to each stockholder at his address
as it appears on the records of the Company, with postage thereon prepaid, and
such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Whenever any such notice is required to be
given, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
Section 6. Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented any
business may be transacted which might have been transacted at the meeting as
originally notified. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
Section 7. Conduct of Meetings. The Chairman of the Board, or such other
officer as may preside at any meeting of the stockholders, shall have the
authority to establish from time to time, such rules for tile conduct of such
meetings, and to take such action, as may in his judgment be necessary or proper
for the conduct of the meeting and in the best interests of the Company and the
stockholders in attendance in person or by proxy.
ARTICLE VI
Committees of the Board of Directors
Section 1. Executive Committee. The Board of Directors shall appoint
an Executive Committee to consist of the President and not less than two (2) nor
more than six (6) other Directors of the Company. The Executive Committee shall
meet at such times and places as it may determine. The Executive Committee
shall have and may exercise when the Board is not in session all the powers of
the Board in the management of the business and affairs of the Company, without
limitation, except as set forth in Section 9 below.
Section 2. Nominating Committee. The Board of Directors shall appoint a
Nominating Committee consisting of three Directors of the Company who shall not
be officers of the Company. The Nominating Committee shall recommend to the
Board the number of Directors which best meets the requirements of the Company;
identify, evaluate, review and recommend to the Board qualified candidates to
fill vacancies on the Board and any newly created directorships resulting from
an increase in the number of Directors; recommend to the Board the individuals
to constitute the nominees of the Board for election as directors at the annual
meeting of stockholders; recommend to the Board a list of Directors selected as
members of each committee of the Board; and perform such other duties as may be
assigned by the Board.
Section 3. Compensation Committee. The Board shall appoint a
Compensation Committee consisting of three (3) or more Directors of the Company.
The Compensation Committee shall review annually and recommend to the Board of
Directors the level of compensation of the Chairman of the Board and the
President, giving consideration for each to the amount and composition of his
total compensation in terms of salary, stock options and other benefits; review
annually the recommendations of the Chairman of the Board and the President
concerning salaries and other compensation of all senior officers reporting to
each of them, as well as review from time to time other conditions of
employment; administer the 1989 Stock Incentive Plan, the 1992 Directors' Stock
Option Plan, the 1995 Stock Bonus Plan and year-end bonus plans; review and make
recommendations to the Board of Directors for changes in the Company's
compensation and benefit plans and practices; and administer other compensation
plans that may be adopted from time to time as authorized by the Board of
Directors.
Section 4. Audit Committee. The Board of Directors shall appoint an Audit
Committee of three or more Directors of the Company who shall not be officers of
the Company. The Audit Committee shall receive from and review with the
Company's independent auditors the annual report of such auditors; review with
the independent auditors the scope of the succeeding annual examination;
nominate the independent auditors to be appointed each year by the Board; review
consulting services made by the Company's independent auditors and evaluate the
possible effect on the auditors' independence of performing such services;
ascertain the existence of adequate internal accounting and control systems; and
review with management and the Company's independent auditors current and
emerging accounting and financial reporting requirements and practices affecting
the Company.
Section 5. Quorum and Vacancies. A majority of the members of the
committee (which majority shall, in the case of the Executive Committee, include
the President) shall constitute a quorum for the transaction of business. In
the absence or disqualification of a member of a committee, the member or
members present at any meeting and not disqualified from voting, whether or not
such member or members constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in place of any such
absent or disqualified member.
Section 6. Notice and Emergency Action. Notice of the time and place of
committee meetings shall be given in writing or by telephone or in person, by
any member of the committee, to all members of the committee at least two
(2) days' prior to the time of holding such meeting; provided, however,
that such notice requirement shall not be applicable if any member of the
Executive Committee deems it necessary to cause the Executive Committee to act
on an urgent basis. In the event a member of the Executive Committee deems such
urgent action necessary, such member shall attempt to contact each other member
of the Executive Committee by telephone for the purpose of having each such
member consider and act upon the urgent matter or matters presented. Such
consideration and action may take place by telephone without convening in
meeting. The quorum and voting requirements set forth in Section 5 above shall
pertain to such urgent action, and for this purpose all persons reached by
telephone shall be deemed to be present. The member of the Executive Committee
who calls for urgent action in the manner described herein, immediately
following the approval or disapproval of any action thereby proposed, shall
report such action to the Secretary of the Company for the purpose of having it
described in the minutes of the Executive Committee. Such report and minutes
shall also include a recitation of all efforts made by the member calling for
such action to contact other Executive Committee members by telephone.
Section 7. Minutes; Reports to Board. Each committee shall keep regular
minutes of its meetings. All actions of the committees shall be reported to the
Board of Directors at the meeting of the Board of Directors next succeeding such
action.
Section 8. Other Committees. The Board of Directors, from time to time,
may appoint other committees for any purpose or purposes, and any such committee
shall have such powers as shall be specified in the resolution of its
appointment.
Section 9. Duties. Any committee, including the Executive Committee, to
the extent provided in the resolution of the Board of Directors, shall have and
may exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Company, and may authorize the
seal of the Company to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Company's property and assets, recommending to the
stockholders a dissolution of the Company or a revocation of a dissolution, or
amending the By-Laws of the Company; and, unless the resolution of the Board
expressly provides, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock.
ARTICLE VII
Certificates for Stock
Section 1. Certificates. Every holder of stock in the Company shall be
entitled to have a certificate signed by, or in the name of the Company by the
Chairman of the Board, or the President or a Vice President and the Treasurer or
an Assistant Treasurer, or the Secretary or an Assistant Secretary of the
Company, certifying the number of shares owned by him in the Company.
Section 2. Signatures. Any of or all the signatures on the certificate may
be facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Company with the same effect as if he were such
officer, transfer agent or registrar at the date of issue.
Section 3. Foreign Owners. The outstanding shares of the Company shall at
all times be owned by citizens of the United States to such extent as will, in
the judgment of the Board of Directors, reasonably assure the preservation of
the Company's status as a United States citizen within the provisions of Section
2 of the Shipping Act, 1916, as amended, or any successor statute applicable to
the business being conducted by the Company (the "Citizenship Provisions"). The
Board of Directors may restrict any original issuance of shares of the Company
to citizens of the United States as such term is defined in the Citizenship
Provisions ("United States Citizens"), and, in any event, shall from time to
time establish, as a condition to the issuance or transfer of shares of the
Company to non-United States Citizens, the minimum percentage of the total
outstanding shares of the Company which shall be owned by United States
Citizens, which minimum percentage may, in the discretion of the Board of
Directors, exceed the minimum percentage required by law (the "Minimum
Percentage"). Nothing herein shall be deemed to preclude ownership by United
States Citizens of shares of the Company in excess of the Minimum Percentage.
Certificates evidencing shares of stock of the Company may be issued in
separate series, denominated respectively "Domestic Share Certificates" and
"Foreign Share Certificates." Domestic Share Certificates shall be issued in
respect of shares owned of record and beneficially by United States Citizens;
Foreign Share Certificates shall be issued in respect of shares owned of record
or beneficially by non-United States Citizens. Holders of Domestic Share
Certificates and of Foreign Share Certificates shall have in all respects
the same corporate status and corporate rights, share for share, except that
transfers of Domestic Share Certificates to non-United States Citizens shall be
restricted and, in certain circumstances, the rights of holders of Foreign Share
Certificates shall be restricted, both as herein provided.
If any shares evidenced by Domestic Share Certificates or Foreign Share
Certificates shall be transferred to United States Citizens, the share
certificates issued to the transferee in respect of the shares transferred shall
be Domestic Share Certificates.
If any shares evidenced by Domestic Share Certificates shall be proposed
to be transferred to non-United States Citizens, the share certificates issued
to the transferee in respect of the shares transferred shall be Foreign Share
Certificates; provided, however, if the stock records of the Company shall
disclose immediately prior to the time of such proposed transfer that (i) the
maximum percentage of outstanding shares of voting stock of any class allowed to
be owned by non-United States Citizens has been met or has been exceeded or (ii)
the maximum percentage of outstanding shares of voting stock of any class
allowed to be owned by non-United States Citizens would be exceeded as a result
of such proposed transfer, no transfer of shares of such class represented by
Domestic Share Certificates shall be made to non-United States Citizens.
If it shall be found by the Company that stock represented by a Domestic
Share Certificate is, in fact, owned of record or voted by or for the account of
a non-United States Citizen, the holder of such stock shall, upon the request of
the Secretary or the transfer agent of the Company, surrender such Domestic
Share Certificate for cancellation in exchange for the issuance of a Foreign
Share Certificate for such stock; provided, however, if the stock records of the
Company shall disclose immediately prior to the time of such proposed exchange
that (i) the maximum percentage of outstanding shares of voting stock of any
class allowed to be owned by non-United States Citizens has been met or has been
exceeded or (ii) the maximum percentage of outstanding shares of voting stock of
any class allowed to be owned by non-United States Citizens would be exceeded as
a result of such proposed exchange, then the exchange shall not be made and the
holder of such stock represented by a Domestic Share Certificate shall not be
entitled to receive dividends or to have any other rights, except the right to
transfer such stock to a United States Citizen.
The Board may establish from time to time reasonable procedures for
establishing the citizenship of stockholders of the Company and, without
limiting the foregoing, may require that in connection with each issue or
transfer of shares of the Company the purchaser or transferee shall certify his
citizenship status and such matters relevant thereto as the Board may require.
The Board may also establish from time to time such other reasonable
procedures as it may deem desirable for the purposes of implementing these
provisions.
Section 4. New Certificates. The Board of Directors may, or may designate
certain persons to, authorize the issuance of a new certificate or certificates
to replace any certificate or certificates theretofore issued by the Company
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors or such designated person may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate or certificates, or his legal representative, to
give the Company a bond indemnity sufficient to indemnify it against any claim
that may be made against the Company on account of the alleged loss, theft or
destruction of any such certificate or the issuance of such new certificate.
Section 5. Transfer of Stock. Upon surrender to the Company or the
transfer agent of the Company of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Company to issue a new certificate to the
person entitled thereto, cancel the old certificate and record the transaction
upon its books.
Section 6. Fixing Record Date. In order that the Company may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to such other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
Section 7. Registered Stockholders. The Company shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VIII
Dividends
Section 1. Dividends upon the capital stock of the Company, subject to the
provisions of the Certificate of Incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property, or in shares of the capital stock, subject to
the provisions of the Certificate of Incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the Company available for dividends such sum or sums as the
Directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Company, or for such other purpose
as the Directors shall think conducive to the interest of the Company, and the
Directors may modify or abolish any such reserve in the manner in which it was
created.
ARTICLE IX
Indemnification
Section 1. The Company shall indemnify any person who was or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative by reason
of the fact that he is or was a Director, officer or employee of the Company, or
is or was serving at the request of the Company as a Director, officer or
employee of another company, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding, to the extent and under the circumstances
permitted by the General Corporation Law of the State of Delaware. Such
indemnification (unless ordered by a court) shall be made as authorized in a
specific case upon a determination that indemnification of
the Director, officer or employee is proper in the circumstances because
he has met the applicable standards of conduct set forth in the General
Corporation Law of the State of Delaware. Such determination shall be made (1)
by the Board of Directors by a majority vote of a quorum consisting of Directors
who were not parties to such action, suit or proceeding, or (2) if such quorum
is not obtainable, or even if obtainable a quorum of disinterested Directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders.
The foregoing right of indemnification shall not be deemed exclusive of
any other rights to which those seeking indemnification may be entitled under
any By-Law, agreement, vote of stockholders or disinterested Directors or
otherwise and shall continue as to a person who has ceased to be a Director,
officer or employee and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 2. Insurance. The Board of Directors shall have the power to
authorize to the extent permitted by the General Corporation Law of the State of
Delaware the purchase and maintenance of insurance on behalf of any person who
is or was a Director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a Director, officer, employee or agent
of another company, partnership, joint venture, trust or other enterprise
against any liability asserted against him or incurred by him in such capacity
or arising out of his status as such whether or not the Company would have the
power to indemnify him against such liability under the provisions of the
General Corporation Law of the State of Delaware.
ARTICLE X
Corporate Seal
The Corporate seal shall have inscribed thereon the name of the Company
and the words "Incorporated July l4, 1983, Delaware."
ARTICLE XI
Amendments
Any of these By- Laws may be altered, a mended or repealed by the
affirmative vote of at least two thirds of the Directors of the Company, which
shall include the affirmative vote of at least one Director of each class of the
Board of Directors if the Board shall then be divided into classes or by the
affirmative vote of the holders of seventy-five percent (75 %) of the shares of
the Company entitled to vote in the election of Directors, voting as one class.
12/27/95
Sixth Amendment to
Permit No. 441
This Sixth Amendment to Permit No. 441 is entered into as of the 30th day
of August, 1993 between the City of Los Angeles, a municipal corporation (the
"City") acting by and through its Board of Harbor Commissioners (the "Board"),
and American President Lines, Ltd., a Delaware corporation having its principal
office at 1111 Broadway, Oakland, CA 94607 (the "Permittee").
Whereas, the parties entered into an agreement relating to terminal
facilities granted to Permittee by City dated as of November 26, 1980, as
amended by the First through Fifth Amendments ("Permit No. 441"), and
Whereas, City and Permittee's subsidiary corporation Eagle Marine Services,
Ltd. ("Eagle Marine") have concurrently herewith entered into an agreement
relating to terminal facilities granted to Eagle Marine by City at Pier 300
("Permit No. 733") at which facilities Permittee intends to relocate as an
invitee of Eagle Marine, and
Whereas, Permittee and City wish to provide for the sale or lease of
certain Permittee-owned container gantry cranes located at the Permit No. 441
premises, and for early termination of Permit No. 441 in connection with such
relocation;
Therefore, the Parties agree as follows:
Article 1. Effective Date.
This Sixth Amendment shall become effective concurrently with Permit No.
733 on the thirty-first (31st) day after publication of the Order of the Board
approving this Amendment following City Council approval of the Amendment and
shall continue in effect until discharged by full performance.
Article 2. Amendments to Permit No. 441.
Section 2.1. Paragraph (a) of Section 3 of Permit No. 441 is hereby
amended to read as follows:
(a) The term of this Permit shall be twenty years from the date this Permit
becomes effective; provided however, this Permit shall terminate at 2400
hours on the 60th day following the Occupancy Date, as defined in Permit
No. 733 of Eagle Marine at the Pier 300 premises; provided further, that
any undischarged obligations arising under this Permit on the part of
either party on the date of termination shall continue in effect under the
terms hereof until discharged.
Section 2.2. Section 4 is hereby amended by adding the following new
paragraphs (m) and (n):
(m) In the event that this agreement has not terminated under the provisions
of paragraph 3(a) as amended by the Sixth Amendment, on or before December
31, 1996, then the provisions of Article 3 of the Fifth Amendment of
Permit No. 441 shall continue to apply after December 31, 1996 until such
time as the Occupancy Date of the Pier 300 premises under the Permit No.
733 occurs. In no event, however, shall such continuation extend past the
twenty year term hereof. During any such extension of the provisions of
Section 3.2 after December 31, 1996, the provisions of section 5 of the
Permit shall not apply to the fourth quarter of the term of this Permit.
In the event that Eagle Marine terminates Permit No. 733 pursuant to
Section 9(f) thereof, Permittee and City shall immediately commence to
negotiate compensation to be paid for each compensation period of the
fourth quarter of the term hereof, pursuant to the procedure established
in Section 4B of the Permit, as amended by the Fourth Amendment to this
Permit No. 441. The provisions of article 3 of the Fifth Amendment of
Permit No. 441, as extended under subsection (m) above, shall cease to
apply on the date following Eagle Marine's termination of Permit No. 733
and the compensation determined under Section 4B shall apply from and
after such date.
(n) Permittee's obligation to pay compensation based on minimum guaranteed
throughput as specified in this Section 4 for the year in which
the Occupancy Date (as defined in Agreement No. 733) occurs shall be
prorated in the proportion that the number of days from January 1st to the
Occupancy Date of the year of termination bears to 365.
Section 2.3. Exchange of C-10 Cranes.
(a) Not later than 24 months prior to the then scheduled Delivery
Date (as that term is defined in Permit No. 733) of the Pier 300
Premises, Permittee shall notify City whether the C-10 cranes
identified in Agreement No. 1404 dated October 29, 1986, as
amended and in effect between the parties (the "Crane Agreement")
are available for purchase as of the Occupancy Date of the Pier 300
premises. City shall have a preferential right to purchase the C-10
cranes over all other persons; provided, City shall give notice to
Permittee of its election to purchase the C-10 cranes within 45 days
of the giving of Permittee's notice of availability. Upon such
election, Permittee shall, on the Occupancy Date, convey all of
its right, title and interest in and to the C-10 cranes concurrently
with payment by City to Permittee in immediately available funds of
the then fair market value of said cranes in their then existing
condition. Permittee shall continue to maintain said cranes as
required in said Crane Agreement until title is conveyed to City.
(b) If City does not elect to purchase the C-10 cranes, or if Permittee
does not offer the cranes for purchase, as provided in paragraph
(a) above, City shall have the option to lease the C-10 cranes from
Permittee under terms and conditions to be agreed between the
parties at the time of the lease. At the end of said lease, if
any, City shall have the option, exercisable upon one
year's prior written notice, to purchase the cranes at their then
fair market value.
(c) In the event that the parties are unable to agree upon the fair market
value of the cranes under the provisions of paragraphs (a) or (b)
above, the parties shall jointly appoint an independent appraiser
to determine such fair market value, or, failing such joint
appointment within fifteen (15) calendar days of a receipt by a
party of a written proposal to jointly appoint an independent
appraiser by the other party, the parties shall each designate an
independent appraiser who together shall jointly designate a third.
The failure of one party to appoint an appraiser within thirty (30)
calendar days of receipt of the other party's proposal of a joint
appraiser shall be deemed a joint appointment of such proposed
appraiser. The appraisal of a jointly appointed appraiser or two
or more of a panel of three appraisers shall be binding and
conclusive on both the City and Permittee; provided however, if a
majority of a panel do not concur, the appraisal which is neither
highest nor lowest shall be conclusive. The
parties hereby jointly instruct such appraiser(s) to render any
appraisal within sixty (60) days following their appointment or as
soon thereafter as practicable. The parties shall share
appraisers' fees equally. City shall pay the fair market value as
determined by such appraisal within 60 days of such appraisal, plus
a late payment charge accruing from the Occupancy Date or the end
of any lease term, as applicable, at the rate of 10% per annum.
(d) At the time of any conveyance of
title of the C-10 cranes to the City under this article 2, the City
shall cooperate with Permittee to permit it to derive certain
federal income tax benefits pursuant to section 1031 and other
sections of the Internal Revenue Code of 1986, as amended;
provided, in no event shall City be required to incur any expense
(other than City employee time and effort) or undertake any
liability or obligation that would be greater than that incurred or
undertaken if the cranes were purchased directly from APL and APL
shall indemnify City therefrom.
Article 3. Continuing Effect.
Except as expressly amended herein above, all of the terms and conditions
of Permit No. 441, as amended, shall continue in effect.
In witness whereof, the parties have executed this Sixth Amendment to
Permit No. 441 by their authorized representatives.
THE CITY OF LOS ANGELES, BY
ITS BOARD OF HARBOR COMMISSIONERS
ATTEST: September 1, 1993 By: /s/ Tay Yoshitani
/s/ Audrey H. Yamaki
Board Secretary Title: Executive Director
AMERICAN PRESIDENT LINES, LTD.
ATTEST: /s/ David V. Ainsworth By: /s/ John G. Burgess
David V. Ainsworth John G. Burgess
Asst. Secretary Title: Executive Vice President
Approved as to form:
/s/ June 29, 1993
James K. Hahn, City Attorney
By: /s/ Catherine H. Mee
, Assistant
* 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.
EXECUTION VERSION
AMENDMENT NO. 1
DATED MAY 19, 1995
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 (HAMBURG BRANCH)
BANQUE INTERNATIONALE A LUXEMBOURG S.A.
(as the Syndicate)
THE CORPORATIONS LISTED IN SCHEDULE A
and
AMERICAN PRESIDENT LINES, LTD.
to
LOAN AGREEMENT
DATED MARCH 14, 1994
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.
THIS AMENDMENT NO. 1 TO LOAN AGREEMENT is made this __ of May,
1995 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"); each of the corporations listed in Schedule A hereto whose
address is 1111 Broadway, Oakland, California 94607, 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:
A. Reference is made to that certain Loan Agreement dated March
14, 1994 among KfW, the Syndicate Agent, the Syndicate and APL (the
"Loan Agreement"). Capitalized terms used herein and not otherwise
defined have the meanings provided therefor in the Loan Agreement as
amended by this Amendment No. 1.
B. The three (3) HDW Vessels will be named as follows: (i) APL
CHINA (Builder's Hull No. 297), (ii) APL JAPAN (BuilderOs Hull No. 298)
and (iii) APL THAILAND (BuilderOs Hull No. 299).
C. The three (3) Daewoo Vessels will be named as follows: (i) APL
KOREA (Builder's Hull No. 4028), (ii) APL PHILIPPINES (Builder's Hull
No. 4033) and (iii) APL SINGAPORE (Builder's Hull No. 4029).
D. With respect to APL PHILIPPINES, APL desires to provide for
the transfer of that Vessel, by way of a partial assignment of the
Daewoo Shipbuilding Agreement (to the extent such Shipbuilding Agreement
relates to APL PHILIPPINES), to APL M.V. Philippines, Ltd., a Delaware
corporation and a wholly-owned Subsidiary of APL ("APL-Philippines"),
such that APL-Philippines would acquire the Vessel directly from Daewoo,
whereupon APL-Philippines would be the "Transferee" with respect to that
vessel hereunder.
E. With respect to the Vessels other than APL PHILIPPINES,
APL desires instead to provide:
(1) for the partial assignment of the Vessels to five wholly-
owned Subsidiaries of the Guarantor (each an "Original
Owner" and, collectively, the "Original Owners"), of the
appropriate Shipbuilding Agreement(in each case to the
extent such Shipbuilding Agreement relates to the Vessel
in question), as follows, such that each of the Original
Owners would acquire its Vessel directly from HDW or
Daewoo, as the case may be:
(a) APL CHINA to be Transferred to APL Newbuildings,
Ltd., a Delaware corporation;
(b) APL JAPAN to be transferred to APL M.V. Japan,
Ltd., a Delaware corporation;
(c) APL KOREA to be transferred to APL M.V. Korea,
Ltd., a Delaware corporation;
(d) APL SINGAPORE to be transferred to APL M.V.
Singapore, Ltd., a Delaware corporation; and
(e) APL THAILAND to be transferred to APL M.V.
Thailand, Ltd., a Delaware corporation; and
(2) thereafter, on each Delivery Date, following the
acquisition of the Vessel in question by the appropriate
Original Owner, for the transfer of such Vessel by such
Original Owner to one of the following five wholly-owned
Subsidiaries of APL pursuant to an Exchange Agreement
dated the date hereof between the Original Owner and the
Transferee of the Vessel (the "Exchange Agreement") (such
Subsidiaries, together with APL Philippines, being
referred to collectively as the "Transferees" and,
individually, as a "Transferee"), whereupon the
Transferee acquiring the Vessel in question would be the
"Transferee" with respect to that Vessel hereunder:
(a) M.V. President Kennedy, Ltd., a Delaware
corporation;
(b) M.V. President Adams, Ltd., a Delaware
corporation;
(c) M.V. President Jackson, Ltd., a Delaware
corporation;
(d) M.V. President Polk, Ltd., a Delaware
corpo- ration; and
(e) M.V. President Truman, Ltd., a Delaware
corporation.
F. Concurrently with the execution and delivery of
this Amendment, APL, the Transferees and the Lenders are entering into
an Amended and Restated Agreement to Acquire and Charter dated as of the
date hereof, respecting, among other things, (i) the assignment of the
Shipbuilding Agreements to the Original Owners and to APL-Philippines,
(ii) the transfer of the Vessels to the Transferees as set forth in
Recitals D and E above, (iii) each TransfereeOs liability for Vessel
Indebtedness hereunder and (iv) AFL's obligation to charter any Vessel
transferred to a Transferee from such Transferee.
G. Notwithstanding the intended Vessel transfers from
the Transferor to APL-Philippines and the Original Owners stated in
Recitals D and E above, APL shall retain the right under the Loan
Agreement to take delivery itself of any of the Vessels from HDW or
Daewoo, as the case may be, and to draw down the applicable Subportion.
H. As more particularly provided herein:
(1) each of the Transferees, upon its execution of a
Note hereunder: (a) if it acquires a Daewoo
Vessel, will be jointly and severally liable as a
co-Borrower, together with all of the other
Transferees that have or thereafter shall execute
a Note hereunder, for all Vessel Indebtedness
respecting any or all of the Daewoo Vessels and
the HDW Vessels, and (b) if it acquires an HDW
Vessel, will be jointly and severally liable as a
co-Borrower, together with all of the other
Transferees that have or thereafter shall execute
an HDW Note hereunder, for all Vessel Indebtedness
respecting any or all of the HDW Vessels; and
(2) each Transferee's obligation to repay Vessel
Indebtedness under the Note executed by it or as a
joint and several co-Borrower under the terms
hereof shall be a non-recourse obligation, and
shall be limited to such Transferee's interest in
the Vessel acquired by it and the other assets and
property covered by the Security Documents to
which such Transferee is a party.
I. Concurrently with the execution and delivery of
this Amendment, the Guarantor will execute and deliver to the Lenders an
Amended and Restated Guarantee, amending and restating in its entirety
the Guarantee dated March 14, 1994, pursuant to which, as more
particularly provided therein, the Guarantor will guarantee the
obligations of APL and each of the Transferees, in each case under the
Loan Agreement, as amended hereby, and the Security Documents to which
it shall become a party.
J. In light of the foregoing, KfW, the Syndicate Agent,
the Syndicate, APL and the Transferees wish to make certain amendments
to the Loan Agreement.
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:
Section 1. The following defined term is added to Section
1 of the Loan Agreement:
"Transferees" means the following six (6) corporations:
(1) M.V. President Kennedy, Ltd.; a Delaware
corporation;
(2) M.V. President Adams, Ltd., a Delaware
corporation;
(3) M.V. President Jackson, Ltd., a Delaware
corporation;
(4) M.V. President Polk, Ltd., a Delaware
corporation;
(5) M.V. President Truman, Ltd., a Delaware
corporation; and
(6) APL M.V. Philippines, Ltd., a Delaware
corporation.
and "Transferee" means, in respect of any Vessel, the corporation named
above that acquires that Vessel pursuant to an Exchange Agreement or, in
the case of APL PHILIPPINES, the Agreement to Acquire and Charter.
This defined term shall supersede and replace the
definition of "Transferee" contained in Section 1 of the Loan Agreement.
Section 2. The following definitions in Section 1 of the
Loan Agreement are amended to read as follows:
"Agreement to Acquire and Charter" means the Amended and
Restated Agreement to Acquire and Charter dated May 19, 1995
among APL, KfW, the Syndicate Agent, the Syndicate Members and
the Transferees respecting each TransfereeOs liability for the
Vessel Indebtedness for any of the Vessels delivered to such
Transferee and APL's obligation to charter any such Vessel from
such Transferee, together with all Exhibits thereto.
"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 acquisition of any Vessel
by a Transferee pursuant to an Exchange Agreement or, in
the case of APL PHILIPPINES, the Agreement to Acquire and
Charter, the related 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 and 15.09 of this Agreement), and references to the
Borrower in any of such Sections shall be construed to
mean such related Transferee as Borrower, except that (x)
references to the "Borrower" in Section 11.03 shall mean
the Borrowers jointly and severally and (y) references to
the "Borrower" in Section 12.01 shall mean any of the
Borrowers. APL shall be the Borrower with respect to all
other provisions of this Agreement (including but not
limited to, Sections 8, 9 and 13.03).
"Delivery Date" means, in respect of each Vessel, the
date on which that Vessel is either delivered to and accepted by APL
pursuant to the relevant Shipbuilding Agreement or ownership of that
Vessel is acquired by a Transferee in accordance with an Exchange
Agreement or, in the case of APL PHILIPPINES, the Agreement to Acquire
and Charter.
"Guarantee" 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 March 14, 1994 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,
"Guarantee" shall mean the Amended and Restated Guarantee
dated the first Delivery Date on which a Transferee shall
acquire a Vessel by the Guarantor guaranteeing the
obligations of APL and the Transferees, in each case
under the Loan Agreement and the Security Documents to
which it shall become a party, substantially in the form
of Appendix E.
"Loan Documents" means this Agreement, the Agreement to
Acquire and Charter, each of the Notes, *, the HDW Security Documents
and the Daewoo Security Documents.
"Obligors" means APL, the Transferees (as such or as
Borrowers) and the Guarantor, and "Obligor" means any of them.
"Operative Documents" shall mean the Loan Documents and
the Charter Documents, collectively.
"Vessel Indebtedness" means, in respect of the HDW
Vessels and Daewoo Vessels, respectively, all sums owing, actually or
contingently, by the related Borrowers, jointly and severally, to the
relevant Lender(s) in respect of the Subportions which relates to such
Vessels 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).
Section 3. Section 2.01(a) of the Loan Agreement is
amended to read as follows:
2.01 The HDW Tranche (a) The HDW Subportion. Upon the terms
and subject to the conditions set forth in this
Agreement, KfW agrees to make available to APL or up to
three of the Transferees (not including APL M.V.
PHILIPPINES, Ltd.) as its Commitment up to three
(3)advances (one per Transferee) on a joint and several
liability basis 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
VesselOs 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 prior to delivery of
the Vessel, but any reductions made in loan amounts shall
not thereafter be eligible for borrowing. The joint and
several obligation of each 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 a 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.
Section 4. The second paragraph of Section 2.01(b) of the
Loan Agreement is amended to read as follows:
Not later than 11:00 a.m. (New York City time) on
the Delivery Date, and upon the fulfillment of the
conditions in Section 7 hereof, the Agent will make such
HDW Subportion available to APL or the related
Transferee, as the case may be, in same day funds at the
account specified in the HDW Notice of Drawdown.
Section 5. Section 2.02(a) of the Loan Agreement is
amended to read as follows:
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 APL or up to three of the
Transferees (including APL PHILIPPINES, Ltd.) on a joint
and several liability basis as its Commitment up to three
(3) advances (one per Transferee), 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 MemberOs Percentage
Interest of the Daewoo Tranche. The joint and several
obligation of each 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 a 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.
Section 6. Section 3.05(c) of the Loan Agreement to
amended to read as follows:
*
Section 7. Sections 5.03 and 5.04 of the Loan Agreement
are amended to read as follows:
*
5.04 Prepayment. (a) Voluntary Prepayment. Subject to
no Event of Default, or Incipient Default, having
occurred and being continuing, each 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 a Borrower
shall elect to make any such optional prepayment, such
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 related 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,
such 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
receives 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
related Borrower.
*
Section 8. Section 7 of the Loan Agreement is amended to
read as follows:
7. CONDITIONS PRECEDENT TO ADVANCE
Each Lender's obligation to make its part of the HDW and
the Daewoo Subportions available to APL or the related
Transferee 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 Height, Gardener, 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 APL, such Transferee 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 APL, such Transferee 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 and
Charter 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 APL, such Transferee and the
Guarantor, (ii) a certificate of the Secretary of each of
APL, such Transferee 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 APL, such
Transferee and the Guarantor or evidencing the authority
of the persons executing the Loan Documents and Charter
Documents, to which it is a party, to execute and deliver
such Loan Documents and Charter Documents and such
Obligor to perform under the Loan Documents and Charter
Documents to which it is a party, and (iv) a certificate
of good standing as to each of APL, such Transferee 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 APL and the Transferee if it is to be the owner
of the related Vessel;
(c) no Event of Default shall have occurred and be
continuing and no Incipient Default shall have occurred
and be continuing and APL, the related Transferee 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 any of APL,
the related Transferee 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 Transferees and the Borrowers, individually
and collectively to perform its obligations as to the
repayment of the Facility by the installments together
with interests thereon herein set out or to perform any
of their respective obligations under the Loan Agreement,
the Charter Documents and the Security Documents to which
any of them 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, the Charter
Documents 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 APL, the related Transferee
and the Guarantor under the 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, 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 Republic
of The Marshall Islands or any other relevant
jurisdiction;
(h) certificate of APL or the related Transferee
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;
(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 a
Transferee pursuant to an Exchange Agreement or, in the
case of APL PHILIPPINES, 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
APL 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 action
(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, prior
to the Delivery Date of such Vessel, assign 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;
(l) each Loan Document and Charter 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) unless the mortgagor under the related
mortgage is not the party accepting delivery under the
Shipbuilding Agreement, 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) Protocol of Delivery and Acceptance of the
relevant Vessel as required under the related
Shipbuilding Agreement, and, if the mortgagor under the
related mortgage is not the party accepting delivery
under the Shiphuilding Agreement, a certificate of
acceptance executed by the related Transferee;
(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 then (10) days prior to the relevant Delivery Date)
evidencing chat 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 a
Transferee pursuant to the Agreement to Acquire and
Charter, then all conditions precedent to such
Transferee's obligations on the related Delivery Date set
forth in Section 3 of the Agreement to Acquire and
Charter shall have been satisfied.
Section 9. The following new Sections 2.03 and 2.04 are
hereby added to the Loan Agreement, immediately following Section 2.02
thereof:
2.03 Joint and Several Liability. Notwithstanding
anything herein or in any other Loan Document to the
contrary, each of the Transferees agrees that, upon its
execution of a Note: (i) if the Transferee acquires a
Daewoo Vessel, it shall be jointly and severally,
directly and primarily liable as a co-Borrower, together
with all of the other Transferees that have or thereafter
shall execute a Note hereunder, for payment in full of
all Vessel Indebtedness respecting any or all of the
Daewoo Vessels and the HDW Vessels, and (ii) if the
Transferee acquires an HDW Vessel, it shall be jointly
and severally, directly and primarily liable as a
co-Borrower, together with all of the other Transferees
that have or thereafter shall execute an HDW Note
hereunder for payment in full of all Vessel Indebtedness
respecting any or all of the HDW Vessels. In order to
evidence its joint and several liability, each Transferee
agrees that, on the related Delivery Date, it shall
execute an endorsement to then outstanding Notes upon
which it is jointly and severally liable. The liability
of each Transferee shall be independent of the duties,
obligations and liabilities of each and all of the other
joint and several Transferees. The Lenders (subject to
the provisions hereof) may bring a separate action or
actions on each, any or all of the Vessel Indebtedness
against each, any or all of the Transferees liable
therefor hereunder, whether action is brought against any
other or all of such Transferees, or any one or more of
the Transferees is or is not joined therein.
2.04 Nonrecourse Liability. Notwithstanding anything
herein, in the Notes or in any other Loan Document to the
contrary, the Lenders agree that they will look solely to
the assets and property covered by the Security Documents
(collectively, the "Recourse Assets") for all amounts
coming due from the Transferees (or any Transferee)
hereunder, under the Notes or under any of the other Loan
Documents, and for the performance of all covenants,
agreements and obligations and for the breach of
representations and warranties or covenants of the
Transferees (or any Transferee) hereunder or under the
Notes or any of the other Loan Documents, or under any
certificate or other documents executed and delivered by
any Transferee as contemplated by the Loan Documents,
and, therefore, notwithstanding anything contained in any
of the aforesaid documents, no judgment or recourse
(except a judgment against the Recourse Assets or any of
them) shall be sought or enforced for the payment or
performance of the Transferees' (or any Transferee's)
obligations under this Agreement, the Notes, any other
Loan Document or any such other certificate or document:
(a) against any Transferee in its individual or personal
capacity, other than in connection with the enforcement
of remedies against the Recourse Assets or (b) against
any assets or property of any Transferee other than the
Recourse Assets; provided, however, that nothing in this
Section shall (x) limit or otherwise prejudice in any way
the rights of the Lenders to proceed against the
Guarantor under the Guarantee or (y) constitute or be
deemed to be a release of the obligations secured by, or
impair the enforceability of, the liens, mortgage
interests or other security interests created by the
Security Documents, or to restrict the remedies available
to the Lenders to realize upon the Security Documents or
enforce the Guarantee.
Section 10. Section 12.02(a) of the Loan Agreement is amended to read
as follows:
(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 or under any of the
Notes and such default remains unremedied for three (3)
Business Days after the due date; or
Section 11. Sections 12.02(d) and (e) of the Loan
Agreement are amended to read as follows:
(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 Mortgage(s) 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; provided, however, that an
Event of Default under Section 24(a)(i) of the Charter
caused by the failure of the Charterer to pay Additional
Charter Hire shall not be an Event of Default under this
Agreement; or
(e) there occurs any event which constitutes an
Event of Default under any Mortgage on any Vessel under
any of the Charters; or
Section 12. Appendix A-1A, Appendix A-1B, Appendix A-2A
and Appendix A-2B of the Loan Agreement (forms of Notes) are each
amended and restated as set forth in Exhibits A-1, A-2, A-3 and A-4
hereto, respectively.
Section 13. Appendix B-1 and Appendix B-2 of the Loan
Agreement (forms of Mortgages) are each amended by (i) replacing the
existing recitals B and C with the following recitals B, C and D (and
changing recitals D and E to E and F, respectively):
B. This Mortgage is granted to secure certain
obligations of the Borrower under that certain Loan Agreement
dated March 14, 1994, as amended by Amendment No.1 thereto, dated
May 19, 1995, among American President Lines, Ltd. ("APL"), the
Borrower, the other Transferees, the Mortgagee and other lenders
(the "Loan Agreement"; terms used herein without definition shall
have the respective meanings provided in the Loan Agreement) (a
copy of which without Exhibits is attached hereto as Exhibit A).
C. The Mortgagee has agreed to make loans with
respect to three (3) vessels [insert names and official numbers],
including the Vessel, one of which is to be owned by the
Borrower, pursuant to the Loan Agreement and that certain Amended
and Restated Agreement to Acquire and Charter, dated May 19,
1995, among APL, the Borrower, the other Transferees, the
Mortgagee and the other Lenders named therein (a copy of which is
attached hereto as Exhibit A-1), such loans to be in an aggregate
amount not to exceed _____________ United States Dollars (USD
_______________) (collectively, the "Loans"). The total amount of
the Loans is or shall be evidenced by the [HDW] [Daewoo] Notes.
The portion of the Loans relating to the acquisition of the
Vessel is in the principal amount of United States Dollars (USD
), which portion is evidenced by the specific [HDW] [Daewoo]
Notes dated May 19, 1995 (the "[HDW] [Daewoo Notes"), (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
[HDW] [Daewoo] Notes and the Borrower's joint and several
liability under the Loan Agreement for the repayment of the
remaining [HDW] [Daewoo] Notes issued or to be issued by APL or
any remaining Transferee and the other obligations stated in
paragraph D below with respect to the acquisition of the other
[HDW] [Daewoo] Vessels other than the Vessel.
D. The term "Obligations" shall mean all of the
obligations of the Borrower to pay any amount to the Mortgagee
under this Mortgage, the [HDW] [Daewoo] __________ Notes and the
Loan Agreement insofar as it relates to the [HDW] [Daewoo]
Tranche Loans (including, without limitation, the Borrower's
joint and several liability under the Loan Agreement for the
repayment of the remaining [HDW] [Daewoo] Notes), whether by
reason of reimbursement, interest, indemnity or for any other
reasons whatsoever.
and (ii) adding the following paragraph after clause (55):
(56) Notwithstanding anything herein, in the [HDW]
[Daewoo]__________ Notes or in any other Loan Document to the
contrary, by acceptance of this Mortgage, the Mortgagee agrees
that it will look solely to the Vessel and the other assets and
property covered by this Mortgage and the other
[HDW] [Daewoo] Security Documents (collectively, the "Recourse
Assets") for all amounts coming due from the Borrower under this
Mortgage, the [HDW] [Daewoo] _____ Notes or any other Loan
Documents, and for the performance of all covenants, agreements
and obligations and for the breach of representations and
warranties or covenants of the Borrower hereunder or under the
[HDW] [Daewoo] _____ Notes or any of the other Loan Documents, or
under any certificate or other documents executed and delivered
by the Borrower as contemplated by the Loan Documents, and,
therefore, notwithstanding anything contained in any of the
aforesaid documents, no judgment or recourse (except a judgment
against the Recourse Assets or any of them) shall be sought or
enforced for the payment or performance of the Borrower's
obligations under this Mortgage, the [HDW] [Daewoo] _____ Notes,
any other Loan Document or any such other certificate or
document: (a) against the Borrower in its individual or personal
capacity, other than in connection with the enforcement of
remedies against the Recourse Assets or (b)against any assets or
property of the Borrower other than the Recourse Assets;
provided, however, that nothing in this paragraph shall (x) limit
or otherwise prejudice in any way the rights of the Mortgagee to
proceed against the Guarantor under the Guarantee, or (y)
constitute or be deemed to be a release of the obligations
secured by, or impair the enforceability of, the liens, mortgage
interests or other security interests created by the [HDW]
[Daewoo] Security Documents, or to restrict the remedies
available to the Mortgagee to realize upon the [HDW] [Daewoo]
Security Documents or enforce the Guarantee.
Section 14. Appendix E of the Loan Agreement (form of
Guarantee) is amended and restated as set forth in Exhibit B hereto.
Section 15. Schedules 4A and 4B of the Loan Agreement
(forms of legal opinions) are amended and restated as set forth in
Exhibits C-1 and C-2 hereto, respectively.
Section 16. This Amendment No. 1 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).
Section 17. Each 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, the provisions of which are hereby incorporated herein
by reference, to the same extent and under the same terms and conditions
so provided in said Section 15.08.
Section 18. Except as amended by this Amendment No. 1,
all other terms, conditions and covenants of the Loan Agreement are
hereby confirmed by the parties hereto and remain unchanged and in full
force and effect. From and after the date hereof, all references to the
Loan Agreement (i) in the Loan Agreement (including references therein
to "this Agreement", "hereof" and "hereunder"), and (ii) in any of the
other Loan Documents, shall be deemed to be references to the Loan
Agreement as amended by this Amendment No. 1.
Section 19. This Amendment No. 1 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.
IN WITNESS WHEREOF, The parties have caused this
Amendment No. 1 to be duly executed by their respective officers as 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:
[Signature Page to Amendment No. 1 to Loan Agreement]
* Application to be filed with the Securities and Exchange
Commission, pursuant to Exchange Act Rule 24-b-2, for confidential
treatment of certain portions of this exhibit.
EXECUTION VERSION
AMENDMENT NO. 2
DATED SEPTEMBER 1, 1995
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 (HAMBURG BRANCH)
BANQUE INTERNATIONALE A LUXEMBOURG S.A.
(as the Syndicate)
THE CORPORATIONS LISTED IN SCHEDULE A
and
AMERICAN PRESIDENT LINES, LTD.
to
LOAN AGREEMENT
DATED MARCH 14, 1994
AS AMENDED BY
AMENDMENT NO. 1 TO LOAN AGREEMENT
DATED MAY 19, 1995
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.
THIS AMENDMENT NO. 2 TO LOAN AGREEMENT is made this 1st
day of September, 1995 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"); each of the corporations listed in Schedule A hereto whose
address is 1111 Broadway, Oakland, California 94607; 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:
A. Reference is made to that certain Loan Agreement
dated March 14, 1994, as amended by Amendment No. 1 thereto dated May
19, 1995 ("Amendment No. 1"), among the parties hereto (the "Old Loan
Agreement". Capitalized terms used herein and not otherwise defined
have the meanings provided therefor in the Loan Agreement.
B. On May 19, 1995, pursuant to the Old Loan Agreement,
APL CHINA was delivered by HDW to APL Newbuildings, Ltd., and, on the
same date, APL CHINA was transferred by APL Newbuildings, Ltd. to one of
the Transferees, namely M.V. President Kennedy, Ltd., as part of an
exchange for a C-10 conbulk vessel, PRESIDENT KENNEDY, owned by such
Transferee, prior to the draw down by M.V. President Kennedy, Ltd. of
the Subportion relating to APL CHINA.
C. With respect to the five remaining Vessels, APL
desires to provide for the partial assignment of the appropriate
Shipbuilding Agreement (in each case to the extent such Shipbuilding
Agreement relates to the Vessel in question) to five wholly-owned
subsidiaries of the Guarantor (each an "Original Owner" and,
collectively, the "Original Owners"), as follows, such that each of the
Original Owners would acquire its Vessel directly from HDW or Daewoo, as
the case may be:
(1) APL JAPAN to be transferred to APL M.V. Japan,
Ltd., a Delaware corporation;
(2) APL KOREA to be transferred to APL M.V. Korea,
Ltd., a Delaware corporation;
(3) APL SINGAPORE to be transferred to APL M.V.
Singapore, Ltd., a Delaware corporation;
(4) APL THAILAND to be transferred to APL M.V.
Thailand, Ltd. a Delaware corporation; and
(5) APL PHILIPPINES to be transferred to APL M.V.
Philippines, a Delaware corporation.
D. The parties to the Old Loan Agreement wish to
amend the Loan Agreement to permit each of the Vessels (other than APL
CHINA) to be transferred by the Original Owner thereof to APL as part of
an exchange for a C-10 conbulk vessel owned by APL, whereupon APL would
execute and deliver the First Mortgage and (in the case of a Daewoo
Vessel) the Second Mortgage, and thereafter APL would transfer the
Vessel in question to the appropriate Transferee, which would assume
such Mortgage(s) in connection with the draw down of the Subportion
relating to such Vessel by such Transferee.
E. Notwithstanding the intended Vessel transfers
referred to in Recital D above, APL shall retain the right under the
Loan Agreement to take delivery itself of any of the remaining Vessels
from HDW or Daewoo, as the case may be, and to draw down the applicable
Subportion.
F. As more particularly described herein:
(1) each of the Transferees, upon its execution of a
Note hereunder: (a) if it acquires a Daewoo
Vessel, will be jointly and severally liable as a
co-Borrower, together with all of the other
Transferees that have or thereafter shall execute
a Note hereunder, for all Vessel Indebtedness
respecting any of all of the Daewoo Vessels and
the HDW Vessels, and (b) if it acquires an HDW
Vessel, will be jointly and severally liable as a
co-Borrower, together with all of the other
Transferees that have or thereafter shall execute
an HDW Note hereunder, for all Vessel Indebtedness
respecting any or all of the HDW Vessels; and
(2) each Transferee's obligation to repay Vessel
Indebtedness under the Note executed by it or as a
joint and several co-Borrower under the terms
hereof shall be a non-recourse obligation, and
shall be limited to such Transferee's interest in
the Vessel acquired by it and the other assets and
property covered by the Security Documents to
which such Transferee in a party.
G. Concurrently with the execution and delivery of
this Amendment, APL, the Transferees and the Lenders are entering into a
Second Amended and Restated Agreement to Acquire and Charter dated as of
the date hereof, respecting, among other things, the permitted exchange
and transfer of each of the Vessels as set forth above.
H. In light of the foregoing, KfW, the Syndicate
Agent, the Syndicate, APL and the Transferees wish to make certain
amendments to the Old Loan Agreement.
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:
Section 1. The following defined term is amended as
follows:
"Transferees" means the following six (6) corporations:
(1) M.V. President Kennedy, Ltd., a
Delaware corporation;
(2) M.V. President Adams, Ltd., a
Delaware corporation;
(3) M.V. President Jackson, Ltd., a
Delaware corporation;
(4) M.V. President Polk, Ltd., a Delaware
corporation;
(5) M.V. President Truman, Ltd., a
Delaware Corporation; and
(6) APL Shipholdings, Ltd., a Delaware
corporation.
and "Transferee" means, in respect of any Vessel, the corporation named
above that acquires that Vessel pursuant to an Exchange Agreement (or
from APL following APL's acquisition of that Vessel pursuant to an
Exchange Agreement).
This defined term shall supersede and replace the
definition of "Transferees" contained in Section 1 of the Old Loan
Agreement.
Section 2. The following definitions in Section 1 of the
Old Loan Agreement are amended to read as follows:
"Agreement to Acquire and Charter" means the Second
Amended and Restated Agreement to Acquire and Charter dated September 1,
1995, among APL, KfW, the Syndicate Agent, the Syndicate Members and the
Transferees respecting each Transferee's liability for the Vessel
Indebtedness for any of the Vessels delivered to such Transferee and
APL's obligation to charter any such Vessel from such Transferee,
together with all Exhibits thereto.
"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 acquisition of any Vessel by a
Transferee which does not involve APL in the prior chain of
title, in accordance with the Agreement to Acquire and Charter,
such Transferee shall be the Borrower with respect to all payment
and performance obligations relating to the Vessel Indebtedness
of that Vessel (including but not limited to, Sections 2.02(d),
3, 4, 5, 6, 10, 11, 12 and 15.09 of this Agreement), and
references to the Borrower in any of such Sections shall be
construed to mean such related Transferee as Borrower, except
that (x) references to the "Borrower" in Section 11.03 shall mean
the Borrowers jointly and severally and (y) references to the
"Borrower" in Section 12.01 shall mean any of the Borrowers. APL
shall be the Borrower with respect to all other provisions of
this Agreement (including but not limited to, Sections 8, 9 and
13.03); and
(iii) From and after the acquisition of any Vessel by a
Transferee from APL following APL's acquisition of that Vessel
pursuant to an Exchange Agreement, both APL and the related
Transferee shall be deemed to be Borrowers (jointly and
severally) with respect to all payment and performance
obligations relating to the Vessel Indebtedness of that Vessel
(including but not limited to, Sections 2.02(d), 3, 4, 5, 6, 10,
1l, 12 and 15.09 of this Agreement), and references to the
Borrower in any of such Sections shall be construed to mean APL
and such related Transferee as Borrower, except that (x)
references to the "Borrower" in Section 11.03 shall mean the
Borrowers jointly and severally and (y) references to the
"Borrower" in Section 12.01 shall mean any of the Borrowers. APL
shall be the only Borrower with respect to all other provisions
of this Agreement (including but not limited to, Sections 8, 9
and 13.03).
"Delivery Date" means, in respect of each Vessel, the
date on which that Vessel is either delivered to and accepted by APL
pursuant to the relevant Shipbuilding Agreement or ownership of that
Vessel is acquired by a Transferee in accordance with the Agreement to
Acquire and Charter.
"Vessel Indebtedness" means, in respect of each Vessel,
all sums owing, actually or contingently, by the related Borrower or
Borrowers, whether individually or jointly or severally, 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 other).
Section 3. The following new definitions are added to
Section 1 of the Old Loan Agreement as follows:
"Assumption of First Mortgage" means the assumption of a
First Mortgage entered into by APL and a Transferee contemplated by
Section 2.03(b) of this Loan Agreement, pursuant to which a Transferee
assumes the payment and performance obligations under the related First
Mortgage.
"Assumption of Second Mortgage" means the assumption of a
Second Mortgage entered into by APL and a Transferee contemplated by
Section 2.03(b) of this Loan Agreement, pursuant to which a Transferee
assumes the payment and performance obligations under the related Second
Mortgage.
"Original Owner" has the meaning set forth in Recital C
hereto.
Section 4. Section 7(k) of the Old Loan Agreement is
amended to read as follows:
(k) (x) if the Vessel is to be transferred to a
Transferee pursuant to an Exchange Agreement (in the case
of APL CHINA) or from APL following APL's acquisition of
the Vessel pursuant to an Exchange Agreement, then
evidence that such Vessel (other than APL CHINA) is duly
registered in the name and ownership of, first, the
Original Owner (if applicable), second, APL (if
applicable), and then 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 APL 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 action
(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; provided further that,
notwithstanding anything to the contrary in this Loan
Agreement or any other Loan Document, APL may, prior to
the Delivery Date of such Vessel, assign 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 (or to an entity with
which APL or the Transferee shall enter into an Exchange
Agreement in respect of the Vessel) and provided finally
that, notwithstanding anything to the contrary in this
Loan Agreement or in any other Loan Document, APL may
transfer any Vessel to an Original Owner as a
"Transferee" and a "Borrower" pursuant to, and for all
purposes of this Agreement and the parties shall make
such changes to the Operative Documents which the parties
and such Original Owner may reasonably deem necessary to
effectuate this "provided finally" clause.
Section 5. Section 2.03 of the Old Loan Agreement is
amended by designating existing Section 2.03 as "2.03(a)" and by adding
a new Section 2.03(b) as follows:
(b) Notwithstanding anything herein or in any
other Loan Document to the contrary, APL agrees that, in
the event a Vessel is acquired by APL (following a Vessel
Exchange between APL and an Original Owner), APL shall be
jointly and severally, primarily and directly liable as a
co-Borrower together with all of the other Transferees
similarly liable for payment in full of the Vessel
Indebtedness respecting that Vessel, it being expressly
understood, however, that APL shall not be liable
hereunder for payment of the Vessel Indebtedness
respecting any Vessel not so acquired by APL (including
APL CHINA). In order to evidence its joint and several
liability, APL agrees that, on the related Delivery Date,
it shall execute, deliver and record a First Mortgage
and, if the Vessel is a Daewoo Vessel, a Second Mortgage
substantially in the form attached to this Agreement.
Upon transfer to, and registration of the Vessel in the
name of, the Transferee, APL and the related Transferee
shall execute, deliver and record an Assumption of First
Mortgage and, if the Vessel is a Daewoo Vessel, an
Assumption of Second Mortgage substantially in the form
attached to this Agreement. The liability of APL
hereunder shall be independent of the duties, obligations
and liabilities of each and all of the Transferees with
which it is jointly and severally liable as provided
herein. The Lenders (subject to the provisions hereof)
may bring a separate action or actions on each, any or
all of the Vessel Indebtedness against APL on each, any
or all of the Vessel Indebtedness as to which it is
jointly and severally liable as provided herein, whether
action is brought against any other or all of the
Transferees with which APL is jointly and severally
liable, or whether any one or more of such Transferees is
or is not joined therein.
Section 6. Section 12.02 (d) of the Old Loan Agreement is
amended to read as follows:
(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 Mortgage(s) 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; provided, however, that, in
the case of a Vessel subject to a Charter substantially
in the form of Exhibit A to the Agreement to Acquire and
Charter, an Event of Default under Section 24(a)(i) of
such Charter caused by the failure of the Charterer to
pay Additional Charter Hire shall not be an Event of
Default under this Agreement; or
Section 7. Appendix A of the Loan Agreement (forms of
Notes) is amended to add, as Appendix A-3A, Appendix A-3B, Appendix A-4A
and Appendix A-4B, the forms of Notes required under Section 2.03(b), as
set forth in Exhibits A-1, A-2, A-3 and A-4 hereto, respectively.
Section 8. Appendix B of the Loan Agreement (forms of
Mortgages) is amended to add, as Appendix B-3 and Appendix B-4, the
forms of the First Preferred Ship Mortgage and the Second Preferred Ship
Mortgage to be executed and delivered by APL as contemplated by Section
2.03(b) of this Agreement, as set forth in Exhibits B-1 and B-2 hereto,
respectively. Appendix B of the Loan Agreement is further amended to
add, as Appendix B-5 and Appendix B-6, the forms of the Assumption of
First Preferred Ship Mortgage and the Assumption of Second Preferred
Ship Mortgage to be executed by the appropriate Transferee as
contemplated by Section 2.03(b) of this Agreement, as set forth in
Exhibits C-1 and C-2 hereto, respectively.
Section 9. This Amendment No. 2 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).
Section 10. Except as amended by this Amendment No. 2,
all other terms, conditions and covenants of the Loan Agreement are
hereby confirmed by the parties hereto and remain unchanged and in full
force and effect. From and after the date hereof, all references to the
Loan Agreement (i) in the Loan Agreement (including references therein
to "this Agreement", "hereof" and "hereunder"), and (ii) in any of the
other Loan Documents, shall be deemed to be references to the Loan
Agreement as amended by this Amendment No. 2.
Section 11. This Amendment No. 2 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.
IN WITNESS WHEREOF, the parties have caused this
Amendment No, 2 to be duly executed by their respective officers
as the day and year first above written.
KREDITANSTALT FUR
WIEDERAUFBAU
By: /s/
Name:
Title:
COMMERZBANK AG, HAMBURG
By: /s/
Name:
Title:
By: /s/
Name:
Title:
COMMERZBANK AG (KIEL BRANCH)
By: /s/
Name:
Title
By: /s/
Name:
Title:
DRESDNER BANK AG in HAMBURG
By: /s/
Name:
Title:
By: /s/
Name:
Title:
[Signature Page to Amendment No. 2 to Loan Agreement]
BANQUE INTERNATIONALE A LUXEMBOURG
S.A.
By: /s/
Name: Jean-Pierre Vernier
Title: Directeur-adjoint
AMERICAN PRESIDENT LINES, LTD.
By: /s/
Name: Thomas R. Meier
Title: Assistant Treasurer
M.V. PRESIDENT KENNEDY, LTD.
M.V. PRESIDENT ADAMS, LTD.
M.V. PRESIDENT JACKSON, LTD.
M.V. PRESIDENT POLK, LTD.
M.V. PRESIDENT TRUMAN, LTD.
APL SHIPHOLDING, LTD.
By: /s/
Name: Thomas R. Meier
Title: Assistant Treasurer
[Signature Page to Amendment No. 2 to Loan Agreement]
EXHIBIT A-1
to Amendment No. 2
to Loan Agreement
[Schedules to be
added to Notes]
APPENDIX A-3A
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
[ ] (together, the "Companies"), for
value received, hereby jointly and severally promise 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 Companies 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, as amended by Amendment No. 1 dated May 19, 1995 as
further amended by Amendment No. 2 thereto dated September 1, 1995 (the
"Loan Agreement"), by and among American President Lines, Ltd. ("APL"),
the corporations listed in Schedule A to Amendment No. 2, 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 (Hamburg Branch) 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 Companies 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 Companies are 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
each of the Companies 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 Companies 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
KREDITANSTALT FUR WIEDERAUFBAU
By: /s/
Name:
Title:
COMMERZBANK AG, HAMBURG
By: /s/
Name:
Title:
By: /s/
ment.
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 Companies by the manual
signature of an authorized officer of each of the Companies.
Notwithstanding anything herein or in any other Loan
Document to the contrary, the Companies (other than APL) agrees that,
upon its execution of this Note, it shall be jointly and severally,
directly and primarily liable as a co-Borrower, together with all of
the other Transferees that have or shall have executed a Note under the
Loan Agreement for payment in full of all Vessel Indebtedness
respecting any or all of the HDW Vessels and the HDW Vessels. APL
agrees that, upon its execution of this Note, it shall be jointly and
severally, directly and primarily liable, with the Transferees also
liable therefor, with respect to any HDW Note executed by APL as co-
Borrower under the Loan Agreement for payment in full of the Vessel
Indebtedness relating to the related HDW Vessel or Vessels. The
liability of the Companies shall be independent of the duties,
obligations and liabilities of each and all of the other joint and
several Transferees. Any Holder (subject to the provisions of the Loan
Agreement) may bring a separate action or actions on each, any or all
of such Vessel Indebtedness against each, any or all of such
Transferees liable therefor and APL (to the extent it is or becomes a
co-Borrower), whether action is brought against any other or all of
such Transferees and APL (as provided herein), or any one or more of
the Transferees or APL (as provided herein) is or is not joined
therein.
Notwithstanding anything herein, in the HDW Notes or in
any other Loan Document to the contrary, except with respect to APL, by
acceptance of this Note the Holder agrees that it will look solely to
the Recourse Assets for all amounts coming due from the Transferees (or
any Transferee) under the Loan Agreement, under the HDW Notes or under
any of the other Loan Documents, and for the performance of all
covenants, agreements and obligations and for the breach of
representations and warranties or covenants of the Companies (other
than APL) (or any Transferee) under the Loan Agreement or under the HDW
Notes or any of the other Loan Documents, or under any certificate or
other documents executed and delivered by the Companies (other than
APL) as contemplated by the Loan Documents, and, therefore,
notwithstanding anything contained in any of the aforesaid documents,
no judgment or recourse (except a judgment against the Recourse Assets
or any of them) shall be sought or enforced for the payment or
performance of the Companies' (other than APL's) (or any Transferee's)
obligations under the Loan Agreement, the HDW Notes, any other Loan
Document or any such other certificate or document: (a) against the
Companies (other than APL) in their individual or personal capacities,
other than in connection with the enforcement of remedies against the
Recourse Assets or (b) against any assets or property of the Companies
(other than APL) other than the Recourse Assets; provided, however,
that nothing in this paragraph shall (x) limit or otherwise prejudice
in any way the rights of the Holders to proceed against the Guarantor
under the Guarantee or (y) constitute or be deemed to be a release of
the obligations secured by, or impair the enforceability of, the liens,
mortgage interests or other security interests created by the Security
Documents, or to restrict the remedies available to Holders to realize
upon the Security Documents or enforce the Guarantee.
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 Companies have caused this
instrument to be duly executed under its corporate seal.
[ ]
By:___________________
[Title]
Attest:
By:_____________________
[Title]
Issue Date:
SCHEDULE 1
Maturity Dates, Principal Amounts and
Initial Interest Rates of Notes
Principal
Maturity Date Amount Interest Rate
EXHIBIT A-2
to Amendment No. 2
to Loan Agreement
APPENDIX A-3B
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
_________, ____
[ ] (together, the
"Companies"), for value received, hereby jointly and severally promise
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 Companies 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, as amended by Amendment No. 1 thereto dated May 19,
1995 and further amended by Amendment No. 2 thereto dated September 1,
1995 (the "Loan Agreement"), by and among American President Lines,
Ltd. ("APL"), the corporations listed in Schedule A to Amendment No. 2,
Kreditanstalt fYr 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 (Hamburg Branch) and Banque Internationale e
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 Companies 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 Companies are 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
each of the Companies 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 Companies, 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.
Notwithstanding anything herein or in any other Loan
Document to the contrary, each of the Companies (other than APL) agrees
that, upon its execution of this Note, it shall be jointly and
severally, directly and primarily liable as a co-Borrower, together
with all of the other Transferees that have or shall have executed a
Note under the Loan Agreement for payment in full of all Vessel
Indebtedness respecting any or all of the HDW Vessels and the HDW
Vessels. APL agrees that, upon its execution of this Note, it shall be
jointly and severally, directly and primarily liable, with the
Transferees also liable therefor, with respect to any HDW Note executed
by APL as co-Borrower under the Loan Agreement for payment in full of
the Vessel Indebtedness relating to the related HDW Vessel or Vessels.
The liability of the Companies shall be independent of the duties,
obligations and liabilities of each and all of the other joint and
several Transferees. Any Holder (subject to the provisions of the Loan
Agreement) may bring a separate action or actions on each, any or all
of such Vessel Indebtedness against each, any or all of such
Transferees liable therefor and APL (to the extent it is or becomes a
co-Borrower), whether action is brought against any other or all of
such Transferees and APL (as provided herein), or any one or more of
the Transferees or APL (as provided herein) is or is not joined
therein.
Notwithstanding anything herein, in the HDW Notes or in
any other Loan Document to the contrary, except with respect to APL, by
acceptance of this Note the Holder agrees that it will look solely to
the Recourse Assets for all amounts coming due from the Transferees (or
any Transferee) under the Loan Agreement, under the HDW Notes or under
any of the other Loan Documents, and for the performance of all
covenants, agreements and obligations and for the breach of
representations and warranties or covenants of the Companies (other than
APL) (or any Transferee) under the Loan Agreement or under the HDW Notes
or any of the other Loan Documents, or under any certificate or other
documents executed and delivered by the Companies (other than APL) as
contemplated by the Loan Documents, and, therefore, notwithstanding
anything contained in any of the aforesaid documents, no judgment or
recourse (except a judgment against the Recourse Assets or any of them)
shall be sought or enforced for the payment or performance of the
Companies' (other than APL's) (or any Transferee's) obligations under
the Loan Agreement, the HDW Notes, any other Loan Document or any such
other certificate or document: (a) against the Companies (other than
APL) in their individual or personal capacities, other than in
connection with the enforcement of remedies against the Recourse Assets
or (b) against any assets or property of the Companies (other than APL)
other than the Recourse Assets; provided, however, that nothing in this
paragraph shall (x) limit or otherwise prejudice in any way the rights
of the Holders to proceed against the Guarantor under the Guarantee or
(y) constitute or be deemed to be a release of the obligations secured
by, or impair the enforceability of, the liens, mortgage interests or
other security interests created by the Security Documents, or to
restrict the remedies available to Holders to realize upon the Security
Documents or enforce the Guarantee.
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 Companies have caused this
instrument to be duly executed under its corporate seal.
[ ]
By:_________________
Title:
Attest:
By:___________________
Title:
EXHIBIT A-3
to Amendment No. 2
to Loan Agreement
[Schedules to be
added to Notes]
APPENDIX A-4A
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
[ ] (together, the "Companies"), for
value received, hereby jointly and severally promise 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 Companies 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, as amended by Amendment No. 1 dated May 19, 1995 as
further amended by Amendment No. 2 thereto dated September 1, 1995 (the
"Loan Agreement"), by and among American President Lines, Ltd. ("APL"),
the corporations listed in Schedule A to Amendment No. 2, 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 (Hamburg Branch) 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 Companies 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 Companies are 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
each of the Companies 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 Companies 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 Companies by the manual
signature of an authorized officer of each of the Companies.
Notwithstanding anything herein or in any other Loan
Document to the contrary, the Companies (other than APL) agrees that,
upon its execution of this Note, it shall be jointly and severally,
directly and primarily liable as a co-Borrower, together with all of
the other Transferees that have or shall have executed a Note under the
Loan Agreement for payment in full of all Vessel Indebtedness
respecting any or all of the Daewoo Vessels and the HDW Vessels. APL
agrees that, upon its execution of this Note, it shall be jointly and
severally, directly and primarily liable, with the Transferees also
liable therefor, with respect to any Daewoo Note executed by APL as co-
Borrower under the Loan Agreement for payment in full of the Vessel
Indebtedness relating to the related Daewoo Vessel or Vessels. The
liability of the Companies shall be independent of the duties,
obligations and liabilities of each and all of the other joint and
several Transferees. Any Holder (subject to the provisions of the Loan
Agreement) may bring a separate action or actions on each, any or all
of such Vessel Indebtedness against each, any or all of such
Transferees liable therefor and APL (to the extent it is or becomes a
co-Borrower), whether action is brought against any other or all of
such Transferees and APL (as provided herein), or any one or more of
the Transferees or APL (as provided herein) is or is not joined
therein.
Notwithstanding anything herein, in the Daewoo Notes or
in any other Loan Document to the contrary, except with respect to APL,
by acceptance of this Note the Holder agrees that it will look solely
to the Recourse Assets for all amounts coming due from the Transferees
(or any Transferee) under the Loan Agreement, under the Daewoo Notes or
under any of the other Loan Documents, and for the performance of all
covenants, agreements and obligations and for the breach of
representations and warranties or covenants of the Companies (other
than APL) (or any Transferee) under the Loan Agreement or under the
Daewoo Notes or any of the other Loan Documents, or under any
certificate or other documents executed and delivered by the Companies
(other than APL) as contemplated by the Loan Documents, and, therefore,
notwithstanding anything contained in any of the aforesaid documents,
no judgment or recourse (except a judgment against the Recourse Assets
or any of them) shall be sought or enforced for the payment or
performance of the Companies' (other than APL's) (or any Transferee's)
obligations under the Loan Agreement, the Daewoo Notes, any other Loan
Document or any such other certificate or document: (a) against the
Companies (other than APL) in their individual or personal capacities,
other than in connection with the enforcement of remedies against the
Recourse Assets or (b) against any assets or property of the Companies
(other than APL) other than the Recourse Assets; provided, however,
that nothing in this paragraph shall (x) limit or otherwise prejudice
in any way the rights of the Holders to proceed against the Guarantor
under the Guarantee or (y) constitute or be deemed to be a release of
the obligations secured by, or impair the enforceability of, the liens,
mortgage interests or other security interests created by the Security
Documents, or to restrict the remedies available to Holders to realize
upon the Security Documents or enforce the Guarantee.
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 Companies have caused this
instrument to be duly executed under its corporate seal.
[ ]
By:___________________
[Title]
Attest:
By:_____________________
[Title]
Issue Date:
SCHEDULE 1
Maturity Dates, Principal Amounts and
Initial Interest Rates of Notes
Principal
Maturity Date Amount
Interest Rate
EXHIBIT A-4
to Amendment No. 2
to Loan Agreement
APPENDIX A-4B
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
_________, ____
[ ] (together, the
"Companies"), for value received, hereby jointly and severally promise
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 Companies
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, as amended
by Amendment No. 1 thereto dated May 19, 1995 and further amended by
Amendment No. 2 thereto dated September 1, 1995 (the "Loan Agreement"),
by and among American President Lines, Ltd. ("APL"), the corporations
listed in Schedule A to Amendment No. 2, 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 (Hamburg
Branch) 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 Companies 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 Companies are 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 each
of the Companies 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
Companies, 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.
Notwithstanding anything herein or in any other Loan
Document to the contrary, each of the Companies (other than APL) agrees
that, upon its execution of this Note, it shall be jointly and
severally, directly and primarily liable as a co-Borrower, together with
all of the other Transferees that have or shall have executed a Note
under the Loan Agreement for payment in full of all Vessel Indebtedness
respecting any or all of the Daewoo Vessels and the HDW Vessels. APL
agrees that, upon its execution of this Note, it shall be jointly and
severally, directly and primarily liable, with the Transferees also
liable therefor, with respect to any Daewoo Note executed by APL as co-
Borrower under the Loan Agreement for payment in full of the Vessel
Indebtedness relating to the related Daewoo Vessel or Vessels. The
liability of the Companies shall be independent of the duties,
obligations and liabilities of each and all of the other joint and
several Transferees. Any Holder (subject to the provisions of the Loan
Agreement) may bring a separate action or actions on each, any or all of
such Vessel Indebtedness against each, any or all of such Transferees
liable therefor and APL (to the extent it is or becomes a co-Borrower),
whether action is brought against any other or all of such Transferees
and APL (as provided herein), or any one or more of the Transferees or
APL (as provided herein) is or is not joined therein.
Notwithstanding anything herein, in the Daewoo Notes or
in any other Loan Document to the contrary, except with respect to APL,
by acceptance of this Note the Holder agrees that it will look solely to
the Recourse Assets for all amounts coming due from the Transferees (or
any Transferee) under the Loan Agreement, under the Daewoo Notes or
under any of the other Loan Documents, and for the performance of all
covenants, agreements and obligations and for the breach of
representations and warranties or covenants of the Companies (other than
APL) (or any Transferee) under the Loan Agreement or under the Daewoo
Notes or any of the other Loan Documents, or under any certificate or
other documents executed and delivered by the Companies (other than APL)
as contemplated by the Loan Documents, and, therefore, notwithstanding
anything contained in any of the aforesaid documents, no judgment or
recourse (except a judgment against the Recourse Assets or any of them)
shall be sought or enforced for the payment or performance of the
Companies' (other than APL's) (or any Transferee's) obligations under
the Loan Agreement, the Daewoo Notes, any other Loan Document or any
such other certificate or document: (a) against the Companies (other
than APL) in their individual or personal capacities, other than in
connection with the enforcement of remedies against the Recourse Assets
or (b) against any assets or property of the Companies (other than APL)
other than the Recourse Assets; provided, however, that nothing in this
paragraph shall (x) limit or otherwise prejudice in any way the rights
of the Holders to proceed against the Guarantor under the Guarantee or
(y) constitute or be deemed to be a release of the obligations secured
by, or impair the enforceability of, the liens, mortgage interests or
other security interests created by the Security Documents, or to
restrict the remedies available to Holders to realize upon the Security
Documents or enforce the Guarantee.
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 Companies have caused this
instrument to be duly executed under its corporate seal.
[ ]
By:_________________
Title:
Attest:
By:___________________
Title:
EXHIBIT B-1
to Amendment No. 2
to Loan Agreement
FIRST PREFERRED SHIP MORTGAGE ON
THE "[ ]" TO
[ ]
THIS FIRST PREFERRED SHIP MORTGAGE dated this ___ day of
__________ 199_, made and given by American President Lines, Ltd., a
Delaware corporation (the "Borrower"), to [Kreditanstalt fur
Wiederaufbau, a public law company incorporated in the Federal Republic
of Germany (the "Mortgagee", which term shall include the Mortgagee's
successors and assignees)] [Commerzbank AG, Hamburg, a public law
company incorporated in the Federal Republic of Germany (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 (Hamburg Branch) and
Banque Internationale a Luxembourg S.A. (collectively, the "Syndicate"
and, together with the Syndicate Agent, the "Mortgagee", which term
shall include any successors and assignees of each)].
WHEREAS:
A. The Borrower is the sole owner of the Republic of The
Marshall Islands flag vessel, "APL [ ]", Official No. MI [ ],
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. This Mortgage is granted to secure, among other
things, certain obligations of the Borrower under that certain Loan
Agreement dated March 14, 1994, as amended by Amendment No. 1 thereto
dated May 19, 1995 and as further amended by Amendment No. 2 thereto
dated September 1, 1995, among the Borrower, [ ] ("[ ]"),
the other Transferees, the Mortgagee and [ ] (" ") (the "Loan
Agreement"). Terms used herein without definition shall have the
respective meanings provided in the Loan Agreement (a copy of which
without attachments (other than the forms of [HDW] [Daewoo] Notes) is
attached hereto as Exhibit A).
C. The Mortgagee has agreed to make loans with respect to
three (3) vessels (the Marshall Islands flag vessels [ ] (Official
Number [ ]), [ ] (Official Number [ ]) and [ ] (Official
Number [ ])), pursuant to the Loan Agreement and that certain Second
Amended and Restated Agreement to Acquire and Charter dated September 1,
1995 among the parties to the Loan Agreement (the "Acquisition
Agreement") (a copy of which is attached hereto as Exhibit B), such
loans to be in an aggregate amount not to exceed [ ] United
States Dollars (USD[ ]) (collectively, the "Loans"'). The total
amount of the Loans is or shall be evidenced by the [HDW] [Daewoo]
Notes. The portion of the Loans relating to the acquisition of the
Vessel is in the principal amount of [ ] United States Dollars (USD
[ ]), which portion has been advanced by the Mortgagee on
the date hereof, for which the Borrower is justly indebted and is
evidenced by the specific [HDW] [Daewoo] Notes dated ______, 199_ (the
"[HDW] [Daewoo] [ ] Notes") (a copy of which is attached hereto
as Exhibit C), 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 [HDW] [Daewoo] [ ] Notes and the Borrower's joint and
several liability under the Loan Agreement for the repayment of the
[HDW] [Daewoo] Notes issued or to be issued by the Borrower or any
remaining Transferee (which shall be the owner[s] of the Vessel[s]
[ ]) [(such Notes, together with the [HDW] [Daewoo] [ ]
Notes are referred to herein for purposes of this Mortgage as the "[HDW]
[Daewoo] Notes")] and the other obligations stated in Paragraph D below
with respect to the acquisition [and financing] of the other [HDW]
[Daewoo] Vessels other than the Vessel.
D. The term "Obligations" shall mean [(i)] all of the
obligations of the Borrower to pay any amount to the Mortgagee under (A)
this Mortgage, (B) the [HDW] [Daewoo] Notes and (C) the Loan Agreement
insofar as it relates to the [HDW] [Daewoo] Notes, [and (ii) all payment
and performance obligations of the Borrower under that certain Bareboat
Charter Party dated May 19, 1995 between the Borrower, as charterer, and
M.V. President Kennedy, Ltd., assigned by M.V. President Kennedy, Ltd.
to the Mortgagee pursuant to that certain APL China Charter Assignment
dated May 19, 1995,] whether by reason of reimbursement, interest,
indemnity or for any other reasons whatsoever.
E. 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.
F. Upon transfer of the Vessel, the Borrower will, on the
date hereof, enter into that certain Bareboat Charter Party dated the
date hereof (the "Charter") with [ ].
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 and performance 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 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 and performance 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 and full performance 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
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 Obligations and 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 this 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 this 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,
this 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 this 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 Preferred Ship Mortgage dated the date hereof (the "Second
Mortgage") in favor of KfW (the "Second Mortgagee")].
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 this 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 any permitted
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) [Reserved] [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 any permitted 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, the Loan Agreement and
the Acquisition Agreement, and by applicable law and to subcharters
permitted by the terms of the 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 any permitted
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 any
permitted 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 [, except the Second Mortgage].
(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 the other [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, the other [HDW] [Daewoo]
Notes and the [HDW] [Daewoo] Security Documents to which it is a party.
(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 [, 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 or caused to be
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 this Mortgage as a preferred mortgage thereunder on the
Vessel until it is re-registered, reflagged and this Mortgage is
replaced by a Replacement Mortgage as provided in Section 20(b) or (c)
hereof.
(24) The Borrower shall place and at all times and places
shall retain a properly certified copy of this 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 American President Lines, Ltd.,
a Delaware corporation (the "Shipowner"), and is covered by a
First Preferred Ship Mortgage in favor of [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 (Hamburg Branch) and Banque
Internationale a Luxembourg S.A.], 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 [and a Second Preferred Ship Mortgage
in favor of Kreditanstalt fur Wiederaufbau]."
(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, appareled, 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 orforfeiture 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 Charter, mortgage (except for 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 this 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)] [3.08(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 any permitted 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 any permitted
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,] 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 [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; [and] (ii) [and after underwriters shall have been given
notice by the Mortgagee of discharge of this Mortgage, to the Second
Mortgagee 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 this 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 this
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
Obligations, with the right to enforce payment of said sum against any
assets of the Borrower, whether they are covered by any [HDW] [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-infact
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 in
respect of the Obligations and 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 in respect of
the Obligations and 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 in respect of the Obligations and 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 in respect of the Obligations and the [HDW] [Daewoo]
Notes or in case a receiver or trustee shall have been appointed for its
property, or any other obligor on the [HDW] [Daewoo] [ ] Notes, its
creditors or its property, the Mortgagee, irrespective of whether any
amount of the Obligations 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 the Obligations, 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, the Obligations 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,
the [HDW] [Daewoo] [ ] Notes or the other Obligations may be
prosecuted and enforced by the Mortgagee without the possession of the
[HDW] [Daewoo] [ ] 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 and the other Obligations.
(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) 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 or any other Obligation
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 or other
Obligations, 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 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 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 aggregate of all possible advances and
other outstanding obligations that may be made under, or otherwise
secured by, this Mortgage is (i) [ ] United States
Dollars (USD[ ]), and (ii) interest and performance of
mortgage covenants. 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, with respect
to its validity, effect, recordation and enforcement, be governed by
and construed in accordance with the applicable Laws of the Republic of
The Marshall Islands. Where, however, rules of interpretation,
construction or usage, with respect to the internal provisions of this
Mortgage, may be made subject to the decisional law of a jurisdiction
other than that of the Republic of The Marshall Islands, the parties
hereto hereby agree that the provisions of this Mortgage shall be
governed by the decisions of the courts of the State of New York.
(54) 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.
[(55) Deutsche Schiffsbank AG may not without the prior
written consent of its public trustee (TreuhSnder) sell, assign, waive
or encumber its interest in this Mortgage until the Loans and all
interest on the Loans have been repaid in full.]
IN WITNESS WHEREOF, the Borrower has caused this Mortgage to be
duly executed by its authorized representative the day and year first above
written.
AMERICAN PRESIDENT LINES, LTD.
______________________________
Name:
Title:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this _____ day of ____________, 199_, before me personally appeared
___________________, known to me, and known to be the person who executed
the foregoing instrument, who, being by me duly sworn, did depose
and say that he resides at ______________________; that he is
________________ of American President Lines, Ltd., a Delaware corporation,
the party described in and which executed the foregoing instrument; that he
signed his name thereto by authority of the Board of Directors of said
corporation and as the free act and deed of such corporation.
__________________________
Notary Public
EXHIBIT B-2
TO AMENDMENT N0. 2
TO LOAN AGREEMENT
Omitted pursuant to Instruction 2 to Item 601 of Regulation S-K.
Same as Exhibit B-1 hereto together with the subordination provisions of
Appendix B-2 to Exhibit 10.4 to Registrant's Form 10-Q for the quarter
ended April 8, 1994.
EXHIBIT B-3
to Amendment No. 2
to Loan Agreement
ASSUMPTION OF FIRST PREFERRED SHIP MORTGAGE
THIS ASSUMPTION OF FIRST PREFERRED SHIP MORTGAGE dated
___________, 199_ (this "Assumption"), supplements the First Preferred
Ship Mortgage dated _____________, 199_ (the "Mortgage"; capitalized
terms used herein without definition shall have the respective meanings
provided in the Mortgage), with respect to the vessel [ ],
Official Number MI [ ] (the "Vessel"), by American President
Lines, Ltd., a Delaware corporation (the "Original Mortgagor"), in
favor of [Kreditanstalt fur Wiederaufbau, a public law corporation
incorporated in the Federal Republic of Germany (the "Mortgagee")]
[Commerzbank AG, Hamburg, a banking corporation incorporated in the
Federal Republic of Germany (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 (Hamburg Branch) and Banque Internationale a
Luxembourg S.A., (the "Syndicate and, collectively with the Syndicate
Agent, the "Mortgagee")]. The Mortgage was recorded at the office of
the Deputy Commissioner of Maritime Affairs of the Republic of The
Marshall Islands in New York, New York on ____________, 199_, at
_________ _.m., in book PM ____ at Page __. By this Assumption, [
], a Delaware corporation (the "Additional Mortgagor"), assumes all of
the rights and obligations of the Original Mortgagor under the
Mortgage, jointly and severally with the Original Mortgagor.
WHEREAS:
A. The Original Mortgagor and the Additional
Mortgagor are jointly and severally liable to the Mortgagee for certain
obligations pursuant to the Loan Agreement.
B. The Original Mortgagor, as sole owner of the
Vessel, has heretofore executed and delivered the Mortgage to the
Mortgagee to secure payment and performance of the Obligations referred
to therein and payment and performance of all other obligations secured
by the Mortgage (the "Secured Obligations").
C. The Original Mortgagor has transferred all of its
right, title and interest in and to the Vessel to the Additional
Mortgagor and concurrently therewith has bareboat chartered the Vessel
from the Additional Mortgagor;
D. The Vessel has been duly documented in the name
of the Additional Mortgagor as the owner thereof in the office of the
Deputy Commissioner of Maritime Affairs of the Republic of The Marshall
Islands in New York, New York; and
E. The execution and delivery of this instrument has
been duly authorized and all conditions and requirements necessary to
make this instrument a valid and binding agreement and to effect the
assumption of the Mortgage provided herein and to continue that
Mortgage, as assumed by this instrument, as a valid, binding and legal
first preferred ship mortgage as security for the due payment and
performance of the Secured Obligations.
NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
Section 1. The Additional Mortgagor hereby assumes
all the obligations and duties of the Original Mortgagor under the
Mortgage. The Additional Mortgagor hereby promises an agreement to pay,
jointly and severally with the Original Mortgagor, in accordance with
and subject to the terms of the Loan Agreement, the Acquisition
Agreement and the [HDW] [Daewoo] [ ] Notes, the unpaid principal
of and interest on the [HDW] [Daewoo] [ ] Notes and agrees to
observe each and every covenant, agreement and condition of the Mortgage
which, by the terms thereof, is to be performed or observed, or both, by
the mortgagor thereunder. The Mortgagee hereby consents to the transfer
of the Vessel from the Original Mortgagor to the Additional Mortgagor
and to the assumption of the Mortgage by the Additional Mortgagor.
Section 2. All of the covenants and agreements on the
part of the Original Mortgagor which are set forth in, and all the
rights, privileges, powers and immunities of the Mortgagee which are
provided for in the Mortgage are incorporated herein and shall apply to
the Additional Mortgagor with the same force and effect as though set
forth in their entirety in this Assumption.
Section 3. Except as amended by this Assumption, the
Mortgage is in all respects ratified and confirmed and all the terms,
provisions and conditions thereof shall be and remain in full force and
effect.
Section 4. Notwithstanding anything herein, in the
Mortgage, in the [HDW] [Daewoo] [ ] Notes or in any other Loan
Document to the contrary, by acceptance of this Assumption, the
Mortgagee agrees that it will look solely to the Vessel and the other
assets and property covered by the Mortgage and the other [HDW] [Daewoo]
Security Documents (collectively, the "Recourse Assets") for all amounts
coming due from the Additional Mortgagor hereunder, under the Mortgage,
the [HDW] [Daewoo] [ ] Notes or any other Loan Documents, and
for the performance of all covenants, agreements and obligations and for
the breach of representations and warranties or covenants of the
Additional Mortgagor hereunder, under the Mortgage or under the [HDW]
[Daewoo] [ ] Notes or any of the other Loan Documents, or under
any certificate or other documents executed and delivered by the
Original Mortgagor or the Additional Mortgagor as contemplated by the
Loan Documents, and, therefore, notwithstanding anything contained in
any of the aforesaid documents, no judgment or recourse (except a
judgment against the Recourse Assets or any of them) shall be sought or
enforced for the payment or performance of the obligations of the
Additional Mortgagor hereunder, under the Mortgage, the [HDW] [Daewoo [
] Notes, any other Loan Document or any such other certificate or
document: (a) against the Additional Mortgagor, in its individual or
personal capacity, other than in connection with the enforcement of
remedies against the Recourse Assets or (b) against any assets or
property of the Additional Mortgagor other than the Recourse Assets;
provided, however, that nothing in this paragraph shall (x) limit or
otherwise prejudice in any way the rights of the Mortgagee to proceed
against the Guarantor under the Guarantee, or (y) constitute or be
deemed to be a release of the obligations secured by, or impair the
enforceability of, the liens, mortgage interests or other security
interests created by the [HDW] [Daewoo] Security Documents, or to
restrict the remedies available to the Mortgagee to realize upon the
[HDW] [Daewoo] Security Documents or enforce the Guarantee.
Section 5. For the purposes of recording this
Assumption of First Preferred Mortgage as required by the Republic of
The Marshall IslandsO Maritime Act of 1990, as amended, the aggregate of
all possible advances and other outstanding obligations that may be made
under or otherwise secured by the Mortgage as supplemented hereby is (i)
__________ ______________________ United States Dollars
(USD_________________), and (ii) interest and performance of mortgage
covenants, The discharge amount is the same as the total amount.
Section 6. This instrument may be executed in any
number of counterparts, and each of such counterparts shall for all
purposes be deemed to be an original.
Section 7. Any notice or demand or other
communication to the Original Mortgagor under the Mortgage shall be sent
to both the Original Mortgagor and the Additional Mortgagor and made in
accordance with Section 15.04 of the Loan Agreement.
[Remainder of this page intentionally left blank.]
IN WITNESS WHEREOF, this instrument has been executed and
delivered the day and year first above written.
AMERICAN PRESIDENT LINES, LTD
By ________________________________
Name:
Title:
[ ]
By ________________________________
Name:
Title:
[ ]
By ________________________________
Name:
Title:
EXHIBIT B-4
TO AMENDMENT NO. 2
TO LOAN AGREEMENT
Omitted pursuant to Instruction 2 to Item 601 of Regulation S-
K. Differs from Exhibit B-3 hereto only in that the assumption is of a
second mortgage rather than a first mortgage.
EXECUTION COPY
AMENDED AND RESTATED GUARANTEE
dated as of May 19, 1995
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 (HAMBURG BRANCH)
BANQUE INTERNATIONALE A LUXEMBOURG S.A.
(as the Syndicate)
AMENDED AND RESTATED GUARANTEE, dated as of May 19, 1995, 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, as amended by
Amendment No. 1 thereto dated May 19, 1995 (the "Loan Agreement"), by and among
the Obligees, the corporations listed as Transferees therein (the "Transferees")
and American President Lines, Ltd., a Delaware corporation ("APL") (the
Transferees and APL are hereinafter referred to individually as an "Obligor" and
collectively as the "Obligors").
This Amended and Restated Guarantee amends, restates and
supersedes in its entirety that certain Guarantee dated as of March 14, 1994
from the Guarantor in favor of the Obligees.
W I T N E S S E T H:
WHEREAS, pursuant to the Loan Agreement and the Amended and
Restated Agreement to Acquire and Charter dated May 19, 1995 by and among APL,
the Transferees and the Obligees, the Transferees will be obligated for any
Notes issued by them 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 owners of the HDW Vessels in accordance
with the Loan Documents shall be jointly and severally liable under all Notes
issued by them under the Loan Agreement,
and all related Vessel Indebtedness, with respect to the purchase financing of
the HDW Vessels;
WHEREAS, the registered owners of the Daewoo Vessels in
accordance with the Loan Documents shall be jointly and severally liable under
all Notes issued by them and by the owners of the HDW Vessels under the Loan
Agreement, and all related Vessel Indebtedness, with respect to the purchase
financing of the Daewoo Vessels and the HDW Vessels;
WHEREAS, the Guarantor is entering into this Guarantee in
consideration of the Obligees entering into the Loan Agreement and purchasing
the Notes.
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 the Obligors under the Loan Documents. Upon failure by
any Obligor 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 any Obligor pursuant to this Section 1.1,
such Obligor'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 any
Obligor under the Loan Documents; or
(c) any change in the corporate existence, structure or ownership
of any Obligor, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any Obligor or its assets; or
(d) the existence of any claim, setoff or other rights which the
Guarantor may have at any time against any Obligor, HDW or Daewoo; or
(e) any defense arising by reason of any invalidity,
unenforceability or other defense of any Obligor, 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 any Obligor to pay any amount
payable by such Obligor 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, amendmentor 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 the Obligors under the Loan
Documents shall have been paid in full or the obligations of the Obligors
thereunder have otherwise terminated, whichever is earlier. If at any time any
amount payable by any Obligor under the Loan Documents is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy or reorganization
of any Obligor 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 any Obligor or any other Person.
1.5 Subrogation. Upon making any payment hereunder, the
Guarantor shall be subrogated to the rights of the Obligees under the Loan
Documents against any Obligor 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 any Obligor for payment of money
under the Loan until all amounts payable by such Obligor under the Loan
Documents have been paid in full or the obligations of such Obligor thereunder
have otherwise terminated, whichever is earlier. Nothing contained in this
Guarantee shall preclude the Guarantor from causing such Obligor to make
payments or perform such actions as are required to be performed by such Obligor
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.
No right of any Obligee hereunder, and no obligation of the
Guarantor hereunder, shall be in any way limited or otherwise impaired by the
failure of any Obligee (i) to commence any action or obtain any judgment against
the Obligors or any Obligor; (ii) to seek recourse against, or to perfect or
enforce any rights in and to, any collateral; (iii) to proceed against any other
guarantee relating to all or any of the obligations guaranteed hereunder or (iv)
to exercise any other right, remedy, power or privilege hereunder or otherwise.
The Guarantor waives and agrees not to assert (a) any right to require any
Obligee to take any action described in clauses (i) to (iv) of the immediately
preceding sentence and (b) any defense based upon an election of remedies which
destroys or impairs the subrogation rights of any Obligee or the right of any
Obligee to proceed against the Guarantor hereunder or any Obligor in respect of
the obligations guaranteed 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 each of the Obligors to perform its other obligations
under each of the Loan Documents to which such Obligor 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, any Obligor or
the Vessels which if adversely determined would have a material adverse effect
on the Guarantor, any Obligor and any of its 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 fYr
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: /s/
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. Eggert
Mr. Bsttcher
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. Kspcke
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
(Hamburg Branch) Ballindamm 6
D-20095 Hamburg
Federal Republic of Germany
Attention: Mr. Spincke
Telex: 402077 DVB
Telecopy: 49-40-308004-12
Banque Internationale a 2 Boulevard Royal
Luxembourg S.A. L-2953 Luxembourg
Attention: Mr. Jean Pierre
Vernier
Telex: 3326 BIL LU
Telecopy: 35-2-4590-2010
ACKNOWLEDGMENT AND CONSENT
OF GUARANTOR
THIS ACKNOWLEDGMENT AND CONSENT OF GUARANTOR is made as of this 1st day
of September, 1995, by AMERICAN PRESIDENT COMPANIES, LTD., a Delaware
corporation (the "Guarantor"), with reference to the following facts and
circumstances:
RECITALS
A. Reference is made to that certain Amended and Restated Guarantee
dated as of May 19, 1995 by the Guarantor in favor of Kreditanstalt fur
Wiederaufbau, Commerzbank AG, Hamburg and the banks listed in Schedule 1
attached thereto (the "Guarantee"). Capitalized terms used herein and not
otherwise defined have the meanings provided therefor in the Guarantee.
B. Concurrently herewith, the Obligees, the Transferees and APL are
entering into (i) that certain Amendment No. 2 to Loan Agreement of even date
herewith (the "Loan Amendment"), which shall modify certain provisions of, and
certain Exhibits to, the Loan Agreement referenced in the Guarantee, and (ii)
that certain Second Amended and Restated Agreement to Acquire and Charter dated
as of September 1, 1995 (the "AAC Amendment"), which shall amend and restate in
its entirety the Agreement to Acquire and Charter referred to in the Loan
Agreement.
C. To induce the Obligees to enter into the Loan Amendment and the
AAC Amendment, the Guarantor wishes to confirm (i) its consent to the Loan
Amendment and the AAC Amendment and the transactions contemplated thereby and
(ii) that the Guarantee remains in full force and effect.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Guarantor hereby acknowledges
and agrees for the benefit of the Obligees as follows:
1. The Guarantee is amended to reflect that: (a) from and after the
date hereof, as used in the Guarantee the term "Loan Agreement" means the Loan
Agreement referred to in the Guarantee, as the same has been amended by the Loan
Amendment, and as the same may be further amended or supplemented from time to
time in accordance with its terms, and (b) as of the date hereof, the Amended
and Restated Agreement to Acquire and Charter referred to in the first "WHEREAS"
clause of the Guarantee has been amended and restated in its entirety pursuant
to the AAC Amendment.
2. The Guarantor hereby consents to the Loan Amendment, the AAC
Amendment and each of the transactions contemplated thereby.
3. The Guarantor hereby confirms and reaffirms the full force,
continuing effect and ongoing applicability of its obligations under the
Guarantee.
IN WITNESS WHEREOF, the Guarantor has executed this Acknowledgment and
Consent of Guarantor as of the date and year first above written.
AMERICAN PRESIDENT COMPANIES, LTD.
By:__/s/____________________________
Name: Peter A. V. HYegel
Title: Assistant Secretary
^DOCNUM^
* 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.
AMENDMENT NO. 1 TO FIRST PREFERRED SHIP MORTGAGE
APL CHINA
Official No. MI 1092
Amendment No. 1 dated the 1st day of September, 1995 (the
"Amendment") to First Preferred Mortgage dated May 19, 1995 (the
"Mortgage") given by M.V. President Kennedy, Ltd., a Delaware corporation
(the "Shipowner"), to Kreditanstalt fur Wiederaufbau, a public law
company incorporated in the Federal Republic of Germany (the
"Mortgagee").
WHEREAS:
A. The Shipowner is the sole owner of the whole of the
Marshall Islands flag vessel APL CHINA, Official No. MI 1092, of 64,502
gross and 33,003 net tons (the "Vessel"), duly documented in the name of
the Shipowner, with her home port at the port of Majuro, The Marshall
Islands, having been built in Kiel by Howaldtswerke-Deutsche Werft AG in
1995;
B. The Mortgage was recorded at the Office of the Deputy
Commissioner of Maritime Affairs of the Republic of The Marshall Islands
at the Port of New York on May 19, 1995 in Book PM 6 at Page 23;
C. The Mortgage secures indebtedness of the Shipowner to the
Mortgagee in the maximum aggregate principal amount of * (the "Loans")
and interest and the performance of mortgage covenants, such Loans having
been or to be made pursuant to the terms of a Loan Agreement dated as of
March 14, 1994, as amended by Amendment No. 1 thereto dated May 19, 1995
and as further amended by Amendment No. 2 thereto dated September 1,
1995, by and among the Mortgagee, the Lenders named therein, American
President Lines, Ltd. ("APL"), the Shipowner and the other Transferees
named therein (the "Loan Agreement");
D. The Shipowner, together with M.V. President Jackson, Ltd.,
has executed an Amended and Restated HDW China Note dated the date hereof
(a copy of which is attached hereto as Exhibit A), amending and restating
in its entirety the HDW China Note dated May 19, 1995 (a copy of which is
attached as Exhibit C to the Mortgage);
E. The Shipowner and the Mortgagee have agreed, inter alia,
to substitute the Amended and Restated HDW China Note for the HDW China
Note attached as Exhibit C to the Mortgage, and to revise Recital C of
the Mortgage to reflect the correct dollar amount for the portion of the
Loans relating to the acquisition of the Vessel.
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Shipowner and the Mortgagee hereby covenant and
agree as follows:
1. The Amended and Restated HDW China Note attached hereto as
Exhibit A shall be substituted for the HDW China Note attached as Exhibit
C to the Mortgage.
2. The third sentence of Recital C of the Mortgage is amended
and restated to read as follows:
"The portion of the Loans relating to the acquisition of the
Vessel is in the principal amount of *, which portion has been
advanced by the Mortgagee on the date hereof, for which the
Borrower is justly indebted and is evidenced by the specific HDW
Notes dated May 19, 1995 (the "HDW China Notes") a copy of which
is attached hereto as Exhibit C), 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 HDW China Notes and
the Borrower's joint and several liability under the Loan
Agreement for the repayment of the remaining HDW Notes evidencing
the Loans issued or to be issued by APL or any remaining
Transferee (who shall be the owners of the Vessel, the APL JAPAN
and the APL THAILAND) and the other obligations stated in
ParagraphED below with respect to the acquisition of the other
HDW Vessels other than the Vessel."
3. This Amendment amends the Mortgage. Wherever the term
"Mortgage" is used in the Mortgage or the Loan Agreement, it shall be
deemed to refer to the Mortgage as amended hereby, and the term "Loan
Agreement" as used in the Mortgage or the Loan Agreement shall be deemed
to mean and refer to the Loan Agreement as amended by Amendment No. 2 to
Loan Agreement in the form attached hereto.
4. Except as specifically amended hereby, all the terms,
covenants and conditions of the Mortgage remain unchanged and in full
force and effect.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Shipowner and the Mortgagee have executed
this Amendment the year and day first above written.
M.V. PRESIDENT KENNEDY, LTD.
By: /s/ Peter A.V. Huegel
Name: Peter A.V. Huegel
Title: Vice President
KREDITANSTALT FUR WIEDERAUFBAU
By: /s/ Ron D. Franklin
Attorney-in Fact
STATE OF NEW YORK )
:ss .:
COUNTY OF NEW YORK )
On this 1st day of September, 1995 before me personally appeared
Peter A.V. Huegel, known to me, and known to be the person who executed
the foregoing instrument, who, being by me duly sworn, did depose and say
that he resides at 3368 Harlan Drive, Redding, California 96003; that he
is Vice President of M.V. President Kennedy, Ltd., a Delaware
corporation, the party described in and which executed the foregoing
instrument; that he signed his name thereto by authority of the Board of
Directors of said corporation and as the free act and deed of such
corporation.
/s/ Carla L. Clarke
Notary Public
CARLA L CLARKE
Notary Public. State of New York
No. 31-4848091
Qualified in New York County
Commission Expires April 30, 1997
STATE OF NEW YORK )
:ss .:
COUNTY OF NEW YORK )
On this 1st day of September, 1995 before me personally appeared
Ron D. Franklin, known to me, and known to be the person who executed the
foregoing instrument, who, being by me duly sworn, did depose and say
that he resides at 120 Central Park South, New York, New York 10019; that
he is Attorney-in-Fact of Kreditanstalt fur Wiederaufbau, a public law
company incorporated in the Federal Republic of Germany, the party
described in and which executed the foregoing instrument; that he signed
his name thereto by authority of the Board of Directors of said
corporation and as the free act and deed of such corporation.
/s/ Carla L. Clarke
Notary Public
CARLA L CLARKE
Notary Public State of New York
No 3i-484E091
Qualified in New York County
Commission Expires April 30, 1997
EXHIBIT A
to Amendment No. 1
AMENDED AND RESTATED
HDW CHINA NOTE
No.1 *
LIBO RATE NOTE
Issued in connection with
the purchase financing
of three (3) container vessels
Original Issue Date: May 19, 1995
Amendment and Restatement Date: September 1, 1995
MATURITY DATE
May 19, 2007
M.V. PRESIDENT KENNEDY, LTD. and M.V. PRESIDENT JACKSON, LTD.
(together, the "Companies"), for value received, hereby jointly and
severally promise to pay to the order of KREDITANSTALT FUR WEIDERAUFBAU
or registered assigns the principal sum of * 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 Companies 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, as amended by Amendment No. 1 thereto
dated May 19, 1995 and as further amended by Amendment No. 2 thereto
dated September 1, 1995 (the "Loan Agreement"), by and among American
President Lines, Ltd. ("APL"), the corporations listed in Schedule A to
Amendment No. 2, Kreditanstalt fur Wiederaufbau, Commerzbank AG, Hamburgt
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 Companies 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 Companies are 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 each of the Companies
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 Companies, 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.
Notwithstanding anything herein or in any other Loan Document to
the contrary, each of the Companies agrees that, upon its execution of
this Note, it shall be jointly and severally, directly and primarily
liable as a co-Borrower, together with all of the other Transferees that
have or shall have executed an HDW Note under the Loan Agreement for
payment in full of all Vessel Indebtedness respecting any or all of the
HDW Vessels. The liability of the Companies shall be independent of the
duties, obligations and liabilities of each and all of the other joint
and several Transferees. Any Holder (subject to the provisions of the
Loan Agreement) may bring a separate action or actions on each, any or
all of such Vessel Indebtedness against each, any or all of such
Transferees liable therefor, whether action is brought against any other
or all of such Transferees, or any one or more of the Transferees is or
is not joined therein.
Notwithstanding anything herein, in the HDW Notes or in any other
Loan Document to the contrary, by acceptance of this Note the Holder
agrees that it will look solely to the Recourse Assets for all amounts
coming due from the Transferees (or any Transferee) under the Loan
Agreement, under the HDW Notes or under any of the other Loan Documents,
and for the performance of all covenants, agreements and obligations and
for the breach of representations and warranties or covenants of the
Companies (or any Transferee) under the Loan Agreement or under the HDW
Notes or any of the other Loan Documents, or under any certificate or
other documents executed and delivered by the Companies as contemplated
by the Loan Documents, and, therefore, notwithstanding anything contained
in any of the aforesaid documents, no judgment or recourse (except a
judgment against the Recourse Assets or any of them) shall be sought or
enforced for the payment or performance of the Companies' (or any
Transferee's) obligations under the Loan Agreement, the HDW Notes, any
other Loan Document or any such other certificate or document: (a)
against the Companies in their individual or personal capacities, other
than in connection with the enforcement of remedies against the Recourse
Assets or (b) against any assets or property of the Companies other than
the Recourse Assets; provided, however, that nothing in this paragraph
shall (x) limit or otherwise prejudice in any way the rights of the
Holders to proceed against the Guarantor under the Guarantee or (y)
constitute or be deemed to be a release of the obligations secured by, or
impair the enforceability of, the liens, mortgage interests or other
security interests created by the Security Documents, or to restrict the
remedies available to the Holders to realize upon the Security Documents
or enforce the Guarantee.
This Note amends and restates in its entirety the HDW China Note
dated May 19, 1995 made by M.V. President Kennedy, Ltd. in favor of
Kreditanstalt fur Wiederaufbau.
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, each of the Companies has caused this
instrument to be executed by its duly authorized representative.
M.V. PRESIDENT KENNEDY, LTD.
By:_________________________
Name: Peter A.V. Huegel
Title: Vice President
M.V. PRESIDENT JACKSON, LTD.
By:____________________________
Name: Peter A.V. Huegel
Title: Vice President
Attest:
By:___________________________
Title:
Consented and agreed to as of
the date first above written:
KREDITANSTALT FUR WIEDERAUFBAU
By:___________________________
Title: Attorney-in-Fact
SCHEDULE 1
Repayment Dates and Principal Amounts
*
^DOCNUM^
* 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.
AMENDMENT NO. 1 TO BAREBOAT CHARTER PARTY
Amendment No. 1 (this "Amendment") made the 1st day of September,
1995 by M.V. President Kennedy, Ltd. ("Owner") and American President
Lines, Ltd. ("Charterer")
WHEREAS, M.V. Kennedy, Ltd., a Delaware corporation, as Owner, and
American President Lines, Ltd., as Charterer, entered into that certain
Bareboat Charter Party dated May 19, 1995 (the "Charter") relating to the
vessel known as "APL CHINA; and
WHEREAS, the Charter was assigned by Owner to Kreditanstalt fur
Wiederaufbau, a public law company incorporated in the Federal Republic
of Germany ("the Assignee") pursuant to the APL China Charter Assignment
dated May 19, 1995.
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby amend the Charter as follows:
1. Section 2(b) the Charter is amended with effect commencing
May 19, 1995 by deleting it in its entirety and by substituting the
following therefor:
(b) Subject to the provisions of Section 24(b)(i) hereof,
Charter hire ("Charter Hire") shall, subject to the provisions of this
Section 2(b), be paid by Charterer to, or for the account of, Owner in
the following two components: (i) "Basic Hire" consisting of (x)
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 HDW Notes related to such Subportion
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 with respect to *, Section 3.08 with respect to default interest,
Section 5.03 with respect to *, and Section 5.04 with respect to
prepayment and (y) all indemnity payments required under Section 11 of
the Loan Agreement when due and payable, and (ii) "Additional Charter
Hire" payable semi-annually at the time of payment of Basic Hire for such
semi-annual period calculated at the rate of * ; provided that (A), if
Basic Hire exceeds Additional Charter Hire for any such semi-annual
period no Additional Charter Hire shall be payable for such period and
(B), if Additional Charter Hire exceeds Basic Charter Hire for any such
semiannual period, Additional Charter Hire shall be payable in an amount
equal to the difference between Basic Hire and the amount of Additional
Charter Hire for such period; provided further, that Charter Hire shall
always be in an amount sufficient to cover Basic Hire and Supplemental
Charter Hire.
2. Except as amended hereby, the terms and provisions of the
Charter remain in full force and effect.
IN WITNESS WHEREOF, Owner and Charterer have caused this Amendment
to be duly executed as of the day and year first above written.
M.V. PRESIDENT KENNEDY, LTD.,
By:/s/ Peter A.V. Huegel
Name: Peter A.V. Huegel
Title: Vice President
AMERICAN PRESIDENT LINES, LTD.,
as Charterer
By:/s/ Thomas R. Meier
Name: Thomas R. Meier
Title: Assistant Treasurer
Consented to:
KREDITANSTALT FUR WIEDERAUFBAU
By:Ron Franklin
Its: Attorney-in-Fact
CONSENT TO AMENDMENT TO CHARTER
Reference is made to that certain Bareboat Charter Party (the
"Charter") dated May 19,1995 between M.V. President Kennedy, Ltd., a
Delaware corporation, as owner, and American President Lines, Ltd., a
Delaware corporation, as charterer which was assigned to Kreditanstalt
fYr Wiederaufbau (the "Assignee") pursuant to that certain APL Charter
Assignment between M.V. President Kennedy, Ltd. dated May 19, 1995 (the
"Assignment").
Pursuant to Section 2(f) of the Assignment, the Assignee hereby
consents to Amendment No. 1 to Bareboat Charter Party in the form annexed
hereto as Exhibit A.
Dated this 1st day of September, 1995.
KREDITANSTALT FUR WIEDERAUFBAU,
as Assignee
By: /s/ Ron Franklin
Name: Ron Franklin
Title: Attorney-in-Fact
* 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.
EXECUTION COPY
___________________________________________________________________
SECOND AMENDED AND RESTATED
AGREEMENT TO
ACQUIRE AND CHARTER
By and Among
AMERICAN PRESIDENT LINES, LTD.,
Transferor,
M.V. PRESIDENT KENNEDY, LTD.,
M.V. PRESIDENT ADAMS, LTD.,
M.V. PRESIDENT JACKSON, LTD.,
M.V. PRESIDENT POLK, LTD.,
M.V. PRESIDENT TRUMAN, LTD.,
APL SHIPHOLDINGS, LTD.,
Transferees,
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 (HAMBURG BRANCH)
BANQUE INTERNATIONALE A LUXEMBOURG S.A.
(as the Syndicate)
Dated September 1, 1995
________________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
RECITALS 1
SECTION 1. DEFINITIONS 4
SECTION 2. TRANSFER AND CHARTER OF THE VESSELS 6
SECTION 3. CONDITIONS PRECEDENT TO A TRANSFEREE'S
OBLIGATIONS ON A DELIVERY DATE 7
SECTION 4. REPRESENTATIONS AND WARRANTIES OF TRANSFEREES 10
SECTION 5. COVENANTS 14
SECTION 6. RELEASE OF A TRANSFEREE 18
SECTION 7. THIRD PARTY VESSEL EXCHANGE 18
SECTION 8. NOTICES 19
SECTION 9. COUNTERPARTS 19
SECTION 10. MODIFICATION 19
SECTION 11. SUCCESSORS AND ASSIGNS 19
SECTION 12. GOVERNING LAW 19
SECTION 13. ASSIGNMENT 20
SECTION 14. SEVERABILITY 20
SECTION 15. TABLE OF CONTENTS; HEADINGS 20
SCHEDULE 1 List of Transferees
SCHEDULE 2 List of Syndicate Banks
EXHIBIT A Form of Charter (Vessel transferred to Transferee
by Original Owner)
EXHIBIT A-1 Form of Charter (Vessel transferred to Transferee
by Transferor)
EXHIBIT B-l Form of HDW Certificate of Delivery and Acceptance
EXHIBIT B-2 Form of Daewoo Certificate of Delivery and Acceptance
EXHIBIT C Form of Charter Assignment/Second Charter Assignment
and Consent
EXHIBIT D Form of Charter Guarantee
<PAGE>
SECOND AMENDED AND RESTATED
AGREEMENT TO ACQUIRE AND CHARTER
THIS SECOND AMENDED AND RESTATED AGREEMENT TO ACQUIRE
AND CHARTER (this "Acquisition Agreement") is made and
entered into as of this 1st day of September, 1995 by and
among (i) AMERICAN PRESIDENT LINES, LTD., a Delaware
corporation (the "Transferor"); (ii) the six corporations
listed on Schedule 1 attached hereto (collectively, the
"Transferees" and each, individually, a "Transferee"); (iii)
KREDITANSTALT FUR WIEDERAUFBAU ("KfW"), a public law
corporation incorporated in the Federal Republic of Germany;
(iv) COMMERZBANK AG, HAMBURG, a banking corporation
incorporated in the Federal Republic of Germany (the
"Syndicate Agent)"; and (v) the banks listed in Schedule 2
attached hereto (each a "Syndicate Member" and,
collectively, the "Syndicate").
This Acquisition Agreement amends, restates and
supersedes in its entirety that certain Agreement to Acquire
and Charter dated March 14, 1994 among the parties hereto,
which Agreement was previously amended and restated in its
entirety pursuant to that certain Amended and Restated
Agreement to Acquire and Charter dated May 19, 1995 among
the parties hereto and acknowledged by APL Newbuildings,
Ltd., a Nevada corporation (collectively, the "Old AAC").
RECITALS:
A. The Transferor has contracted to purchase three (3)
container vessels (the "HDW Vessels") from Howaldeswerke-
Deutsche Werft AG ("HDW'') as is more specifically set forth
in a certain Shipbuilding Agreement dated May 10, 1993, as
amended (the OHDWO Shipbuildinq Agreement"), between the
Transferor and HDW.
B. The three (3) HDW Vessels have been or will be named
as follows: (i) APL CHINA (Builder's Hull No. 297), (ii) APL
JAPAN (Builder's Hull No. 298) and (iii) APL THAILAND
(Builder's Hull No. 299).
C. The Transferor has also contracted to purchase 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 OVesselsO).
D. The three (3) Daewoo Vessels have been or will be
named as follows: (i) APL KOREA (Builder's Hull No. 4028),
(ii) APL SINGAPORE (Builder's Hull No. 4029) and (iii)
APL PHILIPPINES (Builder's Hull No. 4033).
E. The Transferor, KfW, the Syndicate Agent and the
Syndicate entered into a Loan Agreement dated March 14,
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
<PAGE>
the Daewoo Vessels (said Loan Agreement, as amended by
Amendment No. 1 thereto dated as of May 19, 1995 and
Amendment No. 2 thereto of even date herewith, and as the
same may be further amended and supplemented from time to
time in accordance with its terms, being hereinafter
referred to as the "Loan Agreement").
F. The parties hereto wish to allow the Transferor to
make partial assignments of the HDW Shipbuilding Agreement
or the Daewoo Shipbuilding Agreement to up to six separate
Delaware corporations, each to be a wholly-owned subsidiary
of American President Companies, Ltd., a Delaware
corporation (the "Charter Guarantor") (such subsidiaries
being referred to, collectively, as the "Original Owners"
and, individually, as an "Original Owner"), each Original
Owner to be partially assigned the HDW Shipbuilding
Agreement or the Daewoo Shipbuilding Agreement, as the case
may be, only insofar as such Agreement relates to a single
Vessel; provided, however, that, as provided in the Loan
Agreement, the Transferor reserves the right not to assign
any Shipbuilding Agreement, but to take title directly to
the relevant Vessel and either to draw down the applicable
Subportion under the Loan Agreement or to transfer the
Vessel to a Transferee following the Transferor's
acquisition of a Vessel pursuant to an Exchange Agreement.
G. The Original Owners, each of which is to be a
Delaware corporation, will acquire the Vessels from the
respective Builders as follows (if at all):
(1) APL Newbuildings, Ltd., a Delaware
corporation, to acquire APL CHINA;
(2) APL M.V. Korea, Ltd., a Delaware corporation,
to acquire APL KOREA;
(3) APL M.V. Japan, Ltd., a Delaware corporation,
to acquire APL JAPAN;
(4) APL M.V. Singapore, Ltd., a Delaware
corporation, to acquire APL SINGAPORE;
(5) APL M.V. Thailand, Ltd., a Delaware
corporation,
to acquire APL Thailand; and
(6) APL M.V. Philippines, Ltd., a Delaware
corporation, to acquire APL PHILIPPINES.
H. On May 19, 1995, pursuant to the Old AAC, APL CHINA
was delivered by the Builder to APL Newbuildings, Ltd., and,
on the same date, APL CHINA was transferred by APL
Newbuildings, Ltd. to one of the Transferees, M.V. President
Kennedy, Ltd., as part of an exchange for a C-10 conbulk
vessel owned by such Transferee, prior to the draw down of
the Subportion relating to such Vessel by such Transferee.
I. With respect to any of the remaining Vessels, if the
Transferor so requests, the parties desire to permit the
Vessel to be delivered by the applicable Builder to such
Original Owner, which Original Owner would remain the owner
of the Vessel and would become a "Transferee" authorized to
draw down the Subportion relating to that Vessel, subject
however to the execution of amendments to the Operative
<PAGE>
Documents mutually acceptable to the Transferor, such
Original Owner and the Lenders as provided in Section 7(k)
of the Loan Agreement.
J. The parties also desire to permit, upon the terms
and conditions set forth herein, title to each of the
Vessels (other than APL CHINA) to be transferred by the
Original Owner thereof to the Transferor as part of an
exchange for a C-10 conbulk vessel owned by the Transferor,
whereupon the Transferor would transfer the Vessel in
question to the appropriate Transferee, in connection with
the draw down of the Subportion relating to such Vessel by
such Transferee, and such Transferee shall be permitted to
draw down the Subportion applicable to its Vessel upon such
transfer of the Vessel by the Transferor.
K. Concurrently with any transfer of each Vessel to a
Transferee in accordance with the terms hereof, the
Transferor shall enter into a Charter for such Vessel to be
so transferred, as evidenced by the execution of an HDW
Charter, if the Vessel is one of the Vessels being financed
under the HDW Tranche, or a Daewoo Charter, if the Vessel is
one of the Vessels being financed under the Daewoo Tranche,
each Charter to be in the form of (i) Exhibit A hereto, if
Vessel in question is being transferred to the Transferee by
the Original Owner, or (ii) Exhibit A-1 hereto, if the
Vessel in question is being transferred to the Transferee by
the Transferor.
L. Concurrently with the execution of each Charter in
the form of Exhibit A hereto, the Charter Guarantor shall
execute and deliver to the relevant Transferee a guarantee
of payment obligations of the Transferor as charterer under
such Charter (it being understood that no such guarantee
shall be required with respect to Charters in the form of
Exhibit A-1 hereto).
M. Concurrently with the execution and delivery of each
Charter, the Transferee will assign all of its right, title
and interest in and to such Charter (and, if there is one,
the guarantee by the Charter Guarantor of the charter
payment obligations of the Transferor) to: (i) KfW if it
relates to an HDW Vessel, (ii) the Syndicate Agent and the
Syndicate if it relates to a Daewoo Vessel, and (iii) KfW
(as a second priority assignment) if it relates to a Daewoo
Vessel, in each case as security for the Transferee's
obligations under the Loan Documents.
N. Pursuant to the Loan Agreement, the Charter
Guarantor has executed and delivered to the Lenders an
Amended and Restated Guarantee dated May 19, 1995, which
guarantees all obligations of the Transferor and each
Transferee as Borrower under the Loan Agreement and Security
Documents.
NOW, THEREFORE, in consideration of mutual agreements
herein contained, the parties 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
<PAGE>
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:
"Certificate of Delivery and Acceptance" means, with
respect to a given Vessel, a certificate in the form of
Exhibit B-1 or Exhibit 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 designated
Transferee and the acceptance by such Transferee.
"Charter Assignment" means each, and "Charter
Assignments" means every, first priority assignment of each
HDW Charter and each Daewoo Charter by the appropriate
Transferee of the Vessel relating thereto to KfW and to the
Syndicate Agent and the Syndicate, respectively, as security
for such Transferee's obligations as provided under the Loan
Documents and in the form of Exhibit C to this Acquisition
Agreement.
"Charter Documents" means this Acquisition Agreement,
the *, the Bills of Sale from the appropriate Original Owner
(if applicable) and the Transferor (following a vessel
exchange between the Transferor and an Original Owner), as
the case may be, to the Transferee, the Certificates of
Delivery and Acceptance, the Charters, the Charter Hire
Guarantees, the Charter Assignments and the Second Charter
Assignments; provided, however, that, if a Vessel is
transferred by the Transferor (following a vessel exchange
between the Transferor and an Original Owner) directly to
the Transferee in accordance with the terms hereof, there
shall be no Charter Hire Guarantee in respect of such
Vessel.
"Charter Hire Guarantee" means each, and "Charter
Guarantees" means every, guarantee by the Charter Guarantor
of the payment obligations of the Transferor under a
Charter, in the form of Exhibit D to this Acquisition
Agreement; provided, however, that, if a Vessel is
transferred by the Transferor (following a vessel exchange
between the Transferor and an Original Owner) directly to
the Transferee in accordance with the terms hereof, there
shall be no Charter Hire Guarantee in respect of such
Vessel.
*
"Second Charter Assignment and Consent" means each, and
"Second Charter Assignments" means every, second priority
assignment of a Daewoo Charter and, if applicable, the
related Charter Hire Guarantee by the Transferee of the
Vessel relating thereto to KfW as security for such
Transferee's obligations under the Loan Documents with
respect to the Vessel Indebtedness under the HDW Tranche in
the form of Exhibit C to this Acquisition Agreement.
"Solvent" means, with respect to any Transferee on a
Delivery Date, that on such date each of the following is
<PAGE>
true as determined under generally accepted accounting
principles: (i) 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.
SECTION 2. Transfer and Charter of the Vessels.
With respect to any acquisition of a Vessel by a
Transferee:
A. On the Delivery Date for such Vessel, 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 Transferee shall
acquire such Vessel from the Original Owner or the
Transferor (following a vessel exchange between the
Transferor and an Original Owner), and the Lenders
shall make their Commitment available to the
Transferee.
B. The Vessel will have been registered in the
name of the initial owner thereof (i.e., the Original
Owner or the Transferor following a vessel exchange
between the Transferor and an Original Owner, as the
case may be) under the laws of the Republic of The
Marshall Islands and then reregistered in the name of
the Transferee under the laws of the Republic of The
Marshall Islands free and clear of all liens, claims
and encumbrances; provided, however, that, if such
Vessel is transferred by the Original Owner to the
Transferor (following a vessel exchange between the
Transferor and an Original Owner), then, immediately
prior to the transfer of the Vessel by the Transferor
to the Transferee, the Vessel shall also have been
reregistered in the name of the Transferor under the
laws of the Republic of The Marshall Islands.
C. Upon its acquisition of any Vessel pursuant to
the terms hereof (following a vessel exchange between
the Transferor and an Original Owner), the Transferor
will execute, deliver and record a first preferred
mortgage, 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.
D. Following the acquisition of any Vessel by the
relevant Transferee from the Transferor (following a
vessel exchange between the Transferor and an Original
Owner), and in connection with the drawdown of the
relevant Subportion under the Loan Agreement, the
Transferee will execute, deliver and record an
assumption of the first preferred mortgage executed by
the Transferor, and with respect to the Daewoo Vessels
an assumption of the second preferred mortgage executed
by the Transferor, in substantially the form attached
to the Loan Agreement.
E. Simultaneously with the actions specified in
Section 2.C and Section 2.D, the Transferor shall
charter such Vessel from the Transferee, the Transferee
<PAGE>
shall charter such Vessel to the Transferor, pursuant
to the relevant Charter (it being understood that if
the Vessel is transferred to the Transferee by the
Transferor (following a vessel exchange between the
Transferor and an Original Owner) in accordance with
the terms hereof, the Charter shall be in the form of
Exhibit A-1 hereto, instead of Exhibit A hereto), and
the Charter Guarantor shall execute and deliver the
related Charter Hire Guarantee; provided, however,
that, if the Vessel is transferred by the Transferor
(following a vessel exchange between the Transferor and
an Original Owner) to the Transferee in accordance with
the terms hereof, it is understood that no Charter Hire
Guarantee shall be required.
F. In connection with the actions specified in
Sections 2.A, 2.B, 2.C and 2.D, the Transferees shall,
as required in the Loan Agreement (i) execute and
deliver one or more HDW Note(s) (in the case of an HDW
Vessel) or one or more Daewoo Note(s) (in the case of a
Daewoo Vessel), (ii) undertake all obligations as a
co-borrower with joint and several liability with the
other Transferees, with respect to the HDW Tranche
and/or the Daewoo Tranche, as the case may be, as
evidenced by the execution and delivery of Note
endorsements, and (iii) undertake all other obligations
the Transferee may have under the Loan Documents.
G. Delivery and presentation of all documents to
complete the transactions contemplated herein shall be
made at the Closings to be held on the Delivery Dates
convened pursuant to the Loan Agreement.
SECTION 3. Conditions Precedent to a Transferee's
Obligations on a Delivery Date.
A Transferee's right to receive a Loan in respect of
its 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, such
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 Loan Documents and the Charter Documents
to which it is a party, to execute and deliver such
Loan Documents and Charter Documents and the Transferee
<PAGE>
to perform under the Loan Documents and 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 to cause such Vessel to be
acquired by the Transferee in accordance with the
provisions of this Acquisition Agreement;
(c) the Transferor and the Original Owner, if any,
acquiring such Vessel, shall have entered into an
assignment and assumption agreement pursuant to which
the Transferor shall have assigned to such Original
Owner, and such Original Owner shall have assumed, all
of the Transferor's right, title and interest in and
to, and all of the Transferor's obligations under, the
related HDW Shipbuilding Agreement or Daewoo
Shipbuilding Agreement, as the case may be, to the
extent the same relates to such Vessel;
(d) concurrently with the Transferor's acquisition
of any Vessel (following a vessel exchange between the
Transferor and an Original Owner), the Transferor and
the Original Owner shall have entered into an
assignment agreement, pursuant to which such Original
Owner shall have assigned to the Transferor all of such
Original Owner's right, title and interest in and to
the related HDW Shipbuilding Agreement or Daewoo
Shipbuilding Agreement, as the case may be to the
extent the same relates to such Vessel;
(e) 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;
(f) there shall not have occurred any material
adverse change in the financial condition of the
Transferee (or any other Transferee that has already
received a Loan that remains outstanding in whole or in
part) which in the reasonable opinion of the Agent
and/or the Syndicate would materially and adversely
affect the ability of any such Transferee to perform
its obligations as to the repayment of the Facility by
the installments together with interest thereon as
herein set out or to perform its obligations under the
Loan Documents to which it is or will become a party;
(g) all representations and warranties of the
Transferee (and any other Transferee that has already
received a Loan that remains outstanding in whole or in
part) contained in this Acquisition Agreement and of
the Charter Guarantor in the Charter Hire Guarantee (if
a Charter Hire Guarantee is required hereunder) 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;
<PAGE>
(h) 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 to which it is a party, and (ii)
the Transferor and the Charter Guarantor (if a Charter
Hire Guarantee is required hereunder) 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;
(i) 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, the jurisdiction of
registration of such Vessel or any other relevant
jurisdiction;
(j) evidence that such Vessel has been duly
registered (i) first in the name and ownership of the
Transferor and (ii) then in the name and ownership of
the Transferee, in each case under the laws and flag of
the Republic of The Marshall Islands, free of
registered liens except the relevant Mortgage(s);
(k) 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);
(l) 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; and
(m) all conditions precedent as set forth in
Section 7 of the Loan Agreement shall have been
satisfied.
SECTION 4. Representations and Warranties of Transferees.
Each of the Transferees 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
<PAGE>
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 (or prior to the
execution thereof will have 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 to which the Transferee is or
will be a party 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 or the
Charter Documents to which the Transferee is or will be
a party 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
<PAGE>
(which is also the location of the place of business
that is its chief executive office), which 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 Mortgage(s) to which
it will be a party, (B) to ensure that its obligations
thereunder are legal, valid and enforceable and (C) to
make the Mortgage(s) to which it will be a party
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, except as otherwise contemplated by the
Charter Documents, each of the Charter Documents rank
and will rank at least pari passu in priority of
<PAGE>
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 assumption of such Mortgage, as
required) and the Second Mortgage on each Daewoo Vessel
(and the assumption of such Mortgage, as required)
under the laws and flag of the Republic of The Marshall
Islands (including any other Loan Document or Charter
Document required by the laws of the country of the
mortgaged vessel's registry to be filed with such
Mortgages), 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) each Transferee is a wholly-owned Subsidiary
of the Transferor; the Transferor is a wholly-owned
Subsidiary of the Charter Guarantor;
(o) the Transferee does not maintain any Plans;
(p) none of the proceeds of the Loans 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) the Vessel acquired by the Transferee will be
duly documented in the name of the Transferee under the
flag of the Republic of The Marshall Islands;
(s) the Vessel acquired by the Transferee 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; and
(u) the Transferor is a wholly-owned Subsidiary of
the Charter Guarantor.
SECTION 5. Covenants.
<PAGE>
A. Affirmative Covenants. Each of the
Transferees covenants with each of the Lenders that it
shall:
(1) 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 to which it is or will become a
party and to ensure the legality, validity,
enforceability and admissibility in evidence
in such country of each such Mortgage;
(2) 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;
(3) 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;
(4) if the Transferee's agent for service of
process referred to in Section 11 shall for
<PAGE>
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; and
(5) the Transferee shall send to the Agent and
the Syndicate Agent (i) as soon as possible,
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, (iii) 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 (iv) 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. Each of the Transferees
covenants with each of the Lenders as follows:
(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 Charter, 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 to
which it is a party.
(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 one of the
HDW or Daewoo Vessels and chartering such
Vessel 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, without the prior written consent of
the Agent, in the case of the HDW Vessels,
and the Agent and the Syndicate Agent, in the
case of the Daewoo Vessels.
(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 Transferor.
(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
Transferor.
(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.
C. Negative Covenant of Transferor. Without the
prior written consent of the Agent or the Syndicate
Agent, the Transferor shall not transfer the legal or
beneficial ownership, or the control, of any Transferee
or, except as provided in this Acquisition Agreement
and subject to the preceding clause, permit the
consolidation, amalgamation or merger of any Transferee
with or into another corporation or entity.
SECTION 6. Release of a Transferee.
As provided in Section 5.04(c) of the Loan Agreement,
if any HDW or Daewoo Subportion is paid in full and the
Transferee owning the Vessel financed by that Subportion has
the right to have the Mortgage or Mortgages thereon
released, that Transferee shall cease being a party to this
Acquisition Agreement and shall no longer be bound by any
terms and conditions hereof.
SECTION 7. Third Party Vessel Exchange
The parties recognize that, in lieu of delivery of APL
THAILAND or APL PHILIPPINES to an Original Owner, the
Transferor may wish to acquire title to such Vessel from the
applicable Builder following or incident to a vessel
exchange involving the Transferor and an unaffiliated third
party, whereupon (i) APL THAILAND or APL PHILIPPINES, as the
case may be, would be transferred by the Transferor to APL
Shipholdings, Ltd. (formerly named APL M.V. Philippines,
Ltd.), a Delaware corporation ("Shipholdings"), which is one
of the "Transferees" party to the Loan Agreement, and (ii)
following transfer of that Vessel to Shipholdings, the
Subportion applicable to that Vessel would be drawn down by
Shipholdings. As part of such vessel exchange the
Shipbuilding Agreement or the Daewoo Shipbuilding Agreement,
as applicable, may be partially assigned (insofar as the
Agreement relates to the Vessel in question) to a financial
institution acting as a qualified intermediary, provided
that, notwithstanding such partial assignment, the Vessel
shall be delivered by the applicable Builder directly to the
Transferor.
Notwithstanding anything herein or in the Loan
Agreement to the contrary, it shall be a condition precedent
to the right of Shipholdings to draw down the Subportion
applicable to APL THAILAND or APL PHILIPPINES (following
consummation by the Transferor of a vessel exchange
transaction involving an unaffiliated third party and the
subsequent transfer of the Vessel in question by the
Transferor to Shipholdings) that each of the Lenders shall
have consented to such vessel exchange transaction and each
of the Lenders, the Transferor and the Transferees shall
have entered into any amendments to this Acquisition
Agreement and/or the other Operative Documents as may
reasonably be required by the Lenders, and the Transferor
and the Transferees shall have furnished to the Lenders
(subject to confidentiality agreements, as the Transferor or
such unaffiliated third party may reasonably require) copies
of documents relating to such vessel exchange transaction as
may reasonably be requested by the Lenders or their counsel.
SECTION 8. 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. Each such notice, if to a Transferee,
shall be sent to the Transferee at the following address (or
such other address as that Transferee hereafter shall
designate in a writing delivered to the other parties):
1111 Broadway
Oakland, California 94607
Attn: President
SECTION 9. 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 10. 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 11. 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 12. 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 each
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, the provisions of which are
hereby incorporated herein by reference, to the same extent
and under the same terms and conditions so provided in said
Section 15.08.
SECTION 13. 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 14. Severabilitv.
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 15. 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.
[SIGNATURE PAGES FOLLOW]
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
By:_/s/_________________________
Name: Uibeleisen Pfisterer
Title (Director) (Vice President)
COMMERZBANK AG, HAMBURG
By:_/s/_________________________
Name: Kuch
Title: Vice President
By:_/s/_________________________
Name: J. Hagemann
Title: Senior Vice President
COMMERZBANK AG (KIEL BRANCH)
By:_/s/_________________________
Name: Bahlert
Title
By:_/s/_________________________
Name: Dr. Plate
Title:
DRESDNER BANK AG in HAMBURG
By:_/s/_________________________
Name: B. Sorge
Title: Assistant Manager
By:_/s/_________________________
Name: R. Eggert
Title: Senior Manager
VEREINS-und WESTBANK AG
By:_/s/_________________________
Name: VP
Title:
By:_/s/_________________________
Name: AVP
Title:
DEUTSCHE SCHIFFSBANK AG
By:_/s/__________________________
Name: Klaus Pieper
Title:Gen. Manager
By:_/s/_________________________
Name: Wolf Jurgen Onnen
Title:Ass. Gen. Mgr.
NORDDEUTSCHE LANDESBANK -
GIROZENTRALE
By:_/s/___________________________
Name: Huack
Title:Sen. Vice Pres.
By:_/s/_________________________
Name: Hartmann
Title: Vice Pres.
DEUTSCHE VERKEHRS-BANK AG (HAMBURG
BRANCH)
By:_/s/____________________________
Name: Spincke
Title: Director
By:__________________________
Name:
Title:
BANQUE INTERNATIONALE A LUXEMBOURG S.A.
By:_/s/_______________/s/___________
Name: Jean-Pierre Vernier
Claude Lehnertz
Title:Directeur-adjoint
Vice President
AMERICAN PRESIDENT LINES, LTD.
By:_/s/_____________________________
Name: Thomas R. Meier
Title: Assistant Treasuter
M.V. PRESIDENT KENNEDY, LTD.
M.V. PRESIDENT ADAMS, LTD.
M.V. PRESIDENT JACKSON, LTD.
M.V. PRESIDENT POLK, LTD.
M.V. PRESIDENT TRUMAN, LTD.
APL SHIPHOLDINGS, LTD.
By:_/s/____________________________
Name: Thomas R. Meier
Title: Assistant Treasurer
SCHEDULE 1
LIST OF TRANSFEREES
1. M.V. PRESIDENT KENNEDY, LTD., a Delaware corporation
2. M.V. PRESIDENT ADAMS, LTD., a Delaware corporation
3. M.V. PRESIDENT JACKSON, LTD., a Delaware corporation
4. M.V. PRESIDENT POLK, LTD., a Delaware corporation
5. M.V. PRESIDENT TRUMAN, LTD., a Delaware corporation
6. APL SHIPHOLDIDNGS, LTD., a Delaware corporation
EXHIBIT A
TO SECOND AMENDED AND
RESTATED AGREEMENT TO
ACQUIRE AND CHARTER
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 ACKNOWLEDGMENT THEREOF EXECUTED BY KREDITANSTALT
FUR WIEDERAUFBAU AS AGENT ON THE SIGNATURE PAGE
THEREOF.
BAREBOAT CHARTER PARTY
THIS BAREBOAT CHARTER PARTY (the "Charter")
dated this __th day of __________, 199_, between [
], a corporation organized and existing under the laws
of Delaware (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 March 14, 1994, as amended
by Amendment No. 1 thereto dated May 19, 1995 and as
further amended by Amendment No. 2 thereto dated
September 1, 1995 (the "Loan Agreement"), by and among
APL, Owner, as Borrower, the other "Transferees," as
defined in the Loan Agreement, Kreditanstalt fur
Wiederaufbau (["Vessel Lender" or] "Agent")],
Commerzbank AG (Hamburg) (the OSyndicate AgentO [or
OVessel LenderO]), and the banks listed on Schedule 1
thereto (each a OSyndicate MemberO and collectively the
OSyndicateO), as Lenders, with respect to the purchase
financing of six (6) container vessels, including the
Vessel described below, and American President
Companies, Ltd. (the OCharter GuarantorO) has entered
into that certain Amended and Restated Guarantee dated
May 19, 1995 (the OGuaranteeO), 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
Second Amended and Restated Agreement to Acquire and
Charter (the OAcquisition AgreementO) among Owner, the
other corporations identified as Transferees therein
and the parties to the Loan Agreement, pursuant to
which Owner has, by an Exchange Agreement dated as of
the date hereof between Owner and the Original Owner
(OExchange AgreementO), accepted title to, and is
currently the registered owner of, the Republic of The
Marshall Islands flag vessel [ ], 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) together with its joint and several
obligations to pay all other Loans made under the [HDW]
[Daewoo] Tranche (as such term is defined in the Loan
Agreement) (collectively, the "Owner Obligations");
WHEREAS, pursuant to the Exchange Agreement,
Owner has taken title to the Vessel, on its Delivery
Date;
WHEREAS, Owner has simultaneously herewith
entered into a First Mortgage on the Vessel in favor of
the Vessel Lender, in substantially the form of the
First Mortgage set forth in Appendix B-1 to the Loan
Agreement ("Mortgage") as security for the Owner
Obligations;
WHEREAS, 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, Charter Guarantor simultaneously
herewith is entering into a guarantee of the payment
obligations of Charterer under this Charter in favor of
Owner (the "Charter Hire Guarantee");
WHEREAS, simultaneously herewith Owner is
entering into the [ ] Charter Assignment
(the "Charter Assignment") relating to the Charter and
the Charter Hire Guarantee in favor of the Vessel
Lender, and Charterer is consenting to such Charter
Assignment pursuant to this Charter and Charter
Guarantor is consenting to such Charter Assignment in
the Charter Hire Guarantee;
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.
(k) Charterer represents and warrants that
any representation and warranty made on or prior to the
date hereof by any of its Subsidiaries which is a party
to a Charter in this Charter or in any of the Operative
Documents or by any such Subsidiary in any certificate,
statement or other document issued by and on behalf of
any such Subsidiary is not or was not incorrect or
misleading in any material respect when made or deemed
made.
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 of
fifteen years from the date hereof with respect to the
Vessel, 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
OCharter PeriodO).
(b) Subject to the provisions of Section
24(b)(i) hereof, Charter hire ("Charter Hire") shall be
paid by Charterer to, or for the account of, Owner in
the following two components: (i) "Basic Hire"
consisting of (x) 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 [HDW] [Daewoo]
Notes related to such Subportion 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 with
respect to *, Section 3.08 with respect to default
interest, Section 5.03 with respect to *, and Section
5.04 with respect to prepayment and (y) all indemnity
payments required under Section 11 of the Loan
Agreement when due and payable, and (ii) "Additional
Charter Hire" payable semi-annually at the time of
payment of Basic Hire in an amount equal to the
difference between Basic Hire and an amount for such
semi-annual period calculated at the rate of * per day
for such period; provided that Charter Hire shall
always be in an amount sufficient to cover Basic Hire
and Supplemental Charter Hire.
At the end of the fifteen-year charter term
provided in Section 2(a) above, Charterer shall have
the right to extend the Charter for up to three
additional one-year periods. To extend the Charter,
Charterer must give prior written notice of the
one-year extension at least 60 days prior to the end of
the Charter, and, with respect to subsequent periods,
at least 60 days prior to the end of each one-year
extended period. The extension will be on the same
terms and conditions as the Charter; provided, however,
that the amount of Charter Hire shall be equal to the
fair market charter hire of the Vessel as determined in
good faith by the parties within 30 days prior to the
commencement of any one-year extension.
(c) This Charter may not be canceled 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 Basic Hire and Supplemental Charter Hire
pursuant to this Section 2 and all other amounts
payable on behalf of Owner to the Agent 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 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,
Charter 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; (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 Basic 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 Basic
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
(OSupplemental Charter HireO), Charterer shall pay as
and when due any and all amounts (other than principal
and interest on the [HDW] [Daewoo] Notes in respect of
the Subportion relating to the Vessel, 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.
(b) On its delivery, the Vessel is classed
by the American Bureau of Shipping in the highest
classification and rating for vessels of her age and
type. 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 as to maintenance of the Vessel and its
classification and compliance with all applicable laws,
treaties, conventions, rules and regulations of the
Republic of The Marshall Islands, 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, the
Republic of The Marshall Islands, or The American
Bureau of Shipping in order to entitle the Vessel to
the classification and rating required above.
12. WARRANTY CLAIMS.
Owner hereby assigns to Charterer Owner's
rights to the extent assignable, under the [HDW]
[Daewoo] Shipbuilding Agreement with respect to the
Vessel with [ ] (the OShipbuilderO)
relating to the condition and performance of the
Vessel, including its replacement and repair warranty
rights under said contract, and, if not assignable,
then Charterer shall be subrogated to all such rights
of Owner, and Owner hereby assigns to Charterer all
Owner's 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
Oas is, where isO 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 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.
(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 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 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:
ONOTICE OF FIRST PREFERRED
SHIP MORTGAGE AND CHARTER
THIS VESSEL IS OWNED BY M.V. PRESIDENT KENNEDY,
LTD., A DELAWARE CORPORATION (THE OSHIPOWNERO),
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, UNDER AUTHORITY OF
THE REPUBLIC OF THE MARSHALL ISLANDS. UNDER THE
TERMS OF SAID MORTGAGE 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 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, FOR CERTAIN LIENS INCIDENT
TO CURRENT OPERATIONS OR FOR REPAIRS OR CHANGES
PERMITTED BY THE MORTGAGE.O
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
OEvent of DefaultO):
(i) Charterer's failure to pay the whole or
any part of any Charter Hire or Supplemental
Charter Hire under the terms of this Charter
and such default remains unremedied for three
(3) Business Days after the due date thereof;
or
(ii) default by Charterer in the due and
punctual observance and performance of
Charterer's obligations under SECTION 22, the
third sentence of SECTION 25, SECTION 26(b),
c), (d) or (g) of this Charter, Sections
15(b), 16, 21(y) and (z), 23, 29(a), (b), (f)
and (j) of the Mortgage (and to the extent
that such default exposes the Vessel to
forfeiture, Sections 21(x) and 22 of the
Mortgage); or
(iii) any insurance on the Vessel required to
be maintained by Charterer in performance of
Owner's obligations is canceled due to non-
payment of premiums and otherwise not
immediately replaced or the Vessel otherwise
ceases to be insured in accordance with the
provisions of the Mortgage on the Vessel; or
(iv) default by Charterer (other than as
specified in paragraphs (ii) and (iii) of
this SECTION 24(a) in the due and punctual
performance of Owner's obligations under
SECTION 26(e), (f), (g), (h) and (i) of this
Charter and Charter's performance of Owner's
obligations under Sections 18, 21, 22, 24,
25, 26, 28, 50(a) and (b) and 51 of the
Mortgage, in each case, which shall continue
for thirty (30) days after written notice
from the Agent, Owner or Charter Guarantor.
(v) an "Event of Default" under any other
[HDW] [Daewoo] Charter or under any [HDW]
[Daewoo] Charter.
(vi) Charterer or Charter Guarantor is in
breach in the performance or observance of
this Charter, the Charter Hire Guarantee or
any other of the Operative Documents to which
either of them is a party (not being a
default which falls within paragraphs (i),
(ii), (iii), (iv) or (v) of this SECTION
24(a)) and if it is capable of being remedied
and such breach is not remedied within thirty
(30) days after receipt by Charterer of
notice of such breach from Owner or (so long
as the Mortgage is in effect), the Agent; or
(vii) Charterer or any of its Subsidiaries
which is a party to a Charter or Charter
Guarantor 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
(viii) there is a final, unappealable and
enforceable judgment made against Charterer,
any of Charterer's Subsidiaries which is a
party to a Charter or Charter Guarantor
greater than 5% of the Tangible Net Worth of
Charter Guarantor; or
(ix) any representation or warranty made by
or on behalf of Charterer or Charter
Guarantor in this Charter or in any of the
Operative Documents or by Charterer or
Charter Guarantor in any certificate,
statement or other document issued by or on
behalf of Charterer or Charter Guarantor
pursuant to any of the Operative Documents
shall prove to have been incorrect or
misleading in any material respect when made
or deemed made; or
(x) without the prior written consent of
Owner and (so long as the Mortgage remains in
effect) the Agent, there is a merger of
Charterer or Charter Guarantor otherwise than
as permitted under the Operative Documents;
or
(xi) any license, authorization, consent or
approval at any time necessary to enable
Charterer or Charter Guarantor to comply with
its obligations under this Charter, the
Charter Guarantee or any of the other
Operative 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 Owner and (while the Mortgage is
in effect) the Agent with respect to the
Vessel; or
(xii) Charterer or Charter Guarantor shall
(i) 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, (ii) make an assignment for the
benefit of creditors, or (iii) consent to the
appointment of a custodian, receiver, trustee
or other officer with similar powers with
respect to itself or any substantial part of
its property; or
(xiii) 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 Charterer or Charter
Guarantor, a custodian, receiver, trustee or
other officer with similar powers with
respect to Charterer or Charter Guarantor or
with respect to any substantial part of
Charterer's or Charter Guarantor's 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
of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of
Charterer or Charter Guarantor, 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; or
(xiv) default by Charterer of its obligations
under SECTION 26(a) of this Charter.
(b) If an Event of Default shall have
occurred and be continuing:
(i) Upon declaration by Owner by notice in
writing to Charterer, Owner shall be
immediately entitled to payment of all
amounts which are due and payable under this
Charter and, as damages for loss of a bargain
and not as a penalty, whichever in the
following amounts Owner, in its sole
discretion, shall specify: (A) that sum with
respect to the Vessel which shall be equal to
the excess, if any, of (1) the present value
of the unpaid balance of total Charter Hire
which would otherwise have been paid over the
Charter Period but for such declaration by
Owner, discounted a rate of 6% per annum over
(2) the fair market rental value of the
Vessel, as determined by Owner, for the
period from the date of such Owner's
declaration to the date the Charter would
have terminated but for such declaration, or
(B) that sum with respect to the Vessel which
shall be equal to the excess, if any, of (1)
the amount specified in subclause A (1) above
over (2) the amount Owner estimates to be the
fair market sale value of the Vessel;
provided that, (C) in the event Owner shall
have sold the Vessel, in lieu of collecting
any amounts payable to Owner by Charterer
pursuant to the preceding clauses (A) or (B)
of this Section 24(b)(i), Owner, if it shall
so elect, may demand that Charterer pay
Owner, as liquidated damages for loss of a
bargain and not as a penalty, an amount equal
to the excess, if any, of (1) the amount
specified in subclause A(1) above over (2)
the net proceeds of such sale, plus interest
on the unpaid balance of any such excess
amounts immediately payable to Owner by
Charterer pursuant to clauses (A), (B) or (C)
at the Default Interest Rate commencing on
the date of such declaration by Owner to the
date of payment; provided, further, if an
Event of Default hereunder shall have
occurred and be continuing hereunder and 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
with respect to the Subportion relating to
the Vessel to be immediately due and payable
by Owner pursuant to Section 12.01 of the
Loan Agreement and Section (31) of the
Mortgage, the amount immediately payable
hereunder shall in all events be not less
than the principal amount and interest on
such accelerated [HDW] [Daewoo] Notes
together with interest from the date of such
declaration to the date of payment on overdue
principal at the Default Interest Rate plus
any other amounts comprising Basic Hire due
and payable;
(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, 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. 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) 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.
(e) 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.
(f) 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.
(g) 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.
(h) 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.
(i) 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.
(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 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. Any lien of
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. 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.
Charterer shall establish and maintain, or if
appropriate, require Owner to establish and maintain
(i) the Mortgage and any Replacement Mortgage(s) to be
valid and enforceable and duly registered on the Vessel
having the priority of record required under the terms
of the Operative Documents, (ii) each Security
Document, and the liens or security interests created
or intended to be created thereunder to be and remain
in full force and effect. Owner agrees to execute such
documents and furnish such information as Charterer may
request in order to assist Charterer in the discharge
of Charterer's obligations as set forth in the
preceding sentence of this Section 25. 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,
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, (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. COVENANTS OF CHARTERER.
Charterer shall take whatever action is
necessary (not contrary to applicable law and not
contrary to the maintenance of the separate corporate
status of each of such Subsidiaries) as to any of its
Subsidiaries which is a party to a Charter, to:
(a) prevent any of such Subsidiaries from
voluntarily or involuntarily committing or being
subjected to an OEvent of BankruptcyO and will not
suffer any of such Subsidiaries voluntarily or
involuntarily to commit or be subjected to an Event of
Bankruptcy. For the purposes of this SECTION 26(a), an
"Event of Bankruptcy" shall mean any of the events
relating to such Subsidiaries described in SECTION
24(a)(xii) and (xiii) of this Charter;
(b) cause any of such Subsidiaries not to
breach any of its representations and warranties as to
ownership, possession, mortgages, security interests
and lien status and its obligations to defend and hold
harmless the Mortgagee of such Vessels in respect
thereof as required under the first paragraph of
Section 14 of the Mortgages;
(c) prevent, and not suffer any of such
Subsidiaries to, breach any of such Subsidiaries'
obligations under Section 17 of the Mortgage;
(d) prevent, and not suffer any of such
Subsidiaries, to breach any of such Subsidiaries'
representations and warranties under Section 20(a) of
the Mortgage;
(e) cause such Subsidiaries faithfully to
observe all covenants and conditions set forth in
Section 20(b) and (c) of the Mortgage;
(f) cause such Subsidiaries to comply
faithfully with the provisions of Section 25 of the
Mortgage;
(g) cause such Subsidiaries to comply
faithfully with the provisions of Section 27 of the
Mortgage;
(h) cause such Subsidiaries to obtain and
maintain in full force and effect all licenses,
authorizations, consents and approvals to enable them
to comply with their obligations under this Charter and
the other Operative Documents;
(i) cause such Subsidiaries to remedy any
breach of any of the Operative Documents not mentioned
in paragraphs (a) through (h) of this SECTION 26,
except the failure or breach of any of such
Subsidiaries to pay Vessel Indebtedness in respect of
any Vessel.
27. 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.
28. 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.
29. 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).
30. NOTICES.
All notices or other communications by either
party to the other shall be in writing. If such notice
is to 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:
M.V. President Kennedy, 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.
31. CONSENT TO ASSIGNMENT.
Charterer hereby consents to the assignment
of all of Owner's rights, title and interest in and to
this Charter to the Vessel Lender pursuant to the [
] Charter Assignment as security for the payment and
performance of the Owner Obligations with respect to
the Vessel and agrees to make all payments due
hereunder to the accounts specified and otherwise in
accordance with Section 5.06 of the Loan Agreement,
except that so long as no Event of Default shall have
occurred and be continuing, Charterer may make payments
of Additional Charter Hire directly to Owner.
IN WITNESS WHEREOF, the parties hereto have caused
this Charter to be executed the day and year first
above written.
[ ],
as Owner
By:
__________________________
Title:
AMERICAN PRESIDENT
LINES, LTD.,
as Charterer
By:
___________________________
Title:
RECEIPT OF ORIGINAL EXECUTED
COUNTERPART ACKNOWLEDGED:
[ ]
By: _______________________________
EXHIBIT A-1
TO SECOND AMENDED AND
RESTATED AGREEMENT TO
ACQUIRE AND CHARTER
Omitted pursuant to Instruction 2 to Item 601 of
Regulation S-K. Same as Exhibit I to Exhibit A to the
Agreement to Acquire and Charter filed as Exhibit 10.6
with Registrant's Form 10-Q for the quarter ended April
8, 1994, except the recitals refer to the Second
Amended and Restated Agreement to Acquire and Charter
dated September 1, 1995 and related documents.
EXHIBIT B-1
TO SECOND AMENDED AND
RESTATED AGREEMENT TO
ACQUIRE AND CHARTER
__________, 199 _
Kreditanstalt fur Wiederaufbau
Palmengartenstrasse 5-9
60325 Frankfurt am Main
Federal Republic of Germany
RE: Container Vessel Named __________,
Identified by Howaldtswerke-Deutsche Werft AG
(the OContractorO) as Contractor's Hull
No. [297] [298] [299] (the "Vessel") - B IV a
F(W) 753
Dear Sirs:
We refer to a Second Amended and Restated
Agreement to Acquire and Charter (the OAcquisition
AgreementO) dated as of September 1, 1995, and made
between yourselves as Agent and Lender and ourselves as
Transferee (among other parties). 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
pursuant to [the Acquisition Agreement] [that certain
Exchange Agreement dated as of the date hereof between
__________ and ourselves].
We also confirm that the Vessel is recommended for
class "__________" with The American Bureau of Shipping
as per the photocopy or duplicate interim
classification certificate attached hereto, and that
there is no lien or encumbrance on the Vessel.
Yours faithfully,
[NAME OF TRANSFEREE]
By:
___________________________
Name:
Title:
Attachment
EXHIBIT B-2
TO SECOND AMENDED AND
RESTATED AGREEMENT TO
ACQUIRE AND CHARTER
__________, 199 _
Commerzbank AG
Ness 7-9
D-20457 Hamburg
Federal Republic of Germany
RE: Container Vessel Named __________,
Identified by Daewoo Shipbuilding & Heavy
Machinery,
Ltd. (the OContractorO) as Contractor's Hull
No. [4028] [4029] [4033] (the OVesselO) - B
IV a F(W)
753
Dear Sirs:
We refer to a Second Amended and Restated
Agreement to Acquire and Charter (the "Acquisition
Agreement") dated as of September l, 1995, and made
between yourselves as Syndicate Agent and ourselves as
Transferee (among other parties). 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
pursuant to the [Acquisition Agreement] [that certain
Exchange Agreement dated as of the date hereof between
__________ and ourselves].
We also confirm that the Vessel is recommended for
class "__________" with The American Bureau of Shipping
as per the photocopy or duplicate interim
classification certificate attached hereto, and that
there is no lien or encumbrance on the Vessel.
Yours faithfully,
[NAME OF TRANSFEREE]
By:
____________________________
Name:
Title:
Attachment
EXHIBIT C
TO SECOND AMENDED AND
RESTATED AGREEMENT TO
ACQUIRE AND CHARTER
[HDW] [DAEWOO] [SECOND] CHARTER ASSIGNMENT
From
[ ], Assignor
To
[ ], Assignee
Dated: ____________, 199_
[HDW] [DAEWOO] [SECOND] CHARTER ASSIGNMENT
This [Second] Charter Assignment dated , 199_ is
made between (i) [ ], a Delaware corporation
(the "Assignor") and (ii) [ ], a [ ] (the
"Assignee").
W I T N E S S E T H:
WHEREAS, American President Lines, Ltd. ("APL"), a
wholly-owned subsidiary of American President
Companies, Ltd. ("APC"), has heretofore entered into
that certain Loan Agreement dated March 14, 1994, as
amended by Amendment No.1 thereto dated May 19, 1995,
as further amended by Amendment No. 2 thereto dated
September 1, 1995 (as the same may be further amended
or supplemented in accordance with its terms, the "Loan
Agreement"), by and among APL, the Assignor, the other
corporations identified as Transferees therein, the
Assignee, [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")
with respect to the purchase financing of six (6)
container vessels, including the Vessel described
below;
WHEREAS, in accordance with the Loan Agreement and
that certain Second Amended and Restated Agreement to
Acquire and Charter dated September 1, 1995 (as the
same may be further amended or supplemented in
accordance with its terms, the "Acquisition
Agreement"), among the parties to the Loan Agreement,
APL has assigned its rights to receive delivery of the
Vessel described below from [HDW] [Daewoo] to [ ]
(the "Original Owner");
WHEREAS, on the date hereof, the Original Owner
acquired the Vessel from [HDW] [Daewoo];
WHEREAS, in accordance with that certain Exchange
Agreement dated as of the date hereof between APL and
the Original Owner, APL has acquired the Vessel
described below on the date hereof from the Original
Owner;
WHEREAS, APL has [simultaneously herewith] entered
into a First Mortgage on the Vessel in favor of the
Assignee as security for the Owner Obligations referred
to [below in respect of the Vessel] [therein] [and has
also entered into a Second Mortgage on the Vessel in
favor of KfW as security for the Obligations referred
to [therein] [below]];
WHEREAS, APL has transferred the Vessel to the
Assignor and the Assignor has assumed the above-
referenced First Mortgage pursuant to that certain
Assumption of First Preferred Ship Mortgage dated the
date hereof between APL and the Assignor [and has
assumed the above-referenced Second Mortgage pursuant
to that certain Assumption of Second Preferred Ship
Mortgage dated the date hereof between APL and the
Assignor];
WHEREAS, the Assignor has accepted title to, and
is currently the registered owner of, the Republic of
The Marshall Islands flag vessel [ ], 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, the Assignor has let and demised the
Vessel to APL as charterer (the "Charterer") and the
Charterer has hired the Vessel from the Assignor on the
terms and conditions set forth in the Bareboat Charter
Party dated the date hereof (the "Charter"), such
charter of the Vessel being effective upon the
execution and delivery of the Charter;
[WHEREAS, pursuant to that certain Charter Hire
Guarantee executed by APC in favor of the Assignor (the
"Charter Hire Guarantee"), APC has guaranteed the
Charterer's obligations to pay Charter Hire and
Supplemental Charter Hire under the Charter;]
[WHEREAS, as contemplated by the Acquisition
Agreement, the Assignor is entering into a Charter
Assignment relating to the Charter in favor of the
Syndicate Agent (the "Charter Assignment");]
WHEREAS, as contemplated by the Acquisition
Agreement, the Assignor is entering into this [Second]
Charter Assignment relating to the Charter in favor of
the Assignee, and the Charterer is consenting to such
[Second] Charter Assignment pursuant to the 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
payment and performance [by the Assignor] of the [Owner
Obligations] [Obligations (as defined in the Second
Mortgage) and any other obligations secured by the
Second Mortgage (the "Owner Obligations")], and grants
to the Assignee a [first] [second] priority security
interest in all right, title and interest of the
Assignor in and to (i) the Charter [and the Charter
Hire Guarantee], 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 Charter
[and the Charter Hire Guarantee], together with any
extensions, renewal modifications, changes or
amendments of the Charter [and the Charter Hire
Guarantee], (ii) the rights, if any, of the Assignor as
a secured party in and to the Vessel under the Charter,
and (iii) any and all proceeds of the foregoing [;
provided, however, that until an Event of Default (as
that term is defined in the Loan Agreement and the
First Mortgage) shall have occurred and be continuing
and an Event of Default under the Charter (as defined
therein) has occurred and is continuing all payments of
Additional Charter Hire payable under the Charter may
be made directly to the Assignor].
2. The Assignor hereby agrees, represents and
warrants that:
(a) [Each of] the Charter [and the Charter Hire
Guarantee] 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 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 Kreditanstalt fur Wiederaufbau],
and so long as this [Second] Charter Assignment shall
remain in effect, the 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) 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 Charter[,
the Charter Hire Guarantee] or this [Second] Charter
Assignment or any of the rights created by the
Charter[, the Charter Hire Guarantee] or this [Second]
Charter Assignment;
(e) To the knowledge of the Assignor, the
Charterer is not in default of any of the terms of the
Charter;
(f) [Subject to the rights of the Syndicate Agent
under the Charter Assignment] [The] Assignor will not
enter into or consent to any amendment, modification or
other alteration of the Charter [or the Charter Hire
Guarantee] 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.
(g) In case there shall be pending proceedings
for the bankruptcy or for the reorganization of the
Charterer under any applicable law or in connection
with the insolvency of the Charterer, its property or
its creditors, the Assignee, irrespective of whether
Charter Hire (as defined in the Charter) shall then be
due and payable as provided in the Charter 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
all amounts required to be paid by Charterer under the
Charter following such declaration owing and unpaid,
and to file such other papers or documents as may be
necessary or advisable in order to have the claims of
the Assignor allowed in any judicial proceeding
relative to the 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)]
[5.09(b)] of the Loan Agreement. Nothing contained in
this [Second] Charter Assignment shall be deemed to
give the Assignee 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.
(h) Any monies collected by the Assignor pursuant
to enforcement of any of its rights under the Charter[,
the Charter Hire Guarantee] or under any other Charter
Document on account of the occurrence of an Event of
Default by or on behalf of the Assignor shall be
payable to the Assignee and distributed in accordance
with Section [5.09(a)] [5.09(b)] of the Loan Agreement.
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
Charter.
(b) The Assignor will be deemed the owner under
the Charter except as expressly set forth herein.
(c) The Assignee shall have no obligation or
liability under or pursuant to the 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
the Assignee or to which the Assignee may be entitled
under this [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
[and the Second Mortgage]) has occurred, is continuing
and shall not have been cured and waived and no Event
of Default under the Charter (as defined therein) has
occurred and is continuing, 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
Charter to make payment of all monies due and to become
due under or arising out of the Charter at the time and
in the manner set forth in Section 2(b) of the 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 [or 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
[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 Charter [and the
Charter Hire Guarantee] 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.
11. Notwithstanding any other provision of this
[Second] Charter Assignment, this [Second] Charter
Assignment shall terminate, be void and of no further
effect upon the payment in full of the Owner
Obligations, together with payment of all other amounts
then due and owing secured by the First Mortgage [and
the Second Mortgage; provided, however, that, in any
event, this Second Charter Assignment shall terminate
upon termination of the Second Mortgage in accordance
with its terms].
IN WITNESS WHEREOF, the Assignor has caused this
instrument to be duly executed as of the day and year
first above written.
[ ]
By:____________________
Title:
EXHIBIT D
TO SECOND AMENDED AND
RESTATED AGREEMENT TO
ACQUIRE AND CHARTER
CHARTER HIRE GUARANTEE
dated as of , 199_
by
AMERICAN PRESIDENT COMPANIES, LTD.
(as Guarantor)
in favor of
[_____________________________]
(as Obligee)
CHARTER HIRE GUARANTEE, dated as of [ ], l99_, by
AMERICAN PRESIDENT COMPANIES, LTD., a Delaware corporation
(the "Guarantor"), in favor of [ ] (the
"Obligee"). Capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the
Second Amended and Restated Agreement to Acquire and Charter
dated September 1, 1995 (the "Acquisition Agreement"), by
and among 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 the banks listed in such Schedule 1 are
hereinafter referred to collectively as the "Banks"), the
corporations listed as Transferees therein (the
"Transferees") and American President Lines, Ltd., a
Delaware corporation (the "Charterer").
W I T N E S S E T H:
WHEREAS, in accordance with the Acquisition Agreement,
APL has assigned its rights to receive delivery of the
Vessel described below from [HDW] [Daewoo] to [ ] (the
"Original Owner");
WHEREAS, the Obligee has accepted title to, and is
currently the registered owner of, The Republic of The
Marshall
Islands flag vessel [________], Official Number [_______]
(the "Vessel"), and the Obligee 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, in accordance with that certain Exchange
Agreement dated as of the date hereof between the Obligee
and the Original Owner (the "Exchange Agreement"), the
Obligee has acquired the Vessel described below on the date
hereof from the Original Owner;
WHEREAS, the Obligee has simultaneously herewith
entered into a First Mortgage on the Vessel in favor of
[KfW] [the Syndicate] (the "Vessel Lender"), as security for
the Owner Obligations in respect of the Vessel;
[WHEREAS, the Obligee has simultaneously herewith
entered into a Second Mortgage on the Vessel in favor of
KfW, as security for the Obligations of the Obligee referred
to therein;]
WHEREAS, the Obligee has let and demised the Vessel to
the Charterer and the Charterer has hired the Vessel from
the Obligee on the terms and conditions set forth in the
Bareboat Charter Party, dated the date hereof (the
"Charter"), such charter of the Vessel being effective upon
the execution and delivery of the Charter;
WHEREAS, the Guarantor is entering into this Guarantee
in consideration of the Banks entering into the Acquisition
Agreement and purchasing the Notes.
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 of all amounts payable by the Charterer under the
Charter. Upon failure by the Charterer to pay punctually
any such payment required by it to be paid within any
applicable grace periods permitted under the Charter, the
Guarantor shall forthwith on demand pay the amount not so
paid in immediately available funds as specified therein.
Upon payment by the Guarantor of any obligation of the
Charterer pursuant to this Section 1.1, such obligation with
respect to such payment under the Charter 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 the Charter 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 the Charter);
or
(b) any taking, holding, exchange, release,
non-perfection or invalidity of any direct or indirect
security for any obligation of the Charterer under the
Charter; or
c) any change in the corporate existence,
structure or ownership of the Charterer, or any
insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Charterer or its assets; or
(d) the existence of any claim, setoff or other
rights which the Guarantor may have at any time against
the Charterer; or
(e) any defense arising by reason of any
invalidity, unenforceability or other defense of the
Charterer, 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 the
Charterer to pay any amount payable by it under the
Charter; 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 the
Charter or of any other agreement which may be made
relating to the Charter 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 the
Charter); or
(g) any exercise or non-exercise of any right,
power, privilege or remedy under or in respect of this
Guarantee or the Charter, or any waiver of any such
right, power, privilege or remedy or of any default in
respect of the Charter, 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 the 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 the Charterer under the Charter
shall have been paid in full or the obligations of the
Charterer thereunder have otherwise terminated, whichever is
earlier. If at any time any amount payable by the Charterer
under the Charter is rescinded or must be otherwise restored
or returned upon the insolvency, bankruptcy or
reorganization of the Charterer 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 the Charterer 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 Charter against the Charterer
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 the Vessel which is the subject
of the Charter and to exercise any remedy which the Obligee
has or may hereafter have against the Charterer for payment
of money until all amounts payable by the Charterer under
the Charter have been paid in full or the obligations of the
Charterer thereunder have otherwise terminated, whichever is
earlier. Nothing contained in this Guarantee shall preclude
the Guarantor from causing the Charterer to make payments
required by the Charterer under the Charter.
1.6 Payment Guarantee: No Set-Off or Deductions:
No Waiver. The Guarantor hereby agrees that (a) this
Guarantee is a guarantee of payment 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 Obligee of
any provision of the Charter or for any loss due to any acts
taken by the Obligee thereunder.
1.7 Obligations Unaffected. The 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 Charter 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 Charter,
any collateral security at any time granted or received for
any of the Guarantor's obligations, or any Person (including
any Guarantor) that the 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, the Guarantor; provided, however, that any
amount received by the Obligee as a result of any such
action shall correspondingly reduce the Guarantor's
obligations hereunder.
No right of the Obligee hereunder, and no obligation of
the Guarantor hereunder, shall be in any way limited or
otherwise impaired by the failure of the Obligee (i) to
commence any action or obtain any judgment against the
Charterer; (ii) to seek recourse against, or to perfect or
enforce any rights in and to, any collateral; (iii) to
proceed against any other guarantee relating to all or any
of the obligations guaranteed hereunder or (iv) to exercise
any other right, remedy, power or privilege hereunder or
otherwise. The Guarantor waives and agrees not to assert (a)
any right to require the Obligee to take any action
described in clauses (i) to (iv) of the immediately
preceding sentence and (b) any defense based upon an
election of remedies which destroys or impairs the
subrogation rights of the Obligee or the right of the
Obligee to proceed against the Guarantor hereunder or the
Charterer in respect of the obligations guaranteed
hereunder.
SECTION 2. Representations and Warranties of the
Guarantor. The Guarantor represents and warrants to the
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 the Charterer to perform its other
obligations under the Charter, (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 Guarantor and
made available to the Obligee 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 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 the 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, the Charterer or the Vessel which
if adversely determined would have a material adverse effect
on the Guarantor, any Charterer and any of its subsidiaries
on a consolidated basis, or construction of the Vessel, 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 Obligee.
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 fYr 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
Guarantor at: 1111 Broadway, Oakland, California 94607;
Attention: Treasurer, Telefax No.: (510) 272-8931; and (iv)
to the Obligee at: 111 Broadway, Oakland, California 94607.
5.3 The terms of this Guarantee shall be binding
upon, and inure to the benefit of, the Guarantor and the
Obligee 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 Guarantee or the Charter, or
the subject matter hereof or thereof or any of the
transactions contemplated hereby or thereby, brought by the
Obligee or its 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 the Obligee and its 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 Obligee 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 Obligee
or their respective successors, subrogees or assigns to
bring any action or proceeding against the Guarantor or the
Obligee, 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 GUARANTEE, THE CHARTER, 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 GUARANTEE.
5.7 Currency of Account. (a) The Dollar is the
currency of account or each and every sum due from the
Guarantor to the Obligee under this Guarantee in respect of
any of the obligations guaranteed hereunder.
(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
Obligee 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 the 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 the
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 the
Obligee and their respective successors and assigns.
5.10 The Guarantor hereby acknowledges and
consents to the assignment of this Guarantee pursuant to the
terms of the
Charter Assignment dated the date hereof between the Obligee
and [KfW] [the Syndicate].
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
page 1 of 2
NAMES AND ADDRESSES OF SYNDICATE MEMBERS
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. Eggert
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 -Girozentrale
Georgsplatz 1
D-30159 Hannover
Federal Republic of Germany
Attention: Mr. Hartmann
Telex: 921634 GZH D
Telecopy: 49 511 36 14785
Schedule 1
Page 2 of 2
Deutsche verkehrs-Bank AG
(Hamburg Branch)
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
EXECUTION COPY
CHARTER HIRE GUARANTEE
dated as of May 19, 1995
by
AMERICAN PRESIDENT COMPANIES, LTD.
(as Guarantor)
in favor of
M.V. PRESIDENT KENNEDY, LTD.
(as Obligee)
CHARTER HIRE GUARANTEE, dated as of May 19, 1995, by AMERICAN
PRESIDENT COMPANIES, LTD., a Delaware corporation (the "Guarantor"), in
favor of M.V. PRESIDENT KENNEDY, LTD., a Delaware corporation (the
"Obligee"). Capitalized terms used herein and not otherwise defined
herein shall have the meanings set forth in the Amended and Rested
Agreement to Acquire and Charter dated May 19, 1995 (the "Acquisition
Agreement"), by and among 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 the banks listed in such Schedule 1 are hereinafter referred
to collectively as the "Banks"), the corporations listed as Transferees
therein (the "Transferees") and American President Lines, Ltd., a
Delaware corporation (the "Charterer").
W I T N E S S E T H:
WHEREAS, in accordance with the Acquisition Agreement, APL has
assigned its rights to receive delivery of the Vessel described below
from HDW to APL Newbuildings, Ltd. (the "Original Owner");
WHEREAS, the Obligee has accepted title to, and is currently the
registered owner of, The Republic of The Marshall Islands flag vessel
APL CHINA, Official Number MI 1092 (the "Vessel"), and the Obligee 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, in accordance with that certain Exchange Agreement dated
as of the date hereof between the Obligee and the Original Owner (the
"Exchange Agreement"), the Obligee has acquired the Vessel described
below on the date hereof from the Original Owner; WHEREAS, the Obligee
has simultaneously herewith entered into a First Mortgage on the Vessel
in favor of KfW, as security for the Owner Obligations in respect of the
Vessel;
WHEREAS, the Obligee has let and demised the Vessel to the
Charterer and the Charterer has hired the Vessel from the Obligee on the
terms and conditions set forth in the Bareboat Charter Party, dated the
date hereof (the "Charter"), such charter of the Vessel being effective
upon the execution and delivery of the Charter;
WHEREAS, the Guarantor is entering into this Guarantee in
consideration of the Banks entering into the Acquisition Agreement and
purchasing the Notes.
Accordingly, the Guarantor hereby agrees with the Obligees as
follows:
SECTION 1.
Guarantee
Section 1.1 The Guarantee. The Guarantor hereby guarantees as
primary obligor and not as a surety the full and punctual payment of all
amounts payable by the Charterer under the Charter. Upon failure by the
Charterer to pay punctually any such payment required by it to be paid
within any applicable grace periods permitted under the Charter, the
Guarantor shall forthwith on demand pay the amount not so paid in
immediately available funds as specified therein. Upon payment by the
Guarantor of any obligation of the Charterer pursuant to this Section
1.1, such obligation with respect to such payment under the Charter
shall terminate.
Section 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 the Charter 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
the Charter); or
(b) any taking, holding, exchange, release,
nonperfection or invalidity of any direct or indirect security
for any obligation of the Charterer under the Charter; or
(c) any change in the corporate existence, structure
or ownership of the Charterer, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the
Charterer or its assets; or
(d) the existence of any claim, setoff or other rights
which the Guarantor may have at any time against the Charterer;
or
(e) any defense arising by reason of any invalidity,
unenforceability or other defense of the Charterer, 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
the Charterer to pay any amount payable by it under the Charter;
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 the Charter or of
any other agreement which may be made relating to the Charter 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 the Charter); or
(g) any exercise or non-exercise of any right, power,
privilege or remedy under or in respect of this Guarantee or the
Charter, or any waiver of any such right, power, privilege or
remedy or of any default in respect of the Charter, 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 the Guarantor hereunder) incurred directly or
indirectly in respect thereof.
Section 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 the
Charterer under the Charter shall have been paid in full or the
obligations of the Charterer thereunder have otherwise terminated,
whichever is earlier. If at any time any amount payable by the
Charterer under the Charter is rescinded or must be otherwise restored
or returned upon the insolvency, bankruptcy or reorganization of the
Charterer 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.
Section 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
the Charterer or any other Person.
Section 1.5 Subrogation. Upon making any payment hereunder,
the Guarantor shall be subrogated to the rights of the Obligee under the
Charter against the Charterer 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
the Vessel which is the subject of the Charter and to exercise any
remedy which the Obligee has or may hereafter have against the Charterer
for payment of money until all amounts payable by the Charterer under
the Charter have been paid in full or the obligations of the Charterer
thereunder have otherwise terminated, whichever is earlier. Nothing
contained in this Guarantee shall preclude the Guarantor from causing
the Charterer to make payments required by the Charterer under the
Charter.
Section 1.6 Payment Guarantee: No Set-Off or Deductions: No
Waiver. The Guarantor hereby agrees that (a) this Guarantee is a
guarantee of payment 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
Obligee of any provision of the Charter or for any loss due to any acts
taken by the Obligee thereunder.
Section 1.7 Obligations Unaffected. The 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 charter 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 Charter, any collateral security at any time granted or
received for any of the Guarantor's obligations, or any Person
(including any Guarantor) that the 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, the Guarantor;
provided, however, that any amount received by the Obligee as a result
of any such action shall correspondingly reduce the Guarantor's
obligations hereunder.
No right of the Obligee hereunder, and no obligation of the
Guarantor hereunder, shall be in any way limited or otherwise impaired
by the failure of the Obligee (i) to commence any action or obtain any
judgment against the Charterer; (ii) to seek recourse against, or to
perfect or enforce any rights in and to, any collateral; (iii) to
proceed against any other guarantee relating to all or any of the
obligations guaranteed hereunder or (iv) to exercise any other right,
remedy, power or privilege hereunder or otherwise. The Guarantor waives
and agrees not to assert (a) any right to require the Obligee to take
any action described in clauses (i) to (iv) of the immediately preceding
sentence and (b) any defense based upon an election of remedies which
destroys or impairs the subrogation rights of the Obligee or the right
of the Obligee to proceed against the Guarantor hereunder or the
Charterer in respect of the obligations guaranteed hereunder.
SECTION 2.
Representations and Warranties of_the Guarantor.
The Guarantor represents and warrants to the Obligee that:
Section 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;
Section 2.2 the Guarantor has : legal power and authority to
enter into and carry out the terms of this Guarantee;
Section 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;
Section 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;
Section 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;
Section 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;
Section 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;
Section 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;
Section 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);
Section 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 the Charterer to perform its other
obligations under the Charter, (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;
Section 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;
Section 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 Guarantor and made available to the
Obligee 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 Guarantor's control, and that no assurances can be given that any
such projections will be realized);
Section 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;
Section 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 the Obligee that:
Section 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.
Section 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, the Charterer or the Vessel which if
adversely determined would have a material adverse effect on the
Guarantor, any Charterer and any of its subsidiaries on a consolidated
basis, or construction of the Vessel, 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
Section 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 Obligee.
Section 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 Guarantor at: 1111 Broadway, Oakland,
California 94607; Attention: Treasurer, Telefax No.: (510) 272-8931; and
(iv) to the Obligee at: 1111 Broadway, Oakland, California 94607;
Attention: Treasurer, Telefax No.: (510) 272-8931.
Section 5.3 The terms of this Guarantee shall be binding upon,
and inure to the benefit of, the Guarantor and the Obligee and their
respective successors and assigns.
Section 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.
Section 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).
Section 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 Guarantee or
the Charter, or the subject matter hereof or thereof or any of the
transactions contemplated hereby or thereby, brought by the Obligee or
its 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 the Obligee and its 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 Obligee 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
Obligee or their respective successors, subrogees or assigns to bring
any action or proceeding against the Guarantor or the Obligee, 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 GUARANTEE, THE CHARTER, 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 GUARANTEE.
Section 5.7 Currency of Account.
(a) The Dollar is the currency of account or each and
every sum due from the Guarantor to the Obligee under this
Guarantee in respect of any of the obligations guaranteed
hereunder.
(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 Obligee 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 the 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 the Obligee.
Section 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.
Section 5.9 This Guarantee shall be binding upon, inure to the
benefit of, and be enforceable by, the Guarantor and the Obligee and
their respective successors and assigns.
Section 5.10 The Guarantor hereby acknowledges and consents to
the assignment of this Guarantee pursuant to the terms of the Charter
Assignment dated the date hereof between the Obligee and KfW.
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: /s/ Peter A.V. Huegel
Title: Assistant Secretary
1995 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN OF
AMERICAN PRESIDENT COMPANIES, LTD.
SECTION 1. ESTABLISHMENT AND PURPOSE OF THE PLAN.
The Plan was established by the Company effective January 1, 1995, and
amended and restated effective January 1, 1996. The purpose of the Plan is to
supplement certain benefits under the Retirement Plan.
SECTION 2. ELIGIBILITY AND PARTICIPATION.
Participation in this Plan shall be limited to participants in the
Retirement Plan who are employed by a member of the Affiliated Group on or after
January 1, 1995, and who meet one of the following criteria:
(a) Their benefits under the Retirement Plan are
affected by the limitations imposed under section 401(a)(17) or
415 of the Code;
(b) Their benefits under the Retirement Plan are
affected by the exclusion of salaries and bonuses deferred under
the Deferred Compensation Plan or the Stock Bonus Plan from the
compensation taken into account in calculating such benefits; or
(c) Both:
(i) Their actual benefits under the Retirement Plan,
at retirement, are lower than the benefits that they would have
received had they separated from employment with the Affiliated
Group as of December 31, 1992, absent the modification of the
Retirement Plan's benefit formula that was adopted effective June
1, 1989; and
(ii) Their "average annual compensation" under the
Retirement Plan equals or exceeds $125,000 at any time after May
31, 1989.
On June 1 of each year, starting with June 1, 1990, the $125,000 amount set
forth in the preceding sentence shall be adjusted for inflation by multiplying
it by a fraction. The numerator of such fraction shall be the CPI-W for U.S.
Cities on the immediately preceding February 1, and the denominator of such
fraction shall be the CPI-W for U.S. Cities on February 1, 1989.
SECTION 3. PLAN BENEFITS.
(a) Amount of Retirement Plan Supplement. Each Participant whose
pension benefits under the Retirement Plan are reduced by section 401(a)(17) or
415 of the Code, by the exclusion of salaries and bonuses deferred under the
Deferred Compensation Plan or the Stock Bonus Plan from pension calculations or
by the modification of the formula for calculating his or her "retirement
income" (not including cost-of-living adjustments) that was adopted on July 10,
1990, effective as of June 1, 1989, shall be entitled to receive a monthly
benefit under this Plan. The amount of such benefit shall be equal to:
(i) The monthly benefit payment which would be payable to the
Participant under the Retirement Plan if the limitations of sections
401(a)(17) and 415 of the Code, such exclusion and such modification (to
the extent that such modification results in a benefit reduction) did
not apply; minus
(ii) The Participant's actual monthly benefit payment under
the Retirement Plan; minus
(iii) The Participant's actual monthly benefit payment under the
Excess-Benefit Plan of American President Companies, Ltd., as amended.
For purposes of this Subsection (a), the modification of the Retirement Plan
formula that was adopted on July 10, 1990, effective as of June 1, 1989, shall
be deemed to have resulted in a benefit reduction only to the extent that a
Participant's actual monthly benefit payment under the Retirement Plan is less
than the monthly benefit payment that such Participant would have received if
such modification had not been adopted and the Participant had separated from
employment with all members of the Affiliated Group as of December 31, 1992.
The Retirement Plan's Actuarial Equivalency factors shall be used to make this
comparison.
(b) Payment of Retirement Plan Supplement. A Participant's benefit
under Subsection (a) above shall be payable to the Participant or to any other
person (including, without limitation, a surviving spouse) who is receiving
benefits under the Retirement Plan which are derived from the Participant. Any
benefit under Subsection (a) above shall be payable in the same form and at the
same times as the Participant's benefit under the Retirement Plan (and in no
event earlier), unless the Participant's benefit under the Retirement Plan is
paid in the form of a single lump sum. In that event, the benefit under
Subsection (a) above shall be payable in the normal form of benefit provided
under the Retirement Plan, computed as if the benefit actually paid to the
Participant under the Retirement Plan were also payable in the normal form,
unless:
(i) The Participant requests in writing to receive the benefit
under Subsection (a) above in a single lump sum; and
(ii) The Committee expressly approves the Participant's
request.
In the case of a Participant who is entitled to a "COLA-Adjusted Retirement
Income" under the Retirement Plan, the amount of any periodic benefit under
Subsection (a) above shall be recalculated each year in accordance with the
provisions of the Retirement Plan relating to the adjustment of pension benefits
to reflect changes in the cost of living.
SECTION 4. ADMINISTRATION.
The Plan shall be administered by the Committee. The Committee shall
make such rules, interpretations and computations as it may deem appropriate.
Any decision of the Committee with respect to the Plan, including (without
limitation) any determination of eligibility to participate in the Plan and any
calculation of benefits hereunder, shall be conclusive and binding on all
persons.
SECTION 5. CLAIMS AND INQUIRIES.
(a) Application for Benefits. Applications for benefits and
inquiries concerning the Plan (or concerning present or future rights to
benefits under the Plan) shall be submitted to the Company in writing and
addressed to the Chair of the Committee. An application for benefits shall be
submitted on the prescribed form and shall be signed by the Participant or, in
the case of a benefit payable after his or her death, by the beneficiary.
(b) Denial of Application. In the event that an application for
benefits is denied in whole or in part, the Chair of the Committee shall notify
the applicant in writing of the denial and of the right to a review of the
denial. The written notice shall set forth, in a manner calculated to be
understood by the applicant, specific reasons for the denial, specific
references to the provisions of the Plan on which the denial is based, a
description of any information or material necessary for the applicant to
perfect the application, an explanation of why the material is necessary, and an
explanation of the review procedure under the Plan. The written notice shall be
given to the applicant within a reasonable period of time (not more than 90
days) after the Chair of the Committee received the application, unless special
circumstances require further time for processing and the applicant is advised
of the extension. In no event shall the notice be given more than 180 days
after the Chair of the Committee received the application.
(c) Review Panel. The Committee shall serve as the "Review Panel"
under the Plan. The Review Panel shall have the authority to act with respect
to any appeal from a denial of benefits or a determination of benefit rights.
(d) Request for Review. An applicant whose application for benefits
was denied in whole or in part, or the applicant's duly authorized
representative, may appeal from the denial by submitting to the Review Panel a
request for a review of the application within 90 days after receiving written
notice of the denial from the Chair of the Committee. The Chair of the
Committee shall give the applicant or his or her representative an opportunity
to review pertinent materials, other than legally privileged documents, in
preparing the request for a review. The request for a review shall be in writing
and addressed to the Committee. The request for a review shall set forth all of
the grounds on which it is based, all facts in support of the request, and any
other matters that the applicant deems pertinent. The Review Panel may require
the applicant to submit such additional facts, documents or other material as it
may deem necessary or appropriate in making its review.
(e) Decision on Review. The Review Panel shall act on each request
for a review within 60 days after receipt, unless special circumstances require
further time for processing and the applicant is advised of the extension. In
no event shall the decision on review be rendered more than 120 days after the
Review Panel received the request for a review. The Review Panel shall give
prompt written notice of its decision to the applicant. In the event that the
Review Panel confirms the denial of the application for benefits in whole or in
part, the notice shall set forth, in a manner calculated to be understood by the
applicant, the specific reasons for the decision and specific references to the
provisions of the Plan on which the decision is based.
(f) Rules and Interpretations. The Review Panel shall adopt such
rules, procedures and interpretations of the Plan as it deems necessary or
appropriate in carrying out its responsibilities under this Section 5.
(g) Exhaustion of Remedies. No legal action for benefits under the
Plan shall be brought unless and until the claimant (i) has submitted a written
application for benefits in accordance with Subsection (a) above, (ii) has been
notified by the Chair of the Committee that the application is denied, (iii) has
filed a written request for a review of the application in accordance with
Subsection (d) above and (iv) has been notified in writing that the Review Panel
has affirmed the denial of the application; provided, however, that legal action
may be brought after the Chair of the Committee or the Review Panel has failed
to take any action on the claim within the time prescribed by Subsections (b)
and (e) above, respectively.
SECTION 6. AMENDMENT AND TERMINATION.
The Company expects to continue the Plan indefinitely. Future conditions,
however, cannot be foreseen, and the Company shall have the authority to amend
or terminate the Plan at any time. In the event of an amendment or termination
of the Plan, a Participant's benefits hereunder shall not be less than the
benefits to which the Participant would have been entitled if his or her
employment in the Affiliated Group had terminated immediately prior to such
amendment or termination.
SECTION 7. EMPLOYMENT RIGHTS.
Nothing in the Plan shall be deemed to give any person a right to remain
in the employ of any Affiliated Group member or affect the right of the
Affiliated Group members to terminate such person's employment with or without
cause.
SECTION 8. NO ASSIGNMENT.
The rights of any person to payments or benefits under the Plan shall not
be made subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment or garnishment by creditors. Any
act in violation of this Section 8, whether voluntary or involuntary, shall be
void.
SECTION 9. PLAN UNFUNDED.
Participants shall have the status of general unsecured creditors of the
Company. The Plan constitutes a mere promise by the Company to make benefit
payments in the future. It is the Company's intent that the Plan be considered
unfunded for tax purposes and for purposes of Title I of ERISA.
SECTION 10. CHOICE OF LAW.
The validity, interpretation, construction and performance of the Plan
shall be governed by ERISA and, to the extent they are not preempted, by the
laws of the State of California.
SECTION 11. DEFINITIONS.
(a) "Affiliated Group" means a group of one or more chains of
corporations connected through stock ownership with the Company, if:
(i) Stock possessing at least 80% of the total combined
voting power of all classes of stock entitled to vote or at least
80% of the total value of shares of all classes of stock of each
of the corporations, except the Company, is owned by one or more
of the other corporations; and
(ii) The Company owns stock possessing at least 80% of
the total combined voting power of all classes of stock entitled
to vote or at least 80% of the total value of shares of all
classes of stock of at least one of the other corporations
excluding, in computing such voting power or value, stock owned
directly by such other corporations.
In addition, the term "Affiliated Group" includes any other entity which the
Company has designated in writing as a member of the Affiliated Group for
purposes of this Plan or the Retirement Plan. An entity shall be considered a
member of the Affiliated Group only with respect to periods for which such
designation is in effect or during which the relationship described in
Paragraphs (i) and (ii) above exists.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committee" means the Benefits Committee appointed by the
Company's Board of Directors.
(d) "Company" means American President Companies, Ltd., a Delaware
corporation.
(e) "Deferred Compensation Plan" means the Deferred Compensation Plan
of American President Companies, Ltd., as amended, the 1988 Deferred
Compensation Plan of American President Companies, Ltd., as amended, and the
1995 Deferred Compensation Plan of American President Companies, Ltd., as
amended.
(f) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(g) "Participant" means a participant in the Retirement Plan who
participates in this Plan under Section2.
(h) "Plan" means this 1995 Supplemental Executive Retirement Plan of
American President Companies, Ltd.
(i) "Retirement Plan" means the American President Companies, Ltd.
Retirement Plan, as amended, or its successor.
(j) "Stock Bonus Plan" means the American President Companies, Ltd.
1995 Stock Bonus Plan, as it may be amended, or its successor.
SECTION 12. EXECUTION.
To record the amendment and restatement of the Plan, the Company has
caused its duly authorized officer to affix the corporate name hereto.
AMERICAN PRESIDENT COMPANIES, LTD.
By /s/ Timothy J. Windle
-1-
AGREEMENT
THIS AGREEMENT, entered into as of the 13th day of October,
1995, by and between JOHN M. LILLIE (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 includes the
Company and all of its direct or indirect subsidiaries;
Whereas the Employee has been employed by the Company as
Chairman and Chief Executive Officer pursuant to an Employment
Agreement dated as of January 29, 1991, as amended by Amendment No. 1
dated July 28, 1992, and Amendment No. 2 dated January 26, 1993 (the
Agreement, as so amended, being hereinafter referred to as the
"Employment Agreement"), and has served as a member of the Board of
Directors of the Company; and
Whereas the parties wish to provide for the Employee's
resignation from such employment and Board of Directors on mutually
satisfactory terms effective October 13, 1995 (the "Termination Date");
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. Remaining Term of Employment.
(a) Resignation. Effective as of the Termination Date, the
Employee shall resign as an employee, officer and director of the
Company and as an officer and director of all other members of the
Affiliated Group. Employee's resignation is an "Involuntary
Termination Without Cause" by the Company under Section 8 of the
Employment Agreement. Employee hereby waives the notice requirement
set forth in Section 1 of the Employment Agreement.
(b) Termination of Agreement. This Agreement shall
terminate when all obligations of the parties hereunder have been
satisfied.
2. Benefits During Continuation Period.
(a) Continuation Period. Following his resignation, the
Employee shall be entitled to receive the benefits described in the
succeeding subsections of this Section 2. Except as otherwise
provided, such benefits shall continue for the period commencing on the
Termination Date and ending on the earlier of March 1, 1999 or the date
of the Employee's death (the "Continuation Period"). Except as
expressly provided herein, the Employee shall not be eligible to
participate in any of the Company's executive compensation programs or
employee benefit plans after the Termination Date.
(b) Compensation. From October 13, 1995, to the earlier of
(i) April 12, 1996, or (ii) the date of the Employee's death, the
Company shall pay the Employee in approximately equal biweekly
installments, compensation at the annual rate of $575,950. The
Employee shall be entitled to receive a bonus for fiscal year 1995,
payable no later than February 15, 1996, calculated on the basis of a
target bonus of 60 percent of base salary (or 60% of $575,950) and the
management bonus level approved by the Compensation Committee of the
Board of Directors of the Company for bonus-level employees of the
Company generally. From April 13, 1996, until the earlier of (i)
March 1, 1999, or (ii) the date of the Employee's death, the Company
shall pay the Employee, in approximately equal biweekly installments,
compensation at the annual rate of $921,520. The Employee shall not be
entitled to bonus payments for fiscal year 1996 or subsequent years.
(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 $575,950. 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. The period during which the Employee may
elect continued insurance coverage in accordance with the requirements
of the Consolidated Omnibus Budget Reconciliation Act shall not end
until sixty (60) days after the date the Employee's participation in
the Company's group insurance plans terminates.
(d) Incentive Programs. The Continuation Period shall be
counted as employment with the Company for purposes of determining the
expiration date of all options granted to the Employee under the
Company's stock option plans and for purposes of vesting under all
executive compensation programs in which the Employee participated,
including (without limitation) stock purchase, stock options,
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 occurrence of a Change in
Control (as defined in Section 7(a) of the Employment Agreement) during
the Continuation Period shall not result in the vesting of any options
granted to the Employee under the Company's stock option plans.
(e) Supplemental Benefit. 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.
(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 American President Companies, Ltd. Retirement Plan
(the "Retirement Plan"), the Excess Benefit Plan of American
President Companies, Ltd. and the Supplemental Executive
Retirement Plan of American President Companies, Ltd.
(collectively, the "Retirement Program"), which represent all
of the qualified and non-qualified defined benefit pension
plans of the Company in which the Employee participates; and
(ii) The amount of the hypothetical pension benefit
that commences as of the date when the actual pension benefits
commence under Paragraph (i) above, and is determined as
follows: Such hypothetical pension benefit shall be equal to
40 percent of the Employee's Average Annual Compensation minus
40 percent of his Primary Social Security Benefit. The terms
"Average Annual Compensation" and "Primary Social Security
Benefit" shall have the meanings given to such terms in the
Retirement Plan; provided that for purposes of calculating
Average Annual Compensation, the following assumptions shall be
made:
(a) The projected Continuation Period,
determined without regard to the Employee's death, is
counted as employment with the Company; and
(B) The projected annual compensation to be
received by the Employee during the Continuation Period
is deemed to be $921,520, and is counted as
compensation.
For purposes of the Company's Retirement Program, the Company and the
Employee agree that the Employee's Retirement Date will be March 1, 1999.
The Supplemental Pension 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 the Retirement Plan and ending with
the month for which the last pension payment is made to the Employee or his
surviving spouse 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 Program 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 a position which is at least equivalent to 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 2, nor shall any such payment or benefit be reduced by any
earnings or benefits that the Employee may receive from any other
source.
3. Other Benefits and Payments.
(a) Retention of Rights. The Employee shall retain his
rights to benefits under the Company's Retirement Program, SMART Plan
and Deferred Compensation Plans in accordance with the terms and
conditions of such plans and consistent with the termination of his
employment effective as of the Termination Date.
(b) Automobile. The Employee may purchase his Company
automobile for the residual lease value plus tax and license by making
payment in such amount to the Company on or before December 31, 1995.
4. Nondisclosure of Confidential Information.
(a) Confidential Agreement. The parties agree that the
terms and conditions of this Agreement shall be treated as confidential
and shall not be disclosed during the term of this Agreement or at any
time thereafter, except to the extent required by law in the reasonable
opinion of its internal or external legal counsel. The Employee has
had an opportunity to review and comment upon the press release to be
issued by the Company with respect to his resignation (the "Release").
Any written communications by the Company or the Employee regarding the
subject of this Agreement which contains statements inconsistent with
those set forth in the Release shall be subject to the prior written
approval of the other party. No representative of the Company, other
than the Chief Executive Officer, the General Counsel or Mr. F. Warren
Hellman may, in response to questions from the media, securities
analysts or representatives of trade journals, answer questions about
or comment concerning the subject matter of this Agreement or the
Employee's resignation prior to February 28, 1996.
(b) 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.
(c) Public Information. The provisions of Subsection (b) of
this Section 4 shall not apply to information or documents which the
Employee can show were previously furnished to the Company's
stockholders, available for public inspection through a government
agency without making a special request or otherwise made available to
the general public by the Company or were matters of public or general
knowledge in the industry.
5. 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. 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. Except as expressly provided
herein, 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.
6. 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
General Counsel.
7. Release.
(a) The Employee hereby releases and forever discharges the
Company and all other members of the Affiliated Group, and each of
their stockholders, directors, officers and employees from any and all
demands, claims, causes of action or damages of whatever kind or
nature, known or unknown, at law or in equity, which he ever had, now
has or may hereafter claim to have had and which arise, directly or
indirectly, under the Employment Agreement or from the termination of
his employment with the Company or any other member of the Affiliated
Group; provided, however, that the Employee is not in any way hereby
releasing the Company from its obligations under this Agreement. The
Employee recognizes and agrees that such claims include, but are not
limited to, claims under Title VII of the Civil Rights Act of 1964, as
amended, Section 1981 of Title 42 of the United States Code, the Age
Discrimination in Employment Act, as amended, and all other employment
laws, whether federal, state or local.
(b) Nothing herein constitutes an admission of liability by
the Company.
(c) The Employee reserves any statutory or other rights to
legal representation and indemnification by the Company against any
loss, cost, damage or expense that he, as a former director, officer
and employee of the Company, has under applicable law, applicable
insurance policies, the Company's by-laws or certificate of
incorporation or indemnity agreement with the Company, in connection
with any demands, claims or actions hereafter made or brought, which
rights shall continue after the date hereof and for so long as provided
in such documents. Until December 31, 2000, the Employee shall
continue to be named as an insured for his acts while a director or
officer under any Directors' and Officers' insurance policy maintained
by the Company for its directors and officers generally.
8. 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 General Counsel. 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. This Agreement supersedes the
Employment Agreement and settles all rights of the parties thereunder.
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.
(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 provisions 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. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled
exclusively 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.
(i) Option Exercises and Sales of Securities. After March
1, 1996, the Employee shall not be subject to the Company's "window
period" restrictions with respect to exercises of Company options or
sales of Company securities. However, the Employee acknowledges that,
under Section 10(b) of the Securities Exchange Act of 1934, he may not
buy or sell securities of the Company at any time prior to or after
March 1, 1996 if he possesses material information about the Company
which has not been disclosed to the public.
(j) Further Assurances. The Company hereby agrees that it
will provide to the Employee documentation regarding his compensation
and benefit plans participation upon his reasonable request, including
schedules confirming the nature and extent of his participation in such
benefit plans and related tax information.
(k) Execution of Agreement. The Employee acknowledges that
he has consulted with an attorney prior to executing this Agreement,
that he has read and understands the terms of this Agreement and that
these terms are fully and voluntarily accepted by him.
IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by its duly authorized director,
as of the date first above written.
/s/ John M. Lillie
John M. Lillie
AMERICAN PRESIDENT COMPANIES, LTD.
By /s/ F. Warren Hellman
F. Warren Hellman
Chairman, Compensation Committee
Board of Directors
MC951012Cemp-0100jf-Lillie
EXHIBIT 11.1
AMERICAN PRESIDENT COMPANIES, LTD. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
________________________________________________________________________________________________
Year Ended December 29 December 30 December 31
1995 1994 1993
________________________________________________________________________________________________
(In thousands, except
per share amounts)
________________________________________________________________________________________________
PRIMARY EARNINGS PER COMMON SHARE
________________________________________________________________________________________________
<S> <C> <C> <C>
Net Income $ 30,297 $ 74,198 $ 80,109
Preferred Dividends Series C (3,375) (6,750) (6,750)
________________________________________________________________________________________________
Earnings Available $ 26,922 $ 67,448 $ 73,359
________________________________________________________________________________________________
Weighted Average:
Common Stock (1) 27,423 27,231 26,559
Common Stock Equivalents (2) 822 1,071 1,147
________________________________________________________________________________________________
Total Shares 28,245 28,302 27,706
________________________________________________________________________________________________
________________________________________________________________________________________________
Primary Earnings Per Common
Share $ 0.95 $ 2.38 $ 2.65
________________________________________________________________________________________________
FULLY DILUTED EARNINGS PER COMMON SHARE
________________________________________________________________________________________________
Net Income $ 30,297 $ 74,198 $ 80,109
________________________________________________________________________________________________
Weighted Average:
Common Stock (1) 29,734 27,231 26,559
Common Stock Equivalents (2) 822 1,100 1,579
Preferred Stock Series C 3,962 3,962
________________________________________________________________________________________________
Total Shares 30,556 32,293 32,100
________________________________________________________________________________________________
________________________________________________________________________________________________
Fully Diluted Earnings Per
Common Share $ 0.99 $ 2.30 $ 2.50
________________________________________________________________________________________________
(1) In July, 1995, 1,500 outstanding shares of the company's 9%
Series C Cumulative Convertible Preferred Stock ("Series C
Stock") were converted into 3,962 shares of common stock.
Primary Earnings Per Share for 1995 includes deductions for the
9% Series C Cumulative Convertible Preferred Stock dividends of
$3,375 for preferred dividends through the conversion date. The
fully diluted earnings per share calculation for 1995 reflects
the conversion of the Series C stock as though it had occurred as
of the beginning of the year. Additionally, in August through
October 1995, the company repurchased 6,000 shares of its common
stock.
(2) Assumes conversion of outstanding stock options as determined by
application of the treasury stock method.
</TABLE>
EXHIBIT 21.1
AMERICAN PRESIDENT COMPANIES, LTD.
SUBSIDIARIES OF THE COMPANY
SUBSIDIARY JURISDICTION OF INCORP.
____________________________________________________________________________
ACS CANADA, LTD. CANADA
AMERICAN CONSOLIDATION SERVICES OF NORTH AMERICA, LTD. DELAWARE
AMERICAN CONSOLIDATION SERVICES, LTD. HONG KONG
AMERICAN CONSOLIDATION SERVICES, LTD. TAIWAN
AMERICAN CONSOLIDATION SERVICES (AUSTRALIA), PTY. LTD. AUSTRALIA
AMERICAN CONSOLIDATION SERVICES (PHILIPPINES), INC. PHILIPPINES
AMERICAN CONSOLIDATION SERVICES (KOREA), LTD. KOREA
AMERICAN PRESIDENT BUSINESS LOGISTICS SERVICES, LTD. DELAWARE
AMERICAN PRESIDENT COMPANIES FOUNDATION CALIFORNIA
AMERICAN PRESIDENT LINES CANADA, LTD. CANADA
AMERICAN PRESIDENT LINES, LTD. DELAWARE
AMERICAN PRESIDENT LINES (CHINA) COMPANY LIMITED PEOPLE'S REPUBLIC
OF CHINA
AMERICAN PRESIDENT LINES (LANKA) AGENCIES LIMITED SRI LANKA
AMERICAN PRESIDENT TRUCKING COMPANY, LTD. DELAWARE
APL AGENCIES INDIA PRIVATE LIMITED INDIA
APL AGENCIES SDN. BHD. MALAYSIA
APL (BANGLADESH) AGENCIES LIMITED BANGLADESH
APL CORPORATION DELAWARE
APL DE MEXICO, S.A. DE C.V. MEXICO
APL EXPRESS LTD. DELAWARE
APL EXPRESS TRANSPORTATION, LTD. DELAWARE
APL INFORMATION SERVICES, LTD. DELAWARE
APL INTERNATIONAL CORPORATION DELAWARE
APL LAND TRANSPORT SERVICES, INC. TENNESSEE
APL M.V. JAPAN, LTD. DELAWARE
APL M.V. KOREA, LTD. DELAWARE
APL M.V. SINGAPORE, LTD. DELAWARE
APL M.V. THAILAND, LTD. DELAWARE
APL NEWBUILDINGS, LTD. DELAWARE
APL NEWBUILDINGS, LTD. NEVADA
APL SHIPHOLDINGS, LTD. DELAWARE
ASIAN-AMERICAN CONSOLIDATION SERVICES, LTD. CALIFORNIA
CONTROLADORA APC MEXICANA, S.A. DE C.V. MEXICO
EAGLE INTERMODAL, LTD. DELAWARE
EAGLE MARINE SERVICES, LTD. DELAWARE
EAGLE MARINE SERVICES (INDIA), LTD. DELAWARE
EMS DE MEXICO, S.A. DE C.V. MEXICO
EMS LOGISTICS (S) PTE. LTD. SINGAPORE
EMSM, LIMITED LIABILITY COMPANY DELAWARE
GLOBAL ALLIANCE F, LTD. BERMUDA
MULTI MODAL TRANSPORT INTERNATIONAL (PVT) LTD. PAKISTAN
M.V. PRESIDENT ADAMS, LTD. DELAWARE
M.V. PRESIDENT JACKSON, LTD. DELAWARE
M.V. PRESIDENT KENNEDY, LTD. DELAWARE
M.V. PRESIDENT POLK, LTD. DELAWARE
M.V. PRESIDENT TRUMAN, LTD. DELAWARE
NATOMAS REAL ESTATE COMPANY CALIFORNIA
PIONEER INTERMODAL CONTAINER SERVICES CO., LTD THAILAND
PISCES, LIMITED LIABILITY COMPANY CALIFORNIA
SIAM INTERMODAL SERVICES LTD. THAILAND
SONG-DOR HOLDINGS LIMITED HONG KONG
TRADE U.S.A., LTD. DELAWARE
VASCOR, LTD. DELAWARE
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report dated February 9, 1996 included in this Form 10-K, into the
company's previously filed Registration Statements on Form S-3 No. 33-60893,
and Form S-8 Nos. 2-89096, 2-89094, 33-17499, 33-28640, 33-24847, 33-36030,
33-47492, 33-56163 and 33-59441.
/s/ Arthur Andersen LLP
San Francisco, California
March 14, 1996
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint L. Dale
Crandall, Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel,
jointly and severally, my true and lawful attorneys-in-fact, with full power of
substitution in each, for me and in my name, place and stead to execute for me
and on my behalf in each or any one of my offices and capacities with American
President Companies, Ltd. (the "Company"), as shown below, the Company's Annual
Report on Form 10-K for the year ended December 29, 1995, with exhibits thereto
and other documents in connection therewith, which the Company contemplates
filing with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 13th day of
March, 1996.
/s/ Charles S. Arledge
Charles S. Arledge
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint L. Dale
Crandall, Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel,
jointly and severally, my true and lawful attorneys-in-fact, with full power of
substitution in each, for me and in my name, place and stead to execute for me
and on my behalf in each or any one of my offices and capacities with American
President Companies, Ltd. (the "Company"), as shown below, the Company's Annual
Report on Form 10-K for the year ended December 29, 1995, with exhibits thereto
and other documents in connection therewith, which the Company contemplates
filing with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 13th day of
March, 1996.
/s/ John H. Barr
John H. Barr
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint L. Dale
Crandall, Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel,
jointly and severally, my true and lawful attorneys-in-fact, with full power of
substitution in each, for me and in my name, place and stead to execute for me
and on my behalf in each or any one of my offices and capacities with American
President Companies, Ltd. (the "Company"), as shown below, the Company's Annual
Report on Form 10-K for the year ended December 29, 1995, with exhibits thereto
and other documents in connection therewith, which the Company contemplates
filing with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 13th day of
March, 1996.
/s/ Tully M. Friedman
Tully M. Friedman
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint L. Dale
Crandall, Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel,
jointly and severally, my true and lawful attorneys-in-fact, with full power of
substitution in each, for me and in my name, place and stead to execute for me
and on my behalf in each or any one of my offices and capacities with American
President Companies, Ltd. (the "Company"), as shown below, the Company's Annual
Report on Form 10-K for the year ended December 29, 1995, with exhibits thereto
and other documents in connection therewith, which the Company contemplates
filing with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 13th day of
March, 1996.
/s/ Joji Hayashi
Joji Hayashi
Chairman of the Board
and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint L. Dale
Crandall, Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel,
jointly and severally, my true and lawful attorneys-in-fact, with full power of
substitution in each, for me and in my name, place and stead to execute for me
and on my behalf in each or any one of my offices and capacities with American
President Companies, Ltd. (the "Company"), as shown below, the Company's Annual
Report on Form 10-K for the year ended December 29, 1995, with exhibits thereto
and other documents in connection therewith, which the Company contemplates
filing with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 13th day of
March, 1996.
/s/ F. Warren Hellman
F. Warren Hellman
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint L. Dale
Crandall, Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel,
jointly and severally, my true and lawful attorneys-in-fact, with full power of
substitution in each, for me and in my name, place and stead to execute for me
and on my behalf in each or any one of my offices and capacities with American
President Companies, Ltd. (the "Company"), as shown below, the Company's Annual
Report on Form 10-K for the year ended December 29, 1995, with exhibits thereto
and other documents in connection therewith, which the Company contemplates
filing with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 13th day of
March, 1996.
/s/ Timothy J. Rhein
Timothy J. Rhein
President, Chief Executive Officer
and Director
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint L. Dale
Crandall, Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel,
jointly and severally, my true and lawful attorneys-in-fact, with full power of
substitution in each, for me and in my name, place and stead to execute for me
and on my behalf in each or any one of my offices and capacities with American
President Companies, Ltd. (the "Company"), as shown below, the Company's Annual
Report on Form 10-K for the year ended December 29, 1995, with exhibits thereto
and other documents in connection therewith, which the Company contemplates
filing with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 13th day of
March, 1996.
/s/ Toni Rembe
Toni Rembe
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint L. Dale
Crandall, Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel,
jointly and severally, my true and lawful attorneys-in-fact, with full power of
substitution in each, for me and in my name, place and stead to execute for me
and on my behalf in each or any one of my offices and capacities with American
President Companies, Ltd. (the "Company"), as shown below, the Company's Annual
Report on Form 10-K for the year ended December 29, 1995, with exhibits thereto
and other documents in connection therewith, which the Company contemplates
filing with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 13th day of
March, 1996.
/s/ Forrest N. Shumway
Forrest N. Shumway
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint Maryellen B.
Cattani, Timothy J. Windle and Peter A. V. Huegel, jointly and severally, my
true and lawful attorneys-in-fact, with full power of substitution in each, for
me and in my name, place and stead to execute for me and on my behalf in each or
any one of my offices and capacities with American President Companies, Ltd.
(the "Company"), as shown below, the Company's Annual Report on Form 10-K for
the year ended December 29, 1995, with exhibits thereto and other documents in
connection therewith, which the Company contemplates filing with the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as amended,
and any and all amendments to said Form 10-K, hereby ratifying, approving and
confirming all that any such attorney-in-fact may do by virtue of these
presents.
IN WITNESS WHEREOF, I have executed these presents this 13th day of
March, 1996.
/s/ L. Dale Crandall
L. Dale Crandall
Executive Vice President
Chief Financial Officer
and Treasurer
(Principal Financial Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint L. Dale
Crandall, Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel,
jointly and severally, my true and lawful attorneys-in-fact, with full power of
substitution in each, for me and in my name, place and stead to execute for me
and on my behalf in each or any one of my offices and capacities with American
President Companies, Ltd. (the "Company"), as shown below, the Company's Annual
Report on Form 10-K for the year ended December 29, 1995, with exhibits thereto
and other documents in connection therewith, which the Company contemplates
filing with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 13th day of
March, 1996.
/s/ G. Craig Sullivan
G. Craig Sullivan
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint L. Dale
Crandall, Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel,
jointly and severally, my true and lawful attorneys-in-fact, with full power of
substitution in each, for me and in my name, place and stead to execute for me
and on my behalf in each or any one of my offices and capacities with American
President Companies, Ltd. (the "Company"), as shown below, the Company's Annual
Report on Form 10-K for the year ended December 29, 1995, with exhibits thereto
and other documents in connection therewith, which the Company contemplates
filing with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 13th day of
March, 1996.
/s/ Barry L. Williams
Barry L. Williams
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint L. Dale
Crandall, Maryellen B. Cattani, Timothy J. Windle and Peter A. V. Huegel,
jointly and severally, my true and lawful attorneys-in-fact, with full power of
substitution in each, for me and in my name, place and stead to execute for me
and on my behalf in each or any one of my offices and capacities with American
President Companies, Ltd. (the "Company"), as shown below, the Company's Annual
Report on Form 10-K for the year ended December 29, 1995, with exhibits thereto
and other documents in connection therewith, which the Company contemplates
filing with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, and any and all amendments to said Form 10-K, hereby
ratifying, approving and confirming all that any such attorney-in-fact may do by
virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this 13th day of
March, 1996.
/s/ William J. Stuebgen
William J. Stuebgen
Vice President - Controller
(Principal Accounting Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
The undersigned does hereby make, constitute and appoint L. Dale
Crandall, Timothy J. Windle and Peter A. V. Huegel, jointly and severally, my
true and lawful attorneys-in-fact, with full power of substitution in each, for
me and in my name, place and stead to execute for me and on my behalf in each or
any one of my offices and capacities with American President Companies, Ltd.
(the "Company"), as shown below, the Company's Annual Report on Form 10-K for
the year ended December 29, 1995, with exhibits thereto and other documents in
connection therewith, which the Company contemplates filing with the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as amended,
and any and all amendments to said Form 10-K, hereby ratifying, approving and
confirming all that any such attorney-in-fact may do by virtue of these
presents.
IN WITNESS WHEREOF, I have executed these presents this 13th day of
March, 1996.
/s/ Maryellen B. Cattani
Maryellen B. Cattani
Executive Vice President,
General Counsel and Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary information extracted from the 10-K of American
President Companies, Ltd. for the year ended December 29, 1995 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-29-1995
<PERIOD-END> DEC-29-1995
<CASH> 76,564
<SECURITIES> 59,086
<RECEIVABLES> 245,490<F1>
<ALLOWANCES> 0
<INVENTORY> 40,358
<CURRENT-ASSETS> 502,338
<PP&E> 2,203,448
<DEPRECIATION> 961,971
<TOTAL-ASSETS> 1,878,783
<CURRENT-LIABILITIES> 437,188
<BONDS> 687,087
0
0
<COMMON> 25,669
<OTHER-SE> 443,501
<TOTAL-LIABILITY-AND-EQUITY> 1,878,783
<SALES> 0
<TOTAL-REVENUES> 2,895,982
<CGS> 0
<TOTAL-COSTS> 2,702,342<F2>
<OTHER-EXPENSES> 48,372<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38,318
<INCOME-PRETAX> 53,153
<INCOME-TAX> 22,856
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,297
<EPS-PRIMARY> 0.95
<EPS-DILUTED> 0.99
<FN>
<F1>The Allowance for Doubtful Accounts, included in Receivables, amounted to
$22,531 at December 29, 1995.
<F2>The Provision for Doubtful Accounts, included in Total-Costs, amounted to
$14,937 for the 52 weeks ended December 29, 1995.
<F3>Restructuring charge of 48,372 represents cost associated with the
accelerated completion of the reegineering program and other organizational
changes.
</FN>
</TABLE>
