As filed with the Securities and Exchange Commission on March 29,
1994
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1993
Commission File Number 2-87930
OMI CORP.
(Exact name of Registrant as specified in its charter)
DELAWARE 13-2625280
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
90 PARK AVENUE, NEW YORK, NEW YORK 10016
(Address of principal executive office) (Zip Code)
Registrant's telephone number including area code: (212) 986-1960.
Securities registered pursuant to Section 12(b) of the Act:
COMMON STOCK, PAR VALUE $.50 PER SHARE NEW YORK STOCK EXCHANGE
Title of Class Name of Exchange on
which Registered
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
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 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.
YES X NO
<PAGE>
Aggregate market value of Registrant's voting stock, held by
non-affiliates, based on the closing price on the New York Stock
Exchange as of the close of business on March 22, 1994: $218,611,430.
Number of shares of the Registrant's Common Stock outstanding as of
March 22, 1994: 30,682,306.
The following document is hereby incorporated by reference into
Part III of this Form 10-K:
(1) Portions of the OMI Corp. 1994 Proxy Statement to be
filed with the Securities and Exchange Commission.
<PAGE>
CONTENTS
PART I
Items 1 and 2. Business and Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of
Security Holders
Executive Officers of OMI
PART II
Item 5. Market for OMI's Common Stock and
Related Security Holder Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations
Item 8. Financial Statements and Supplementary
Data
Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure
PART III
Item 10. Directors and Executive Officers of
OMI
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial
Owners and Management
Item 13. Certain Relationships and Related
Transactions
PART IV
Item 14. Exhibits, Financial Statements, Schedules
and Reports on Form 8-K
SIGNATURES
<PAGE>
PART I
ITEMS 1. AND 2. BUSINESS AND PROPERTIES
GENERAL
OMI Corp. ("OMI" or the "Company"), organized under the laws of the
State of Delaware on July 19, 1968, is currently located at 90 Park
Avenue, New York, New York pursuant to a sublease which expires in
1999. The telephone number is (212) 986-1960.
The Company owns solely or through joint ownership or charters-in
a fleet of 47 vessels which includes tankers, dry bulk carriers, a
liquid petroleum gas ("LPG") carrier and an ore/bulk/oil ("OBO")
carrier as follows:
36 tankers - 11 U.S. flag, aggregating 537,750 dwt.;
20 foreign flag, aggregating 2,046,277
dwt; and 5 chartered-in foreign flag,
aggregating 360,571 dwt.
9 bulk carriers - 3 U.S. flag, aggregating 136,404
deadweight metric tons ("dwt."); and 6
foreign flag, aggregating 329,346 dwt.
1 LPG carrier - foreign flag, 49,880 dwt.
1 OBO carrier - foreign flag, 71,879 dwt.
NOTE: Approximately 26% of the owned and jointly-owned
tonnage is under charters extending beyond year-end
1994.
There are two aspects to vessel operations, technical operation,
which involves making the vessel function, including maintaining,
crewing and insuring, and commercial operation, which involves
arranging the business of the vessel. OMI is commercial operator
of all U.S. flag vessels it owns or leases and technical operator
of all such vessels, except for four tankers and two dry bulk
carriers which are eligible for Operating Differential Subsidies
("ODS") but are not eligible for U.S. coastwise trading (the "ODS
Eligible Vessels"). The technical operation of the ODS Eligible
Vessels, which qualify for non-coastwise U.S. military cargo and
preference trades, is performed by a qualified independent
operator. OMI, either individually or through a joint venture
partnership, is technical operator of its wholly-owned foreign flag
vessels except for its two most recently acquired Suezmax tankers
which remain under the bareboat charters in existence at the time
of their acquisition. The LPG carrier is operated by an
independent manager. Technical and commercial operation of the
jointly-owned vessels is allocated to OMI or its joint venture
partner based primarily on the experience of the entity with the
type and size of vessel.
<PAGE>
The Company's vessels are available for charter on a voyage, time
or bareboat basis. Under a voyage charter, the operator of a
vessel agrees to provide the vessel for the transport of specific
goods between specific ports in return for the payment of an
agreed-upon freight per ton of cargo or, alternatively, for a named
total amount. All operating costs are for the operator's account.
A single voyage (generally two to ten weeks) charter is often
referred to as a "spot market" charter. A voyage charter involving
more than one voyage is commonly known as a "consecutive voyage"
charter.
A time charter involves the placing of a vessel at the charterer's
disposal for a set period of time during which the charterer may
use the vessel in return for the payment by the charterer of a
specified daily or monthly hire rate. In time charters, operating
costs such as for crews, maintenance and insurance are typically
paid by the owner of the vessel and voyage costs such as fuel and
port charges are paid by the charterer.
Under a bareboat charter, the charterer takes possession of the
vessel in return for a specified amount payable to the owner of the
vessel. The bareboat charterer must provide its own crew, pay all
operating and voyage expenses and is responsible for the operation
and management of the vessel.
Voyage, time and bareboat charters are available for varying
periods, ranging from a single trip to a long-term arrangement
approximating the useful life of the ship, to commercial firms
(such as oil companies) and governmental agencies, both foreign and
domestic, on a worldwide basis. In general, a long-term charter
affords the vessel owner greater assurance that it will be able to
cover its costs (including depreciation, interest, and operating
costs). Operating the vessel in the spot market affords the owner
greater speculative opportunity, which may result in high rates
when ships are in high demand or low rates (possibly insufficient
to cover costs) when ship availability exceeds demand. Ship
charter rates are affected by world economics, international
events, weather conditions, strikes, governmental policies, supply
and demand, and many other factors beyond the control of the
Company.
The following table sets forth certain information with respect to
the Company's vessels all of which are wholly-owned by the Company
except (1) the OMI HUDSON and the OMI STAR, which are chartered-in
under a bareboat charter, (2) the SETTEBELLO, WHITE SEA, WILOMI
ALTA, WILOMI TANANA, WILOMI YUKON, ELBE, MARITIME MOSAIC, MARITIME
OMI, MARITIME NANCY, CLIPPER, MARITIME LAPIS and ALASKA TRADER
which are jointly-owned, and (3) the chartered-in crude and product
tankers. The vessels which are not operated by a joint venture
partner or by an independent manager or operator are operated by
OMI Bulk Management Co., a division of the Company.
<PAGE>
<TABLE>
<CAPTION>
DEAD-
WEIGHT CHARTER
TYPE OF METRIC EXPIRA-
NAME OF VESSEL VESSEL BUILT (L/T) YEAR<F1> TONNAGE TION<F2>
<S> <C> <C> <C> <S>
U.S. FLAG VESSELS:
OMI COLUMBIA<F3> Crude Oil Tanker 1974 138,698 Spot
OMI DYNACHEM<F4> Chemical/Product Carrier 1981 51,668 05/97
OMI HUDSON<F4> Chemical/Product Carrier 1981 51,668 05/97
OMI STAR<F4> Chemical/Product Carrier 1970 37,711 05/97
OMI CHAMPION Product Carrier 1969 38,482 05/94
OMI WILLAMETTE Product Carrier 1969 38,461 Spot
OMI LEADER Product Carrier 1969 38,414 Spot
PATRIOT<F5> Product Carrier 1976 35,662 Spot
RANGER<F5> Product Carrier 1976 35,662 Spot
COURIER<F5> Product Carrier 1977 35,662 Spot
ROVER<F5> Product Carrier 1977 35,662 Spot
OMI MISSOURI<F5> Dry Bulk Carrier 1983 49,672 Spot
OMI SACRAMENTO<F5> Dry Bulk Carrier 1983 49,672 Spot
PLATTE Dry Bulk Carrier 1982 37,060 Spot
TOTAL U.S. FLAG OPERATING FLEET: 14 VESSELS 674,154 DWT
FOREIGN FLAG VESSELS:
SETTEBELLO<F6> Crude Oil Carrier 1983 322,446 Spot
WHITE SEA<F7> Crude Oil Carrier 1975 155,702 Spot
CAIRO SEA Crude Oil Carrier 1975 154,719 10/94
TRINIDAD SEA Crude Oil Carrier 1974 154,605 06/94
WILOMI ALTA<F7> Crude Oil Carrier 1990 146,270 05/95
CZANTORIA Crude Oil Carrier 1975 146,104 06/94
SOKOLICA Crude Oil Carrier 1975 145,649 10/97
WILOMI TANANA<F7> Crude Oil Carrier 1992 134,003 Spot
COLORADO Crude Oil Carrier 1980 86,648 05/97
OCEAN SPIRIT Crude Oil Carrier 1982 61,388 Spot
WILOMI YUKON<F7> Product Carrier 1992 99,195 04/94
PANDA Product Carrier 1987 83,651 09/95
ELBE<F8> Product Carrier 1984 66,800 10/94
NILE Product Carrier 1981 65,755 02/95
VOLGA Product Carrier 1981 65,689 01/95
LIMAR Product Carrier 1988 29,999 03/94
PAULINA Product Carrier 1984 29,993 03/94
ALMA Product Carrier 1988 29,994 06/94
PAGODA Product Carrier 1988 29,996 05/94
PATRICIA Product Carrier 1984 29,973 07/95
EBRO Ore/Bulk/Oil Carrier 1978 71,879 Spot
MARITIME MOSAIC<F8> Dry Bulk Carrier 1993 73,657 Spot
MARITIME OMI<F8> Dry Bulk Carrier 1994 72,800 Spot
MARITIME NANCY<F8> Dry Bulk Carrier 1990 72,136 Spot
CLIPPER<F8> Dry Bulk Carrier 1983 43,583 Spot
MARITIME LAPIS<F8> Dry Bulk Carrier 1990 41,408 Spot
ALASKA TRADER<F8><F11> Dry Bulk Carrier 1986 25,762 Spot
GENERAL LPG Carrier 1975 49,880 03/95
<PAGE>
TOTAL OPERATING FLEET: 28 VESSELS 2,497,382 DWT
3 CHARTERED-IN CRUDE TANKERS<F9> 273,444 DWT
2 CHARTERED-IN PRODUCT TANKERS<F10> 87,127 DWT
TOTAL FOREIGN FLAG OPERATING FLEET: 33 VESSELS 2,857,953 DWT
TOTAL OMI FLEET: 47 VESSELS 3,532,107 DWT
<FN>
<F1> Weighted average age (based on carrying capacity) of the
Company's owned fleet (including jointly-owned) at
year-end 1993 is 11.9 years.
<F2> Expiration dates do not reflect charterers' options for
extensions or cancellations.
<F3> Rebuilt in 1983 under Wrecked Vessels Act, 46 U.S.C.
Section 14.
<F4> The vessels are time chartered to a 50% owned affiliate
at rates dependent upon the performance of the affiliate.
<F5> Bareboat chartered to a qualified independent operator
and time chartered back to the Company.
<F6> Joint ownership with Bergesen d.y. A/S, Norway.
<F7> Joint ownership with an affiliate of Anders Wilhelmsen &
Co., Norway.
<F8> Joint ownership with an affiliate of International
Maritime Carriers Limited, Hong Kong.
<F9> Time chartered-in under charters expiring in July 1994,
December 1994 and April 1995.
<F10> Time chartered-in under charters expiring in November
1994 and December 1994.
<F11> UNDER CONTRACT TO SELL.
</TABLE>
<PAGE>
A brief description of the functions of the various types of
vessels owned or operated by the Company is set forth below:
Product Carrier - Normally carries refined petroleum
products such as gasoline, naphtha
and kerosene.
Chemical Tanker - Normally carries various types of
liquid chemicals.
Crude Tanker - Normally carries crude oil and dirty
products.
Dry Bulk Carrier - Carries dry bulk products such as
coal, ore, grain and fertilizer.
LPG Carrier - Carries various petroleum gas
products in liquid form.
OBO Carrier - Carries liquid petroleum or dry bulk
products.
The Company is under contract to purchase a 1978 built 268,038 dwt
crude oil carrier to be delivered during the second quarter of 1994
and has also agreed to joint ownership of an additional vessel to
be delivered from a shipyard in China, to be jointly owned with an
affiliate of Anders Wilhelmsen & Co. All of the Company's joint
ownership arrangements involve beneficial ownership by the Company
of 50% or less interest.
As of December 31, 1993, OMI's U.S. flag ships were subject to
mortgages and bonds in the aggregate principal amount of
approximately $69,902,000 and OMI's foreign flag ships (not
including debt of jointly-owned ships) were subject to mortgages in
the aggregate principal amount of approximately $48,668,000. The
Company and its joint venture partners are also several guarantors,
in proportion to their respective beneficial ownership, of certain
loan transactions relating to the joint ventures. The aggregate
amount of such debt is approximately $102,869,000, with OMI's
share being approximately $49,594,000.
The Company owns approximately 80% of OMI Petrolink Corp.
("Petrolink"), a Houston-based company which renders lightering
services for large tankers in the U.S. Gulf. Petrolink
charters-in, for varying term periods, such vessels as are
necessary to satisfy the needs of its customers. OMI Offshore
Marine Services, Inc. ("Offshore Marine"), a subsidiary of
Petrolink with its principal office in Sabine Pass, Texas, at
year-end managed five offshore support boats and three lightering
support vessels. The boats, owned by Petrolink, have also provided
support for rigs and platforms in the Gulf of Mexico. Early in
1993, Petrolink purchased an additional boat, and also sold seven
boats, delivered during the first quarter of 1993.
<PAGE>
The Company's wholly owned subsidiary, OMI Ship Management, Inc.,
continues to provide technical services to the U.S. Maritime
Administration for ten (10) vessels in the Ready Reserve Fleet
Program under a multi-year contract. From time to time, OMI Ship
Management also manages vessel conversion contracts for various
U.S. government agencies.
OMI owns an 8.8% equity interest in Chiles Offshore Corporation
("COC"), Houston, Texas after participating in a public offering of
COC's common stock and selling 1,919,875 shares of stock during
1993 and January 1994. COC currently owns fourteen (200-300 feet)
jackup drilling rigs of which twelve are located in the U.S. Gulf
of Mexico. COC's remaining two jackup drilling rigs are located in
international waters. In January 1994, a partnership in which OMI
owns a 25% interest, sold a drilling rig which was its primary
asset, and will be dissolved.
The Company is a party to an agreement with Hvide Shipping, Inc.
("HSI"), Fort Lauderdale, Florida, a privately-held corporation
with significant bulk shipping operations, to charter on a long
term basis to Ocean Specialty Tankers Corp. ("OSTC") several U.S.
flag chemical/petroleum product carriers. The OMI DYNACHEM, the
OMI HUDSON and the OMI STAR and two similar vessels controlled by
Hvide have been time chartered for approximately seven years to
OSTC, a Houston-based company with expertise in marketing parcel
tankers. Revenues will be determined by trading conditions
prevailing over the terms of the charters, with net proceeds shared
among the vessels in accordance with mutually agreed formulas. OMI
and HSI each own a 50% interest in OSTC.
During 1992, Ecomarine USA, a partnership with Ecoventures, Inc.,
an affiliate of Ecolmare, SpA, was formed to build environmental
vessels offering a comprehensive oil spill service, a marine
pollution control service, and a marine monitoring and mapping
service, but failed to develop any business. The Company has
written off its investment and intends to sell its interest or wrap
up the operations in 1994.
The Company continues to consider alternative structures for its
international operations which would be intended to increase its
access to capital and improve its tax situation.
CUSTOMERS
Payments to the Company under the Public Law 480/416 federal
programs accounted for approximately 18% of the Company's
consolidated voyage revenues for 1993. No other charterer
accounted for 10% or more of OMI's consolidated revenues. The OMI
COLUMBIA, the largest of the Company's domestic vessels which in
prior years accounted for approximately 5% of the Company's total
revenues, was redelivered to the Company in 1992 in accordance with
the provisions of the charter. Its revenues during 1993 were
approximately $4,000,000. For information about major customers,
see Note 13 to OMI's Consolidated Financial Statements.
<PAGE>
U.S. SUBSIDIES
The Merchant Marine Act, 1936, as amended (the "Merchant Marine
Act"), permits domestic shipping companies to establish a
tax-deferred fund called a Capital Construction Fund ("CCF") for
such purposes as acquiring qualified vessels for use in certain
U.S. flag trades, reconstruction of existing vessels and payment of
principal on certain existing indebtedness. The Company maintains
a CCF as well as a Reserve Fund maintained in connection with its
Title XI financed vessels. Pursuant to a Dual Use Agreement,
monies on deposit in the Reserve Fund have the tax deferred aspects
of a CCF. As of December 31, 1993, the balance in the CCF and
Reserve Fund was approximately $13,786,000.
Operating cost differentials favor foreign ships in worldwide
commerce. However, because United States laws restrict U.S.
coastwise trade (generally transport of cargo by sea from one U.S.
port to another) to U.S. built, U.S. flag ships, foreign flag ships
cannot compete for U.S. coastwise cargoes.
To encourage U.S. flag vessels to engage in foreign trade, the
Merchant Marine Act provides for direct subsidies to equalize the
disparity between the costs of U.S. operations and construction and
the costs of foreign operations and construction. A qualified
shipowner may apply for a contract with the Maritime Subsidy Board
of the U.S. Department of Transportation (the "Board") whereby a
portion of the costs of operating a U.S. flag vessel is subsidized.
Certain restrictions are placed on operations and dividends. The
subsidy resulting from this is known as an Operating-Differential
Subsidy ("ODS"). Similarly, the Board may grant a construction
subsidy for the construction of a U.S. flag vessel in a U.S.
shipyard. This is characterized as a Construction-Differential
Subsidy ("CDS"). Vessels built with CDS or operating with ODS are
not presently permitted in the U.S. coastwise trade during the term
of restrictions associated with these programs except on a case-by-
case waiver basis. A shipowner has filed suit to clarify the length
of the term of coastwise trading restrictions associated with the CDS
program. The United States Government is defending its current
interpretation of these restrictions in this lawsuit. Congress has
not appropriated funds for new ODS or CDS contracts since 1981.
On November 4, 1993, the House of Representatives approved, by a vote
of 354-67, a bill which would revise and extend an operating subsidy
program for a limited number of U.S.-flag vessels. The legislation
approved by the House of Representatives must be approved by the Senate
and signed by the President before becoming law. The final details of
a continuing operating support program and the Company's possible
participation in any approved program are not known at this time.
Four of the Company's U.S. flag tankers were constructed with CDS
and are eligible for ODS and two of the Company's U.S flag dry bulk
carriers became eligible for ODS in January 1990 under an ODS
sharing program approved by the Board. These vessels are operated
<PAGE>
by a qualified independent operator. The tankers also qualify for
non-coastwise U.S. military cargo. The bulk carriers are employed
primarily in the carriage of U.S. government generated preference
cargoes. During such charters or whenever the vessels are used for
non-coastwise U.S. military cargo or in the preference trades, they
are not eligible for ODS. In 1993, the Company did not receive any
CDS, but the qualified independent operator received some ODS
payments as a result of several tanker voyages which resulted in
some savings by the Company.
The Export Administration Act ("EAA"), which provides the strictest
restrictions under U.S. law of exports on Alaskan North Slope oil,
will expire June 30, 1994. Legislation to reauthorize the Act, and
separate legislation to establish permanent restrictions on the export
of Alaska North Slope oil, has been introduced into Congress. The
Administration has advised Congress it is reviewing the issue and
may propose changes to the current restrictions. A separate bill has
also been introduced to repeal the export restrictions. The EAA
reauthorization legislation includes provisions continuing the
restrictions in their present form, and the restrictions have
remained unchanged throughout the last three EAA reauthorizations.
On several previous occasions, the EAA has lapsed due to delays in
reauthorization. In each case, the export restrictions have remained
in effect pursuant to the International Emergency Economic Powers Act
and by their incorporation in the Energy Policy and Conservation Act.
The State of Alaska has brought suit challenging the restrictions
on export of Alaska North Slope oil as unconstitutional on several
grounds, including that they discriminate against Alaska. The State's
action seeks an order invalidating the restrictions. The United
States is defending the restrictions, and a coalition of organizations
supporting the restrictions, including the Company, has intervened in
support of the United States. Motions to dismiss the suit, and cross-
motions for summary judgement, are pending.
If the export restrictions are rescinded or allowed to lapse,
portions of the Company's U.S. coastwise fleet could be adversely
affected, with any off-setting benefit derived by those of the
Company's vessels that operate in international trade being
immaterial because the volume of such exports would be small in
relation to prevailing movements of crude oil in international
trade. Efforts also continue to be made to loosen any remaining
regulatory barriers to the export from the U.S. of crude oil (other
than Alaskan North Slope production) and so-called partly refined
oil. To the extent such efforts are successful (Congress has
generally opposed liberalization), U.S. coastwise tanker demand
could be adversely affected. The U.S. - Canada Free Trade
Agreement Implementation Act of 1988 contains a provision allowing
Canada access to a maximum of 50,000 barrels per day of North Slope
Alaska crude oil provided such oil is shipped on U.S. flag vessels,
and the U.S. Commerce Department has proposed allowing the export
of 25,000 barrels per day of heavy crude oil produced off the coast
of California.
<PAGE>
Legislation was passed and signed into law in 1985 to extend the
requirement to utilize U.S. flag vessels under the Public Law 480
program (by which the U.S. Government sells or donates surplus
grain for export to developing countries) from its historic 50%
level to 75% over a three year period. Currently, most food aid
programs are at the 75% level but several have still remained at
the 50% level. This program benefits the Company's three U.S. flag
dry bulk carriers and several of its U.S. flag tankers. This
extension of the cargo preference law was opposed by many
agricultural interests and the Administration. While the 75% level
was retained in the 1990 Farm Bill, there is no assurance that the
new requirement will withstand possible future legislative tests.
REGULATIONS
The Company is required by various governmental and
quasi-governmental agencies to obtain certain permits, licenses and
certificates with respect to its vessels. The kinds of permits,
licenses and certificates required depend upon such factors as the
country of registry, the commodity transported, the waters in which
the vessel operates, the nationality of the vessel's crew, the age
of the vessel and the status of the Company as owner or charterer.
The Company believes that it has or can readily obtain all permits,
licenses and certificates necessary to permit its vessels to
operate.
In the operation of its U.S. flag vessels, the Company is subject
to various statutes and regulations, including the Merchant Marine
Act. Under the Merchant Marine Act, vessels owned by United States
citizens are subject to requisition by purchase or charter by the
United States whenever the President declares that the national
security requires such action. The owner of any such vessel must
receive just compensation as provided in the Merchant Marine Act,
but there is no assurance that lost profits, if any, will be fully
recovered. Additionally, U.S. law requires that, to be eligible for U.S.
coastwise trade, a corporation owning a vessel must be at least 75%
U.S. owned. In order to assure compliance with this citizenship
requirement, the Restated Certificate of Incorporation of the
Company authorizes, and the Board of Directors has adopted, a
By-law authorizing the Board to determine a minimum percentage of
outstanding shares of capital stock of the Company that must be
held by U.S. citizens. The minimum percentage established by the
Board now stands at 77% and officers of the Company have been
authorized to set such percentage higher, if deemed advisable. The
Board has also adopted procedures for establishing the citizenship
of the Company's stockholders. The Company's stock certificates
(otherwise identical) are identified as "Domestic Share
Certificates" (certificates representing shares issued to United
States citizens) and "Foreign Share Certificates" (certificates
representing shares issued to persons who are non-U.S. citizens).
Any purported transfer of shares represented by a Domestic Share
Certificate to a non-U.S. citizen that would cause the level of
<PAGE>
ownership by U.S. citizens to drop below the minimum set by the
Board of Directors will not be recorded on the registration books
of the Company and will be ineffective to transfer the shares or
any voting, dividend or other rights in respect thereof. The
By-laws authorize the Company to make all determinations with
respect to the validity of any transfer under these provisions
and any such decision by the Company is final and binding.
The Company's operations are also affected by U.S., state and
foreign environmental protection laws and regulations, particularly
the U.S. Port and Tanker Safety Act, various volatile organic
compound emission requirements, the BCH Code for chemical carriers,
the IMO/USCG pollution regulations and various SOLAS amendments.
Compliance with such laws and regulations entail additional
expense, including vessel modifications and changes in operating
procedures.
The Oil Pollution Act of 1990 (the "OPA") affects all vessel owners
shipping oil or hazardous materials to, from, or within the U.S.
The law phases out the use of tankers having single hulls,
effectively imposes on vessel owners unlimited liability in the
event of a catastrophic oil spill and establishes the Oil Spill
Liability Trust Fund. The OPA requires that tankers over 5,000
gross tons calling at U.S. ports have double hulls if contracted
after June 30, 1990, or delivered after January 1, 1994;
furthermore, it calls for the elimination of all single hull
vessels by the year 2010 on a phase-in schedule that is based on
size and age, unless the tankers are retrofitted with double hulls.
In addition, the law permits existing single hull tankers to
operate until the year 2015 if they discharge at deep water ports,
such as the Louisiana Offshore Oil Port (LOOP), or lighter more
than 60 miles offshore.
Under the new U.S. legislation, liability for an oil spill is
governed not only by the OPA, but also by the laws, rules and
regulations established by every coastal and inland waterway state;
Federal law does not preempt these state laws and provides that
claims made by state governments and other affected parties are not
subject to limitations of liability if the oil spill results from
gross negligence, willful misconduct or violation of any federal
operating or safety standard. One result of the OPA has been to
create greater prominence for those U.S. independent owners with a
long standing industry reputation for a high quality of technical
management and well maintained physical assets. Another effect of
the new law has been to increase costs for liability insurance for
vessel owners trading to the U.S. While the Company maintains
insurance at levels it believes prudent, the claim from a
catastrophic spill could exceed the insurance coverage available,
in which event there could be a material adverse effect on the
Company.
<PAGE>
The Company believes that compliance with applicable environmental
and pollution laws and regulations has not had and is not expected
to have a material adverse effect upon its competitive position;
however the Company's financial position, value and useful life of
its vessels and results of operations may be affected as a result
of OPA.
COMPETITION
The Company competes with a small number of domestic and a large
number of foreign fleets. Both the domestic and foreign fleets
include vessels owned by independent operators and major oil
companies; in addition, many foreign fleets are government owned.
Some of the Company's competitors have greater financial resources
than the Company.
Competition in the ocean shipping industry varies primarily
according to the nature of the contractual relationship as well as
with respect to the kind of commodity being shipped. Federal
regulations insulate domestic shipping from direct competition with
international shipping. Competition in virtually all bulk trades,
including crude oil, petroleum products and dry bulk (mainly coal,
grain and ore) is intense.
EMPLOYEES AND LABOR RELATIONS
On December 31, 1993, the Company and its subsidiaries had
approximately 914 employees, of whom approximately 811 were
seagoing employees. The Company's seagoing employees which serve
aboard its U.S. flag vessels are covered by collective bargaining
agreements with various maritime unions, all of which expire in
June 1996. Together with other maritime employers, the Company is
obligated through these agreements to contribute to various
multi-employer pension and health and welfare and other plans. The
Employee Retirement Income Security Act of 1974, as amended,
provides for liabilities for withdrawal from a multi-employer
pension plan if an employer reduces its operations below a minimum
level. It is not anticipated that the Company will be in such a
position, but it is possible that the failure or withdrawal of any
shipping company employer may cause other employers (such as the
Company) to increase their plan contributions.
The Company primarily utilizes one hiring agent to crew its foreign
flag vessels. Although agents sign labor contracts with labor
organizations in various foreign countries that represent seagoing
personnel from these countries, the Company is not a party to these
contracts. Some senior shipboard positions on foreign flag vessels
are filled directly by the Company.
The Company considers its relationship with its employees,
including its seagoing crews, to be satisfactory.
<PAGE>
VALUE OF ASSETS, CASH REQUIREMENTS AND TAXES
Although the replacement costs of comparable new vessels are
significantly above the book value of OMI's fleet, the market value
of OMI's fleet may be below book value when market conditions are
weak. In common with other shipowners, OMI continually considers
asset redeployment which could at times include the sale of vessels
at less than their book value.
OMI's results of operations and cash flow may be significantly
affected by future charter markets because only 26% of OMI's
tonnage is on charters extending beyond year-end 1994.
At December 31, 1993, net book values of vessels exceeded their tax
bases by approximately $252,843,000. Accordingly, if such vessels
were disposed of at prices at or near book value, the Company's
liability for taxes on the resulting taxable gain would be
substantial. See Note 5 to OMI's Consolidated Financial Statements
set forth in Item 8.
For years subsequent to December 31, 1983, the Company and its
domestic subsidiaries have filed consolidated federal income tax
returns.
The 1986 Tax Reform Act had a significant effect on the taxation of
income from U.S. controlled (over 50%) foreign shipping operations.
This change in the tax law affected retained earnings of OMI's
international fleet operations, excluding the Company's joint
ventures with overseas partners. There is no basic change with
respect to the exclusion from taxation of U.S. controlled foreign
companies' income earned and re-invested in foreign shipping
operations between January 1, 1976 and December 31, 1986; earnings
prior to 1976 are not subject to taxes unless repatriated.
Under the 1986 Act, effective January 1, 1987, earnings of U.S.
controlled foreign shipping companies are subject to U.S. income
tax. As in the past, disinvestment of qualified investments in
foreign shipping operations (as defined) can lead to taxation of
past reinvested earnings; year end 1986 has been established as a
permanent base, with the amount of any decrease in assets recorded
at the end of subsequent years deemed to be taxable income in the
respective years, limited to the total amount reinvested from 1976
through 1986. Shifting of earning assets to non-U.S. controlled
(50% or less interest) foreign companies could result in
disinvestment.
OMI assets have a low tax basis and a relatively large deferred tax
liability due to the following practices.
OMI has employed monies held in the Capital Construction Fund
("CCF"), which are designated pretax U.S. flag earnings, for the
acquisition of qualified U.S. flag tonnage. The depreciable tax
base of such assets is reduced by the amount of the tax savings
related to the CCF monies employed.
<PAGE>
Prior to enactment of the 1986 Tax Reform Act, OMI utilized
accelerated depreciation for tax purposes in determining earnings
on its foreign flag vessels. Accelerated depreciation on foreign
flag vessels is no longer permitted. Accelerated depreciation for
tax purposes is allowed on U.S. flag vessels. The tax on the
difference between accelerated and book depreciation is recorded as
a deferred tax liability.
In 1988, OMI adopted the provisions of FASB Statement No. 96 -
"Accounting for Income Taxes." Accordingly, deferred taxes have
been fully provided on the difference between tax basis and book
basis of all domestic and foreign vessels excluding joint ventures.
Earnings of less than 50%-owned foreign shipping companies (joint
ventures other than Amazon) are not subject to U.S. income taxes
unless repatriated, and no provision for deferred taxes has
been made on such earnings.
In 1992, the Company adopted FASB Statement No. 109 - "Accounting
for Income Taxes." There was no cumulative effect on the Company's
financial position or results of operations from this change.
ITEM 3. LEGAL PROCEEDINGS
OMI and its subsidiaries are not parties to any material pending
legal proceedings for damages, or a related group of such
proceedings, other than ordinary routine litigation incidental to
the business.
OMI is a party, as plaintiff or defendant, in a variety of lawsuits
for damages arising principally from personal injuries or other
casualties in the ordinary course of the maritime business. All
such personal injury and casualty claims against OMI are fully
covered by insurance (subject to deductibles which are not
material).
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the security holders of the
Company during the fourth quarter of 1993.
EXECUTIVE OFFICERS OF OMI
Set forth below are the names, ages, position and office, term and
year appointed of all of the Company's executive officers
(including OMI Bulk Management Co., a division of the Company) as
of March 22, 1994.
<PAGE>
<TABLE>
<CAPTION>
AGE YEAR
AS OF APPOINTED
NAME POSITION AND OFFICE HELD 3/22/94 TO OFFICE
<S> <C> <C> <C>
Michael Klebanoff Chairman of the Board 73 1983
Jack Goldstein President and Chief
Executive Officer 55 1986
Chaim Barash Senior Vice President and 48 1984
President, OMI Bulk Management Co.
Vincent de Sostoa Senior Vice President, Treasurer 49 1989
and Chief Financial Officer
OMI Corp./OMI Bulk Management Co.
Fredric S. London Senior Vice President 46 1987
and General Counsel
Craig H. Stevenson, Jr. Sr. Vice President 40 1993
OMI Corp./OMI Bulk Management Co.
Enrico Fenzi Vice President 62 1990
Kathleen C. Haines Vice President/Controller 39 1994
Richard Halluska Vice President 46 1993
William A.G. Hogg Vice President 56 1994
Anthony Naccarato Vice President 48 1987
William Osmer Vice President 39 1994
Kenneth Rogers Vice President 38 1994
</TABLE>
There is no family relationship by blood, marriage or adoption (not
more remote than first cousins) between any of the above
individuals and any other executive officer or any OMI director.
The term of office of each officer is until the first meeting of
directors after the annual stockholders' meeting next succeeding
his election and until his respective successor is chosen and
qualified.
There are no arrangements or understandings between any of the
above officers and any other person pursuant to which any of the
above was selected as an officer.
<PAGE>
Mr. Klebanoff has served as Chairman of the Board of the Company
since 1983.
The following are descriptions of other occupations or positions
that the other executive officers of the Company have held during
the last five years:
Jack Goldstein was appointed President and Chief Executive Officer
of the Company in April 1986.
Chaim Barash was elected Senior Vice President/Operations of the
Company in November 1986 and President of OMI Bulk Management Co.
in October 1992.
Vincent de Sostoa was elected Senior Vice President/Finance of the
Company in January 1989.
Fredric S. London was elected Senior Vice President of the Company
in December 1991. He was elected Vice President of the Company in
December 1988.
Craig H. Stevenson was elected Senior Vice President/Chartering of
the Company in August 1993. For five years prior thereto he was
President of Ocean Specialty Tankers Corp., a marketing manager for
several of the Company's chemical tankers.
Enrico Fenzi was elected Vice President of the Company in September
1990. He was elected Assistant Vice President of the Company in
January 1988.
Kathleen C. Haines was elected Vice President of the Company in
January 1994. She was elected Assistant Vice President and
Controller in December 1992. Prior thereto, Ms. Haines was
Assistant Controller.
Richard Halluska was elected Vice President of the Company in July
1993. He was elected Assistant Vice President of the Company in
December 1989.
William A.G. Hogg was elected Vice President of the Company in
January 1994. He was elected Assistant Vice President of the
Company in June 1987.
William Osmer was elected Vice President of the Company in January
1994. He was elected Assistant Vice President of the Company in
December 1986.
Anthony Naccarato was elected Vice President/Labor Relations of the
Company in June 1987.
Kenneth Rogers was elected Vice President of the Company in January
1994. He was elected Assistant Vice President of the Company in
December 1990. Prior thereto, Mr. Rogers was Ship Manager.
<PAGE>
PART II
ITEM 5. MARKET FOR OMI CORP.'S COMMON STOCK AND
RELATED SHAREHOLDER MATTERS
COMMON STOCK
The Company listed for trading on the New York Stock Exchange all
of its common stock on March 13, 1992 (NYSE-OMM). Previously, the
Company's common stock initially traded on the over-the-counter
market on January 4, 1984, began trading on the NASDAQ National
Market System on February 18, 1986, and on January 27, 1989 was
listed for trading on the American Stock Exchange. As of March 22,
1994, the number of holders of OMI common stock was approximately
5,533.
PAYMENT OF DIVIDENDS TO SHAREHOLDERS
On May 2, 1990, the Board of Directors of OMI voted to initiate a
semi-annual dividend of $.05 per share of common stock. At the
Company's annual meeting of shareholders on June 19, 1991, the
Board approved an increase in its semi-annual dividend from $.05 to
$.07 per share of common stock. The dividends were paid in 1990 at
$.05 and 1991 and 1992 at $.07. On July 23, 1992, dividends were
paid to shareholders of record on June 26, 1992, and subsequently,
on January 21, 1993, to shareholders of record on December 28,
1992. On June 15, 1993, the Board voted to declare special
dividends rather than adhere to a regular dividend policy. For the
year ended December 31, 1993, there were no dividends declared.
1993 QUARTER 1st 2nd 3rd 4th
High 5 5/8 6 1/4 7 7
Low 3 7/8 4 3/4 5 5/8 6 1/8
1992 QUARTER 1st 2nd 3rd 4th
High 8 5/8 6 1/4 5 7/8 5 1/4
Low 5 3/4 4 1/4 3 5/8 3 3/8
Semi-annual dividends declared $0.07 $0.07
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
OMI CORP. AND SUBSIDIARIES
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE YEARS ENDED DECEMBER 31, 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues $270,479 $265,529 $284,758 $242,145 $181,333
Other income 4,699 5,685 3,956 3,132 3,422
Depreciation and amortization 35,441 35,483 34,688 30,993 25,206
Operating income 1,902 12,195 54,713 33,884 23,322
Gain (loss) on disposal of
assets - net 4,401 (1,146) 105 -0- 13,118
Provision for writedown of
investments (1,625) (16,183) -0- -0- -0-
Interest expense 21,788 23,983 29,527 28,521 18,189
Equity in operations of joint
ventures 5,544 9,059 12,259 9,907 11,653
Net (loss) income $ (8,747) $(11,424) $ 29,876 $ 14,117 $ 27,484
Net (loss) income per common
share $ (0.29) $ (0.36) $ 0.94 $ 0.44 $ 1.01
Cash dividends declared on
common stock $ -0- $ 0.14 $ 0.14 $ 0.10 $ -0-
OTHER FINANCIAL DATA:
Cash dividends received from
joint ventures $ 11,823 $ -0- $ 5,880 $ -0- $ -0-
Cash and cash equivalents 45,321 16,850 26,158 21,404 38,462
Vessels and other property - net 453,683 458,564 499,010 519,305 376,497
Investments in, and advances to
joint ventures 77,802 78,492 74,894 51,654 66,996
Total assets $671,516 $644,443 $678,618 $684,483 $521,639
Current portion of long-term debt $ 15,302 $ 40,820 $ 32,505 $ 43,192 $ 22,095
Long-term debt 282,325 222,435 242,311 266,837 145,046
Total debt $297,627 $263,255 $274,816 $310,029 $167,141
Total stockholders' equity $220,026 $218,391 $229,551 $209,543 $209,274
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OMI Corp. ("OMI" or the "Company"), is a highly diversified bulk
shipping company active in both the U.S. flag and international
markets. OMI also has interests in lightering services in the Gulf
of Mexico through OMI Petrolink Corp. ("Petrolink"), in offshore
drilling through an 8.8 percent interest in Chiles Offshore
Corporation ("COC"), and in the workboat market, via a two percent
interest in Seacor Holdings, Inc.
Results of operations of OMI include operating activities of the
Company's domestic and foreign flag wholly-owned vessels, leased
vessels and vessels chartered-in. Revenues are derived from five
principal markets: crude oil, refined petroleum, dry bulk, LPG and
combination carrier.
FISCAL YEARS 1993, 1992 AND 1991
NET VOYAGE REVENUES
The Company's vessels are operating under a variety of charters and
contracts. The nature of these arrangements is such that, without
a material variation in net voyage revenues (voyage revenues less
vessel and voyage expenses), the revenues and expenses attributable
to a vessel deployed under one type of charter or contract can
differ substantially from those attributable to the same vessel if
deployed under a different type of charter or contract.
Accordingly, depending on the mix of charters or contracts in place
during a particular accounting period, the Company's voyage
revenues and vessel and voyage expenses can fluctuate substantially
from one period to another even if the number of vessels deployed,
the number of voyages completed, the amount of cargo carried and
the net voyage revenues derived from the vessels were to remain
relatively constant. As a result, fluctuations in voyage revenues
and expenses are not necessarily indicative of trends in
profitability. The discussion below addresses variations in net
voyage revenues.
In the period between mid-1988 and the beginning of 1991, the
majority of OMI's vessels operated under time charter agreements.
Since 1991, however, rates for time charters have declined, and
vessels completing long-term time charters in 1992 were shifted to
the spot market rather than being committed to long-term charters
at unfavorable rates. Under a time charter, the charterer assumes
certain operating expenses, such as bunkers and port charges. The
length of time charters usually ranges for a period of one to five
years, which, if rates are satisfactory, gives the company a
predictable revenue stream and reduces its exposure to the
volatility of the rates in the spot market. Under a voyage
("spot") charter, most expenses are for the owner's account and the
charters are generally short-term. Revenues may be higher in the
spot market as the owner has to cover more costs. If rates in the
spot market are not adequate, the Company may elect to lay the
vessel up until rates improve.
<PAGE>
As a result of weak worldwide economic conditions and a lower
demand for petroleum products beginning after the Persian Gulf war
of 1991, spot rates have fluctuated. While market pressures have
reduced revenues, operating costs have increased, partially due to
regulatory changes and new environmental laws. A direct impact on
OMI, as a result of the Oil Pollution Act of 1990, was a
substantial increase in insurance costs in 1992, which have leveled
off in 1993.
The Company currently participates with seven of its American flag
tanker and dry bulk vessels in a number of federal programs for the
distribution of agricultural products. These programs were enacted
and are controlled by Congress as an extension of U.S. foreign
policy. If these programs were discontinued or modified, six
American flag vessels, eligible for Operating-Differential Subsidy
from the U.S. Government, would operate in international trades.
The Company's voyage revenues include charter hire from the
Military Sealift Command ("MSC") in the amounts of $192,000,
$23,942,000 and $42,061,000 for the years ended December 31, 1993,
1992 and 1991, respectively. The Company currently has only one
vessel on a voyage charter to MSC due to cutbacks in military
spending. Vessels, previously chartered by MSC, are operating in
the commercial market with subsidy or in federal programs.
Net voyage revenues decreased $10,299,000 or 16 percent for the
year ended December 31, 1993 from the prior year. The net decrease
resulted primarily from increased idle time between voyages for
five domestic vessels (aggregating approximately 541 more offhire
days in 1993 than in 1992) while continuing to incur port expenses
and other daily expenses. The net decrease is also attributable to
three domestic vessels operating in a profit sharing pool, four
vessels operating on time charters were offhire a total of 144 days
for drydocking, loss of revenue for two vessels disposed of, and
reduced revenue from Petrolink resulting from reduced volume of its
lightering operations in 1993 and the sale of seven workboats.
Although the federal programs that the American flag tankers and dry
bulk vessels participated in were successful during 1993, in 1994 these
programs have been cut back by the U.S. Government. These vessels
will operate in the spot market and will likely experience sporadic
offhire days during 1994. The OMI Columbia began the first quarter
with spot charters in the Alaskan North Slope trade and the Company
anticipates further employment in late 1994. Two other vessels
operating in the spot market in 1993 will continue operating in
the spot market in 1994 at approximately the same rates.
The majority of the foreign flag vessels are currently operating on
time charters, five of which expire in 1994. Management expects
that three of these vessels will be able to operate in the spot
market at competitive rates for the balance of 1994. Two vessels
were added to the foreign fleet in December 1993, which are operating
under bareboat charters.
<PAGE>
During March 1994, OMI contracted to purchase a vessel for approx-
imately $12,050,000, which will operate in the spot market.
Net voyage revenues decreased $41,569,000 or 39 percent for the
year ended December 31, 1992 from the prior year. The following
factors were the primary cause of this decrease: thirteen vessels,
for which time charters expired during the year, were placed in the
spot market because replacement time charters were not available at
acceptable rates; two vessels, which operated in the spot market in
both 1992 and 1991, earned lower rates in 1992 than in the previous
year; two domestic vessels were laid up during a portion of the
year; market conditions affecting the workboat operations of
Petrolink weakened; and insurance costs increased, in part, from
regulatory and environmental law changes.
Net voyage revenues increased $23,827,000 or 28 percent for the
year ended December 31, 1991 over 1990. Net increases during 1991
resulted primarily because of the acquisition of the remaining 50.1
percent interest in a joint venture, on March 13, 1990, whose
operations were consolidated with those of OMI for a full year
during 1991 compared with nine months in 1990. Additionally,
increased rates on time charters continuing from 1990 and revenues
from a domestic vessel acquired in 1991 contributed to 1991 revenue
increases.
YEAR ENDED DECEMBER 31, 1993 VERSUS DECEMBER 31, 1992
VOYAGE REVENUES AND VESSEL AND VOYAGE EXPENSES
Voyage revenues increased $5,936,000 or two percent, with net
increases in domestic revenues of $2,223,000 and foreign revenues
of $3,713,000 for the year ended December 31, 1993 compared to the
year ended December 31, 1992. Domestic revenues increased
primarily from improvement in spot rates earned for two vessels in
1993 over 1992, three vessels which incurred less offhire days in
1993 than in 1992 and the purchase of a new vessel in June 1993
which operates in the spot market, primarily in grain trades.
Domestic revenue increases were offset by decreased volume and
reduced rates in Petrolink's lightering operations due to increased
competition in 1993, an accident which caused the loss of a vessel
which had been operating on a time charter since December 1992, the
scrapping of a vessel in October 1993, and decreases in revenues of
two vessels, including the Company's largest domestic vessel, the
OMI Columbia, which were idle during 1993 for an aggregate of
approximately 330 days. The OMI Columbia's operating results had
<PAGE>
a significantly adverse effect on the Company's earnings for 1993.
However, while there can be no assurance, the Company believes that
conditions have stabilized and, early in 1994, several spot
charters were obtained for this vessel at satisfactory charter
rates. During 1991, the last year in which the vessel was fully
employed, it generated approximately $14.7 million of revenue and
$3.1 million of pre-tax income. In the two years prior thereto,
revenues were approximately $15.2 million and $14.5 million,
respectively, and pre-tax income was approximately $4.8 million in
each period. In 1992 and 1993, the vessel generated approximately
$9.3 million and $4.0 million of revenue and a pre-tax loss of $1.1
million and $1.3 million, respectively. The pre-tax income effect
of the vessel's sporadic trading as against full employment has
historically been about $5.0-$7.0 million per year.
Foreign revenues increased primarily because three vessels, which
operated on time charters for a portion of 1992 began operating in
the spot market and received higher revenues in 1993. Revenues
also increased because two vessels were chartered-in during the
last quarter of 1993. Foreign increases were partially offset by
decreases from three vessels which incurred 110 idle days due to
drydocking. The three vessels were on time charters in 1993 and
1992.
Vessel and voyage expenses increased by $16,235,000 or eight
percent consisting of net increases in domestic expenses of
$13,832,000 and foreign expenses of $2,403,000 for the year ended
December 31, 1993 over the comparable year in 1992. Vessel and
voyage expenses increased largely due to the change in charter
status for four domestic vessels and four foreign vessels from time
charters in 1992 to spot charters in 1993. Other increases in
expenses relate to expenses for the domestic vessel acquired May
1993, 78 more operating days in 1993 for a vessel which was
operating in the spot market in both 1993 and 1992, and lease
payments on a vessel which was sold and leased back in November
1992. Increases in expenses were partially offset by decreases in
expenses for three vessels which were operating in the spot market
in 1992 and began time charters in 1993, decreased expenses from
workboat operations of Petrolink due to the workboat sales, and
decline in volume of approximately 11 percent in Petrolink's
lightering operations.
OTHER INCOME
Other income consists primarily of management fees received from
affiliates and/or other parties. During the year ended December
31, 1993, other income decreased $986,000, or 17 percent, for the
year as compared to 1992. The decrease in 1993 resulted primarily
from a payment of $1,000,000 from Wilomi, Inc. ("Wilomi") during
the first quarter of 1992, which was paid in accordance with a
contractual agreement relating to the construction contract of a
vessel delivered, offset by increases from the U.S. Government for
the management of vessels in the Ready Reserve Fleet under a
contract renewed for 10 vessels in 1993.
<PAGE>
OTHER OPERATING EXPENSES
The Company's operating expenses, other than vessel and voyage
expenses, consist of depreciation and amortization, operating lease
expense and general and administrative expenses. For the year
ended December 31, 1993 these expenses had a net decrease of
$992,000 or two percent, as compared to the year ended December 31,
1992. The primary causes of the decrease in 1993 in general and
administrative expenses were a change in health insurance coverage
for employees, a decrease in other employee benefits and a
reduction in legal fees for transactions during 1993 in comparison
to 1992.
OTHER INCOME (EXPENSE)
Other income (expense) consists of gain/loss on disposal of assets
- - net, provision for writedown of investments, interest expense,
interest income, and minority interest. For the year ended
December 31, 1993, net other expense decreased $21,633,000, or 55
percent, over 1992. The net decrease resulted primarily from the
writedown of $13,094,000 on COC stock during 1992. In addition,
decreases during 1993 also resulted from the $2,190,000 gain from
the sale of seven workboats of Petrolink, gain on sale of COC stock
of $4,086,000 previously written down in 1992 and the decrease in
interest expense resulting from both lower interest rates and a
decrease in the outstanding principal balance of debt during the
year prior to issuing $170,000,000 in Senior Notes in November
1993, offset in part by losses on the sale of a 50 percent owned
joint venture and 25 percent equity investment aggregating
approximately $1,554,000.
(BENEFIT) PROVISION FOR INCOME TAXES
The benefit for income taxes of $1,730,000 for the year ended
December 31, 1993 varied from statutory rates in 1993 by excluding
the tax effect on the equity in operations of joint ventures other
than Amazon Transport, Inc. ("Amazon"), as management considers it
to be permanently invested, and included the effect of the change
in the Federal tax rate.
On August 2, 1993, Congress passed the Omnibus Budget
Reconciliation Act of 1993 (the "Act"). The major component of the
Act affecting OMI is the retroactive increase in the marginal
corporate tax rate from 34 percent to 35 percent, increasing the
provision for deferred taxes payable by $3,044,000 to comply with
the provisions of the Act.
EQUITY IN OPERATIONS OF JOINT VENTURES
Equity in operations of joint ventures of $5,544,000 was $3,515,000
or 39 percent lower in 1993 than in 1992. Joint venture equity was
less in 1993 primarily due to a gain on sale of a vessel owned by
<PAGE>
Wilomi in April 1992, which increased OMI's equity by approximately
$4,826,000. This decline, along with a decline in profits for the
vessel owned by Amazon, resulting from the termination of its time
charter in 1993 and lower profits being earned in the spot market,
were offset by decreases in operating losses in 1993 compared to
1992 incurred by a partnership, Ecomarine USA, which was wrapping
up during 1993, and increased equity in the operating results of
White Sea Holdings Ltd., a joint venture formed during December
1992.
YEAR ENDED DECEMBER 31, 1992 VERSUS DECEMBER 31, 1991
VOYAGE REVENUES AND VESSEL AND VOYAGE EXPENSE
Voyage revenues decreased $20,958,000 or seven percent, with net
decreases of $7,924,000 and $13,034,000 in the domestic and foreign
fleets, respectively, for the year ended December 31, 1992 compared
to the year ended December 31, 1991. The net decrease in domestic
revenues consisted of an aggregate decrease of $16,404,000 offset
by increases of $8,480,000. The decreases resulted from reduced
revenues from Petrolink's workboat operations, the lay-up of two
vessels and the sale of a vessel in May 1992. Increases in
revenues resulted primarily from two vessels which were on time
charters in both 1992 and 1991, one of which continued the charter
through 1992 at an increased rate and one of which operated for 52
more days in 1992 as a result of offhire incurred for repairs in
1991. Increases in domestic revenues also resulted from three
vessels that began operating in the spot market in 1992 which were
on time charters in 1991. Also, three vessels managed by a joint
venture received additional revenues in 1992 as a result of
increased profit sharing.
In the foreign fleet, the net decrease in voyage revenues resulted
primarily from the expiration of three time charters which were
replaced with both voyage and short-term time charters with less
favorable rates throughout the year, reduction in rates for a
vessel which was operating in the spot market since 1991, and two
vessels chartered-in during 1991 which were not part of OMI's fleet
during 1992.
Vessel and voyage expenses increased $20,611,000 or 12 percent
consisting of a $16,473,000 increase in expenses of domestic
operations and a $4,138,000 net increase in foreign operations for
the year ended December 31, 1992 over the comparable 1991 period.
The increase in domestic vessel and voyage expenses resulted
primarily from increased voyage expenses of four vessels, two of
which were operating in the spot market in both 1992 and 1991, and
two vessels which began operating in the spot market in 1992 that
were previously on time charters. Other increases in expenses were
incurred on four vessels continuing time charters from 1991 with
overall increases in stores, crew and insurance costs.
<PAGE>
The net increase in foreign vessel and voyage expenses consisted of
an aggregate increase of $9,825,000 offset by decreases of
$5,687,000. The increases resulted primarily from five vessels
previously on time charters in 1991, which began operating in the
spot market in 1992, and similar to the domestic operations,
increased vessel expenses on two vessels continuing time charters
from 1991. Decreases in vessel and voyage expenses were
attributable to the return of the chartered-in vessels.
OTHER INCOME
During the year ended December 31, 1992, other income increased
$1,729,000, or 44 percent, over 1991. The increase in 1992
resulted primarily from a contractual payment of $1,000,000 from
Wilomi relating to a vessel delivered in the first quarter of 1992.
The remaining increase in 1992 relates to increases in management
fees from the U.S. Government for management of the Ready Reserve
Fleet.
OTHER OPERATING EXPENSES
Other operating expenses increased $2,678,000, or five percent,
over 1991. The primary increases in 1992 resulted in increased
general and administrative expense of $1,859,000 from the change in
the ESOP calculation in the third quarter of 1991 and the addition
of a London marketing office in January 1992. Additionally,
depreciation and amortization increased $795,000 during 1992
resulting primarily from the acquisition during the fourth quarter
of a previously leased vessel and capital improvements on existing
vessels.
OTHER INCOME (EXPENSE)
For the year ended December 31, 1992, net other expense increased
$12,067,000, or 44 percent, over 1991.
During 1992 OMI deemed its investment in COC shares to have an
other than temporary decline in its market value and provided for
a writedown of $13,094,000, in addition to a $1,982,000 writedown
of a partnership investment to the realizable value of the
company's assets. Net loss of $1,146,000 resulted primarily from
the loss on the sale of a domestic vessel and disposal of other
property of $1,394,000 offset by net gains from the sale of
investments and amortization of gain on sale from the
sale/leaseback of a vessel. Additionally, during 1992, interest
expense decreased $5,544,000 resulting from the decline in interest
rates and refinancing of debt.
EQUITY IN OPERATIONS OF JOINT VENTURES
Equity in operations of joint ventures was $3,200,000, or 26
percent, lower during 1992 than in 1991. The net decrease for the
<PAGE>
year, excluding the gain on sale of vessels of $4,826,000 in 1992
and $5,940,000 in 1991, primarily resulted from lower rates and
higher expenses on vessels which operated under voyage charters in
1992. Additionally, two vessels, which were under construction in
1991, were delivered to a 49 percent joint venture during March and
August of 1992. These vessels operated on voyage charters while
incurring some offhire days between charters. Additionally, income
for the second half of 1992 declined by approximately $2,500,000
due to the drop in the spot market rates for five vessels operating
in the spot market or on backhaul voyages to reposition the
vessels. The average decline in rates for each of the vessels was
approximately $2,800 per day, reflecting a cyclical decline in spot
market rates. Moreover, OMI owned a 25 percent interest in an
offshore drilling rig whose charter expired in 1991 and for which
no revenues were derived in 1992. This accounted for 38 percent of
the total decrease in equity for 1992.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at December 31, 1993 was $32,957,000
versus a working capital deficit of $21,133,000 at December 31,
1992. Cash and cash equivalents of $45,321,000 at December 31,
1993 increased $28,471,000 or 169 percent over the balance of
$16,850,000 at December 31, 1992. In 1993, the source of the
Company's liquidity was issuance of debt, including use of lines of
credit, and cash generated by operations. For the year ended
December 31, 1993, net cash provided by operating activities was
$18,300,000, which was an increase of $6,314,000 or 53 percent from
$11,986,000 provided in 1992.
Net cash used by investing activities was $8,778,000 in 1993 versus
$13,624,000 in 1992. The Company received dividends aggregating
$11,823,000 in 1993 from certain joint ventures. Most joint
venture earnings are considered to be permanently invested and are
not available for distribution, and there is no certainty that the
joint venture, the earnings of which are not considered to be
permanently invested, will have sufficient earnings to pay
dividends in the future. Therefore, the Company cannot rely on
dividends or loans from its joint ventures to improve its
liquidity.
The Company operates in a capital intensive industry and augments
cash generated by operating activities with debt in order to
purchase ships. On November 3, 1993, the Company completed a
public sale of $170,000,000, 10.25 percent Senior Notes due
November 1, 2003 ("the Notes"). The Notes are unsecured
obligations of the Company. The net proceeds of approximately
$163,781,000, after deducting fees and expenses, were used to
prepay outstanding indebtedness of approximately $98,000,000 and
the balance is being used for general corporate purposes, including
the acquisition of vessels. The consummation of the offering of
the Notes gives the Company greater financial flexibility. The
<PAGE>
Company has improved its liquidity and financial position by (1)
extending the average life of its indebtedness so that the average
life more closely approximates the useful life of its vessels, (2)
prepaying a portion of its long-term debt scheduled to come due
between 1994 and 1998, (3) enhancing the Company's ability to
benefit from improvements in industry conditions, and (4)
positioning the Company to finance the acquisition of replacement
and additional vessels. The Company believes that, based upon
current levels of operations and anticipated improvements in
charter market conditions, cash flow from operations together with
other available sources of funds, including lines of credit
aggregating $45,500,000, should be adequate to make required
payments of principal and interest on the Company's debt, including
the Notes, to permit anticipated capital expenditures and to fund
working capital requirements.
In addition to cash provided by operating activities and issuance
of the Notes, OMI received cash from the following significant
activities:
*During 1993, Petrolink sold seven workboats and other
property and received $3,750,000 in cash proceeds from the
sale; the remaining proceeds were received in the form of
stock and a note payable through March 1996.
*OMI received cash proceeds of $68,153,000 from drawdowns on
its lines of credit and $7,000,000 in mortgage notes during
the year ended December 31, 1993.
*OMI was reimbursed $5,734,000 by a joint venture, White Sea
Holdings Ltd., formed during December 1992 for a vessel OMI
had purchased on behalf of the venture.
*The Company received $5,552,000 from the sale of 1,173,000
shares of COC stock, and $1,363,000 on the sale of its
investment in Mundogas Orinoco Ltd.
*The Company received insurance proceeds of approximately
$7,000,000 for the loss of the OMI Charger.
*OMI received $1,480,000 in proceeds from the scrapping of a
vessel.
During the year ended December 31, 1993, OMI made the following
disbursements other than from operating activities:
*Cash payments of $81,653,000 on short-term lines of credit,
$6,910,000 on notes with joint ventures and approximately
$135,718,000 payments on mortgage notes on vessels as of
December 31, 1993.
*Capital expenditures of $36,548,000 for the purchase of one
domestic vessel in May 1993, the purchase of two foreign flag
vessels in December 1993, improvements to vessels and other
property, and the purchase of a workboat.
*Cash dividends of $2,140,000 paid on OMI common stock.
*Cash payments of $3,724,000 in the form of contributions to
existing joint venture/partnership investments.
<PAGE>
COMMITMENTS
On January 28, 1994, a vessel built in Japan for a joint venture
was delivered for an aggregate purchase price of $38,479,000. OMI
has committed, with a joint venture partner, to construct another
vessel to be built in the Peoples Republic of China for a cost of
approximately $54,400,000. The vessel is scheduled to be delivered
in the second quarter of 1996.
OMI acts as a guarantor for a portion of the debt incurred by joint
ventures with affiliates of two of its joint venture partners.
Such debt was approximately $102,869,000 at December 31, 1993 with
OMI's share of such guarantees being approximately $49,594,000.
OMI also is a guarantor for one of its joint venture's revolving
line of credit of $4,000,000, with a guarantee to OMI from its
joint venture partner of $2,000,000.
The Company and its joint venture partners have committed to fund
any working capital deficiencies which may be incurred by their
joint venture investments. At December 31, 1993, no such
deficiencies have been funded.
EFFECTS OF INFLATION
The Company does not consider inflation to be a significant risk to
the cost of doing business in the current and foreseeable future.
The Company has experienced some additions to the costs of
operating the vessels due to price level increases, however, in
some cases, the effect has been offset by charter escalation
clauses.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
OMI CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<CAPTION>
For the Years Ended December 31, 1993 1992 1991
<S> <C> <C> <C>
Revenues:
Voyage revenues $265,780 $259,844 $280,802
Other income (Note 2) 4,699 5,685 3,956
Total revenues 270,479 265,529 284,758
Operating Expenses:
Vessel and voyage 209,722 193,487 172,876
Depreciation and amortization 35,441 35,483 34,688
Operating lease 6,666 6,473 6,449
General and administrative 16,748 17,891 16,032
Total operating expenses 268,577 253,334 230,045
Operating income 1,902 12,195 54,713
Other Income (Expense):
Gain (loss) on disposal of assets-
net (Note 12) 4,401 (1,146) 105
Provision for writedown of
investments (Note 4) (1,625) (16,183)
Interest expense (21,788) (23,983) (29,527)
Interest income 1,738 2,000 2,505
Minority interest in income of
subsidiary (649) (244) (572)
Net other expense (17,923) (39,556) (27,489)
(Loss) income before income taxes and
equity in operations of joint ventures (16,021) (27,361) 27,224
(Benefit) provision for income taxes
(Note 5) (1,730) (6,878) 9,607
(Loss) income before equity in
operations of joint ventures (14,291) (20,483) 17,617
Equity in operations of joint
ventures (Note 2) 5,544 9,059 12,259
Net (loss) income $ (8,747) $(11,424) $ 29,876
Net (loss) income per common share
(Note 1) $ (0.29) $ (0.36) $ 0.94
Weighted average number of shares of
common stock outstanding 30,590 31,654 31,934
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
OMI CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
DECEMBER 31, 1993 1992
ASSETS
<S> <C> <C>
Current assets:
Cash, including cash equivalents of:
1993, $34,848; 1992, $8,707 (Notes 1,4) $ 45,321 $ 16,850
Marketable securities (Notes 1,4) 6,021 55
Advances to masters 503 740
Receivables:
Traffic 11,932 10,711
Affiliates (Note 2) 13,775
Other 10,910 5,697
Current portion of Capital Construction
and other restricted funds (Notes 1,3,4) 6,543
Prepaid expenses and other current
assets 6,323 5,490
Assets held for sale, net (Note 11) 7,716
Total current assets 81,010 67,577
Capital construction and other
restricted funds (Notes 1,3,4) 13,786 7,387
Vessels and other property:
Vessels (Note 3) 753,819 741,210
Other property 7,922 7,490
Total vessels and other property 761,741 748,700
Less accumulated depreciation 308,058 290,136
Vessels and other property-net 453,683 458,564
Investments in, and advances to joint ventures 77,802 78,492
Long-term securities (Notes 1,4) 16,912 7,545
Other assets and deferred charges 28,323 24,878
Total $671,516 $644,443
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
OMI CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
<CAPTION>
DECEMBER 31, 1993 1992
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Notes payable to banks (Note 3) $ 13,500
Accounts payable $ 4,125 2,827
Accrued liabilities:
Voyage and vessel 20,238 19,783
Interest 5,202 4,061
Income taxes payable (Note 5) 2,329
Other 3,186 5,390
Current portion of long-term debt (Notes 3,4) 15,302 40,820
Total current liabilities 48,053 88,710
Advance time charter revenues and other
liabilities 14,372 9,324
Long-term debt (Notes 3,4) 282,325 222,435
Deferred income taxes payable (Note 5) 104,003 103,495
Minority interest in subsidiary 2,737 2,088
Commitments and contingencies (Notes 12,14)
Stockholders' equity:
Common stock, $0.50 par value, 80,000,000
shares authorized; 30,615,434 and 30,567,811
shares issued and outstanding, 1993 and 1992,
respectively (Note 8) 15,307 15,284
Capital surplus 128,900 128,705
Retained earnings 64,496 73,243
Cumulative translation adjustment (Note 1) 4,912 4,912
Unearned compensation - employee stock
ownership trust (Note 7) (2,159) (2,520)
Unearned compensation-restricted stock (Note 8) (1,057) (1,152)
Unrealized gain on investment, net of
deferred taxes of $5,228 (Note 4) 9,709
Treasury stock (Note 6) (82) (81)
Total stockholders' equity 220,026 218,391
Total $671,516 $644,443
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
OMI CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except per share data)
<CAPTION>
For the years ended December 31, 1993 1992 1991
<S> <C> <C> <C>
Cash Flows Provided by Operating Activities:
Net (loss) income $ (8,747) $(11,424) $ 29,876
Adjustments to reconcile net (loss) income to
net cash provided by operating activities:
Decrease in deferred income taxes (4,720) (14,040) (3,759)
Depreciation and amortization 35,441 35,483 34,688
Amortization of unearned compensation 456 148 212
(Gain) loss on disposal of assets - net (4,401) 1,146 (105)
Provision for writedown of investments 1,625 16,183
Equity in operations of joint ventures (5,544) (9,059) (12,259)
Changes in assets and liabilities:
Decrease (increase) in receivables and other
current assets 8,302 6,984 (4,556)
(Decrease) increase in accounts payable and
accrued liabilities (448) 1,277 3,572
Advances to joint ventures - net (6,657) (7,056) (2,691)
(Increase) decrease in other assets and
deferred charges (2,992) (626) 7,030
Increase (decrease) in advance charter hire and
other liabilities 5,382 (7,025) 3,261
Other assets and liabilities - net 603 (5) 458
Net cash provided by operating activities 18,300 11,986 55,727
Cash Flows (Used) Provided by Investing Activities:
Proceeds from disposition of vessels and other
property 12,178 16,708 217
Decrease in marketable securities and restricted
funds 12 447 1,147
Additions to vessels and other properties (36,548) (22,624) (10,770)
Contributions to Capital construction and other
restricted funds (3,750) (6,272)
Withdrawals from Capital construction and
other restricted funds 916 4,256 2,700
Proceeds and interest received on Capital
construction and other restricted funds (650) (1,218) (565)
Dividends received from joint ventures 11,823 5,880
Investments in joint ventures (3,724) (2,648) (2,427)
Purchase of long-term investments (4,795)
Proceeds received on note receivable 300
Proceeds received from sale of investments 6,915
Net cash used by investing activities (8,778) (13,624) (10,090)
<PAGE>
Cash Flows Provided (Used) by Financing Activities:
Cash proceeds and payments on notes payable to
bank - net (13,500) 13,500 (10,000)
Cash proceeds from issuance of long-term debt 177,000 59,496 32,859
Net proceeds from issuance of common stock 218 29 539
Purchase of treasury stock (1) (2,658) (2,303)
Payments on long-term debt (including ESOP) (142,628) (73,557) (58,141)
Dividends paid (2,140) (4,480) (3,837)
Net cash provided (used) by financing
activities 18,949 (7,670) (40,883)
Net increase (decrease) in cash and cash equivalents 28,471 (9,308) 4,754
Cash and cash equivalents at beginning of year 16,850 26,158 21,404
Cash and cash equivalents at end of year $ 45,321 $ 16,850 $ 26,158
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
OMI CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<CAPTION>
Unearned Unearned
Cumulative Compensation Compensation Unrealized Total
Common Stock Capital Retained Translation From Restricted Gain/Loss on Treasury Stockholders'
Shares Amount Surplus Earnings Adjustment ESOP Stock Investment-Net Stock Equity
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January
1, 1991 32,014 $16,008 $139,003 $63,608 $4,912 $(12,591) $(1,397) $209,543
Net income 29,876 29,876
Dividends ($0.14
per share) (4,473) (4,473)
Issuance of restricted
stock awards 15 7 108 (115)
Amortization of
unearned
compensation 212 212
Exercise of stock
options 137 69 470 539
Payment of ESOP loan 2,105 2,105
Purchase of treasury
stock $(2,303) (2,303)
Retirement of treasury
stock (313) (157) (2,146) 2,303
Unrealized loss on
investment-net $(5,948) (5,948)
Balance at December
31, 1991 31,853 15,927 137,435 89,011 4,912 (10,486) (1,300) (5,948) -- 229,551
Net loss (11,424) (11,424)
Dividends ($0.14
per share) (4,384) (4,384)
Tax benefit for
dividends on
unallocated ESOP
shares 40 40
Amortization of
unearned
compensation 148 148
Exercise of stock
options 6 3 26 29
Payment of ESOP loan 1,141 1,141
Purchase and retirement
of ESOP shares 6,825 (6,825)
Purchase of treasury stock (2,658) (2,658)
Retirement of
treasury stock (1,291) (646) (8,756) 9,402
Unrealized loss on
investment-net (3,057) (3,057)
Realized loss on
investment 9,005 9,005
<PAGE>
Balance at December
31, 1992 30,568 15,284 128,705 73,243 4,912 (2,520) (1,152) -- (81) 218,391
Net loss (8,747) (8,747)
Exercise of stock
options 47 23 195 218
Amortization of
unearned
compensation 361 95 456
Unrealized gain on
investment 9,709 9,709
Purchase of treasury
stock (1) (1)
Balance at December
31, 1993 30,615 $15,307 $128,900 $64,496 $4,912 $ (2,159) $(1,057) $ 9,709 $ (82) $220,026
See notes to consolidated financial statements.
</TABLE>
<PAGE>
OMI CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Years Ended December 31, 1993
(All tabular amounts are in thousands of dollars)
Note 1 - Summary of Significant Accounting Policies
PRINCIPLES OF CONSOLIDATION - The consolidated financial
statements include all domestic and foreign subsidiaries which
are more than 50 percent owned by OMI Corp. ("OMI" or the
"Company"). All significant intercompany accounts and
transactions have been eliminated in consolidation.
Investments in joint ventures, in which the Company's interest
is 50 percent or less and where it is deemed that the
Company's ownership gives it significant influence over
operating and financial policies, are accounted for by the
equity method. Accordingly, net income includes OMI's share
of the earnings of these companies.
OPERATING REVENUES AND EXPENSES - Voyage revenues and expenses
are recognized on the percentage of completion method of
accounting based on voyage costs incurred to date to estimated
total voyage costs. Estimated losses on voyages are provided
for in full at the time such losses become evident.
Special survey and drydock expenses are accrued and charged to
operating expenses over the survey cycle, which is generally
a two to three year period.
FOREIGN CURRENCY TRANSLATION - Foreign currency translation
adjustments were related to assets and liabilities of two
wholly-owned subsidiaries, whose functional currency was Yen.
In August 1990, the functional currency of these subsidiaries
was changed to U.S. dollars. The cumulative translation
adjustment at that time was $(4,912,000), net of deferred
income taxes of $(2,530,000) and will remain at this amount
until such assets are sold or disposed of.
ACCOUNTING FOR INVESTMENTS IN EQUITY SECURITIES - The Company
has elected early adoption of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" ("SFAS 115") as of December 31, 1993. As
a result of the adoption of SFAS 115, the Company recorded an
unrealized gain of $9,709,000, net of deferred taxes of
$5,228,000, which is presented as a separate component of
stockholders' equity. Adjustments are made to net income for
any impairment in value that is deemed to be other than
temporary.
<PAGE>
Prior to adoption of SFAS 115, equity securities were carried
at the lower of cost or market.
MARKETABLE SECURITIES - Marketable securities comprise the
current portion of available-for-sale securities.
Available-for-sale securities, both current and long-term, are
carried at market value. Net unrealized gains or losses are
reported as a separate component of stockholders' equity until
realized. Realized gains and losses on the sales of
securities are recognized in net income on the specific
identification basis.
CAPITAL CONSTRUCTION AND OTHER RESTRICTED FUNDS - The Capital
construction fund is restricted to provide for replacement
vessels, additional vessels or reconstruction of vessels built
in the United States. The other restricted funds are to be
used to pay certain of the Company's debt. These funds can be
used at the discretion of the Company upon receipt of written
approval from the Maritime Administration.
VESSELS AND OTHER PROPERTY - Vessels and other property are
recorded at cost. Depreciation for financial reporting
purposes is provided principally on the straight-line method
based on the estimated useful lives of the assets up to the
assets' estimated salvage value. Salvage value is based upon
a vessel's light weight tonnage multiplied by a scrap rate.
Leasehold improvements are amortized on the straight-line
method over the terms of the leases or the estimated useful
lives of the improvements as appropriate.
The Company periodically reviews the book value of its vessels
and its ability to recover the remaining book value of the
vessels using undiscounted cash flows over the remaining life
of each vessel.
GOODWILL - Goodwill, recognized in business combinations
accounted for as purchases, of $17,868,000 before accumulated
amortization of $2,559,000 and $1,858,000 at December 31, 1993
and 1992, respectively, is being amortized over 25 years.
NET (LOSS) INCOME PER COMMON SHARE - Net (loss) income per
common share is determined by dividing net (loss) income by
the weighted average number of common shares outstanding
during the period. Shares issuable upon the exercise of stock
options (see Note 8) have not been included in the computation
because they would not have a material effect on net (loss)
income per common share.
INCOME TAXES - OMI files a consolidated Federal income tax
return which includes all its domestic subsidiary companies.
Deferred income taxes are consistent with the provisions of
<PAGE>
the Financial Accounting Standards Board ("FASB") Statement
No. 109, "Accounting for Income Taxes", which was adopted by
the Company in 1992 (see Note 5).
POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS - In December 1990,
the FASB issued Statement No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions", effective for
fiscal years beginning after December 15, 1992. Adoption of
this statement has not affected the Company's financial
position or results of operations as the Company provides no
postretirement benefits.
During November 1992, the FASB issued Statement No. 112,
"Employers' Accounting for Postemployment Benefits", effective
for fiscal years beginning after December 15, 1993. Adoption
of this statement is not expected to have any material effect
on the Company's financial position or results of operations.
CASH FLOWS - During the years ended December 31, 1993, 1992
and 1991, interest paid totalled approximately $20,647,000,
$25,429,000 and $28,679,000, respectively. For the years
ended December 31, 1993, 1992 and 1991, income taxes paid were
approximately $6,413,000, $7,628,000 and $10,964,000,
respectively.
Cash equivalents represent liquid investments which mature
within 90 days. The carrying amount approximates fair market
value.
For the years ended December 31, 1993, 1992 and 1991, noncash
transactions, which have been excluded from the Consolidated
Statements of Cash Flows, include the amortization of the
receivable from ESOP of $361,000, $1,141,000 and $2,105,000,
respectively (see Note 7), and accruals for capital
expenditures of $115,000, $2,525,000 and $2,676,000,
respectively.
RECLASSIFICATION - Certain reclassifications have been made to
the 1992 and 1991 financial statements to conform to the 1993
presentations.
NOTE 2--INVESTMENTS IN JOINT VENTURES
OMI's investments in joint ventures are accounted for using
the equity method, under which the Company's share of earnings
of these affiliates is reflected in income as earned and
dividends are credited against the investment in joint
ventures when received.
The operating results of the joint ventures have been included
in the accompanying consolidated financial statements on the
following basis:
<PAGE>
<TABLE>
<CAPTION>
Percent of Ownership
<S> <C>
Amazon Transport, Inc. ("Amazon") 49.0
Aurora Management Ltd. ("Aurora") 49.9<F1>
Aurora Tankers Ltd. 49.9
Ecomarine USA 49.0
Gainwell Investments Ltd. 25.0
Geraldton Navigation Company Inc. 49.9
Grandteam Ship Management Ltd. 50.0
Greeley Management Ltd. 49.9<F1>
K/S Palawan Princess 25.0<F2>
Mosaic Alliance Corporation ("Mosaic") 49.9
Mundogas Orinoco Ltd. 50.0<F3>
Ocean Specialty Tankers Corp. ("OSTC") 50.0
Vanomi Management, Inc. 50.0
White Sea Holdings Ltd. ("White Sea") 49.0
Wilomi, Inc. ("Wilomi") 49.0
<FN>
<F1> Joint ventures terminated July 1, 1993.
<F2> The joint venture sold its primary asset in January 1994 and is being wound down.
<F3> OMI sold its investment in Mundogas Orinoco Ltd. on May 4, 1993 for a loss of
$1,363,000.
</TABLE>
OMI has entered into management service agreements with
certain of its joint ventures, wherein the Company acts as
technical and/or commercial manager for certain of the
ventures' vessels. Management fees relating to services
rendered to joint ventures aggregated $699,000, $567,000 and
$589,000 for the years ended December 31, 1993, 1992 and 1991,
respectively. During 1992, OMI received a $1,000,000 payment
from Wilomi, which is included in other income.
At December 31, 1993, Mosaic owned 893,800 shares of OMI
common stock at an aggregate cost of $4,595,000, acquired on
the open market between 1990 and 1992 at prices ranging from
$3.56 to $7.34. During February 1994, Mosaic sold 300,000
shares of OMI stock at $7.19 per share.
During 1993, 1992 and 1991, OMI chartered three vessels for
$24,269,000, three vessels for $27,260,000 and four vessels
for $29,964,000, respectively, to OSTC. These amounts are
included in the revenue of OMI as the operations of OSTC are
not consolidated with OMI.
Summarized combined financial information pertaining to all
affiliated companies accounted for by the equity method is as
follows:
<PAGE>
<TABLE>
<CAPTION>
December 31,
1993 1992 1991
Results of operations:
<S> <C> <C> <C>
Revenues $118,769 $107,994 $108,856
Operating income 17,410 12,797 18,495
Gain on disposal of vessels, net 9,845 11,883
Net income $ 10,869 $ 17,405 $ 25,353
Net Assets:
Current assets $ 44,445 $ 47,704 $ 30,647
Vessels and other property, net 283,792 256,808 192,985
Other assets 22,880 33,829 16,428
Total assets 351,117 338,341 240,060
Less:
Current liabilities 30,956 39,024 19,858
Long-term debt 156,839 131,132 68,131
Other liabilities 2,023 13,535 7,967
Total liabilities 189,818 183,691 95,956
Shareholders' and partners' equity $161,299 $154,650 $144,104
</TABLE>
During the fourth quarter of 1993, OMI recognized a $1,625,000
writedown of its investment in Ecomarine USA, which represents
OMI's remaining interest in the partnership. In 1992, OMI
wrote this investment down by $1,982,000.
At December 31, 1992, OMI had receivables from affiliates of
$13,775,000 consisting of $4,655,000 in dividends receivable
from Amazon, $2,500,000 in dividends receivable from Wilomi,
and $6,620,000 receivable for the purchase of a vessel on
behalf of White Sea. These receivables were collected in
1993, with the exception of $886,000 from White Sea, which was
contributed to the venture.
The Company received dividends from Amazon of $4,410,000 and
$258,000 from Aurora in 1993.
Certain of the loan agreements to which the Company's joint
ventures are party contain restrictive covenants requiring
minimum levels of cash or cash equivalents, working capital
and net worth, maintenance of specified financial ratios and
collateral values, and restrict the ability of the joint
ventures to pay dividends to the Company.
<PAGE>
The loan agreements described above also contain various
provisions restricting the right of the joint ventures to make
certain investments, to place additional liens on their
property, to incur additional long-term debt, to make certain
payments (including in certain instances, dividends), to merge
or to undergo a similar corporate reorganization, and to enter
into transactions with affiliated companies.
NOTE 3--LONG-TERM DEBT AND CREDIT ARRANGEMENTS
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
December 31,
1993 1992
<S> <C> <C>
10.25% unsecured Senior Notes due 11/01/03 $170,000
Bonds and mortgage notes secured by vessels:
8.2% payable in varying installments
to 1997 $ 7,533
9.15% to 10.1% payable in varying
installments to 2006<F1> 36,390 40,643
Mortgage notes and term loans at variable rates
above floating prime or London Interbank
Offering Rate ("LIBOR") in varying installments
to 2002<F2> 82,181 198,955
Unsecured notes payable to affiliates at 6.3%
and 6.5% to 1996 8,881 15,791
Other 175 333
Total 297,627 263,255
Less current portion of long-term debt 15,302 40,820
Long-term debt $282,325 $222,435
<FN>
<F1> On January 27, 1994, OMI refinanced $12,187,500 in Title XI debt at 5.35 percent.
<F2> Rates at December 31, 1993 ranged from approximately 4.56 percent to 5.0
percent.
</TABLE>
In November 1993, the Company issued $170,000,000 in unsecured
Senior Notes due November 1, 2003. The notes are not
redeemable prior to November 1, 1998; thereafter, the notes
are redeemable at the option of the Company at a premium until
November 1, 2000 when the notes will be redeemable at face
value, plus accrued interest.
Bonds of domestic subsidiaries of OMI aggregating $36,390,000
and $48,176,000 at December 31, 1993 and 1992, including the
amounts due within one year, are collateralized by mortgages
on specific vessels and are guaranteed as to the principal and
<PAGE>
interest by the U.S. Government under the Title XI program.
These security arrangements restrict these subsidiaries from,
among other things, the withdrawal of capital, the payment of
common stock dividends and the extending of loans to
affiliated parties.
At December 31, 1993, vessels with a net book value of
$269,349,000, investments of $13,786,000 (included in Capital
construction and other restricted funds in the accompanying
balance sheets) and shares of a subsidiary and a joint venture
with an aggregate carrying value of $22,420,000 have been
pledged as collateral on available lines of credit with banks
and long-term debt issues.
Certain of the loan agreements of the Company's subsidiaries
contain restrictive covenants requiring minimum levels of cash
or cash equivalents, working capital and net worth,
maintenance of specified financial ratios and collateral
values, and restrict the ability of the Company's subsidiaries
to pay dividends to the Company.
The loan agreements described above also contain various
provisions restricting the right of OMI and/or its
subsidiaries to make certain investments, to place additional
liens on the property of certain of OMI's subsidiaries, to
incur additional long-term debt, to make certain payments, to
merge or to undergo a similar corporate reorganization, and to
enter into transactions with affiliated companies. As
dividend payments are limited to 50 percent of net income
earned subsequent to issuance of the Notes, none of the
retained earnings at December 31, 1993 were available for
payment of dividends.
The maturities of the long-term debt for the five years
following December 31, 1993 are as follows:
1994 $ 15,302
1995 19,131
1996 16,838
1997 14,608
1998 16,901
Thereafter 214,847
Total $297,627
At December 31, 1993, OMI had available and unused a total of
$45,500,000 in five short-term lines of credit with banks at
variable rates, based on LIBOR.
OMI has entered into interest rate SWAP agreements to manage
interest costs and the risk associated with changing interest
<PAGE>
rates. At December 31, 1993 and 1992, the Company had
outstanding four and seven, respectively, interest rate SWAP
agreements with commercial banks. These agreements
effectively change the Company's interest rate exposure on
floating rate loans to fixed rates ranging from 5.29 percent
to 9.02 percent. The interest rate SWAP agreements have
various maturity dates from December 1994 to February 1999.
The changes in the notional principal amounts are as follows:
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Notional principal amount, beginning of year $112,162 $100,125
Reductions of notional amounts (6,300) (2,950)
Termination of SWAPS (36,212) (57,500)
New SWAP agreements 72,487
Notional principal amount, end of year $ 69,650 $112,162
</TABLE>
Interest expense on interest rate SWAPS for the three years
ended December 31, 1993, 1992 and 1991 was $2,914,000,
$4,332,000 and $2,412,000, respectively. Gains on termination
of SWAP agreements totalled $217,000 for the year ended
December 31, 1993. There were no gains on terminations in
1992 or 1991.
The Company is exposed to credit loss in the event of
non-performance by other parties to the interest rate SWAP
agreements. However, OMI does not anticipate non-performance
by the counter-parties.
NOTE 4--FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values of the Company's financial
instruments at December 31, are as follows:
<TABLE>
<CAPTION>
1993 1992
Carrying Fair Carrying Fair
Value Value Value Value
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 45,321 $ 45,321 $ 16,850 $ 16,850
Marketable securities 6,021 6,021 55 55
Capital construction and other
restricted funds ("CCF") 13,786 13,786 13,930 13,930
Long-term investments 16,912 16,912 7,545 8,149
Notes payable to banks 13,500 13,500
Long-term debt 297,627 306,003 263,255 255,523
Unrecognized financial instruments:
Interest rate SWAPS:
In a net receivable position 868
In a net payable position (4,865) (6,515)
Net payable $ (4,865) $ (5,647)
</TABLE>
<PAGE>
The fair value of long-term debt is estimated based on the
quoted market prices for the same or similar issues or on the
current rates offered to the Company for debt of the same
remaining maturities. The fair value of interest rate SWAPS
(used for hedging purposes) is the estimated amount the
Company would receive or pay to terminate SWAP agreements at
the reporting date, taking into account current interest rates
and the current credit-worthiness of the SWAP counter-parties.
Securities available-for-sale included in Marketable
securities, Capital construction and other restricted funds,
and Long-term investments consisted of the following
components:
<TABLE>
<CAPTION>
Fair Unrealized
Value Gain
<S> <C> <C>
Current:
1,200,000 common shares of Chiles Offshore
Corporation ("COC") $ 6,000 $ 4,478
Miscellaneous Securities 21 -0-
Long-term:
2,885,077 common shares of COC 14,446 10,459
12,500 B Capital shares of Sundal Collier & Co. a.s. 591 -0-
CCF:
Cash equivalents 115 -0-
Mutual funds - adjustable rate mortgages 4,670 -0-
Preferred stocks 9,001 -0-
Total 14,937
Deferred taxes (5,228)
Unrealized gain $ 9,709
</TABLE>
Excluded from the above schedule are 125,000 shares of Seacor
Holdings, Inc., with a carrying value of $1,875,000, which are
restricted from sale until February 1995, and in accordance
with SFAS 115, are not included in securities available-for-
sale.
In 1992, OMI recognized a $13,094,000 loss provision as a
charge against operations pertaining to the COC investment.
The unrealized loss of $5,948,000, net of deferred taxes of
$3,295,000, reflected in stockholders' equity in 1991,
pertained to this investment.
<PAGE>
NOTE 5--INCOME TAXES
A summary of the components of the (benefit) provision for
income taxes is as follows:
<TABLE>
<CAPTION>
For the Years Ended December 31,
1993 1992 1991
<S> <C> <C> <C>
Current provision $ 2,990 $ 7,122 $13,366
Deferred tax benefit (4,720) (14,040) (3,759)
Tax benefit for dividends on unallocated
ESOP shares 40
(Benefit) provision for income taxes $(1,730) $(6,878) $ 9,607
</TABLE>
The (benefit) provision for income taxes varied from the
statutory rates due to the following:
<TABLE>
<CAPTION>
For the Years Ended December 31,
1993 1992 1991
<S> <C> <C> <C>
Tax (benefit) provision at statutory rate $ (3,341) $ (6,140) $ 13,619
Equity in earnings of joint ventures
(other than Amazon) net of dividends
declared (1,314) (834) (4,028)
Amortization of ESOP loan 374
Effect of change in Federal tax rate 3,044
Other (119) 96 (358)
(Benefit) provision for income taxes $ (1,730) $ (6,878) $ 9,607
</TABLE>
The components of deferred income taxes payable - net relate
to the tax effects of temporary differences as follows:
<TABLE>
<CAPTION>
December 31,
1993 1992
<S> <C> <C>
Deferred tax liabilities:
Difference between book and tax basis in assets $ 95,019 $ 99,106
Unrealized gain on investment 5,228
Capital construction fund 5,146 4,736
Previously excluded foreign income 7,873 7,873
Undistributed earnings of Amazon 382 1,022
ESOP 680 900
Other 2,302 4,076
Total deferred tax liabilities 116,630 117,713
Deferred tax assets:
Unrealized losses on investments (4,920) (5,125)
Reserve for drydocking (4,757) (4,342)
Deferred foreign deficits (2,323) (2,382)
Other (627) (2,369)
Total deferred tax assets (12,627) (14,218)
Deferred income taxes payable--net $104,003 $103,495
</TABLE>
<PAGE>
In 1992, the Company adopted FASB Statement No. 109,
"Accounting for Income Taxes". There was no cumulative effect
on the Company's financial position or results of operations
from this change. Prior year's financial statements had not
been restated for deferred income taxes and benefits which had
been provided in accordance with the provisions of FASB
Statement No. 96.
The Company has not provided deferred taxes on its equity in
the undistributed earnings of foreign corporate joint ventures
accounted for under the equity method other than Amazon.
These earnings are considered by management to be permanently
invested in the business. If the earnings were not considered
permanently invested, approximately $10,347,000 of additional
deferred tax liabilities would have been provided at December
31, 1993.
On August 2, 1993, Congress passed the Omnibus Budget
Reconciliation Act of 1993, (the "Act"). The major component
of the Act affecting OMI was the retroactive increase in the
marginal corporate tax rate from 34 percent to 35 percent,
increasing deferred taxes payable by $3,044,000 to comply with
the provisions of the Act.
NOTE 6--TREASURY STOCK
During 1992, OMI purchased 639,000 shares of the Company's
common stock at an aggregate price of $2,658,000. In
addition, 666,000 shares were added to treasury from the ESOP
(see Note 7) and 1,291,000 shares were retired.
NOTE 7--EMPLOYEE STOCK OWNERSHIP PLAN
In November 1987, OMI established an Employee Stock Ownership
Plan ("ESOP"), effective January 1, 1987, for all eligible
employees and approved a contribution of $400,000 toward the
funding of the ESOP trust.
In November 1987, the ESOP trust borrowed $9,600,000 from a
bank, pursuant to a loan agreement guaranteed by OMI, which
provided for 28 quarterly payments. OMI agreed to make annual
contributions to the ESOP as necessary to repay the principal
and interest on the ESOP's debt. The ESOP purchased 2,666,666
shares of common stock, at the same date, from OMI for
$10,000,000.
In February 1990, OMI expanded its 1987 ESOP Plan by
purchasing 737,366 shares of OMI common stock for an aggregate
purchase price of $7,558,000. OMI funded this purchase by
amending the November 1987 loan agreement, providing for 24
quarterly installments at a rate of Prime plus .53 percent,
with a final payment due November 1995.
<PAGE>
OMI's contribution to the ESOP had been used to make loan
principal and interest payments. With each loan payment, a
portion of the common stock had been released from the pledge
to the bank and allocated annually to participating employees
to the extent allowable by the Internal Revenue Code.
On December 23, 1992, OMI repurchased 666,000 shares of OMI
common stock from the ESOP trust at an aggregate cost of
$6,825,000 and, correspondingly, reduced the receivable from
ESOP by the same amount. During 1992, OMI reduced ESOP debt
by scheduled payments of $1,141,000, and in July 1992 paid the
remaining ESOP loan balance of $9,345,000.
NOTE 8--STOCK OPTION AND RESTRICTED STOCK PLANS
The Incentive Stock Option Plan ("ISO") of 1984 provides for
the granting of options to acquire up to 600,000 shares of the
Company's common stock. Options under this Plan are
exercisable at the rate of 33 1/3 percent a year, commencing one
year from the date of grant and expiring ten years after the
date of grant.
The Non-Qualified Stock Option Plan of 1986 provides for the
granting of up to 500,000 shares at a price not less than fair
market value at the date of grant. Options are exercisable at
the rate of 20 percent per year, commencing one year from the
date of grant, and expiring ten years after the date of grant.
Stock Appreciation Rights ("SARs") have been granted in tandem
with all options under this plan. Such rights offer
recipients the alternative of electing to cancel the related
stock option, and to receive instead an amount in cash, stock
or a combination of cash and stock equal to the difference
between the option price and the market price of the Company's
stock on the date at which the SAR is exercised.
Proceeds received from the exercise of the options are
credited to the capital accounts. Compensation expense is
recorded for options based on the difference between market
price on the day exercised and option prices. Compensation
expense relating to SARs is recorded with respect to the
rights based upon the quoted market value of the shares and
exercise provisions. Charges (benefits) to net income
relating to SARs and/or options in 1993, 1992 and 1991 were
$96,000, $(126,000) and $426,000, respectively.
On June 12, 1990, the Board of Directors of OMI adopted, with
shareholders' approval, the 1990 Equity Incentive Plan (the
"1990 Plan"). The total number of shares of OMI common stock
that may be optioned or issued as stock under this plan is
1,000,000 shares. The maximum number of issuable common stock
is 300,000 shares, of which OMI awarded 15,000 shares and
<PAGE>
254,000 shares in 1991 and 1990, respectively, to eligible key
employees under this Plan. On January 27, 1993 and December
18, 1990, OMI granted 131,000 and 606,000 options,
respectively, that are not intended to qualify as incentive
stock options which are exercisable at a rate of 33 1/3
percent per year commencing one year from the date of grant,
and expiring ten years after the date of grant. Upon issuance
of restricted common stock under the 1990 Plan, unearned
compensation, equivalent to the market value at the date of
grant, is charged to stockholders' equity and subsequently
amortized over the life of the award.
A summary of the changes in shares under option for all plans
is as follows:
Number of
Options Option Price
Outstanding at
January 1, 1991 1,162,833 $2.8125 to 9.875
Exercised (137,154) 2.8125 to 4.6875
Cancelled (108,000) 4.6875 to 5.125
Outstanding at
December 31, 1991 917,679 2.8125 to 9.875
Exercised (6,000) 5.125
Forfeited (4,267) 4.6875
Outstanding at
December 31, 1992 907,412 2.8125 to 9.875
Granted 131,000 4.50
Exercised (47,623) 2.8125 to 5.125
Forfeited (14,300) 5.125 to 9.875
Outstanding at
December 31, 1993 976,489 $4.25 to 9.875
NOTE 9--RETIREMENT BENEFITS AND DEFERRED COMPENSATION
In June 1993, the Company terminated its non-contributory
defined benefit Pension Plan (the "Plan"). This termination
resulted in a loss of $1,017,000, which the Company recognized
in 1993. All participants of the Plan were fully vested as of
the termination date. The settlement of the accumulated
benefit obligation, through the purchase of annuity contracts
for or lump-sum payments to participants by the Company, will
be completed in 1994.
In determining the actuarial present value of the projected
benefit obligation as of December 31, 1993 and 1992, the
weighted average discount used was 4.2 percent in 1993 (which
approximates the rate expected to be used in settlement of
these obligations in 1994) and 8.5 percent in 1992, and the
rate of increase in future compensation expense was 5 percent
in 1992.
<PAGE>
The expected long-term rate of return on Pension Plan assets
was 8 percent in 1993 and 1992. Assets of the Plan primarily
consist of Chase Domestic Liquidity Funds.
The following table sets forth the Plan's funded status and
amounts recognized by OMI at December 31:
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Actuarial present value of accumulated benefit
obligation (vested: 1993--$2,908; 1992--$856) $ 2,908 $ 1,128
Projected benefit obligation $ 2,908 $ 1,365
Fair value of Plan assets 1,399 1,019
Projected benefit obligation in excess of Plan assets (1,509) (346)
Unrecognized net loss 110 108
Unrecognized prior service cost 931 (357)
Unrecognized transition asset (24) (28)
Adjustment to recognize minimum liability (1,017)
Accrued pension cost included in other liabilities $(1,509) $ (623)
Net periodic pension cost includes the following
components:
Service cost-benefits earned during the year $ 136 $ 274
Interest cost on projected benefit obligation 114 86
Actual return on Plan assets (38) (32)
Amortization of transition asset (4) (4)
Amortization of prior service cost 7 (37)
Deferred asset loss (57) (35)
Net periodic pension cost $ 158 $ 252
The terminated Plan has been replaced by a 401(k) Plan.
Employees are eligible to receive their vested benefits from
the old Plan in the form of cash, which may be rolled into the
new Plan. The 401(k) Plan is available to full-time employees
who meet the Plan's eligibility requirements. This Plan is a
defined contribution Plan, which permits employees to make
contributions up to two percent of their annual salaries. The
Company matches 100 percent of the employee's contribution.
Company contributions were $91,000 in 1993.
In addition, certain domestic subsidiaries make contributions
to union sponsored multi-employer pension plans covering
seagoing personnel. Contributions to these plans amounted to
approximately $961,000, $746,000 and $908,000 for 1993, 1992
and 1991, respectively. If these subsidiaries were to
withdraw from the plans or the plans were to terminate, the
subsidiaries would be liable for a portion of any unfunded
Plan benefits that might exist.
<PAGE>
In December 1991, the Board of Directors adopted the OMI Corp.
Key Employees Deferred Compensation Plan which enables key
employees of the Company and its subsidiaries to defer the
receipt of a portion of their compensation, including salary,
bonus and income derived from restricted stock and stock
options, until termination of employment or for a certain
period of years. The Company has included $134,000 and
$131,000 in other accrued liabilities, at the end of 1993 and
1992, respectively, to reflect its liability under this Plan.
NOTE 10--OPERATING LEASES
Total rental expense, including contingent rentals, amounted
to $40,350,000, $42,647,000 and $46,765,000 for the years
ended December 31, 1993, 1992 and 1991, respectively.
Principally, leases are for vessels and office space.
The future minimum rental payments required, by year, under
operating leases subsequent to December 31, 1993, are as
follows:
1994 $ 27,457
1995 22,223
1996 10,901
1997 12,419
1998 10,868
Thereafter 66,535
Total $150,403
Time charters to third parties of the Company's owned and
leased vessels are accounted for as operating leases. Minimum
future revenues, by year, to be received subsequent to
December 31, 1993 on these time charters are as follows:
1994 $ 76,873
1995 51,595
1996 16,996
1997 6,887
Total $152,351<F1>
<FN>
<F1> Minimum future revenues for later years are not included
above due to the charterers' options to continue the lease at
such dates.
</TABLE>
NOTE 11--ASSETS HELD FOR SALE
In December 1992, OMI Petrolink Corp. ("Petrolink"), a
subsidiary of the Company, entered into a contract to sell
seven workboats for $7,500,000 for delivery in 1993.
<PAGE>
Petrolink received $3,750,000 in cash, notes receivable of
$1,875,000 payable through March 31, 1996 and $1,875,000 in
restricted stock of the purchaser. Gain on the sale was
approximately $2,190,000.
NOTE 12--DISPOSAL OF ASSETS
In 1992, the Company entered into a sale/leaseback transaction
on a vessel. The Company received $11,500,000 in cash, of
which $3,500,000 was used to pay the mortgage on the vessel,
a $2,000,000 secured note receivable due December 31, 1995,
and a six-year lease at the current market rate. The gain of
approximately $2,001,000 is being amortized over the term of
the lease.
The net gain (loss) for the year ended December 31, on
disposal of assets consists of the following:
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Amortization of gain on sale $ 334 $ 52
Gain (loss) on sale of vessels 1,802 (1,322)
Net loss on disposal of other assets (318) (72)
Net gain on sale of CCF investments 77 196
Loss on sale of joint venture interests (1,554)
Gain on sale of marketable securities 4,060
Total $ 4,401 $(1,146)
</TABLE>
During 1991, OMI sold marketable securities and other assets
with a cost of $7,319,000, resulting in a net gain of
$105,000.
In October 1993, the Company's vessel, OMI Charger, which was
at anchor without cargo outside Galveston, Texas, suffered
explosions which caused the deaths of three persons and
resulted in the total loss of the vessel. No environmental
damage occurred. The Company's insurance covered the loss of
the vessel and its protection and indemnity coverage is
expected to cover property and personal injury claims.
<PAGE>
NOTE 13--FINANCIAL INFORMATION RELATING TO DOMESTIC AND FOREIGN
OPERATIONS
Presented below is certain information relating to OMI's
operations:
<TABLE>
<CAPTION>
Years ended December 31,
1993 1992 1991
<S> <C> <C> <C>
Revenues:
Domestic $199,118 $196,804 $208,348
Foreign 71,361 68,725 76,410
Total $270,479 $265,529 $284,758
Operating income (loss):
Domestic $(12,276) $ (2,419) $ 23,308
Foreign 14,178 14,614 31,405
Total $ 1,902 $ 12,195 $ 54,713
Identifiable assets:
Domestic $299,860 $271,172 $319,872
Foreign 371,656 373,271 358,746
Total $671,516 $644,443 $678,618
Capital expenditures:
Domestic $ 15,199 $ 5,920 $ 9,986
Foreign 21,349 16,704 784
Total $ 36,548 $ 22,624 $ 10,770
Depreciation and amortization:
Domestic $ 20,258 $ 21,170 $ 21,514
Foreign 15,183 14,313 13,174
Total $ 35,441 $ 35,483 $ 34,688
</TABLE>
Investments in and net receivables from foreign subsidiaries
amounting to $395,988,000, $274,109,000 and $287,343,000 at
December 31, 1993, 1992 and 1991, respectively, have been
excluded from domestic assets as they have been eliminated in
consolidation.
Voyage revenues included income from major customers as
follows:
<TABLE>
<CAPTION>
Years ended December 31,
1993 1992 1991
<S> <C> <C> <C>
Federal Government Program,
PL480/416 $47,261 $28,273 $29,079
Military Sealift Command 192 23,942 42,061
Total $47,453 $52,215 $71,140
</TABLE>
<PAGE>
NOTE 14--COMMITMENTS AND CONTINGENCIES
OMI and certain subsidiaries are defendants in various actions
arising from shipping operations. Such actions are covered by
insurance or, in the opinion of management, after review with
counsel, are of such nature that the ultimate liability, if
any, would not have a material adverse effect on the
consolidated financial statements.
In September 1988, the Board of Directors adopted a Separation
Allowance Program providing for severance benefits to all
non-union employees other than non-resident aliens, leased
employees, directors who are not employees of the Company or
employees with individual severance plans in the event there
is a change of control in OMI and such employees are
thereafter terminated without cause or transferred or their
position is significantly changed. Severance benefits include
a lump-sum payment equal to the employee's average monthly
wages immediately prior to the date of termination times the
lesser of 24 or one for each year of full-time employment by
the Company (but not less than six).
The Company has employment agreements with five key officers.
Each of the employment agreements provide that if the employee
is terminated without cause, voluntarily terminates his
employment within 90 days of a relocation or reduction in
compensation or responsibilities, dies or is disabled, such
employee will continue to receive base salary (plus a portion
of his incentive bonus for the year in which termination
occurs) and other benefits until December 31, 1994 or twelve
months from the date of termination, whichever is later. In
addition, if any such employee is terminated without cause
(other than for reasons of disability) within three years of
a Change of Control (as defined in the Company's Separation
Allowance Program), the Company will pay such employee an
amount equal to three times the sum of his then current base
salary and his maximum incentive bonus. The aggregate
commitment for future salaries, excluding bonuses, under these
employment agreements is approximately $1,328,000 at December
31, 1993. The maximum contingent liability for salary and
incentive compensation in the event of a change in control is
approximately $3,574,000 at December 31, 1993. The Company is
in the process of revising its employment agreements and
contracts with additional key employees.
OMI has committed, with a joint venture partner, to construct
a vessel to be built in the Peoples Republic of China for a
cost of approximately $54,400,000. The vessel is scheduled to
be delivered in the second quarter of 1996.
OMI acts as a guarantor for a portion of the debt incurred by
joint ventures with affiliates of two of its joint venture
<PAGE>
partners. Such debt was approximately $102,869,000 at
December 31, 1993 with OMI's share of such guarantees being
approximately $49,594,000. OMI also is a guarantor for one of
its joint venture's revolving line of credit of $4,000,000,
with a guarantee to OMI from its joint venture partner of
$2,000,000.
The Company and its joint venture partners have committed to
fund any working capital deficiencies which may be incurred by
their joint venture investments. At December 31, 1993, no
such deficiencies have been funded.
NOTE 15--SUBSEQUENT EVENT
On January 28, 1994, a vessel built in Japan for a joint
venture was delivered for an aggregate purchase price of
$38,479,000.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of OMI Corp.:
We have audited the accompanying consolidated balance sheets of OMI
Corp. and its subsidiaries as of December 31, 1993 and 1992 and the
related consolidated statements of operations, stockholders' equity
and cash flows for each of the three years in the period ended
December 31, 1993. Our audits also included the financial
statement schedules listed in Item 14. These financial statements
and financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements and financial statement schedules
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, such consolidated financial statements present
fairly, in all material respects, the financial position of the
companies at December 31, 1993 and 1992 and the results of their
operations and their cash flows for each of the three years in the
period ended December 31, 1993, in conformity with generally
accepted accounting principles. Also, in our opinion, such
financial statement schedules, when considered in relation to the
basic consolidated financial statements taken as a whole, present
fairly, in all material respects, the information set forth
therein.
Deloitte & Touche
New York, New York
February 18, 1994
<PAGE>
ITEM 8. SUPPLEMENTARY DATA
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
(In thousands, 1993 QUARTER ENDED 1992 QUARTER ENDED
except per share amounts) March 31 June 30 Sept. 30 Dec. 31 March 31 June 30 Sept. 30 Dec. 31
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $67,838 $68,046 $69,099 $65,496 $69,447 $64,225 $ 64,473 $67,384
Operating income (loss) 2,649 392 1,075 (2,214) 8,258 3,837 (3,192) 3,292
Net income (loss) $ 1,604 $ (519) $(1,897)<F2> $(7,935) $ 2,865 $ 2,549 $(11,970) $(4,868)
Net income (loss) per
common share<F1> $ 0.05 $ (0.02) $ (0.06)<F2> $ (0.26) $ 0.09 $ 0.08 $ (0.38) $ (0.16)
Weighted average number of
shares of common stock
outstanding 30,568 30,579 30,601 30,603 31,845 31,762 31,742 31,273
<FN>
<F1> Earnings per share are based on stand-alone quarters.
<F2> Includes a charge of $3,044,000 to increase deferred taxes payable from a marginal tax rate of 34
percent to 35 percent, to comply with provisions of the Omnibus Budget Reconciliation Act of 1993.
</TABLE>
<PAGE>
ITEM 8. FINANCIAL SCHEDULES
OMI CORP. AND SUBSIDIARIES SCHEDULE II
AMOUNTS RECEIVABLE FROM RELATED PARTIES
AND UNDERWRITERS, PROMOTERS AND EMPLOYEES
(OTHER THAN RELATED PARTIES)
DECEMBER 31, 1993
(IN THOUSANDS)
Balance at Balance at
Beginning End
Affiliate of Year Additions Deletions of Year
Amazon Transport, Inc. $ 4,655 $ -0- $ 4,655 $ -0-
Wilomi, Inc. 2,500 -0- 2,500 -0-
White Sea Holdings Ltd. 6,620 -0- 6,620<F1> -0-
Total $ 13,775 $ -0- $ 13,775 $ -0-
[FN]
<F1> The Company received $5,734 from White Sea Holdings, Inc. during 1993
and the remaining balance was recorded as a capital contribution.
<PAGE>
SCHEDULE III
<TABLE>
OMI CORP.
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(IN THOUSANDS)
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Revenues:
Voyage revenues $ 10,462 $ 7,532 $ 7,360
Other income 5,425 5,189 5,537
Total revenues 15,887 12,721 12,897
Operating Expenses:
Vessel and voyage 14,275 9,705 4,556
Depreciation and amortization 1,706 1,320 1,213
General and administrative 13,731 14,903 17,498
Total operating expenses 29,712 25,928 23,267
Operating loss (13,825) (13,207) (10,370)
Other Income (Expense):
Loss on disposal of investments (411) (27)
Interest expense (5,149) (2,319) (2,673)
Interest income 392 424 447
Minority interest in income of subsidiary (649) (244) (572)
Net other expense (5,817) (2,166) (2,798)
Loss before income taxes and equity in
operations of joint ventures (19,642) (15,373) (13,168)
(Benefit) provision for income taxes (1,730) (6,878) 9,607
Loss before equity in operations of subsidiaries (17,912) (8,495) (22,775)
Equity in operations of subsidiaries 9,165 (2,929) 52,651
Net (loss) income (8,747) (11,424) 29,876
Retained Earnings, Beginning of Year 73,243 89,011 63,608
Less: Dividends on common stock 4,384 4,473
Add: Tax benefit for dividends on
unallocated ESOP shares 40
Retained Earnings, End of Year $ 64,496 $ 73,243 $ 89,011
See notes to condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
OMI CORP. SCHEDULE III
CONDENSED BALANCE SHEETS
DECEMBER 31, 1993 AND 1992
(IN THOUSANDS)
<CAPTION>
LIABILITIES AND
ASSETS 1993 1992 STOCKHOLDERS' EQUITY 1993 1992
<S> <C> <C> <S> <C> <C>
Current Assets: Current Liabilities:
Notes payable to banks (Note 3) $ 7,000
Cash and cash equivalents $ 26,438 $ 308 Accounts payable $ 84 196
Marketable securities 21 55 Accrued liabilities:
Prepaid expenses and other Vessel and voyage 649 244
current assets 4,274 8,017 Interest 2,894 50
Assets held for sale, net 2,429 Taxes 2,329
Other 2,142 3,580
Total Current Assets 30,733 10,809 Current portion of long-term debt (Note 2) 2,350 10,202
Capital Construction Fund and Total Current Liabilities 8,119 23,601
Other Restricted Funds 3,673 2,426
Advance Time Charters and Other
Liabilities 438 292
Investment in (at equity) and Long-Term Debt (Note 2) 183,531 15,027
Net Advances to Subsidiaries 464,030 343,919 Deferred Taxes 104,003 103,495
Minority interest in subsidiary 2,737 2,088
Vessels and Other Property: Stockholders' Equity:
Vessels 8,462 Common stock 15,307 15,284
Other property 6,521 6,116 Capital surplus 128,900 128,705
Total Vessels and Other Retained earnings 64,496 73,243
Property 14,983 6,116 Cumulative translation
Less accumulated depreciation 3,413 2,276 adjustment - net 4,912 4,912
Receivable from emplyee stock
Total Vessels and Other ownership trust (2,159) (2,520)
Property-net 11,570 3,840 Unearned compensation-restricted
stock (1,057) (1,152)
Unrealized gain on investments,
Other Assets and Deferred Charges 8,848 1,900 net of deferred tax of $5,228 9,709
Treasury stock (82) (81)
Total Stockholders' Equity 220,026 218,391
Total $518,854 $362,894 Total $518,854 $362,894
See notes to condensed financial statements.
</TABLE>
<PAGE>
SCHEDULE III
<TABLE>
OMI CORP.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(IN THOUSANDS)
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (8,747) $ (11,424) $ 29,876
Adjustments to reconcile net (loss) income
to net cash provided (used) by operating
activities:
Depreciation and amortization 1,706 1,320 1,213
Decrease in deferred income taxes (4,720) (14,040) (3,759)
Amortization of unearned compensation 456 148 212
Loss on disposal of investments 411 27
Equity in operations of subsidiaries (9,165) 3,173 (52,385)
Changes in assets and liabilities - net 25,686 24,963 43,122
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,627 4,167 18,279
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of vessel 1,480
Additions to vessels and other property (8,852) (699) (1,065)
Sale of marketable securities and Capital
Construction and other restricted funds 12 134 2,890
Contribution to Capital Construction and other
restricted funds (166)
Contributions to subsidiaries (123,700) (5,950)
NET CASH FLOWS (USED) PROVIDED BY
INVESTING ACTIVITIES (131,226) (6,515) 1,825
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 218 29 539
Cash proceeds from issuance of long-term debt 230,653 24,290
Payments on long-term debt (including ESOP) (77,001) (14,756) (14,497)
Purchase of treasury stock (1) (2,658) (2,303)
Dividends paid (2,140) (4,480) (3,837)
NET CASH FLOWS PROVIDED (USED) BY FINANCING
ACTIVITIES 151,729 2,425 (20,098)
NET INCREASE IN CASH AND CASH EQUIVALENTS 26,130 77 6
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 308 231 225
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 26,438 $ 308 $ 231
See notes to condensed financial statements.
</TABLE>
<PAGE>
SCHEDULE III
OMI CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. The condensed financial statements, hereto reflect OMI Corp. ("OMI")
parent only, balance sheets, statements of operations and statements of
cash flows. All domestic and foreign subsidiaries which are more than
20% owned and investments in joint ventures are accounted for by the
equity method.
See Notes to Consolidated Financial Statements on pages 35 through 53
of OMI's 1993 Form 10K.
Certain reclassifications have been made to the 1992 financial
statements to conform to the 1993 presentations.
2. Long-Term Debt
Long-term debt as of December 31, 1993 and 1992 consisted of the
following:
<TABLE>
<CAPTION>
1993 1992
(dollars in thousands)
<S> <C> <C>
10.25% unsecured Senior Notes due 11/01/03 $170,000
Mortgage note at a variable rate above
floating prime or London Interbank Offering
Rate ("LIBOR") in varying installments
to 1998<F1> 7,000
Promissory unsecured notes payable to an affiliate
at 6.3% and 6.5% to 1996 8,881 $ 15,791
Term loans at variable rates in varying
installments to 1994<F2> 9,438
Total 185,881 25,229
Less current portion 2,350 10,202
Long-term debt $183,531 $ 15,027
<FN>
<F1> Rates at December 31, 1993 ranged from 4.5625 percent to 4.8125 percent.
<F2> Rates at December 31, 1992 ranged from 4.67 percent to 4.69 percent.
</TABLE>
In November 1993, the Company issued $170,000,000 in unsecured Senior
Notes due November 1, 2003. The notes are not redeemable prior to
November 1, 1998; thereafter, the notes are redeemable at the option
of the Company at a premium until November 1, 2000 when the notes will
be redeemable at face value, plus accrued interest.
3. Lines of Credit
At December 31, 1992, the Company had $7,000,000 in short-term notes
payable to banks representing borrowings against lines of credit
established with a bank.
At December 31, 1993, the Company had available and unused $35,500,000
in four lines of credit at variable rates, based on LIBOR.
<PAGE>
<TABLE>
OMI CORP. AND SUBSIDIARIES SCHEDULE V
PROPERTY, PLANT AND EQUIPMENT
DECEMBER 31, 1993, 1992 AND 1991
(IN THOUSANDS)
<CAPTION>
Balance at Other Balance at
Beginning Additions Retirements Changes End of
Classification of Year at Cost or Sale Add (Deduct) Year
<S> <C> <C> <C> <C> <C>
1993
Leasehold Improvements $ 2,358 $ 2,358
Machinery and Equipment 5,132 $ 657 $ 134 $ (91)<F1> 5,564
Vessels 741,210 36,006 45,415 22,018<F1><F2><F3> 753,819
$ 748,700 $ 36,663 $ 45,549 $ 21,927 $ 761,741
1992
Leasehold Improvements $ 2,143 $ 332 $ 113 $ (4)<F4> $ 2,358
Machinery and Equipment 4,584 796 160 (88)<F1><F4> 5,132
Vessels 765,709 19,064 20,949 (22,614)<F1><F2> 741,210
$ 772,436 $ 20,192 $ 21,222 $ (22,706) $ 748,700
1991
Leasehold Improvements $ 3,057 $ 123 $ (1,037)<F5> $ 2,143
Machinery and Equipment 4,120 711 $ 232 (15)<F6> 4,584
Vessels 755,170 12,613 (2,074)<F5><F6> 765,709
$ 762,347 $ 13,447 $ 232 $ (3,126) $ 772,436
<FN>
<F1> Reclassification between machinery and equipment and vessels.
<F2> Reclassification with Assets held for sale.
<F3> Decrease resulted from write-off of tank coating on a vessel.
<F4> Reclassification between leasehold improvements and machinery and equipment.
<F5> Reclassification of improvements to a leased vessel now being added to cost of vessel.
<F6> Decrease due to write-off of assets which were fully amortized/depreciated.
</TABLE>
<PAGE>
<TABLE>
OMI CORP. AND SUBSIDIARIES SCHEDULE VI
ACCUMULATED DEPRECIATION AND AMORTIZATION
DECEMBER 31, 1993, 1992 AND 1991
(IN THOUSANDS)
<CAPTION>
Balance at Other Balance at
Beginning Additions Retirements Changes End of
Classification of Year at Cost or Sale Add (Deduct) Year
<S> <C> <C> <C> <C> <C>
1993
Leasehold Improvements $ 1,356 $ 328 $ 1,684
Machinery and Equipment 2,174 523 $ 78 2,619
Vessels 286,606 33,889 31,345 $ 14,605<F1><F2> 303,755
$ 290,136 $ 34,740 $ 31,423 $ 14,605 $ 308,058
1992
Leasehold Improvements $ 1,080 $ 316 $ 39 $ (1)<F3> $ 1,356
Machinery and Equipment 1,777 566 161 (8)<F3><F4> 2,174
Vessels 270,569 33,818 2,893 (14,888)<F1><F4> 286,606
$ 273,426 $ 34,700 $ 3,093 $ (14,987) $ 290,136
1991
Leasehold Improvements $ 821 $ 259 $ 1,080
Machinery and Equipment 1,642 346 $ 196 $ (15)<F5> 1,777
Vessels 240,579 33,399 (3,409)<F5> 270,569
$ 243,042 $ 34,004 $ 196 $ (3,424) $ 273,426
<FN>
<F1> Amount includes reclassification from assets held for sale.
<F2> Amount includes reduction due to write-off of tank coating on a vessel.
<F3> Reclassification between leasehold improvements and machinery and equipment.
<F4> Reclassification between machinery and equipment and vessels.
<F5> Decrease represents write-off of fully amortized/depreciated assets.
</TABLE>
<PAGE>
SCHEDULE X
OMI CORP. AND SUBSIDIARIES
SUPPLEMENTAL INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(IN THOUSANDS)
CHARGED TO EXPENSE:
Item 1993 1992 1991
Maintenance & Repair $21,410 $14,010 $16,962
<PAGE>
WILOMI, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1993 AND 1992
NOTES 1993 1992
ASSETS
CURRENT ASSETS:
Cash (including cash equivalents of
$2,400,000 in 1993 and $1,500,000
in 1992) 2 $ 7,013,960 $ 3,342,896
Advances to masters 89,026 63,823
Accounts receivable 925,328 1,032,323
Other receivables 352,930 704,988
Notes due from affiliate 4 2,755,102 2,500,000
Prepaid expenses 922,827 972,533
Total current assets 12,059,173 8,616,563
RECEIVABLES FROM AFFILIATES 4 225,192
VESSELS (net of accumulated depreciation
of $10,069,152 in 1993 and
$5,259,704 in 1992) 2,3 120,682,447 125,438,232
NOTES DUE FROM AFFILIATES 4 16,409,898 19,165,000
OTHER ASSETS 1,098,586 763,753
TOTAL ASSETS $150,475,296 $153,983,548
See notes to consolidated financial statements.
<PAGE>
NOTES 1993 1992
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 408,002 $ 339,083
Accrued expenses 2,261,056 1,225,868
Accrued interest payable 1,562,057 1,339,786
Due to affiliate 4 2,500,000
Current portion of long-term debt 6,064,000 5,887,000
Total current liabilities 10,295,115 11,291,737
PAYABLES TO AFFILIATES 4 2,168,126
ADVANCE TIME CHARTER REVENUES AND
OTHER LIABILITIES 500,656 458,029
LONG-TERM DEBT 5 90,283,000 96,347,000
STOCKHOLDERS' EQUITY:
Common stock - $1.00 par value;
10,000 shares authorized and outstanding 10,000 10,000
Capital surplus 1,080,577 1,080,577
Retained earnings 48,305,948 42,628,079
Total stockholders' equity 49,396,525 43,718,656
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $150,475,296 $153,983,548
<PAGE>
WILOMI, INC. AND SUBSIDIARIES
<TABLE>
STATEMENTS OF CONSOLIDATED INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 and 1991
<CAPTION>
NOTES 1993 1992 1991
<S> <C> <C> <C> <C>
VOYAGE REVENUES 2 $23,831,942 $17,159,445 $10,234,828
OPERATING EXPENSES:
Vessel and voyage 9,426,685 7,845,194 2,387,272
Depreciation 4,809,448 3,314,786 1,111,536
General and administrative 504,191 323,817 209,827
Total operating expenses 14,740,324 11,483,797 3,708,635
INCOME FROM OPERATIONS 9,091,618 5,675,648 6,526,193
GAIN ON SALE OF VESSEL 3 9,848,317 12,050,416
INCOME BEFORE INTEREST EXPENSE 9,091,618 15,523,965 18,576,609
INTEREST EXPENSE: 3
Interest expense 4,827,706 4,126,453 2,702,563
Interest income (1,413,957) (1,248,308) (129,630)
Net interest expense 3,413,749 2,878,145 2,572,933
NET INCOME 5,677,869 12,645,820 16,003,676
RETAINED EARNINGS, BEGINNING OF YEAR 42,628,079 36,084,300 20,080,624
DIVIDEND DECLARED 4 6,102,041
RETAINED EARNINGS, END OF YEAR $48,305,948 $42,628,079 $36,084,300
See notes to consolidated financial statements.
</TABLE>
<PAGE>
WILOMI, INC. AND SUBSIDIARIES
<TABLE>
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 and 1991
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,677,869 $12,645,820 $16,003,676
Adjustments to reconcile net income to net
cash flows provided (used) by operating activities:
Depreciation 4,809,448 3,314,786 1,111,536
Gain on sale of vessel (9,848,317) (12,050,416)
Changes in assets and liabilities:
Decrease (increase) in receivables
and advances to masters 433,850 (1,618,586) (164,564)
Decrease (increase) in prepaid expenses 49,706 (791,861) (17,838)
Increase (decrease) in accounts payable
and other current liabilities 1,326,378 1,807,646 (125,770)
Other assets and liabilities - net (2,685,524) 839,912 (395,699)
Net cash flows provided (used)
by operating activities 9,611,727 6,349,400 (4,360,925)
CASH FLOWS PROVIDED (USED) BY
INVESTING ACTIVITIES:
Additions to vessels under construction (13,930,243)
Additions to vessels (53,663) (97,349,609) (18,636,180)
Proceeds from sale of vessel 47,530,000 48,908,457
Proceeds on notes due from affiliates 2,500,000
Payments on notes due from affiliates (19,165,000) (5,500,000)
Net cash flows provided (used)
by investing activities 2,446,337 (68,984,609) 10,842,034
CASH FLOWS (USED) PROVIDED BY FINANCING ACTIVITIES:
Cash proceeds from issuance of
long-term debt 123,857,500 17,415,500
Payment on long-term debt (5,887,000) (57,468,568) (29,499,224)
Payments on notes to affiliates (15,060,452)
Proceeds from issuance of notes to affiliates 11,520,000
Dividends paid (2,500,000) (1,000,000)
Net cash flows (used) provided
by financing activities (8,387,000) 65,388,932 (15,624,176)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,671,064 2,753,723 (421,217)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 3,342,896 589,173 1,010,390
CASH AND CASH EQUIVALENTS, END OF YEAR $ 7,013,960 $ 3,342,896 $ 589,173
See notes to consolidated financial statements.
</TABLE>
<PAGE>
WILOMI, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
1. COMPANY
Wilomi, Inc. and subsidiaries (the "Company" or "Wilomi") are
jointly-owned by Universal Bulk Carriers, Inc. ("UBC"), a wholly-
owned subsidiary of OMI Corp. ("OMI"), and K/S Wilhelmsen Transport
and Trading A/S ("Wilhelmsen") with interests of 49 and 51 percent
respectively. On August 9, 1992, OMI transferred its 49 percent
investment in Wilomi to its wholly-owned subsidiary, UBC. The joint
venture, incorporated on May 15, 1987, owns and operates commercial
vessels.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION - The consolidated financial statements include
all subsidiaries of the Company. All significant intercompany accounts
and transactions have been eliminated in consolidation.
OPERATING REVENUES AND EXPENSES - Voyage revenues and expenses are
recognized on the percentage-of-completion method of accounting based
on voyage costs incurred to date to estimated total voyage costs.
Estimated losses on voyages are provided in full at the time such
losses become evident.
Special survey and drydock expenses are accrued and charged to
operating expenses over the survey cycle, which is generally a three
year period.
VESSELS AND VESSELS UNDER CONSTRUCTION - Vessels are recorded at
cost; including interest on funds borrowed to finance the construction
of new vessels. Interest of $594,893 and $2,088,081 was capitalized
during the years ended December 31, 1992 and 1991, respectively.
Depreciation is provided on the straight-line method based on the
estimated useful lives of the vessels, up to the vessel's estimated
salvage value. Salvage value is based upon the vessel's light weight
tonnage, multiplied by a scrap rate.
The Company periodically reviews the book value of its vessels and
its ability to recover the remaining book value of the vessels using
undiscounted cash flow over the remaining life of each vessel.
FEDERAL INCOME TAXES - No provision has been made for Federal
income taxes. The income of the Company is not generally subject to
tax as a result of various provisions of the Internal Revenue Code.
Additionally, the country in which the Company is incorporated exempts
shipping and maritime operations from taxation.
<PAGE>
CASH FLOWS - Cash equivalents represent liquid investments that
equal fair market value and mature within 90 days. During the
years ended December 31, 1993, 1992 and 1991, the Company paid
interest of $4,605,435, $4,097,261 and $5,178,645, respectively. The
Company paid no taxes in 1993, 1992 or 1991.
3. VESSELS AND VESSELS UNDER CONSTRUCTION
In November 1993, the Company entered into an agreement to construct
a new vessel at an approximate cost of $54,000,000. The vessel is
expected to be delivered in 1996.
During 1992, the Company took delivery of three vessels which had
been under construction in 1991. One vessel, with total costs of
$37,681,683, was sold in April, 1992 at a gain of $9,848,317.
In July 1991, a vessel with total construction costs of $36,858,043
was delivered to the Company. This vessel was sold in September 1991
for a gain of $12,050,416.
4. RELATED PARTY TRANSACTIONS
OMI acted as technical and commercial manager for two vessels
owned during 1993 and three vessels owned during 1992 and 1991.
Management fees to OMI relating to years ended December 31, 1993,
1992 and 1991 were $288,000, $255,827 and $277,034, respectively.
Wilhelmsen acted as manager for one vessel owned during 1993.
Management fees to Wilhelmsen for the year ended December 31, 1993
were $144,000.
The Company declared dividends of $5,102,041 and $1,000,000 in 1992.
Notes due from affiliates in 1993 of $19,165,000 bear interest at 6.5
percent. During 1992, notes due from affiliates of $19,165,000 and
$2,500,000 accrued interest at 6.5 percent and 6.3 percent,
respectively. In 1992, the Company forgave $2,602,041 of the note
due from Wilhelmsen in lieu of payment of the dividend. Notes due from
affiliates of $5,500,000 in 1991 bear interest at 6.3 percent. Interest
income on these notes amounted to $1,263,000, $836,000 and $25,000
for the years ended December 31, 1993, 1992 and 1991, respectively.
In accordance with an agreement between UBC and Wilhelmsen, UBC
is entitled to receive $1,000,000 upon delivery of each vessel that
was contracted for or under construction at the time the joint
venture was formed. In 1992, Wilomi took delivery on a new building
subject to this agreement. Accordingly, Wilomi paid a dividend of
$1,000,000 to UBC in 1992.
<PAGE>
5. LONG-TERM DEBT
Long term debt at December 31, 1993 and 1992 consisted of the following:
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Mortgage notes on vessels; at variable
rates above LIBOR, payable semi-
annually to 2002<F1> $ 96,347,000 $102,234,000
Less - current portion 6,064,000 5,887,000
Long-term debt $ 90,283,000 $ 96,347,000
<FN>
<F1> Rates at December 31, 1993 ranged from 4.625 percent to 4.75 percent.
</TABLE>
The maturities of the mortgage notes payable, for each of the five years
following December 31, 1993, are as follows:
1994 $ 6,064,000
1995 6,446,000
1996 6,654,000
1997 6,879,000
1998 7,122,000
Thereafter 63,182,000
Total $ 96,347,000
At December 31, 1993, the Company had available $10,000,000 in a
short-term line of credit with a bank at a variable rate based on LIBOR.
The fair market value of long-term debt at December 31, 1993 is equal
to its carrying value.
During 1992, credit line draw-downs on two vessels which were under
construction during 1991 were refinanced with bank loans totaling
$83,960,000. Additionally, a mortgage note on a vessel was refinanced
in the amount of $19,300,000.
6. COMMITMENTS AND CONTINGENCIES
The Company acts as a guarantor on debt incurred by an affiliated
company. Such debt was $4,000,000 at December 31, 1993.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders of Wilomi, Inc. and Subsidiaries:
We have audited the accompanying consolidated balance sheets of
Wilomi, Inc. and subsidiaries as of December 31, 1993 and 1992 and
the related statements of consolidated income and retained earnings and of
cash flows for each of the three years in the period ended December 31,
1993. These financial statements are the responsibility of the Companies'
management. Our responsibility is to express an opinion on these financial
statements 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, such financial statements present fairly, in all material
respects, the financial position of the Companies at December 31, 1993 and
1992, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1993 in conformity with
generally accepted accounting principles.
Deloitte & Touche
New York, New York
February 18, 1994
<PAGE>
AMAZON TRANSPORT, INC.
BALANCE SHEETS
DECEMBER 31, 1993 and 1992
NOTES 1993 1992
ASSETS
CURRENT ASSETS: 2
Cash and cash equivalents $ 7,873,324 $11,155,370
Advances to masters 31,971 137,417
Receivables:
Traffic 530,721
Other 107,258 331,606
Prepaid expenses and other current
assets 497,579 279,184
Total current assets 9,040,853 11,903,577
VESSEL AT COST: 2
Vessel 21,394,270 21,272,767
Less accumulated depreciation 4,906,994 4,293,358
Vessel - net 16,487,276 16,979,409
RECEIVABLE FROM AFFILIATE 3 4,410,000
OTHER ASSETS 5,866 73,712
TOTAL ASSETS $25,533,995 $33,366,698
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES - Accounts payable
and accrued liabilities $ 2,113,435 $ 833,033
PAYABLE TO AFFILIATES 3 14,707 4,695,025
ADVANCED TIME CHARTER REVENUE 511,897
STOCKHOLDERS' EQUITY:
Common stock - $5.00 par value;
authorized 5,000 shares,
outstanding 180 shares 900 900
Capital surplus 21,194,085 21,194,085
Retained earnings 2,210,868 6,131,758
Total stockholders' equity 23,405,853 27,326,743
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $25,533,995 $33,366,698
See notes to financial statements.
<PAGE>
AMAZON TRANSPORT, INC.
<TABLE>
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<CAPTION>
NOTES 1993 1992 1991
<S> <C> <C> <C> <C>
VOYAGE REVENUES 2 $11,301,039 $11,425,394 $11,147,205
OPERATING EXPENSES:
Vessel and voyage 2 5,608,645 3,022,774 2,776,319
Depreciation 2 613,636 604,741 596,799
General and administrative 220,006 216,154 223,094
Total operating expenses 6,442,287 3,843,669 3,596,212
INCOME BEFORE OTHER INCOME 4,858,752 7,581,725 7,550,993
OTHER INCOME:
Interest income 219,792 674,448 528,285
Miscellaneous income 566 61,007
Total other income 220,358 735,455 528,285
NET INCOME 5,079,110 8,317,180 8,079,278
RETAINED EARNINGS, BEGINNING OF YEAR 6,131,758 7,314,578 11,235,300
DIVIDENDS DECLARED 4 (9,000,000) (9,500,000) (12,000,000)
RETAINED EARNINGS, END OF YEAR $ 2,210,868 $ 6,131,758 $ 7,314,578
See notes to financial statements.
</TABLE>
<PAGE>
AMAZON TRANSPORT, INC.
<TABLE>
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,079,110 $ 8,317,180 $ 8,079,278
Adjustments to reconcile net income
to net cash flows provided
by operating activities:
Depreciation 613,636 604,741 596,799
Change in assets and liabilities:
Increase in receivables and
advances to masters (200,927) (1,337) (322,167)
(Increase) decrease in prepaid
expenses and other current assets (218,395) 1,277,248 (1,285,089)
Decrease (increase) in receivable
from affiliate 1,097,268 (1,097,268)
Decrease (increase) in other assets 67,846 (73,712) 20,088
Increase (decrease) in accounts payable
and accrued liabilities 1,280,402 86,853 (116,937)
(Decrease) in payable to affiliates (25,318) (190,930) (9,727)
(Decrease) increase in advanced time charter
revenue and other liabilities (511,897) (523,263) 1,035,160
NET CASH PROVIDED BY OPERATING ACTIVITIES 6,084,457 10,594,048 6,900,137
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:
Additions to vessel (121,503) (133,845) (112,606)
Loans to affiliates (9,000,000)
Proceeds received from affiliate 4,410,000
CASH PROVIDED (USED) BY INVESTING ACTIVITIES 4,288,497 (9,133,845) (112,606)
CASH FLOWS USED BY FINANCING ACTIVITIES:
Dividends paid (13,655,000) (55,557) (12,000,000)
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (3,282,046) 1,404,646 (5,212,469)
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 11,155,370 9,750,724 14,963,193
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 7,873,324 $11,155,370 $ 9,750,724
See notes to financial statements.
</TABLE>
<PAGE>
AMAZON TRANSPORT, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
1. ORGANIZATION
Amazon Transport, Inc. (the "Company" or "Amazon") is jointly
owned by Universal Bulk Carriers, Inc. ("UBC"), a wholly-owned
subsidiary of OMI Corp. ("OMI"), and Bergesen d.y. A/S ("Bergesen")
with interests of 49 and 51 percent, respectively. The Company
began operating as a joint venture on December 3, 1988 for the purpose
of owning and chartering commercial vessels. The Company owned and
operated one vessel, the Settebello, for all periods presented.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Operating Revenues and Expenses - Voyage revenues and expenses are
recognized on the percentage-of-completion method of accounting.
Estimated losses are provided in full at the time such losses
become evident.
Vessel - The vessel is recorded at cost. Depreciation is provided
on the straight-line method based on the estimated useful life of the
vessel up to the estimated salvage value. Salvage value is based
upon the scrap value of the vessel's light weight tonnage.
The Company periodically reviews the book value of its vessel
and its ability to recover the remaining book value of the vessel using
undiscounted cash flows over the remaining life of the vessel.
Federal Income Taxes - No provision has been made for Federal income
taxes. The income of the Company is not generally subject to tax as a
result of various provisions of the Internal Revenue Code.
Additionally, the country in which the Company is incorporated exempts
shipping and maritime operations from taxation.
Cash Flows - Cash equivalents represent liquid investments which
mature within 90 days. The Company paid no interest or taxes in 1993,
1992 and 1991.
3. RELATED PARTY TRANSACTIONS
The Company has entered into management service agreements with OMI
and Bergesen, who act as technical and commercial managers of the
Settebello. The Company paid OMI and Bergesen management fees of
$200,000 for each of the years ended December 31, 1993, 1992, and 1991.
<PAGE>
The following table summarizes balances receivable from or due to
affiliated companies at December 31:
1993 1992
Receivable from affiliate:
OMI $4,410,000
Payable to affiliates:
OMI $ 14,646 $ 29,281
UBC 61 4,657,572
Bergesen 8,172
$ 14,707 $4,695,025
During 1992, the Company issued 6.5 percent notes in the amounts of
$4,410,000 and $4,590,000 to OMI and Bergesen, respectively. Interest
earned on these notes aggregated $391,068. On December 31, 1992, the
Company forgave the $4,590,000 note due from Bergesen and $199,443 of
related interest in lieu of payment of a portion of the dividend.
(See Note 4).
4. DIVIDENDS
During 1993, the Company declared and paid a $9,000,000 dividend.
The Company also paid $4,655,000 of 1992 dividends during the year.
During 1992, the Company declared dividends of $9,500,000 of which
$55,557 was paid.
During 1991, the Company paid dividends of $12,000,000 to UBC and
Bergesen.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders of Amazon Transport, Inc.:
We have audited the accompanying balance sheets of Amazon Transport, Inc.
as of December 31, 1993 and 1992 and the related statements of operations and
retained earnings and of cash flows for each of the three years in the
period ended December 31, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements 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 accompanying financial statements present fairly,
in all material respects, the financial position of the Company at December
31, 1993 and 1992 and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 1993 in conformity
with generally accepted accounting principles.
Deloitte & Touche
New York, New York
February 18, 1994
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF OMI
Pursuant to General Instruction G(3) the information regarding directors
called for by this item is hereby incorporated by reference from OMI's 1994
Proxy Statement to be filed with the Securities and Exchange Commission.
Certain information relating to Executive Officers of the Company appears
at the end of Part I of this Form 10-K Annual Report.
ITEM 11. EXECUTIVE COMPENSATION
Pursuant to General Instruction G(3) the information called for by this
item is hereby incorporated by reference from OMI's 1994 Proxy Statement to
be filed with the Securities and Exchange Commission.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Pursuant to General Instruction G(3) the information called for by this
item is hereby incorporated by reference from OMI's 1994 Proxy Statement
to be filed with the Securities and Exchange Commission.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to General Instruction G(3) the information called for by this
item is hereby incorporated by reference from OMI's 1994 Proxy Statement to
be filed with the Securities and Exchange Commission.
PART IV
ITEM 14. FINANCIAL STATEMENT SCHEDULES, EXHIBITS, REPORTS ON FORM
8-K AND FINANCIAL STATEMENTS OF AFFILIATES
(a) Financial Statements and Financial Statement Schedules
1. Financial Statements:
OMI Corp. and Subsidiaries Consolidated Statements of
Operations for the three years ended December 31, 1993.
OMI Corp and Subsidiaries Consolidated Balance Sheets at
December 31, 1993 and 1992.
OMI Corp. and Subsidiaries Consolidated Statements of Cash
Flows for the three years ended December 31, 1993.
OMI Corp. and Subsidiaries Consolidated Statements of Changes
in Stockholders' Equity for the three years ended December
31, 1993.
<PAGE>
OMI Corp. and Subsidiaries Notes to Consolidated Financial
Statements for the three years ended December 31, 1993.
OMI Corp. and Subsidiaries Quarterly Results of Operations
for 1993 and 1992.
2. Financial Statement Schedules:
II -- OMI Corp. and Subsidiaries Amounts Receivable from
Related Parties and Underwriters, Promotors and Employees
(Other than Related Parties) at December 31, 1993.
III -- OMI Corp. (Parent only) Condensed financial information
as to financial position as of December 31, 1993 and 1992,
and statements of cash flows and results of operations for the
years ended December 31, 1993, 1992 and 1991.
V -- OMI Corp. and Subsidiaries Property, Plant and Equipment
for the years ended December 31, 1993, 1992 and 1991.
VI -- OMI Corp. and Subsidiaries Accumulated Depreciation and
Amortization of Property, Plant and Equipment for the years ended
December 31, 1993, 1992 and 1991.
X -- OMI Corp. and Subsidiaries Supplementary Income Statement
Information for the years ended December 31, 1993, 1992 and 1991.
3. Exhibits
<TABLE>
<CAPTION>
Number Incorporated by Reference to Description of Exhibit
<C> <C> <C>
3.1 Exhibit 3.1 to 1990 Form 10-K Report Certificate of Incorporation as amended and restated.
of the Company (No. 2-87930)
3.2 Exhibit 3.2 to 1990 Form 10-K Report By-laws as amended.
of the Company (No. 2-87930)
4.1 Exhibit 4.1 to 1989 Form 10-K Report Form of Common Stock Certificate (Domestic).
of the Company (No. 2-87930)
4.2 Exhibit 4.2 to 1989 Form 10-K Report Form of Common Stock Certificate (Foreign).
of the Company (No. 2-87930)
10.1 Exhibit 10.1 to Registration Statement Tax Sharing Agreement between Ogden Corporation and the Company.
on Form S-1 (No. 33-7341)
10.2 Exhibit 10(d) to 1983 Form 10-K Report OMI Incentive Stock Option Plan.<F1>
of the Company (No. 2-87930)
10.3 Exhibit 10.11 to Registration Statement OMI Supplementary Deferred Benefit Plan, as amended.
on Form S-1 (No. 33-7341)
<PAGE>
10.4 Exhibit 10.9 to Registration Statement OMI Non-Qualified Stock Option Plan.
on Form S-1 (No. 33-7341)
10.5 Exhibit 10.14(a) to Registration Severance Agreement dated as of August 9, 1984 between
Statement on Form S-1 (No. 33-7341) Michael Klebanoff and the Company.<F1>
10.6(a)Exhibit 10.9(a) to 1989 Form 10-K Report Employment Agreement dated as of December 31, 1989 between
of the Company (No. 2-87930) Jack Goldstein and the Company.<F1>
10.6(b)Exhibit 10.9(b) to 1989 Form 10-K Report Employment Agreement dated as of December 31, 1989 between
of the Company (No. 2-87930) George W. Vlandis and the Company.<F1>
10.6(c)Exhibit 10.9(c) to 1989 Form 10-K Report Employment Agreement dated as of December 31, 1989 between
of the Company (No.2-87930) Peter P. Long and the Company.<F1>
10.6(d)Exhibit 10.9(d) to 1989 Form 10-K Report Employment Agreement dated as of December 31, 1989 between
of the Company (No.2-87930) Chaim Barash and the Company.<F1>
10.6(e)Exhibit 10.9(e) to 1989 Form 10-K Report Employment Agreement dated as of December 31, 1989 between
of the Company (No. 2-87930) Vincent J. de Sostoa and the Company.<F1>
10.6(f)Exhibit 10.9(f) to 1989 Form 10-K Report Employment Agreement dated as of December 31, 1989 between
of the Company (No. 2-87930) Fredric London and the Company.<F1>
10.7 Exhibit 10.15 to 1987 Form 10-K Report Swap Agreement dated as of July 1, 1987 among General Electric
of the Company (No. 2-87930) Credit Corporation, The Bank of New York, OMI Clover Transport, Inc.
and OMI Hudson Transport, Inc.
10.8 Exhibit 10.16 to 1987 Form 10-K Report Bareboat Charter Party dated August 12, 1987 between OMI Clover
of the Company (No. 2-87930) Transport, Inc. and The Bank of New York, not in its individual
capacity but solely as owner trustee.
10.9 Exhibit 10.17 to 1987 Form 10-K Report Trust Indenture relating to United States Government Guarantee Ship
of the Company (No. 2-87930) Financing Notes, dated November 20, 1980, as supplemented, between
OMI Hudson Transport, Inc. (as Shipowner by assumption on August 12,
1987) and Citibank, N.A.
10.10(a)Exhibit 10.20 to 1987 Form 10-K Report OMI Corp. Employee Stock Ownership Plan (effective January 1,
of the Company (No. 2-87930) 1987). 1987)<F1>
10.10(b)Exhibit 10.23 to 1988 Form 10-K Report Amendment No. 1 dated September 15, 1988 to OMI Corp. Employee
of Company (No. 2-87930) Stock Ownership Plan.<F1>
10.11 Exhibit 10.19 to 1988 Form 10-K Report OMI Corp. '88 Pension Plan effective January 1, 1988.<F1>
of the Company (No. 2-87930)
10.12 Exhibit 10.20 to 1988 Form 10-K Report Commitment to Guarantee Obligations dated April 28, 1988 between
of the Company (No. 2-87930) OMI Challenger Transport, Inc. and the United States of America.
10.13 Exhibit 10.25 to 1989 Form 10-K Report Loan Agreement dated November 3, 1989 between Manufacturers
of the Company (No. 2-87930) Hanover Trust Company and Mosaic Alliance Corporation.
<PAGE>
10.14 Exhibit 10.30 to 1990 Form 10-K Report Loan Agreement dated as of June 8, 1990 among the CIT Group/Equip-
of the Company (No. 2-87930) ment Financing, Inc. and Nile Transport, Inc. and Volga Transport, Inc.,
as borrowers, and OMI Corp., Universal Bulk Carriers, Inc. and OMI of
Delaware Inc., as guarantors.
10.15 Exhibit 10.31 to 1990 Form 10-K Report OMI Corp. 1990 Equity Incentive Plan.<F1>
Report of the Company (No. 2-87930)
10.16 Exhibit 10.32 to 1990 Form 10-K Report Loan Agreement dated August 1990 between Manufacturers Hanover Trust
of the Company (No. 2-87930) Company and Geraldton Navigation Company Pte. Ltd. as borrower, and
Maritime Carriers Limited and OMI Corp. as guarantors.
10.17 Exhibit 10.34 to 1990 Form 10-K Report Interest Rate Swap Agreement and Confirmation dated as of October 3,
of the Company (No. 2-87930) 1990, and effective October 5, 1990, between the Company and
Christiania Bank.
10.18 Exhibit 10.35 to 1990 Form 10-K Report Interest Rate Swap Agreement and Confirmation dated as of October 3,
of the Company (No. 2-87930) 1990, and effective February 28, 1990, between the Company and
Christiania Bank.
10.19 Exhibit 10.40 to 1990 Form 10-K Report Confirmation of Interest Rate Swap Agreement dated November 5,
of the Company (No. 2-87930) 1990 between Mosaic Alliance Corporation and Manufacturers Hanover
Trust Company.
10.20(a)Exhibit 10.42 to 1990 Form 10-K Report Loan Agreement dated November 28, 1990 between the Company and
of the Company (No. 2-87930) Christiania Bank.
10.21(b)Exhibit 10.27(b) to 1992 Form 10-K Report Addendum No. 1 dated May 22, 1992 to Loan Agreement between the
of the Company (No. 2-87930) Company and Christiania Bank dated November 28, 1990.
10.22 Exhibit 10.43 to 1990 Form 10-K Report Confirmation of Interest Rate dated November 29, 1990 relating to
of the Company (No. 2-87930) Interest Rate Swap Agreement between Rubicon Tankers Ltd. and
Manufacturers Hanover Trust Company dated as of December 1, 1988.
10.23 Exhibit 10.44 to 1991 Form 10-K Report OMI Corp. Key Employees Deferred Compensation Plan, effective
of the Company (No. 2-87930) January 1, 1992.<F1>
10.24 Exhibit 10.46 to 1991 Form 10-K Report Loan Agreement dated October 15, 1991 between Mendala III Trans-
of the Company (No. 2-87930) port, Inc. and Bresen Ship Finance Co.
10.25 Exhibit 10.48 to 1991 Form 10-K Report Vessel refinancing dated February 26, 1992 among Mendala II Transport,
of the Company (No. 2-87930) Inc., as Borrower, Wilomi, Inc., as Guarantor, and Christiania Bank.
10.26 Exhibit 10.36 to 1992 Form 10-K Report Credit Agreement dated September 9, 1992 between Ocean Specialty
of the Company (No. 2-87930) Tankers Corp. and Den norske Bank AS.
10.27 Exhibit 10.37 to 1992 Form 10-K Report Loan Agreement dated July 15, 1992 among Nederlandse
of the Company (No. 2-87930) Scheepshypotheek Bank N.V., The Bank of Nova Scotia, OMI Missouri
Transport, Inc. and the Company.
10.28 Exhibit 10.38 to 1992 Form 10-K Report Loan Agreement dated October 15, 1992 between Limar Shipping Ltd.
of the Company (No. 2-87930) and Christiania Bank Og Kreditkasse.
<PAGE>
10.29 Exhibit 10.39 to 1992 Form 10-K Report Floating Rate Loan Facility dated March 26, 1992 between Mendala II
of the Company (No. 2-87930) Transport, Inc. and Christiania Bank.
10.30 Exhibit 10.40 to 1992 Form 10-K Report Working Capital Facility dated February 4, 1993 between the Company
of the Company (No. 2-87930) and Chemical Bank.
10.31 Exhibit 10.41 to 1992 Form 10-K Report Loan Agreement dated July 15, 1992 between the Company and Marine
of the Company (No. 2-87930) Midland Bank, N.A.
10.32 Exhibit 10.42 to 1992 Form 10-K Report Loan Agreement dated March 25, 1992 among Ebro Transport, Inc.,
of the Company (No. 2-87930) Tagus Transport, Inc., Thames Transport, Inc. ("Borrowers"), Universal
Bulk Carriers, Inc. ("Guarantor") and Citibank, N.A. ("Agent") and
Citibank, N.A., The Bank of New York and The First Bank of Boston
(the "Banks").
10.33(a)Exhibit 10.43(a) to 1992 Form 10-K Report Bareboat Chemical Carrier Charter Party between AFG Star Limited
of the Company (No. 2-87930) Partnership and Omichem Transport, Inc. dated September 30, 1992.
10.33(b)Exhibit 10.43(b) to 1992 Form 10-K Report Secured Promissory Note among AFG Star Limited Partnership and
of the Company (No. 2-87930) American Finance Group ("Borrower") and the Company ("Lender")
dated November 6, 1992.
10.34 Exhibit 10.44 to 1992 Form 10-K Report Loan Agreement dated as of January 21, 1993 between the Company and
of the Company (No. 2-87930) Citibank N.A.
10.35 Exhibit 10.45 to 1992 Form 10-K Report Interest Rate and Currency Exchange Agreement dated January 17,
of the Company (No. 2-87930) 1992; Confirmation dated January 15, 1992 and effective January 17, 1992
(Transaction No. 92349); Confirmation dated January 15, 1992 and
effective January 17, 1992 (Transaction No. 92350); Confirmation dated
July 7, 1992 and effective February 28, 1994 (Transaction No. 921009);
and Confirmation dated October 1, 1992 and effective February 28, 1995
(Transaction No. 921472).
10.36 Exhibit 10.46 to 1992 Form 10-K Report Floating Rate Loan Facility Agreement dated March 2, 1993 between
of the Company (No. 2-87930) White Sea Corp. ("Borrower") and Den norske Bank AS.
10.37 Exhibit 10.47 to 1992 Form 10-K Report Credit Agreement dated February 19, 1993 between the Company and
of the Company (No. 2-87930) Den norske Bank AS.
10.38 Loan Agreement dated August 23, 1993 between OMI Corp. and
Christiania Bank og Kreditkasse.
10.39 Registration Statement on Form S-3 filed Form of Indenture with respect to the $170,000,000 OMI Corp. 10 1/4%
October 27, 1993 (No. 33-67640) Senior Notes due November 1, 2003.
10.40 Loan Agreement dated as of November 12, 1993 among Geraldton
Navigation Co. Inc. and Hayes Navigation Co. Pte. Ltd. and Larsen Ship
Finance Co.
<PAGE>
10.41 Supplemental Commitment to Guarantee Obligations dated December
22, 1993 by the United States of America and accepted by the Bank of
New York, as Owner Trustee and OMI Clover Transport, Inc., as
Charterer, relating to the refinancing of the United States Government
Guaranteed Ship Financing Bonds, Series C, 11.45% Sinking Fund Bonds
due December 1, 2006.
10.42 Floating Rate Loan Facility Agreement dated December 29, 1993
between Saugatuck Shipping Ltd. and Colorado Shipping Ltd. as
Borrowers and Chemical Bank, Christiania Bank og Kreditkasse and
Den Norske Bank AS.
10.43 Supplemental Commitment to Guarantee Obligations dated January 27,
1994 by the United States of America and accepted by OMI Hudson
Transport, Inc., relating to the refinancing of the United States
Government Guaranteed Ship Financing Bonds, Series B, 9.70% Sinking
Fund Bonds due September 4, 2001.
21 Subsidiaries of the Company.
99 Declarations Executive Risk Policy No. 81092598-F dated December 31,
1993, for the period from December 31, 1993 to January 31, 1995.
<FN>
<F1> Denotes executive compensation plan and/or employment agreement.
</TABLE>
(b) Reports on Form 8-K.
None.
(d) Financial Statements of Affiliates:
Wilomi Inc. and Subsidiaries
Consolidated Balance Sheets at December 31, 1993 and 1992,
and Related Statements of Consolidated Income and Retained
Earnings, and Cash Flows for each of the three years in the
period ended December 31, 1993 and Independent Auditors'
Report.
Amazon Transport, Inc.
Balance Sheets at December 31, 1993 and 1992 and Related
Statements of Operations and Retained Earnings, and Cash
Flows for each of the three years in the period ended
December 31, 1993 and Independent Auditors' Report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
OMI CORP.
By /s/ Jack Goldstein
JACK GOLDSTEIN
President, Chief Executive Officer and Director
Pursuant to the requirements of the Securities 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.
SIGNATURE TITLE
/s/ Michael Klebanoff Chairman of the Board March 22, 1994
MICHAEL KLEBANOFF and Director
President, Chief March 22, 1994
/s/ Jack Goldstein Executive Officer,
JACK GOLDSTEIN and Director
/s/ Chaim Barash Senior Vice President March 22, 1994
CHAIM BARASH and Director
/s/ Livio Borghese Director March 22, 1994
LIVIO BORGHESE
/s/ C.G. Caras Director March 22, 1994
C.G. CARAS
/s/ Steven D. Jellinek Director March 22, 1994
STEVEN D. JELLINEK
/s/ Emanuel L. Rouvelas Director March 22, 1994
EMANUEL L. ROUVELAS
/s/ Franklin W.L. Tsao Director March 22, 1994
FRANKLIN W.L. TSAO
/s/ George W. Vlandis Director March 22, 1994
GEORGE W. VLANDIS
Senior Vice President, March 22, 1994
/s/ Vincent J. de Sostoa Treasurer and Chief
VINCENT J. DE SOSTOA Financial Officer
EXHIBIT 10.38
LOAN AGREEMENT
OMI CORP.,
BORROWER
and
CHRISTIANIA BANK OG KREDITKASSE,
LENDER
AUGUST 23, 1993
THIS LOAN AGREEMENT is made the 23rd day of August, 1993, by
and among OMI CORP., a corporation organized and existing under the
laws of the State of Delaware with offices at 90 Park Avenue, New
York, New York (hereinafter called the "Borrower"), and CHRISTIANIA
BANK OG KREDITKASSE, a corporation organized and existing under the
laws of the Kingdom of Norway, acting through its New York branch,
with offices at 11 West 42nd Street, New York, New York
(hereinafter called the "Lender"), on the other part.
WITNESSETH THAT:
1. DEFINITIONS
1.01 DEFINED TERMS. In this Agreement the words and expressions
specified below shall, except where the context otherwise requires,
have the meanings attributed to them below:
"Agreement" this Agreement as the same shall be amended,
modified or supplemented from time to time;
"Applicable Rate(s)" any rate or rates of interest on the Loan
Balance from time to time applicable pursuant to Clause 6.02;
"Assigned Moneys" sums received by the Lender pursuant to the
Assignments or either of them;
"Assignment Notices" (a) a notice by the Borrower with respect
to the Earnings Assignment executed by it, substantially in
the form set out in Exhibits 1 and 2 to Schedule 4; and (b) a
notice by the Borrower with respect to the Insurances
Assignment substantially in the form set out in Exhibit 3 to
Schedule 5;
"Assignments" the Earnings Assignment and the Insurances
Assignment, or either thereof, as the context requires;
"Banking Day(s)" days on which banks are open for the
transaction of business of the nature required by this
Agreement in the place or places from time to time specified;
<PAGE>
"Code" the Internal Revenue Code of 1986, as amended, and any
successor statute and regulations promulgated thereunder;
"Dollars" and the sign "$" the legal currency, at any relevant
time hereunder, of the United States of America and, in
relation to all payments hereunder, in same day funds settled
through the New York Clearing House Interbank Payments System
(or such other Dollar funds as may be determined by the Lender
to be customary for the settlement in New York City of banking
transactions of the type herein involved);
"Drawdown Date" a Banking Day being not later than August 31,
1993;
"Earnings Assignment" an assignment in respect of the earnings
of the Vessel from any and all sources to be executed by the
Borrower in favor of the Lender pursuant to Clause
4.01(b)(iii) hereof substantially in the form set out in
Schedule 4 hereto;
"Environmental Affiliate" shall have the meaning ascribed
thereto in Clause 10.01 A (vi);
"Environmental Claim" shall have the meaning ascribed thereto
in Clause 10.01 A (vi);
"ERISA" the Employment Retirement Income Security Act of 1974,
as amended;
"ERISA Affiliate" a trade or business (whether or not
incorporated) which is under common control with the Borrower
within the meaning of Sections 414(b), (c), (m) or (o) of the
Code;
"Events of Default" any of the events set out in Clause 9.01;
"Final Payment Date" the fifth anniversary of the Drawdown
Date or, if such date is not a Banking Day, the next following
Banking Day, unless such next following Banking Day falls in
the following month, in which case the Final Payment Date
shall be the immediately preceding Banking Day;
"Funding Periods" periods of one, three, six or twelve
months or, subject to availability, such longer period(s) as
may be agreed between the Borrower and the Lender, as selected
by the Borrower pursuant to Clause 6.01 for purposes of
funding the Loan;
"GAAP" shall have the meaning ascribed thereto in Clause 1.03;
"Insurances Assignment" an assignment in respect of the
insurances on the Vessel to be executed by the Borrower in
favor of the Lender pursuant to Clause 4.01(b)(iv) hereof
substantially in the form set out in Schedule 5 hereto;
<PAGE>
"LIBOR" Shall have the meaning ascribed thereto in Section
6.02;
"Liquid Assets" with respect to any person, its unencumbered
(a) cash on hand or on deposit in banks (b) readily marketable
investment grade securities, (c) readily marketable commercial
paper rated "A-1" by Standard and Poor's Corporation (or
similar rating by any similar organization that rates
commercial paper), and (d) certificates of or time deposits at
or banker's acceptances issued by commercial banks of
recognized standing;
"Loan" the loan made available by the Lender to the Borrower
hereunder in the principal amount of Seven Million United
States Dollars (US$7,000,000) pursuant to Clause 3 hereof for
the purpose of financing, in part, the purchase price of the
Vessel;
"Loan Balance" the Dollar amount of the Loan at any relevant
time as reduced by payments pursuant to the terms of this
Agreement;
"Margin" one and three-eighths percent (1 3/8%);
"Mortgage" a first preferred mortgage to be executed by the
Borrower over the Vessel pursuant to Clause 4.01(b)(ii) hereof
substantially in the form of Schedule 3 hereto;
"Note" the promissory note to be executed by the Borrower on
the Drawdown Date to evidence the Loan pursuant to Clause
4.01(b)(i) substantially in the form set out in Schedule 2
hereto;
"Operating Account" shall have the meaning ascribed thereto in
Clause 8.01;
"Payment Dates" the date falling six (6) months after the
Drawdown Date and the dates which fall respectively at six (6)
month intervals thereafter and ending with the Final Payment
Date or, if any such date is not a Banking Day, the next
following Banking Day, unless such next following Banking Day
falls in the following month, in which case the Payment Date
shall be the immediately preceding Banking Day;
"Plan" any employee benefit plan covered by Title IV of ERISA;
"Security Document(s)" the Mortgage, the Assignments and any
other documents that may be executed as security for the
repayment of the Loan and the Borrower's obligations in
connection therewith;
<PAGE>
"Security Period" the period from the Drawdown Date to the
date upon which the Loan and all other amounts due to the
Lender pursuant to this Agreement, the Note and the Security
Documents becomes repayable and is repaid in full or prepaid
in full;
"Tangible Net Worth" with respect to any corporation, shareholders'
equity less intangible assets;
"Taxes" any present or future income or other taxes, levies,
duties, charges, fees, deductions, or withholdings of any
nature now or hereafter imposed, levied, collected, withheld,
or assessed by any taxing authority whatsoever, except for
taxes on or measured by the overall net income of the Lender
imposed by the Kingdom of Norway, the United States of
America, the State of New York or any governmental subdivision
or taxing authority of any thereof or by the jurisdiction
selected by the Lender (or any political subdivision or taxing
authority thereof) in which the Loan is from time to time
payable;
"Total Debt" with respect to any person, the aggregate of long-term
debt, current maturities of long-term debt, capitalized lease
obligations, current installments of capitalized lease obligations
and notes payable;
"Vessel" the 1982 built bulk carrier known as the PLATTE (ex
SPIRIT OF TEXAS) of about 24,384 gross tons and 19,513 net tons
registered in the name of the Borrower under United States flag,
having Official No. 653210;
1.02 CONSTRUCTION. Words importing the singular number only shall
include the plural and vice versa. Words importing persons shall
include companies, firms, corporations and their successors and
assigns.
1.03 ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with generally
accepted accounting principles as in effect from time to time in
the United States of America consistently applied ("GAAP") and all
financial data submitted pursuant to this Agreement shall be
prepared in accordance with GAAP, and all financial data submitted
pursuant hereto shall be derived from financial statements prepared
in accordance with such principles.
2. REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and
to make the Loan, the Borrower represents and warrants to the
Lender (which representations and warranties shall survive the
execution and delivery of this agreement and the making of the
Loan) that:
<PAGE>
(a) PURPOSE OF LOAN. the Borrower requires the Loan for use
in connection with its lawful corporate purposes and will
utilize the proceeds thereof to finance, in part, the
acquisition of the Vessel;
(b) DUE ORGANIZATION AND POWER. the Borrower is duly formed,
validly existing and in good standing under the laws of the
State of Delaware, has full power to carry on its respective
business as now being conducted and to enter into and perform
its obligations under this Agreement, the Note, and the
Security Documents and has complied with all statutory and
other requirements relative to such business;
(c) AUTHORIZATION AND CONSENTS. all necessary corporate
action has been taken to authorize, and all necessary consents
and authorities have been obtained to permit, the Borrower to
enter into and perform its obligations under this Agreement,
the Note and the Security Documents and to borrow, service and
repay the Loan and, as of the date of this Agreement, no
further consents or authorities are necessary for the service
and repayment of the Loan or any part thereof;
(d) BINDING OBLIGATIONS. this Agreement, the Note and the
Security Documents constitute or will, when executed and
delivered, constitute the legal, valid and binding obligations
of the Borrower enforceable thereagainst in accordance with
their respective terms;
(e) NO VIOLATION. the execution and delivery of, and the
performance of the provisions of, this Agreement, the Note and
the Security Documents by the Borrower do not, and will not
during the Security Period, contravene any applicable law or
regulation existing at the date hereof or any contractual
restriction binding the Borrower or the constating instruments
thereof;
(f) LITIGATION. no action, suit or proceeding is pending or
threatened against the Borrower before any court, board of
arbitration or administrative agency which is likely to result
in any material adverse change in the business or condition
(financial or otherwise) of the Borrower;
(g) NO DEFAULT. the Borrower is not in default under any
material agreement by which it is bound, nor is it in default
in respect of any material financial commitments or
obligations;
(h) FINANCIAL INFORMATION. all financial statements,
information and other data furnished by the Borrower to the
Lender are complete and correct, and such financial statements
have been prepared in accordance with GAAP and accurately and
fairly represent the financial condition of the Borrower as of
<PAGE>
the date or respective dates thereof and the results of
operations of the Borrower for the period or respective
periods covered by such financial statements. Since such date
or dates, there has been no material adverse change in the
financial condition or results of operations of the Borrower
other than as previously disclosed to the Lender in writing.
The Borrower does not have any contingent obligations,
liabilities for taxes or other outstanding financial
obligations which are material in the aggregate except as
disclosed in such statements, information and data;
(i) THE VESSEL. upon the Drawdown Date, the Vessel:
(i) will be in the sole and absolute ownership of the
Borrower, unencumbered, save and except for the Mortgage
on her in favor of the Lender, and duly registered in the
name of the Borrower under United States flag;
(ii) will be classed in the highest classification and
rating available for vessels of its age and type with the
American Bureau of Shipping or another internationally
recognized classification society as the Lender shall
approve without any outstanding recommendations affecting
class;
(iii) will be seaworthy for hull and machinery insurance
warranty purposes and in every way fit for its existing
service;
(iv) will be insured in accordance with the provisions
of the Mortgage and the requirements thereof in respect
of such insurances will have been fulfilled; and
(v) the Vessel will be managed by OMI Bulk Management
Co. a division of the Borrower;
(j) FOREIGN ASSETS CONTROL REGULATIONS. none of the
transactions contemplated herein will violate any of the
provisions of the Foreign Assets Control Regulations of the
United States of America (Title 31, Code of Federal
Regulations, Chapter V, Part 500, as amended), any of the
provisions of the Cuban Assets Control Regulations of the
United States of America (Title 31, Code of Federal
Regulations, Chapter V, Part 515, as amended), any of the
provisions of the Libyan Assets Control Regulations of the
United States of America (Title 31, Code of Federal
Regulations, Chapter V, Part 550, as amended), any of the
provisions of the Iraqi Sanctions Regulations (Title 31, Code
of Federal Regulations, Chapter V, Part 575, as amended), any
of the provisions of the Haitian Transactions Regulations of
the United States of America (Title 31, Code of Federal
Regulations, Chapter V, Part 580, as amended), any of the
<PAGE>
provisions of the Federal Republic of Yugoslavia (Serbia and
Montenegro) Assets Control Regulations (Title 31, Code of
Federal Regulations, Chapter V, Part 585 as amended) or any of
the provisions of the Regulations of the United States of
America Governing Transactions in Foreign Shipping of
Merchandise (Title 31, Code of Federal Regulations, Chapter V,
Part 505, as amended);
(k) OFFICES. the only office or place within the United
States wherein records of the Borrower are kept is located at
90 Park Avenue, New York, New York; the Borrower maintains no
other place of business in the United States;
(l) ERISA. the execution and delivery of this Agreement, the
Note and the Security Documents and the consummation of the
transactions hereunder and thereunder will not involve any
prohibited transaction within the meaning of ERISA or Section
4975 of the Code. No condition exists or event or transaction
has occurred in connection with any Plan maintained or
contributed to by the Borrower or any ERISA Affiliate
resulting from the failure of any thereof to comply with ERISA
insofar as ERISA applies thereto which is reasonably likely to
result in the Borrower or any ERISA Affiliate incurring any
liability, fine or penalty which individually or in the
aggregate would have a material adverse effect on the
Borrower; and
(m) CITIZENSHIP. the Borrower is a United States citizen
duly qualified to own and operate the Vessel under the United
States flag.
3. AMOUNT AND TERMS OF THE LOAN
3.01 ADVANCE OF LOAN. The Lender, relying upon each of the
representations and warranties set out in Clause 2, hereby agrees
with the Borrower that, subject to and upon the terms of this
Agreement, it will make the Loan to the Borrower on the Drawdown
Date in the amount of U.S.$7,000,000. The Loan shall be repayable
as provided in Clause 5 hereof.
3.02 THE NOTE. The Loan made by the Lender to the Borrower
hereunder shall be evidenced by the Note.
3.03 DRAWDOWN NOTICE. The Loan provided for hereunder shall be
made on not less than three (3) Banking Days notice in writing
served on the Lender by the Borrower substantially in the form of
the Drawdown Notice attached hereto as Schedule 1 specifying (i)
the Drawdown Date (being a Banking Day) and (ii) the Funding
Period. Upon fulfillment of the applicable conditions set forth in
Clause 4, the Lender will make the proceeds of the Loan available
to the Borrower.
<PAGE>
3.04 EFFECT OF DRAWDOWN NOTICE. The notice requesting drawdown of
the Loan hereunder shall be deemed to constitute a warranty by the
Borrower (a) that the representations and warranties stated in
Clause 2 (updated mutatis mutandis) are true and correct on the
date of such notice and will be true and correct on the Drawdown
Date as if made on such date, and (b) that no Event of Default nor
any event which with the giving of notice or lapse of time or both
would constitute an Event of Default has occurred and is
continuing. Such notice will be irrevocable.
4. CONDITIONS
4.01 CONDITIONS PRECEDENT. The obligation of the Lender to make
the Loan available to the Borrower as provided for under this
Agreement shall be expressly subject to the conditions that:
(a) the Lender has received the following documents in form
and substance satisfactory to the Lender and its legal
advisers:
(i) copies, certified as true and complete by the
Secretary or an Assistant Secretary of the Borrower, of
the resolutions of the board of directors of the Borrower
evidencing approval of this Agreement, the Note and the
Security Documents and authorizing an appropriate officer
or officers or attorney or attorneys-in-fact to execute
the same on its behalf, or other evidence of such
approvals and authorizations as shall be acceptable to
the Lender and its legal advisers;
(ii) certified copies of all documents (with a
certified translation if an original is not in English)
evidencing any other necessary action (including by such
parties thereto other than the Borrower as may be
required by the Lender), approvals or consents with
respect to this Agreement, the Note and the Security
Documents;
(iii) copies of the Certificate of Incorporation and By-
laws of the Borrower certified as true and complete by
its Secretary or Assistant Secretary; and
(iv) good standing certificates for the Borrower issued
by the Secretary of State of the State of Delaware;
(b) the Borrower shall have duly executed and delivered to
the Lender:
(i) the Note;
<PAGE>
(ii) the Mortgage;
(iii) the Earnings Assignment;
(iv) the Insurances Assignment;
(v) the Assignment Notices; and
(vi) such Uniform Commercial Code Financing Statements
as the Lender shall request;
(c) the Lender shall be satisfied the Borrower is not subject
to any Environmental Claim which could have a material adverse
effect on the business, assets or results of operations of any
thereof;
(d) the Lender shall have received evidence satisfactory to
it and its legal advisers that:
(i) the Vessel is duly registered in the ownership of
the Borrower under the United States flag free of all
liens and encumbrances of record except for the Mortgage;
(ii) the Vessel is classed with an internationally
recognized classification society acceptable to the
Lender in the manner provided in Clause 2.1(i)(ii); and
(iii) the Vessel is insured in accordance with the
provisions of the Mortgage and all requirements thereof
in respect of such insurances have been fulfilled;
(e) the Mortgage shall have been duly filed and recorded with
the Officer in Charge of Documentation of the United States
Coast Guard for the Port of New York and shall constitute a
first preferred mortgage lien on the Vessel under the laws of
the United States of America;
(f) the Lender shall have received evidence satisfactory to
it and its legal advisers that, save for the liens created by
the Mortgage, the Earnings Assignment, the Insurances
Assignment and liens permitted thereby there are no liens,
charges or encumbrances of any kind whatsoever on the Vessel
or her earnings or insurances;
(g) the Lender shall have received such legal opinions as the
Lender shall have required as to all or any matters under the
laws of the States of Delaware and New York and the Federal
laws of the United States of America covering the
representations and conditions which are the subjects of
Clauses 2 and 4 of this Agreement.
4.02 FURTHER CONDITIONS PRECEDENT. The obligation of the Lender to
make the Loan available to the Borrower shall be, expressly and
separately from the foregoing, conditional upon, at the Drawdown
Date:
<PAGE>
(a) the Lender having received a valid request for the
drawdown of the Loan in the amount of the Loan;
(b) the representations stated in Clause 2 (up-dated mutatis
mutandis to such date) being true and correct as if made on
that date;
(c) no Event of Default having occurred and being continuing
and no event having occurred and being continuing which, with
the giving of notice or lapse of time, or both, would
constitute such an Event of Default;
(d) the Lender being satisfied that no Event of Default will
arise following the making of the Loan and that no event or
state of affairs exists which constitutes, in the reasonable
opinion of the Lender, a real threat that it will be unlawful
for the Borrower to make any payment as required under the
terms of this Agreement, the Note, the Security Documents or
any of them;
(e) there having been no material adverse change in the
financial condition of the Borrower since the date hereof; and
(f) the Lender shall have received prior to the Drawdown Date
such updated certificates as it shall require in respect of
the certificates required by Clause 4.01 hereof.
4.03 FUNDING LOSSES. In the event that, on the date specified for
making available the Loan hereunder in the notice requesting the
same given pursuant to Clause 3.03, the Lender shall not be obliged
under this Agreement to make the Loan available under this
Agreement, the Borrower shall indemnify and hold the Lender fully
harmless against any losses which the Lender may sustain as a
result of borrowing or agreeing to borrow funds to meet the
drawdown requirement in respect thereof and the certificate of the
Lender shall (save and except for manifest error) be conclusive and
binding on the Borrower as to the extent of any losses sustained by
the Lender.
4.04 SATISFACTION OF CONDITIONS AFTER DRAWDOWN. Without prejudice
to any of the other terms and conditions of this Agreement, in the
event that the Lender, in its sole discretion, makes the Loan
available to the Borrower prior to the satisfaction of all or any
of the conditions referred to elsewhere in this Article 4, the
Borrower hereby covenants and undertakes to satisfy or procure the
satisfaction of such condition or conditions within fourteen (14)
days after the Drawdown Date (or such longer period as the Lender,
in its sole discretion, may agree).
<PAGE>
5. REPAYMENT AND PREPAYMENT
5.01 REPAYMENT. The Borrower shall repay the Loan in ten (10)
consecutive semi-annual installments on the Payment Dates in
Dollars in freely available funds, the first nine (9) of which
installments of principal shall be in the amount of Five Hundred
Thousand Dollars ($500,000) each and the tenth such installment
shall be in the amount necessary to repay the Loan in full.
5.02 MANDATORY PREPAYMENT. The Borrower shall prepay the Loan in
full within five (5) Banking Days of the occurrence of any of the
following events:
(a) any government authorization, permission, approval, or
consent required for the legality, validity or enforceability
of this Agreement, the Note, any Security Document or other
instrument, document, or agreement delivered hereby or thereby
(other than any time charter or contract of affreightment), in
connection with the transaction contemplated hereby or thereby
has been revoked or restricted or ceases to be in full force
and effect in any way which the Lender, in the exercise of its
reasonable judgment, deems prejudicial to the Lender's rights
or remedies hereunder and the Lender shall have so notified
the Borrower; or
(b) any judgment or order is made the effect whereof would be
to render ineffective or invalid this Agreement, the Note or
the Security Documents (other than any time charter or
contract of affreightment) to which the Borrower is a party;
or
(c) the Vessel becomes a Total Loss (as such term is defined
in the Mortgage) unless such loss is fully covered by
insurance (as provided in the Mortgage) assigned to the Lender
and the proceeds of such insurance have been received by the
Lender in satisfaction the Loan Balance and all other
obligations of the Borrower under the Agreement and the Note
within 180 days after the occurrence of the event giving rise
to such Total Loss; or
(d) it becomes impossible or unlawful for the Borrower to
fulfill any of the covenants and obligations contained in this
Agreement, the Note or any of the Security Documents or for
the Lender to exercise the rights vested in it under this
Agreement, the Note or the Security Documents and the Lender
considers that such impossibility or illegality will have a
material adverse effect on its rights under this Agreement,
the Note or the Security Documents or the enforcement thereof.
5.03 VOLUNTARY PREPAYMENT. The Borrower shall be entitled to
prepay the Loan, without penalty, in whole, on any Banking Day, or
<PAGE>
in part, on any Payment Date, in an amount (in an integral multiple
of Two Hundred Fifty Thousand Dollars ($250,000.00)) equal to or
exceeding Five Hundred Thousand Dollars ($500,00.00) upon giving to
the Lender not less than fourteen (14) days prior written notice
prior to such Payment Date (which notice shall be irrevocable)
specifying the amount and date of prepayment provided that:
(a) Any partial prepayment made shall be applied in or
towards satisfaction of the repayment installments of the Loan
failing due thereafter under Clause 5.01 in the inverse order
of their due dates for payment;
(b) Any amounts prepaid shall not be available for
reborrowing; and
(c) On the date of prepayment all accrued interest to the
date of such prepayment shall be paid in full with respect to
the portion of the principal being prepaid together with any
and all costs or expenses incurred by the Lender in connection
with any breaking of funding (as certified by the Lender,
which certification shall, save for any manifest error, be
conclusive and binding on the Borrower).
6. INTEREST AND RATE
6.01 FUNDING PERIODS. For funding purposes the Borrower may select
Funding Periods of one (1), three (3), six (6) or twelve (12)
months by giving the Lender at least three (3) Banking Days notice
prior to the end of any then existing Funding Period. Unless and
until the Borrower makes an election of a period for funding, the
relevant Funding Period shall be for a period of three (3) months.
The Borrower's right to select the Funding Period shall be subject
to the restriction that no selection of a Funding Period shall be
effective unless the Lender is satisfied that the necessary funds
will be available to the Lender for such period and that no Event
of Default or event which with notice or the passage of time or
both would constitute an Event of Default shall have occurred. The
Borrower's right to select the Funding Period is further subject to
the requirement that if the Borrower selects a Funding Period which
extends beyond the next one (1) or more Payment Dates (other than
the last) there shall in respect of part of the Loan as shall be
equivalent to the amount of each installment of principal falling
due for payment before the expiry of that Funding Period be such
separate Funding Period or Periods so as to ensure that a Funding
Period shall expire in respect of each such part of the Loan on the
relevant Payment Date. The Borrower shall pay all administrative
costs and any breaking of funding costs incurred by the Lender by
reason of the Borrower's selection of Funding Periods under this
Clause 6.01 (the Lender's certification as to the amount such costs
shall be conclusive save for manifest error).
<PAGE>
6.02 APPLICABLE RATE; DEFAULT RATE. The Loan shall bear interest
at the rate (the "Applicable Rate") per annum equal to the Margin
plus the interest rate at which Dollar deposits are offered to the
Lender in the London Interbank Eurodollar Market for the applicable
Funding Period determined in accordance with Clause 6.01 ("LIBOR"),
together with any applicable margin imposed on the Lender as a
result of the operation of Regulation D (Code of Federal
Regulations, Title 12, Chapter II, Part 204), as in effect from
time to time. Any payment hereunder not paid when due, whether on
a Payment Date or by acceleration, shall bear interest thereafter
at a rate per annum of either (i) the Margin plus two percent (2%)
over the cost to the Lender of funding such overdue amount, or (ii)
two percent (2%) over the Applicable Rate, whichever is greater.
6.03 PAYMENT OF INTEREST. Accrued interest shall be payable
quarterly in arrears and on the last day of each Funding Period and
at such other times as interest is required to be paid by the
Lender to fund the Loan Balance or any portion thereof.
6.04 INTEREST PAYABLE ON BANKING DAYS. If interest would, under
Clause 6.03, be payable on a day which is not a Banking Day, it
shall then be payable on the next following Banking Day, unless
such next following Banking Day falls in the following month in
which case it shall be payable on the Banking Day immediately
preceding the day on which such interest would otherwise be
payable.
6.05 CALCULATION OF INTEREST. All interest shall accrue from day
to day and be calculated on the actual number of days elapsed and
on the basis of a 360 day year.
7. PAYMENTS
7.01 PLACE OF PAYMENT; NO SETOFF. All payments to be made
hereunder by the Borrower shall be made on the due date of such
payment to the Lender:
(a) in Dollars in freely available funds, to ABA No.
021-000-018 The Bank of New York for Account No. 802-612-0277
Christiania Bank, New York branch; and
(b) without set-off or counterclaim and free from, clear of,
and without deduction for, any Taxes, provided, however, that
if the Borrower shall at any time be compelled by law to
withhold or deduct any Taxes from any amounts payable to the
Lender hereunder, the Borrower shall pay such additional
amounts in Dollars as may be necessary in order that the net
amounts received after withholding or deduction shall equal
the amounts which would have been received if such withholding
or deduction were not required and, in such event, the
Borrower shall promptly send to the Lender such documentary
evidence with respect to such withholding or deduction as may
be required from time to time by the Lender.
<PAGE>
7.02 PAYMENTS TO BORROWER. All sums advanced by the Lender to the
Borrower hereunder shall be advanced in Dollars to the account of
the Borrower with the Lender or as the Borrower shall direct in the
Drawdown Notice.
7.03 ALTERNATE MANNER OF PAYMENT. Notwithstanding anything to the
contrary in this Clause 7, payments described herein may be made in
such other manner as shall be reasonably directed by the Lender
with notice to the Borrower prior to the next payment to which such
instructions shall apply.
8. THE OPERATING ACCOUNT.
8.01 OPERATING ACCOUNT. The Borrower shall open an account (no.
4062344701) with the Lender at its branch located 11 West 42nd
Street, New York, New York (the "Operating Account") on or prior to
the Drawdown Date into which all earnings of the shall be
deposited. So long as no Event of Default specified herein or in
any of the Security Documents, and no event which, with notice or
the passage of time, or both, would constitute such an Event of
Default shall have occurred and be continuing, such monies may be
utilized for any business purpose whatsoever consistent with the
terms of this Agreement. Amounts accumulated in the Operating
Account shall bear interest for the account of the Borrower in
accordance with the Lender's normal practice.
8.02 APPLICATION OF MONIES ON DEFAULT. Upon the occurrence of an
Event of Default, and so long as the same shall be continuing, all
moneys then held in the Operating Account and all such Assigned
Moneys thereafter received by the Lender shall be retained by the
Lender as collateral security and may be applied by the Lender as
provided in Clause 9.03.
8.03 MONEYS IN ACCOUNT AS COLLATERAL. All monies of the Borrower
on deposit with the Lender in the Operating Account or from such
account with have been invested by the Lender on behalf of the
Borrower shall be collateral security for the payment and
performance by the Borrower of its obligation hereunder, under the
Note and under the Security Documents and the Borrower hereby
pledges, assigns and grants to the Lender a security interest in
the Operating Account, the monies on deposit therein and such
investments.
9. EVENTS OF DEFAULT
9.01 In the event that any of the following events shall occur:
(a) PRINCIPAL AND INTEREST PAYMENTS. any principal of or
interest payable in connection with the Loan or any other
amount becoming payable to the Lender under this Agreement,
the Note or any of the Security Documents or any of them is
not paid on the due date or date of demand (as the case may
be); or
<PAGE>
(b) REPRESENTATIONS, ETC. representation or warranty made
by the Borrower in this Agreement or in any of the Security
Documents or other instrument, document, or agreement
delivered in connection herewith or therewith proves to have
been incorrect when made in any material respect; or
(c) INCORRECT STATEMENT AFFECTING PERFORMANCE. of the
statements made by the Borrower in this Agreement proves to be
incorrect and the Lender concludes that, by reason thereof,
the Borrower may be unable to perform its obligations under
the Note and this Agreement; or
(d) COVENANTS. the Borrower defaults in performance of any
term, covenant or agreement contained in this Agreement, the
Note, the Security Documents or any of them, or any other
instrument, document or agreement delivered in connection
herewith or therewith, or there occurs any other event which
constitutes a default under the Note or any of the Security
Documents in each case other than an Event of Default referred
to elsewhere in this Clause 9.01, and any such default
continues unremedied for a period of thirty (30) days; or
(e) INDEBTEDNESS. the Borrower or any direct or indirect
subsidiary of the Borrower fails to make payment at stated
maturity, upon acceleration or otherwise of any principal of,
premium or interest on any indebtedness or obligation for
borrowed money (other than the Loan) or for the deferred
purchase price of property and any such failure shall continue
for more than the period of grace, if any, specified in the
terms of such indebtedness or obligation, or otherwise agreed,
and shall not have been remedied or waived pursuant thereto;
or any mortgage or other security interest or charge present
or future and created or assumed by the Borrower or any direct
or indirect subsidiary of the Borrower shall become
enforceable and the holder thereof shall take steps to enforce
the same; or
(f) CROSS DEFAULT. the Borrower or any direct or indirect
subsidiary of the Borrower defaults under any agreement or
instrument to which it is a party and such default is not
cured or waived within thirty (30) days thereafter; or
(g) OWNERSHIP OF VESSEL. the Borrower ceases to retain its
ownership of the Vessel or, without the prior written consent
of the Lender, the registration or flag of the Vessel is
changed; or
(h) DEFAULT UNDER MORTGAGE. there is an event of default
under the Mortgage; or
(i) BANKRUPTCY. the Borrower commences any proceedings
relating to any substantial portion of its properties under
<PAGE>
any reorganization, arrangement or readjustment of debt,
dissolution, winding up, adjustment, composition, or
bankruptcy or liquidation law or statute of any jurisdiction,
whether now or hereafter in effect ("Proceeding"), or there is
commenced against the Borrower any Proceeding and such
Proceeding remains undismissed or unstayed for a period of
thirty (30) days; or any receiver, trustee, liquidator, or
sequestrator of, or for, the Borrower or any substantial
portion of its properties is appointed and is not discharged
within a period of thirty (30) days; or the Borrower by any
act indicates consent to or approval of or acquiescence in any
Proceeding or the appointment of any receiver, trustee,
liquidator, or sequestrator of, or for, itself or any
substantial portion of its property; or
(j) TERMINATION OF OPERATIONS OR SALE OF ASSETS. the
Borrower ceases its operations, sells or otherwise disposes of
all or substantially all of its assets; or
(k) CITIZENSHIP. the Borrower ceases to be a United States
citizen qualified to own and operate the Vessel under the
United States flag; or
(l) MATERIAL ADVERSE CHANGE. any change occurs in the
financial position of the Borrower or any of its subsidiaries
which, in the reasonable opinion of the Lender adversely
affects the ability of any such party to perform its
respective obligations under any agreement (including this
Agreement and the Security Documents) material to its
business, and if such adverse change is capable of being
cured, such change is not cured within thirty (30) days.
then the Lender's obligation to make the Loan available shall cease
and the Lender may, by notice to the Borrower, declare any amount
of the Loan then outstanding, accrued interest and any other sums
payable by the Borrower hereunder, under the Note and under the
Security Documents to which it is a party due and payable whereupon
the same shall forthwith be due and payable without presentment,
demand, protest, or notice of any kind, all of which are hereby
expressly waived; provided, that upon the happening of an event
specified in subclause (i) of this Clause 9.01, the Note shall be
immediately due and payable without declaration or other notice to
the Borrower.
9.02 INDEMNIFICATION. The Borrower shall indemnify the Lender
against any loss or costs or expenses (including legal expenses)
which the Lender sustains or incurs as a consequence of any default
hereunder, under the Note and the Security Documents including (but
without limitation) all losses incurred in liquidating or re-
employing fixed deposits made by third parties or funds acquired to
effect or maintain the Loan or any part thereof.
<PAGE>
9.03 APPLICATION OF FUNDS ON DEFAULT. All moneys received by the
Lender under or pursuant to this Agreement, the Note or any of the
Security Documents after the happening of any Event of Default
(except as otherwise provided in any Security Document) shall be
applied by the Lender, in its discretion, in the following manner:
(i) first, in or towards the payment or reimbursement of
any expenses or liabilities incurred by the Lender in
connection with the ascertainment, protection or enforcement
of its rights and remedies hereunder and under the Note and
under the Security Documents,
(ii) secondly, in or towards payment of any arrears of
interest owing in respect of the Loan then outstanding,
(iii) thirdly, in or towards repayment of the principal
amount of the Loan then outstanding,
(iv) fourthly, in or towards payment of all other sums which
may be owing to the Lender under this Agreement, the Note and
the Security Documents or any of them,
(v) fifthly, the surplus (if any) shall be paid to the
Borrower or to whomsoever else may be entitled thereto.
10. COVENANTS
10.01 The Borrower hereby covenants and undertakes with the
Lender that, from the date hereof and so long as any principal,
interest or other monies are owing in respect of the Loan or under
this Agreement, the Note, the Security Documents or any of them:
A. The Borrower will:
(i) PERFORMANCE OF OBLIGATIONS. duly perform and
observe, and procure the observance and performance by
all other parties thereto (other than the Lender) of, the
terms of this Agreement, the Note and the Security
Documents;
(ii) EVENT OF DEFAULT. promptly inform the Lender of
any occurrence of which the Borrower becomes aware (a)
which constitutes or, with the giving of notice or lapse
of time or both, would constitute, an Event of Default or
(b) which, in its reasonable opinion, might adversely
affect its ability, or the ability of any other party
thereto, to perform its obligations under this Agreement,
the Note and the Security Documents or any of them;
(iii) FURTHER ASSURANCES. without prejudice to Clause 2
and this Clause 10.01, obtain every consent and do all
other acts and things which may from time to time be
<PAGE>
necessary or desirable for the continued due performance
of all its and any other party's respective obligations
under this Agreement, the Note and the Security Documents;
(iv) FINANCIAL REPORTS. deliver to the Lender:
(a) as soon as available but not later than one
hundred and twenty (120) days after the end of each
fiscal year of the Borrower, complete copies of the
financial reports thereof, all in reasonable
detail, which shall include at least a consolidated
balance sheet as of the end of such year and the
related consolidated income statement and statement
of sources and uses of funds for such year prepared
by an independent public accountant selected by the
Borrower and satisfactory to the Lender together
with unaudited consolidating balance sheets for
such year together with unaudited consolidating
income statement and statement of sources and uses
of funds for such year which unaudited reports
shall be prepared by the Borrower and certified to
be true and complete by the Chief Financial Officer
thereof;
(b) as soon as available but not less than sixty
(60) days after the end of each quarter of each
fiscal year of the Borrower, quarterly interim
balance sheets and profit and loss statements of
the Borrower, in each case certified to be true and
complete by the Chief Financial Officer thereof
which shall include a consolidating report;
(c) concurrently with each delivery of financial
statements pursuant to subparagraphs (a) and (b) of
this subclause (iv), a certificate of the principal
financial officer of the Borrower stating that he
has reviewed the provisions of this Agreement, of
the Note and of each of the Security Documents, and
the performance or observance by the Borrower
thereof, and either stating that to his knowledge
no event has occurred and no condition exists which
constitutes or with the giving of notice or lapse
of time, or both, would constitute an Event of
Default under this Agreement or, if any such event
has occurred or condition exists specifying the
nature and period of existence of such event or
condition of which he has knowledge and what action
the Borrower is taking or proposes to take with
respect thereto;
<PAGE>
(d) such other statement or statements, lists of
property and accounts, budgets, reports and
financial information with respect to operation and
management of the Vessel (including, but not
limited to, quarterly income statements) and the
employment of other vessels owned directly or
indirectly by the Borrower, certified to be true
and complete by the chief financial officer thereof
as the Lender may from time to time reasonably request;
(v) COMPLIANCE WITH LAW. do or cause to be done all
things necessary to comply with all material laws, and
the rules and regulations thereunder, applicable to the
Borrower, including, without limitation, those laws,
rules and regulations relating to employee benefit plans
and environmental matters;
(vi) ENVIRONMENTAL ISSUES. promptly upon the occurrence
of any of the following conditions, provide to the Lender
a certificate of a chief executive officer thereof,
specifying in detail the nature of such condition and its
proposed response or the response of its Environmental
Affiliate: (a) its receipt or the receipt by its
Environmental Affiliates of any written communication
whatsoever that alleges that such person is not in
compliance with any applicable environmental law or
environmental approval, if such noncompliance could
reasonably be expected to have a material adverse effect
on the business, assets, operations, property or
financial condition of the Borrower, (b) knowledge by it,
or any of its Environmental Affiliates that there exists
any Environmental Claim pending or threatened against any
such person, which could reasonably be expected to have
a material adverse effect on the business, assets or
operations, property or financial condition of the
Borrower, or (c) any release, emission, discharge or
disposal of any material that could form the basis of any
Environmental Claim against it or any of its
Environmental Affiliates if such Environmental Claim
could reasonably be expected to have a material adverse
effect on the business, assets or operations, property or
financial condition of the Borrower. Upon the written
request by the Lender, it will submit to the Lender at
reasonable intervals, a report providing an update of the
status of any issue or claim identified in any notice or
certificate required pursuant to this subsection. For
the purposes of this subsection, "Environmental Claim"
shall mean any claim under federal, state and local
environmental, health and safety laws, statutes or
regulations. "Environmental Affiliate" shall mean any
person or entity the liability of which for Environmental
Claims the Borrower may have assumed by contract or
operation of law;
<PAGE>
(vii) ERISA. forthwith upon learning of the occurrence
of any material liability of the Borrower or any ERISA
Affiliate pursuant to ERISA in connection with the
termination of any Plan or withdrawal or partial
withdrawal from any multi-employer plan (as defined in
ERISA) or of a failure to satisfy the minimum funding
standards of Section 412 of the Code or Part 3 of Title
I of ERISA by any Plan for which the Borrower or any
ERISA Affiliate is plan administrator (as defined in
ERISA), furnish or cause to be furnished to the Lender
written notice thereof;
(viii) SWAP AGREEMENT. in the event the Borrower and the
Lender enter into an interest rate swap agreement in
connection herewith, execute all such agreements or
amendments to the Security Documents which the Lender
requires so as to secure the obligations of the Borrower
under such swap agreement on a pari passu basis with the
obligations of the Borrower hereunder;
(ix) TOTAL DEBT TO NET WORTH. maintain a ratio of (a)
its Total Debt to (b) its Tangible Net Worth of at least
3 to 1, throughout the Security Period;
(x) LIQUID ASSETS. on a consolidated basis, maintain
less than $15,000,000 in Liquid Assets from the date
hereof; and
(xi) DEBT SERVICE RATIO. for each quarter of the
Borrower's fiscal year, maintain a ratio of (a) the
gross operating cash flow of the Vessel (that is, the
gross revenue earned by the Vessel during such quarter
less operating expenses incurred in connection with the
Vessel during such quarter) to (b) all installments of
principal and payments of interest in respect of the Note
for such quarter as provided in Clause 5.01 of at least
1.25 to 1.0.
B. The Borrower will not, and will procure that the Borrower
will not, without the prior written consent of the Lender:
(i) LIENS, ETC. create, assume or permit to exist any
mortgage, pledge, lien, charge, encumbrance or any
security interest whatsoever upon the Vessel or its
earnings or insurances except:
(aa) liens for taxes not yet payable;
(bb) the Assignments, the Mortgage and such other
mortgages, pledges, liens, charges or encumbrances
in favor of the Lender; and
<PAGE>
(cc) liens, charges and encumbrances on the
Vessel permitted to exist under the terms of the
Mortgage;
(ii) CAPITAL COMMITMENT. authorize or accept any
capital commitments in respect of the Vessel in excess of
$500,000;
(iii) CONSOLIDATION OR MERGER. consolidate with, or
merge into, any other corporation, or merge any other
corporation into the Borrower;
(iv) CHANGE IN BUSINESS. except as the Borrower's
Board of Directors shall determine, change the nature of
its business or commence any business other than the
owning and operation of vessels;
(v) SALE OF VESSEL OR OTHER ASSETS. sell or otherwise
dispose of the Vessel unless, prior to or contemporaneously
with such sale, the Borrower prepays the Loan in full together
with all other sums owing to the Lender in connection herewith;
(vi) CHANGE HEAD OFFICE. change the county of the
location of its chief executive office or any office in
which the records relating to any charter or other
contract covering, or to the earnings and insurances of,
the Vessel are kept on less than thirty (30) days prior
written notice to the Lender;
(vii) CHANGE OF VESSEL MANAGER. unless (aa) the new
manager is an affiliate of the Borrower and (bb) the
Lender has been given prior notice of the change of
manager of the Vessel, change the manager of the Vessel; or
(viii) DIVIDENDS. if the Borrower or any of its
affiliates has, in the opinion of the Lender, materially
defaulted under any agreement for borrowed moneys and so
long as the same shall continue, pay dividends or
distribute any of its assets to its shareholders.
10.02 VESSEL VALUATION. If requested by the Lender, the Borrower
shall obtain a valuation of the Vessel, charter-free, in Dollars
from an independent marine appraiser or other source, in each case
reasonably satisfactory to the Lender. The first such valuation
during any calendar year and any such valuation obtained upon the
occurrence of an Event of Default shall be at the Borrower's cost,
any other valuation during such year to be at the Lender's cost.
In the event the Borrower shall fail or refuse to obtain the
valuation requested pursuant to this Clause 10.02 within ten (10)
days of the Lender's request therefor, the Lender shall be
authorized to obtain such valuation, at the Borrower's expense,
from an independent marine appraiser or other source selected by
<PAGE>
the Lender, which valuation shall be deemed the equivalent of a
valuation duly obtained by the Borrower pursuant to this Clause
10.02, but the Lender's actions in doing so shall not excuse any
default of the Borrower under this Clause 10.02
10.03 COLLATERAL MAINTENANCE. If at any time after the Drawdown
Date the charter-free value of the Vessel, as determined pursuant
to Clause 10.02, falls below one hundred forty percent (140%) of
the Loan Balance, the Borrower shall, within a period of fifteen
(15) days following receipt by the Borrower of written notice from
the Lender notifying the Borrower of such shortfall and specifying
the amount thereof (which amount shall, in the absence of manifest
error, be deemed to be conclusive and binding on the Borrower) (a)
deliver to the Lender, upon its request, such additional collateral
as may be satisfactory to it, in its sole discretion (including the
deposit of cash in a cash collateral account maintained with the
Lender), such that the sum of (i) the value of the Vessel, as
determined in accordance with the latest appraisal delivered
pursuant to Clause 10.02, and (ii) such additional collateral shall
be greater than the required one hundred forty percent (140%) of
the Loan Balance or (b) prepay such part of the Loan (together with
interest thereon and other moneys payable in respect of such
prepayment pursuant to Clause 5.03) as shall result in the charter-
free value of the Vessel being not less than the required one
hundred forty percent (140%) of the Loan Balance. Any such
prepayment shall be applied as provided in Clause 5.03.
10.04 OTHER REPORTS ON VESSEL. If the Lender shall so request,
the Borrower shall provide the Lender with copies of all internally
generated inspection or survey reports on the Vessel.
11. ASSIGNMENT
This Agreement shall be binding upon, and inure to the benefit
of, the Borrower and the Lender and their respective successors and
assigns, except that the Borrower may not assign any of its rights
or obligations hereunder without the prior written consent of the
Lender. In giving consent as aforesaid to any assignment by the
Borrower the Lender shall be entitled to impose such conditions as
it shall think fit. The Lender shall be entitled to assign the
whole or any part of its rights or obligations under this Agreement
(i) to any subsidiary or holding company of the Lender or to any
subsidiary company of any thereof and the Lender shall forthwith
give notice of any such assignment to the Borrower, or (ii) with
the prior written consent of the Borrower (which shall not be
unreasonably withheld) to any other bank or financial institution
whatsoever or (iii) provided the Lender remains the agent for such
other bank or financial institution to grant participations to any
other bank or financial institution.
<PAGE>
12. ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.
12.01 ILLEGALITY. In the event that by reason of any change in
any applicable law, regulation or regulatory requirement or in the
interpretation thereof it shall appear to the Lender that it has
become unlawful for the Lender to maintain or give effect to its
obligations as contemplated by this Agreement, the Lender shall
inform the Borrower to that effect, whereafter the liability of the
Lender to make the Loan available shall forthwith cease and the
Borrower shall prepay the amount of the Loan then outstanding to
the Lender immediately. In any such event, but without prejudice
to the aforesaid obligations of the Borrower to prepay the Loan,
the Borrower and the Lender shall negotiate in good faith with a
view to agreeing on terms for making the Loan available from
another jurisdiction or otherwise restructuring the Loan on a basis
which is not unlawful.
12.02 INCREASED COSTS. If any change in applicable law,
regulation or regulatory requirement or in the interpretation or
application thereof by any governmental or other authority, shall:
(i) subject the Lender to any Taxes with respect to its
income from the Loan; or
(ii) change the basis of taxation to the Lender of payments
of principal or interest or any other payment due or to become
due pursuant to this Agreement (other than a change in the
basis effected by the United States, the State of New York or
the City of New York or such other jurisdiction where the Loan
may be payable), or
(iii) impose, modify or deem applicable any reserve
requirements or require the making of any special deposits
against or in respect of any assets or liabilities of,
deposits with or for the account of, or loans by, the Lender,
or
(iv) impose on the Lender any other condition affecting the
Loan,
and the result of the foregoing is either to increase the cost to
the Lender of making available or maintaining the Loan or any part
thereof or to reduce the amount of any payment received by the
Lender, then and in any such case if such increase or reduction in
the opinion of the Lender materially affects the interests of the
Lender:
(a) the Lender shall notify the Borrower of the happening of
such event,
<PAGE>
(b) the Borrower shall forthwith upon demand pay to the
Lender such amount as the Lender certifies to be necessary to
compensate the Lender for such additional cost or such
reduction, and
(c) any such demand as is referred to in subclause (b) of
this Clause 12.02(iv) may be made by the Lender at any time
before or after the Drawdown Date and at any time before any
repayment of any portion, but not all, of the Loan then
outstanding.
PROVIDED, however, that the foregoing provisions shall not be
applicable in the event that increased costs to the Lender result
from the exercise by the Lender of its right to assign its rights
or obligations under Clause 13 hereof or are otherwise attributable
to acts of the Lender.
12.03 INABILITY TO DETERMINE LIBOR. If the Lender shall determine
that, by reason of circumstances affecting the London Interbank
Market generally, adequate and reasonable means do not or will not
exist for ascertaining the Applicable Rate for the Loan for any
Funding Period, the Lender shall give notice of such determination
to the Borrower. The Borrower and the Lender shall then negotiate
in good faith in order to agree upon a mutually satisfactory
interest rate and/or Funding Period to be substituted for those
which would otherwise have applied under this Agreement. If the
Borrower and the Lender are unable to agree upon such a substituted
interest rate and/or Funding Period within thirty (30) days of the
giving of such determination notice, the Lender shall set an
interest rate and Funding Period to take effect from the expiration
of the Funding Period in effect at the date of determination, which
rate shall be equal to the Margin plus the cost to the Lender of
funding the Loan. In the event the state of affairs referred to in
this Clause 12.03 shall extend beyond the end of the Funding
Period, the foregoing procedure shall continue to apply until
circumstances are such that the Applicable Rate may be determined
pursuant to Clause 6.
12.04 DETERMINATION OF LOSSES. A certificate or determination
notice of the Lender as to any of the matters referred to in this
Clause 12 shall, save for any manifest error, be conclusive and
binding on the Borrower.
12.05 COMPENSATION FOR LOSSES. Where the Loan or any portion
thereof is to be prepaid by the Borrower pursuant to any of the
foregoing provisions of this Clause 12, the Borrower shall
simultaneously with such prepayment pay to the Lender all accrued
interest to the date of actual payment and all other sums payable
by the Borrower to the Lender pursuant to this Agreement together
with such amounts as may be certified by the Lender to be necessary
to compensate the Lender for any loss, premium or penalties
incurred or to be incurred by it on account of funds borrowed to
make, fund or maintain the Loan for the remainder (if any) of the
then current Funding Period or Periods but otherwise without
penalty or premium.
<PAGE>
13. CURRENCY INDEMNITY
13.01 CURRENCY CONVERSION. If for the purpose of obtaining or
enforcing a judgment in any court in any country it becomes
necessary to convert into any other currency (the "judgment
currency") an amount due in Dollars under this Agreement, the Note
or any of the Security Documents then the conversion shall be made,
in the discretion of the Lender, at the rate of exchange prevailing
either on the date of default or on the day before the day on which
the judgment is given or the order for enforcement is made, as the
case may be (the "conversion date"), provided that the Lender shall
not be entitled to recover under this clause any amount in the
judgment currency which exceeds at the conversion date the amount
in Dollars due under this Agreement, the Note or any of the
Security Documents.
13.02 CHANGE IN EXCHANGE RATE. If there is a change in the rate
of exchange prevailing between the conversion date and the date of
actual payment of the amount due, the Borrower shall pay such
additional amounts (if any, but in any event not a lesser amount)
as may be necessary to ensure that the amount paid in the judgment
currency when converted at the rate of exchange prevailing on the
date of payment will produce the amount then due under this
Agreement, the Note or any of the Security Documents in Dollars.
Any excess over the amount due received or collected by the Lender
shall be remitted to the Borrower.
13.03 ADDITIONAL DEBT DUE. Any amount due from the Borrower under
Clause 13.02 shall be due as a separate joint and several debt and
shall not be affected by judgment being obtained for any other sums
due under or in respect of this Agreement, the Note or any of the
Security Documents.
13.04 RATE OF EXCHANGE. The term "rate of exchange" in this
Clause 13 means the rate at which the Lender in accordance with its
normal practices is able on the relevant date to purchase Dollars
with the judgment currency and includes any premium and costs of
exchange payable in connection with such purchase.
14. FEES AND EXPENSES
14.01 ARRANGEMENT FEE. On or prior to execution of this
Agreement, the Borrower shall pay to the Lender an arrangement fee
of Thirty-Five Thousand Dollars ($35,000).
14.02 FACILITY FEE. The Borrower shall pay to the Lender annually
in advance a nonrefundable facility fee of Five Thousand Dollars
($5,000) per annum, the first such payment to be made on the date
of execution of this Agreement and the last such payment to be on
the fourth anniversary thereof.
<PAGE>
14.03 COMMITMENT FEE. In addition, the Borrower shall pay to the
Lender a commitment fee computed at the rate of three quarters of
one percent (3/4%) per annum on Seven Million Dollars ($7,000,000)
from August 3, 1993 to the Drawdown Date.
14.04 COSTS, CHARGES AND EXPENSES. The Borrower agrees to pay the
Lender promptly (whether or not the Loan or any part thereof is
ever made available hereunder) all costs, charges and expenses
incurred by or on behalf of the Lender (including, without
limitation, external legal fees and out-of-pockets expenses,
inclusive of travel expenses) in connection with the negotiation,
preparation, execution and enforcement or attempted enforcement of
or the restructuring of the Borrower's obligations under, this
Agreement, the Note and the Security Documents or otherwise in
connection with the Loan, as well as in connection with any
supplements, amendments, waivers or consents relating thereto.
15. APPLICABLE LAW AND JURISDICTION
15.01 APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
15.02 JURISDICTION. The Borrower hereby irrevocably submits to
the jurisdiction of the courts of the State of New York and of the
United States District Court for the Southern District of New York
in any action or proceeding brought against it by the Lender under
this Agreement or any instrument delivered hereunder and hereby
agrees that service of summons or other legal process thereon may
be made by serving a copy of the summons or other legal process in
any such action on the Borrower by mailing or delivering the same
by hand to the Borrower at the address indicated for notices in
Clause 16.02. The service, as herein provided, of such summons or
other legal process in any such action or proceeding shall be
deemed personal service and accepted by the Borrower as such, and
shall be legal and binding upon the Borrower for all the purposes
of any such action or proceeding. Final judgment (a certified or
exemplified copy of which shall be conclusive evidence of the fact
and of the amount of any indebtedness of the Borrower to the
Lender) against the Borrower in any such legal action or proceeding
shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment. In the event that the Borrower shall not be
conveniently available for such service, the Borrower hereby
irrevocably appoints the person who then is the Secretary of State
of the State of New York as such attorney-in-fact and agent.
Notwithstanding anything herein to the contrary, the Lender may
bring any legal action or proceeding in any other appropriate
jurisdiction.
<PAGE>
16. NOTICES AND DEMANDS
16.01 NOTICES IN WRITING. Every notice or demand required or
permitted under this Agreement shall be in writing and may be given
or made by telex or telefax.
16.02 ADDRESSES FOR NOTICE. Every notice or demand required or
permitted under this Agreement shall be sent as follows:
IF TO THE BORROWER:
90 Park Avenue
New York, New York 10016
Telex No.: 224060 OMIMAR UR
Telefax No.: (212) 297-2288
Attention: President
IF TO THE LENDER:
11 West 42nd Street
New York, New York 10036
Telex No.: 824-277 CBNY UF
Telefax No.: (212) 827-4888
Attention: Loan Administration
16.03 NOTICES DEEMED DELIVERED. Every notice or demand required
or permitted under this Agreement shall except so far as otherwise
expressly provided by this Agreement, be deemed to have been
received in the case of a telex with confirmed answerback or
telefax at the time of dispatch thereof (provided that if the date
of dispatch is not a Banking Day in the locality of the party to
whom such notice or demand is sent it shall be deemed to have been
received on the next following Banking Day in such locality), in
the case of a letter delivered by hand, at the time of delivery
and, in the case of a letter, on the expiration of seventy-two (72)
hours after the same is put into the mail.
17. MISCELLANEOUS
17.01 TIME OF ESSENCE. Time is of the essence of this Agreement
but no failure or delay on the part of the Lender to exercise any
power or right under this Agreement shall operate or be construed
as a waiver thereof, nor shall any single or partial exercise by
the Lender of any power or right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The
remedies provided herein are cumulative and are not exclusive of
any remedies provided by law.
<PAGE>
17.02 UNENFORCEABLE PROVISIONS. In case any one or more of the
provisions contained in this Agreement, the Note or any of the
Security Documents should be invalid, illegal or unenforceable in
any respect under any law applicable in any relevant jurisdiction,
the validity, legality and enforceability of the remaining
provisions herein or therein contained shall not in any way be
affected or impaired thereby.
17.03 REFERENCES. References herein to Clauses and Schedules are
to be construed as references to clauses of, and schedules to, this
Agreement.
17.04 FURTHER ASSURANCES. The Borrower agrees that if this
Agreement, the Note or any of the Security Documents shall at any
time be deemed by the Lender for any reason intent and spirit
hereof or thereof, it will execute or cause to be executed such
other and further assurances and order more effectively to
accomplish the purposes of this Agreement, the Note or any of the
Security Documents.
17.05 ENTIRE AGREEMENT. This Agreement constitutes the entire
Agreement of the parties and cannot be amended other than by
written agreement signed by the parties hereto.
17.06 HEADINGS. In this Agreement, Clause headings are included
for convenience of reference only and shall not be taken into
account in the interpretation of this Agreement.
<PAGE>
I N W I T N E S S whereof the parties hereto have caused this
Agreement to be executed by their respective duly authorized
representative on the day and year first above written.
OMI CORP.
By:/s/ Vincent J. de Sostoa
Vincent J. de Sostoa
Senior Vice President
CHRISTIANIA BANK OG
KREDITKASSE
By:/s/ Svein Engh
Svein Engh
Vice President
By:/s/ Justin F. McCarty, III
Justin F. McCarty, III
Vice President
EXHIBIT 10.40
LOAN AGREEMENT
GERALDTON NAVIGATION COMPANY INCORPORATED
as Borrower
HAYES NAVIGATION CO. PTE. LTD.
as Shipowner
and
LARSEN SHIP FINANCE CO.
as Lender
THIS LOAN AGREEMENT dated as of November 12, 1993 by and
between: Geraldton Navigation Company Incorporated, a Panamanian
corporation having a registered address at Arosemena & Diaz, Comosa
Building, Samuel Lewis and Manuel M. Ycaza Avenues, Panama City,
Republic of Panama, as Borrower; Hayes Navigation Co. Pte. Ltd., a
Singaporean corporation having a registered address at 100 Beach
Road, 23-00 Shaw Towers, Singapore 0718, as Owner; and Larsen Ship
Finance Co., a Liberian corporation having a registered address at
80 Broad Street Monrovia, Republic of Liberia, as Lender.
WITNESSETH
WHEREAS, Borrower has entered into a certain shipbuilding
contract dated November 27, 1991 (as amended, supplemented or
otherwise modified from time to time, the "Purchase Agreement")
with Sumitomo Corporation, a Japanese corporation ("Contractor"),
for the construction by Contractor's subcontractor, Oshima
Shipbuilding Co., Ltd., a Japanese corporation ("Builder"), of one
(1) Panamax bulk carrier designated as Builder's Hull No. 10161 to
be named the M/V "Maritime OMI" (the "Vessel");
WHEREAS, the Owner is a wholly owned subsidiary of
Borrower;
WHEREAS, pursuant to the terms of an Assignment and
Amendment Agreement dated as of March 16, 1992, the Purchase
Agreement was assigned by the Borrower to the Owner;
WHEREAS, under the terms of the Purchase Agreement, the
Vessel is scheduled to be delivered by Contractor to Owner on or
before January 31, 1994;
WHEREAS, Borrower has agreed to provide the Owner with
the funds to finance the Owner's costs related to the construction
of the Vessel;
WHEREAS, Borrower desires to borrow from Lender, and
Lender is willing to loan to Borrower, an amount up to the United
States Dollar equivalent of sixty-five percent (65%) of the
Contract Price for the Vessel of Japanese Yen Four Billion Three
Hundred Million (Y4,300,000,000) but not to exceed Twenty-six
Million United States Dollars (US$26,000,000.00) which amount shall
be provided by Borrower to the Owner to partially finance the
construction cost and acquisition of the Vessel all in accordance
with the terms and subject to the conditions contained herein.
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions
As used herein, the following capitalized terms shall
have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Borrower" means Geraldton Navigation Company
Incorporated, a Panamanian corporation, and its successors and
assigns.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York (U.S.A.), Hong
Kong, London (United Kingdom) or Tokyo (Japan) are authorized or
required by law to close.
"Classification Society" means Nippon Kaiji Kyokai.
"Commitment" means the amount set forth in Section 2.01
hereof, or where the context so requires, the obligation of the
Lender to lend to the Borrower up to such amount subject to the
terms and conditions of this Agreement.
"Commitment Period" means the period commencing on the
date of this Agreement first above written and terminating on the
earlier of (i) August 31, 1994, or (ii) the date on which the
Lender's obligation to lend hereunder terminates in accordance with
the terms and conditions of this Agreement.
"Contract Price" means Japanese Yen Four Billion Three
Hundred Million (Y4,300,000,000).
"Debt" of any Person means at any date, without
duplication, (i) all obligations of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (iii) all obligations of such
Person to pay the deferred purchase price of property or services,
except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee or
charterer under capital leases or ship charter party agreements,
(v) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, and
(vi) all Debt of others directly or indirectly guaranteed by such
Persons (by way of take-or-pay or financial maintenance
arrangements or otherwise).
"Delivery Date" means the date (such date to be a
Business Day) on which the Vessel is delivered by Contractor and
Builder to the Owner seaworthy and ready for immediate commercial
service in accordance with the terms and conditions of, including
the specifications set forth in, the Purchase Agreement and the
terms and conditions provided for in the Protocol of Delivery and
Acceptance and other documents required by Article VII of the
Purchase Agreement to be delivered or obtained on or prior to the
delivery of the Vessel.
"Drawdown Date" means either the First Drawdown Date or
the Second Drawdown Date as the context requires.
"Event of Default" has the meaning set forth in Section
9.01 hereof.
"Final Contract Price" means the price of the Vessel on
the Delivery Date as determined in accordance with the terms of the
Purchase Agreement without reference to any post delivery
adjustments.
"First Drawdown Date" means the date that is two (2)
Business Days after the date Vessel is launched at the Builder's
shipyard.
"Funding Loss" has the meaning set forth in Section 7.02
hereof.
"Guarantor" or "Guarantors" means OMI Corp., a Delaware
corporation, having its principal place of business at 90 Park
Avenue, New York, New York 10016, U.S.A. ("OMI"); IMC HOLDINGS
LIMITED, a Bermuda corporation, having its registered office at
Cedar House, 41 Cedar Avenue, Hamilton, Bermuda ("IMCH"); and IMC
Development & Management Ltd., a Hong Kong corporation, having its
principal place of business at Suite 703, One Pacific Place, 88
Queensway, Hong Kong ("IMCDM").
"Guaranty" means each of the irrevocable and
unconditional several guarantees of the Guarantors, guaranteeing in
each case a portion, and in the aggregate all of, the payment of
all sums and performance of all other obligations by the Borrower
and the Owner to the Lender hereunder, and under the Interim Note
and the Note, such Guarantees to be substantially in the form
attached hereto as Exhibit A and dated as of the First Drawdown
Date.
"Interest Payment Date" means (A) in the case of the
period from the Launching Date through the Delivery Date on the
last day of each Interest Period, and (B) in the case of the period
commencing with the Delivery Date and ending on the Termination
Date, (i) if the Borrower selects a three (3) month Interest
Period, then on the last day of such Interest Period; (ii) if the
Borrower selects a six (6) month or twelve (12) month Interest
Period, then on each Principal Payment Date falling within such
Interest Period and on the last day of such Interest Period.
"Interest Period" means (A) in the case of the period
from the Launching Date through the Delivery Date, the period
commencing on the First Drawdown Date and ending one (1) month
thereafter, and subsequent Interest Periods shall commence on the
expiration date of the immediately preceding Interest Period and
expire one (1) month thereafter or on the Delivery Date, whichever
shall occur first, and (B) in the case of the period commencing
with the Delivery Date and ending on the Termination Date, the
period commencing on the Second Drawdown Date and ending three (3),
six (6) or twelve (12) months thereafter as the Borrower may
select, and subsequent Interest Periods shall commence on the
expiration date of the immediately preceding Interest Period and
expire three (3), six (6) or twelve (12) months thereafter as the
Borrower may select; provided that (i) if any Interest Period ends
on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such Business
Day occurs in a new calendar month, in which case such Interest
Period will end on the immediately preceding Business Day; and (ii)
no Interest Period may be selected which would end after the
Termination Date.
"Interest Rate" means, for any one (1), three (3), six
(6) or twelve (12) month Interest Period, the rate per annum
(rounded upward, if necessary, to the nearest 1/100 of one percent)
equal to the Euro-Dollar Offered Rate for such Interest Period on
such day, as quoted on Telerate page 314 (or, if such Euro-Dollar
Offered Rate is not so quoted, the rate that the Lender determines
in its sole discretion to be a reasonable estimation of such Euro-
Dollar rate in light of all relevant circumstances at the time of
such determination) as of 10:00 a.m. (New York time) two (2)
Business Days prior to the first day of the applicable Interest
Period plus one point two five percent (1.25%).
"Interest Renewal Date" means the date on which each
subsequent Interest Period commences following the expiration of
the immediately previous Interest Period.
"Interim Note" means the promissory note of the Borrower
substantially in the form of Exhibit B attached hereto and dated as
of the First Drawdown Date in the principal amount of the First
Instalment of the Loan Amount.
"Launching Date" means the date the Owner receives from
the Contractor a facsimile copy of a statement by the
Classification Society confirming that the Vessel has been launched
at the Builder's shipyard.
"Lender" means Larsen Ship Finance Co., a Liberian
corporation, and its successors and assigns.
"Lien" means with respect to any asset, any mortgage,
deed of trust, lien, pledge, charge, security interest or
encumbrance of any kind, including without limitation, the interest
of a mortgagee under any ship mortgage.
"Loan Amount" or "Loan" means the loan made by the Lender
to the Borrower pursuant to Article II hereof and as such amount
remains outstanding from time to time after the First or Second
Drawdown Date, as applicable.
"Note" means the promissory note of the Borrower
substantially in the form of Exhibit C attached hereto dated the
Second Drawdown Date and in the principal amount of the Loan.
"Notice of Borrowing" means the notice provided for in
Section 2.02 hereof substantially in the form of Exhibit D attached
hereto.
"Owner" means Hayes Navigation Co. Pte. Ltd., a Singapore
corporation having a registered office at #23-00 Shaw Towers, 100
Beach Road 0718, Singapore, all of the issued and outstanding
capital shares of which shall be owned of record by the Borrower as
of the First Drawdown Date.
"Person" means an individual, a corporation, a
partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an
agency or instrumentality thereof.
"Principal Payment Date" means each of the twenty (20)
successive semi-annual dates commencing six (6) months after the
Second Drawdown Date as tabulated in the Principal Repayment
Schedule attached hereto and made a part hereof; provided that if
any Principal Payment Date falls on a day other than a Business
Day, such Principal Payment Date shall be extended to the next
succeeding Business Day unless such Business Day occurs in a new
calendar month, in which case such Principal Payment Date shall be
the immediately preceding Business Day.
"Protocol of Delivery and Acceptance" means one of the
delivery documents between Contractor and the Owner pursuant to
which Contractor delivers the Vessel to Owner and the Owner accepts
same.
"Second Drawdown Date" means the Delivery Date of the
Vessel to Owner from Contractor.
"Termination Date" means the date that is one hundred and
twenty (120) months after the Second Drawdown Date.
ARTICLE II
THE LOAN
SECTION 2.01 COMMITMENT TO LEND AND PURPOSE OF THE LOAN
(a) During the Commitment Period, the Lender agrees, on
the terms and subject to the conditions set forth in this
Agreement, to lend to the Borrower in the aggregate the lesser of
(i) sixty-five percent (65%) of the United States Dollar equivalent
(as calculated on the applicable Drawdown Dates) of the Final
Contract Price and (ii) Twenty Six Million United States Dollars
(US$26,000,000.00) (the "Loan Amount" or the "Loan").
(b) The Borrower agrees that it will pay all of the
proceeds of the Loan directly to the Owner or its order who will
solely and exclusively use such proceeds for the payment or
reimbursement of the costs related to the construction of the
Vessel.
SECTION 2.02 METHOD OF BORROWING
(a) During the Commitment Period and subject to the
terms and conditions of this Agreement, the Borrower shall be
permitted to drawdown the Loan in two installments. The first
installment of the United States Dollar equivalent of fifteen
percent (15%) of the Contract Price shall be drawndown on the First
Drawdown Date (the "First Installment"). The second installment of
the remaining Loan Amount shall be drawndown on the Second Drawdown
Date (the "Second Instalment"). The amount of the Second Installment
shall be determined by subtracting the principal amount of the
First Installment (plus other amounts due hereunder) from the figure
equal to sixty five percent (65%) of the United States Dollar
equivalent of the Final Contract Price, provided, however, that the
combined total of the First and Second Installments shall not
exceed US$26,000,000.
(b) The Borrower shall give the Lender by telex or
facsimile a notice (a "Notice of Borrowing") not later than seven
(7) Business Days prior to the applicable Drawdown Date certifying
that all applicable conditions specified in Article III have been
satisfied or will have been satisfied on or prior to such Drawdown
Date, and, in the case of the Second Installment, specifying its
selection of the initial Interest Period and requesting the
drawdown of the applicable Instalment of the Loan Amount.
(c) After receipt of the applicable Notice of Borrowing
by the Lender, such Notice of Borrowing shall not be revocable by
the Borrower, unless the Launching Date or the Delivery Date, as
applicable, has been postponed and the Borrower agrees to pay the
costs and expenses (including any Funding Losses), if any,
incurred by the Lender due to such postponement.
(d) On the applicable Drawdown Date, the Lender shall,
unless the Lender determines that any applicable condition
specified in Article III has not been fully satisfied, make
available by telegraphic or other electronic transfer that
instalment of that portion of the Loan Amount as provided in
Section 2.02(a) above (minus any fees due and payable as set forth
in this Agreement) in immediately available United States Dollar
funds to the Borrower's account, or order, as designated in the
Notice of Borrowing. The drawdown of the Second Instalment shall
constitute the Lender's complete fulfillment of its loan commitment
assumed hereunder and the Second Drawdown Date shall be deemed the
date of the Borrower's receipt of the full Loan Amount.
(e) The Borrower shall pay any expenses, charges or fees
incurred by the Lender in connection with the transfer of the Loan
Amount upon receipt of a certificate from the Lender setting forth
the amount of such expenses, charges or fees, which certificate
shall be deemed conclusive in the absence of manifest error.
SECTION 2.03 NOTES
(a) The First Installment of the Loan Amount shall be
evidenced by the Interim Note payable to the order of the Lender in
an amount equal to the U.S. Dollar equivalent of fifteen percent
(15%) of the Contract Price, and bearing interest as provided in
Section 2.05 hereof.
(b) On the Second Drawdown Date, the Interim Note shall
be retired and the principal amount outstanding thereunder shall be
combined with the Second Instalment of the Loan made by the Lender
and the combined amount shall be evidenced by the Note payable to
the order of the Lender in an amount equal to the amount of the
Loan, and bearing interest as provided in Section 2.05 hereof.
(c) The Lender shall record, and prior to any transfer
of the Interim Note or the Note, shall endorse on the schedule
forming a part thereof appropriate notations to evidence the date
and amount of each payment of principal made by the Borrower with
respect thereto; provided that the failure of the Lender to make
any such recordation or endorsement shall not affect the
obligations of the Borrower hereunder or under such note. The
Lender is hereby irrevocably authorized by the Borrower to so
endorse such Interim Note or Note and to attach to and make a part
of such note a continuation of such schedule as and when required.
SECTION 2.04 REPAYMENT OF LOAN
Principal of the Loan shall be repaid on each Principal
Payment Date in accordance with the Principal Repayment Schedule
attached hereto. Notwithstanding the Principal Repayment Schedule,
on the 20th Principal Payment Date, the Borrower shall pay all
outstanding amounts due under this Agreement and the Note,
including without limitation any outstanding principal, interest,
fees, costs, losses or expenses.
SECTION 2.05 INTEREST
(a) The Loan shall bear interest on the outstanding
principal amount thereof for each day from the Drawdown Date until
it becomes due, at the Interest Rate in effect for each Interest
Period. Accrued interest shall be payable in arrears by the
Borrower on each Interest Payment Date.
(b) Not later than three (3) Business Days prior to the
expiration of each Interest Period commencing with the Interest
Period ending on the Delivery Date, the Borrower shall give Lender
written notice of Borrower's selection of the duration of the next
succeeding Interest Period. In the event that Lender does not
receive proper notice as to the Borrower's selection of the next
Interest Period, then such Interest Period shall be six (6) months.
SECTION 2.06 OVERDUE INTEREST
Any overdue principal of and, to the extent permitted by
law, overdue interest on the Loan and any overdue fees ("Overdue
Amounts") shall bear interest (after as well as before judgment)
for each day until paid in full at the rate that is two percent
(2%) per annum above the Interest Rate then in effect. Overdue
Amounts and accrued interest thereon payable under this Section
2.06 shall be payable on demand of the Lender without notice or
presentment.
SECTION 2.07 COMMITMENT AND CLOSING FEES
(a) The Borrower shall pay to the Lender a commitment
fee at the rate of point four percent (0.4%) per annum on the
unused portion of the maximum Commitment outstanding from time to
time. For purposes of this clause 2.07(a) the unused portion of the
Commitment shall be determined by deducting amounts drawndown
hereunder from $26,000,000. Such commitment fees shall accrue from
and including the date hereof to and including the Second Drawdown
Date and shall be payable quarterly in arrears commencing three
months from the date hereof and on the Second Drawdown Date;
provided that if the date of any such payments falls on a day which
is not a Business Day, then such payment will be extended to the
next succeeding Business Day.
(b) The Borrower shall pay the Lender a single closing
fee of one percent (1.0%) of the Loan Amount on the Second Drawdown
Date.
The closing fee and any outstanding commitment fees shall
be deducted from the proceeds of the Loan on the Second Drawdown
Date.
SECTION 2.08 PREPAYMENTS
(a) The Borrower may, at its option, prepay the whole or
any part of the Loan Amount on the last day of an Interest Period,
provided, however, that the Borrower shall give Lender not less
than thirty (30) days prior written notice of Borrower's intention
to prepay stating the date and amount of such prepayment, and that
in case of partial prepayment, the amount of any principal
prepayment shall be One Hundred Thousand United States Dollars (US
$100,000.00) or an integral multiple thereof. No part of the Loan
Amount or interest thereon paid, repaid or prepaid hereunder may be
re-borrowed hereunder at any time.
(b) Except as otherwise provided herein, notice of any
intended prepayment of the Loan Amount stipulated herein shall be
irrevocable and binding upon the Borrower and such principal
amount and accrued interest thereon shall be due and payable on the
date specified in such notice.
(c) Notwithstanding sub-paragraph (a) hereof, in the
event that the Owner sells or otherwise transfers ownership of the
Vessel, the Borrower shall prepay the Loan Amount in full together
with accrued interest thereon and any other amounts which may be
due hereunder on the date of closing of such sale or transfer. The
Borrower shall give the Lender written notice of such sale or
transfer at least ten (10) Business Days prior to the closing,
provided, however, that such notice may be revoked and the Borrower
shall not be obligated to prepay the Loan Amount if the sale or
transfer is not consummated for reasons not attributable to the
Borrower or the Owner and the Borrower gives the Lender prior
written notice of such revocation no later than two (2) Business
Days prior to the scheduled date of such closing. In connection
with such a revocation of notice, the Borrower shall pay any costs
and expenses (including Funding Losses), if any, incurred by the
Lender as a result thereof.
(d) Any part of the Loan Amount prepaid hereunder shall
be credited in inverse order of maturity of the Loan Amount as set
forth in Section 2.04 hereof.
(e) In addition to the prepayment amount, the Borrower
shall pay any and all banking charges, penalties, finance charges,
costs and expenses (including Funding Losses) incurred by the
Lender as a result of such prepayment.
(f) Notwithstanding any other provision hereof or of the
Interim Note or the Note, all amounts theretofore drawndown
hereunder shall become immediately due and payable upon the
termination or cancellation of the Purchase Agreement prior to the
delivery of the Vessel or upon the expiration of the Commitment
Period prior to the Delivery Date.
SECTION 2.09 GENERAL PROVISIONS AS TO PAYMENTS
All sums payable to the Lender under this Agreement and
the Interim Note or the Note, including without limitation payments
of principal and interest and any fees, costs, or expenses shall be
paid not later than 11:00 A.M. (New York time) on the date when
due, in United States Dollar funds immediately available in New
York, to the bank account designated by Lender in its discretion.
If the date for any payment of principal is extended by
operation of law or otherwise, interest thereon shall be payable
for such extended time.
SECTION 2.10 COMPUTATION OF INTEREST AND FEES
Interest on the Loan under Sections 2.05 and 2.06 shall
be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed, calculated as to each period
established pursuant to Sections 2.05 and 2.06 and from and
including the first day thereof but excluding the last day thereof.
ARTICLE III
CONDITIONS TO BORROWING
The obligation of the Lender to make the Loan pursuant to
Article II hereof is subject to the satisfaction of all of the
following conditions precedent, satisfaction of which shall be
determined by the Lender:
(a) Authorizations
On or before the First Drawdown Date the Lender
shall have received, in form and substance satisfactory
to it, the following documents (with a certified
translation if the original is not in English):
(i) copies of the Articles of Incorporation and
By-laws, as amended to date (or equivalent
documents), of the Borrower certified by an
authorized director or officer of the Borrower to
be true copies and currently in full force and
effect;
(ii) copies of the Articles of Incorporation and
the By-laws, as amended to date (or equivalent
documents), of the Owner and the Guarantors
certified by a duly authorized director or officer
of the Owner and each Guarantor to be true copies
and currently in full force and effect;
(iii) certified copies of (X) the resolutions of
the Board of Directors of the Borrower approving
this Agreement, the Interim Note, the Note and such
other documents to be delivered by it in connection
herewith or therewith and (Y) all other documents
evidencing any necessary corporate action of the
Borrower, if any, with respect thereto;
(iv) certified copies of (X) the resolutions of
the Board of Directors of Owner and each Guarantor
approving in the case of the Owner, this Agreement
and the Mortgage, and in the case of each
Guarantor, its Guaranty and such other documents to
be delivered by Owner and Guarantors in connection
herewith or therewith and (Y) all other documents
evidencing any necessary corporate action of Owner
and the Guarantors, if any, with respect thereto;
(v) a certificate of a director or proper officer
of the Borrower certifying as to the names and true
signatures of the directors or officers authorized
to sign this Agreement, the Interim Note, the Note
and the other documents to be delivered by it
hereunder or thereunder; and
(vi) a certificate of a director or proper officer
of Owner and each Guarantor certifying as to the
names and true signatures of the directors or
officers authorized to sign, in the case of the
Owner, this Agreement and the Mortgage, and in the
case of each Guarantor, its Guaranty and the other
documents to be delivered by it hereunder or
thereunder.
(b) Guarantees
On or before the First Drawdown Date, the Lender
shall have received the Guarantees duly executed and
delivered by each Guarantor.
(c) Notice of Borrowing
The Lender shall have received a Notice of Borrowing
as required by Section 2.02 hereof.
(d) Protocol of Delivery and Acceptance/Builders
Certificate
Contractor and Builder shall have performed all of
their obligations under the Purchase Agreement and on or
before the Delivery Date shall have delivered to the
Owner the Vessel and all documents required to be
delivered to the Owner under the Purchase Agreement and
the Lender shall have received from the Owner (i) a duly
executed copy of the Protocol of Delivery and Acceptance
(by facsimile or otherwise) formally accepting delivery
of the Vessel from Contractor to Owner, and (ii) a duly
executed Builder's Certificate (by facsimile or
otherwise).
(e) Vessel
On the Delivery Date the Vessel shall be owned by
the Owner free and clear of all liens, charges or
encumbrances, except for the Mortgage, and the Lender
shall have received the certificate of a duly authorized
officer of the Owner to such effect, and shall be duly
registered in the name of the Owner under the laws of the
Republic of Singapore, and shall have the classification
of NK NS* MNS*, M0, "Bulk Carrier, Strengthened for Heavy
Cargoes, Nos. 2, 4 & 6 Holds may be empty" as evidenced
by a certificate from the Classification Society as to
such classification and rating being in full force and
effect on the Delivery Date without any outstanding
recommendations or requirements.
(f) Notes
On or before the First Drawdown Date, the Lender
shall have received the Interim Note duly executed and
delivered by the Borrower and on or before the Second
Drawdown Date the Lender shall have received the Note
duly executed and delivered by the Borrower.
(g) Charter Assignment Agreement
The Owner shall have executed and delivered an
assignment of any charter party agreement relating to the
Vessel in effect on the Second Drawdown Date the duration
of which is twelve (12) months or greater substantially
in the form of Exhibit E attached hereto (the "Charter
Assignment").
(h) Creation of First Priority Statutory Ship Mortgage
A Singaporean First Priority Statutory Ship Mortgage
and attached Deed of Covenants substantially in the form
of Exhibit F attached hereto (for purposes of this
Agreement, the term "Mortgage" shall be deemed to include
the Mortgage and the attached Deed of Covenants) from the
Owner to the Lender covering the Vessel shall have been
duly executed, delivered and recorded on the Delivery
Date and all other actions required to be taken shall
have been taken so as to constitute the Mortgage as a
first priority statutory ship mortgage on the Vessel
under the laws of the Republic of Singapore.
(i) General Assignment of Earnings
The Owner shall have executed and delivered to the
Lender the General Assignment of Earnings substantially
in the form of Exhibit G attached hereto (the "General
Assignment of Earnings") assigning to the Lender all
right, title and interest of the Owner in and to all
earnings of the Vessel including, but not limited to, all
earnings (including, but not limited to, both gross hire
and positive net pool profit) from all charter parties of
whatever type to a pool.
(j) Assignment of Insurances
The Owner shall have executed and delivered to the
Lender an assignment substantially in the form of Exhibit
H attached hereto (the "Assignment of Insurances")
assigning to the Lender all right, title and interest of
the Owner in and to any and all policies, contracts or
entries relating to the insurances from time to time
covering the Vessel and all proceeds thereof.
(k) Purchase Agreement Assignment
The Owner shall have executed and delivered to the
Lender a Purchase Agreement Assignment substantially in
the form of Exhibit I attached hereto (the "Purchase
Agreement Assignment") assigning to the Lender, as
security only, all right, title and interest of the Owner
in and to the Purchase Agreement.
(l) Insurance
The Owner shall have at its own expense obtained the
insurance coverage as provided in Article VI and the
Mortgage together with endorsements naming the Lender as
loss payee and additional insured and shall have provided
the Lender with evidence of such coverage in form and
substance satisfactory to the Lender including a report
in reasonable detail by independent marine insurance
brokers (who may be marine insurance brokers regularly
employed by the Owner or Borrower) with respect to the
insurances maintained on the Vessel and its operation,
and the Lender shall be satisfied with such report.
(m) Pledge of Outstanding Shares of Owner
Borrower shall have executed and delivered to the
Lender the Stock Pledge Agreement substantially in the
form of Exhibit J attached hereto (the "Stock Pledge
Agreement"), covering all of the authorized, issued and
outstanding shares of stock of the Owner together with
(i) certificates representing the pledged shares; (ii)
undated stock powers for each such certificate executed
in blank; and (iii) evidence that all corporate actions
necessary to perfect and protect the Lender's interest in
the pledged shares have been taken.
(n) No Event of Default
There exists no Event of Default and no event that
with the giving of notice or the lapse of time or both
would constitute an Event of Default, and, on each
Drawdown Date, the Lender shall have received a
certificate of a duly authorized officer or director of
each of the Borrower, Owner and each Guarantor to such
effect.
(o) Representations and Warranties
The representations and warranties of the Borrower
and the Owner contained in this Agreement and the
Mortgage and of the Guarantors contained in the
Guarantees shall be true and correct on and as of each
applicable Drawdown Date, with the same effect as though
made on such date and any consents, licenses, approvals
or authorizations required by Article V, sub-paragraphs
(a) and (k) to have been obtained, shall have been duly
and timely obtained on or before the applicable Drawdown
Date, and the Lender shall have received the certificate
of a duly authorized officer or director of the Borrower
to such effect.
(q) Opinions of Counsel
The Lender shall have received from Fredric S.
London, Esq., counsel for OMI, and from counsel for
Borrower, IMCH and IMCDM (such counsel to be reasonably
satisfactory to Lender), favorable opinions, satisfactory
in scope, form and substance to the Lender and its
counsel, as to the legal matters set forth below, (i) the
due organization, existence and good standing of the
Borrower, and each of the Guarantors, (ii) the corporate
power, authority and legal right of the Borrower, and
each of the Guarantors to execute and perform their
respective obligations under this Agreement and under
each of the other documents referred to herein, (iii) the
due authorization of all acts and things to be done by
the Borrower, and each of the Guarantors in connection
with the transactions hereby contemplated, and (iv) the
due execution and delivery of this Agreement, the Interim
Note, the Note and the Collateral (as such term is
defined in Article IV).
(r) Pledge and Assignment
The Owner shall have delivered, or caused to have
been delivered, to the Lender the Notice of Pledge and
Assignment and Acknowledgment and Consent in the forms
reasonably satisfactory to the Lender.
(s) Other Documents
The Lender shall have received such other approvals,
opinions, certificates, instruments, agreements and
documents as it may reasonably request, all in form and
substance satisfactory to the Lender.
(t) Proceedings and Documents
All corporate, governmental and other proceedings in
connection with the transactions contemplated hereby and
all instruments and documents incidental thereto shall be
in form and substance reasonably satisfactory to the
Lender, and the Lender shall have received all such
counterpart originals or certified or other copies of all
such instruments and documents as the Lender shall have
reasonably requested.
Unless otherwise specifically set forth above, the
documents and agreements referred to in this Article III (other
than the Notices of Borrowing) shall be delivered to the Lender, in
the case of the Guarantees, the Interim Note, the Purchase
Agreement Assignment, and the Stock Pledge Agreement, on or before
the First Drawdown Date and in the case of the remaining documents
referred to in this Article III on or before the Second Drawdown
Date.
ARTICLE IV
SECURITY
The Borrower's prompt and full payment to the Lender
and/or the subsequent holder of any Note issued hereunder, of the
principal, interest and any other amounts due hereunder or under
the Interim Note or the Note shall, to the extent applicable, be
secured by the following collateral (collectively, the
"Collateral"):
(a) the Mortgage;
(b) the Guarantees;
(c) the General Assignment of Earnings;
(d) the Assignment of Insurances;
(e) the Purchase Agreement Assignment;
(f) the Stock Pledge Agreement;
(g) the Deposit Account (as such term is defined in
Article VIII); and
(h) when executed and delivered, the Charter Assignment.
ARTICLE V
REPRESENTATIONS, COVENANTS AND WARRANTIES
The Borrower and the Owner hereby represent, covenant and
warrant as follows:
(a) The Borrower and the Owner are corporations duly
incorporated, validly existing and in good standing under the laws of
the Republic of Panama in the case of the Borrower and the Republic
of Singapore in the case of the Owner without limitation on the
duration of their existence and have all corporate powers and all
governmental licenses, authorizations, consents and approvals required
to own their respective assets and to carry on their respective
businesses as now conducted and proposed to be conducted and to
execute, deliver and perform their obligations under this Agreement
and under each of the documents executed or to be executed thereby
as contemplated herein.
(b) The execution, delivery and performance by the Borrower
and Owner (as applicable) of this Agreement, the Interim Note, the
Note, the Mortgage, the General Assignment of Earnings, the Assignment
of Insurances, the Purchase Agreement Assignment, the Stock Pledge
Agreement and the Charter Assignment are within the Borrower's and
Owner's respective corporate power and authority and have been duly
authorized by all necessary corporate action.
(c) The execution, delivery and the performance by the
Borrower and the Owner of their respective obligations under this
Agreement, the Interim Note, the Note, the Mortgage, the General
Assignment of Earnings, the Assignment of Insurances, the Purchase
Agreement Assignment, the Stock Pledge Agreement and the Charter
Assignment do not and will not (i) violate or conflict with any
provision of law, statute, rule, regulation, treaty or convention
or any order, writ, injunction, license, permit, ruling, regulation,
decree or judgment of any court or governmental or regulatory body,
agency, commission, tribunal or other authority in the jurisdiction
of which they are subject, (ii) result in, or require, the creation
or imposition of any Lien on any of the properties or assets now
owned or hereafter acquired by the Borrower or the Owner except
in favor of the Lender, (iii) violate or conflict with the
Borrower's or the Owner's Certificate of Incorporation or By-laws
(or equivalent documents) or (iv) violate or conflict with, or
constitute, with notice or lapse of time or both, a default under
any of the terms, conditions or provisions of any agreement,
judgment, injunction, order, decree or other instrument to which
the Borrower or the Owner is a party or by which the Borrower
or the Owner is bound or to which any of the Borrower's or
the Owner's properties, assets or business are subject.
(d) This Agreement has been duly and validly executed
and delivered by the Borrower and the Owner and constitutes the
valid and binding obligation of the Borrower and the Owner
enforceable in accordance with its terms, and the Interim
Note, the Note, the Mortgage, the General Assignment of
Earnings, the Assignment of Insurances, the Purchase Agreement
Assignment, the Stock Pledge Agreement, and the Charter
Assignment when executed and delivered, will constitute the valid
and binding obligations of the Borrower and the Owner, each
enforceable in accordance with its respective terms.
(e) (i) The balance sheet of the Borrower as of June
30, 1993 and the profit and loss statement of the
Borrower for the six month period then ended as
certified by an appropriate officer of the
Borrower, copies of which have been delivered to
the Lender, fairly present, in conformity with
generally accepted accounting principles applied on
a consistent basis, the financial position of the
Borrower as of such date and its results of
operations and changes in financial position for
such six month period.
(ii) Since June 30, 1993, there has been no
material adverse change in the business, financial
position, results of operations or prospects of the
Borrower or the Owner.
(f) (i) There is no action, suit or proceeding pending
against, or to the knowledge of the Borrower
threatened against or affecting, the Borrower or
its properties before any court or arbitrator or
any governmental body, agency, official or other
instrumentality in Panama or elsewhere or before
any privately constituted panel which, if adversely
determined, could materially adversely affect the
business, financial position or results of
operations of the Borrower or the validity or
enforce to any order, writ, decision, injunction,
decree or demand of any court or federal, state,
municipal or other governmental department,
commission, board, bureau, agency or other
instrumentality, domestic or foreign, or of any
privately constituted panel.
(ii) There is no action, suit or proceeding
pending against, or to the knowledge of the Owner
threatened against or affecting, the Owner or its
properties before any court or arbitrator or any
governmental body, agency, official or other
instrumentality in Singapore or elsewhere or before
any privately constituted panel which, if adversely
determined, could materially adversely affect the
business, financial position or results of
operations of the Owner or the validity or
enforceability of, or the ability of the Owner to
perform any of its obligations under this
Agreement, the Mortgage, the General Assignment of
Earnings, the Assignment of Insurances, the
Purchase Agreement Assignment or the Charter
Assignment and the Owner is not in default with
respect to any order, writ, decision, injunction,
decree or demand of any court or federal, state,
municipal or other governmental department,
commission, board, bureau, agency or other
instrumentality, domestic or foreign, or of any
privately constituted panel.
(g) None of the assets of the Borrower or the Owner is
subject to any mortgage, lien, pledge, charge or other encumbrance,
except in favor of the Lender.
(h) Neither the Borrower nor the Owner is in default,
and no condition exists which with notice or lapse of time or both
would constitute a default, under any term, condition or covenant
or provision of any agreement or other instrument to which it is
a party or by which it is bound or to which any of its properties,
assets or businesses are subject which could result in a material
adverse change in or affecting its business, financial position or
results of operations or materially adversely affect its ability to
perform any of its respective obligations under this Agreement,
the Interim Note, the Note, the Mortgage, the General Assignment
of Earnings, the Assignment of Insurances, the Purchase Agreement
Assignment, the Stock Pledge Agreement, the Charter Assignment or
the Purchase Agreement and neither the Borrower nor the Owner is
in default under any judgment, order, writ, injunction or decree
of any court, arbitrator or governmental department, commission,
board, agency or instrumentality, domestic or foreign, which
default would materially adversely affect its ability to
perform any of their respective obligations under this Agreement,
the Interim Note, the Note, the Mortgage, the General Assignment
of Earnings, the Assignment of Insurances, the Purchase Agreement
Assignment, the Stock Pledge Agreement, the Charter Assignment
or the Purchase Agreement. None of the Owner, the Contractor or the
Builder is in default and no condition exists which with
notice or lapse of time or both would constitute a default, under
any term, condition or covenant of the Purchase Agreement.
(i) All of the issued and outstanding shares of the
capital stock of the Owner have been duly authorized,
validly issued and are fully paid and non-assessable and
constitute all of the authorized shares of the Owner's capital
stock, which consists only of one class. All of such
shares are owned by the Borrower free of any liens,
charges or encumbrances thereon or affecting title thereto other
than the lien of the Stock Pledge Agreement in favor of
the Lender.
(j) The Owner does not have any security agreements or
financing statements outstanding under the Uniform Commercial
Code of any state of the United States of America with respect
to its assets, except security agreements and financing
statements in favor of the Lender.
(k) (i) The Borrower, the Owner and OMI are in
compliance with all applicable United States
federal, state, local, foreign and international
laws, regulations, conventions and agreements
relating to pollution prevention or protection of
human health or the environment (including,
without limitation, ambient air, surface water,
ground water, navigable waters, water of the
contiguous zone, ocean waters and international
waters), including without limitation, laws,
regulations, conventions and agreements relating to
(1) emissions, discharges, releases or threatened
releases of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous materials, oil, hazardous
substances, petroleum and petroleum products and
by-products ("Materials of Environmental Concern"),
or (2) the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling
of Materials of Environmental Concern (such laws,
regulations, conventions and agreements hereinafter
called, "Environmental Laws"); (ii) the Borrower,
the Owner and OMI have all permits, licenses, approvals,
rulings, variances, exemptions, clearances, consents or
other authorizations required under applicable Environmental
Laws ("Environmental Approvals") and are in full compliance
with all Environmental Approvals required to operate their
businesses as presently conducted or as reasonably
anticipated to be conducted; (iii) neither of the
Borrower, the Owner nor any Guarantor has received any
notice, claim, action, cause of action, investigation or
demand by any other person, entity, enterprise or government,
political subdivision, intergovernmental body or agency,
department or instrumentality thereof alleging, in the
case of the Borrower and the Owner, potential liability
for, and in the case of the Guarantors, material potential
liability for, or a requirement to incur, investigatory
costs, cleanup costs, response and/or remedial costs
(whether incurred by a governmental entity or otherwise),
natural resources damages, property damages, personal
injuries, attorneys' fees and expenses, or fines or
penalties, in each case arising out of, based on or resulting
from (1) the presence, or release or threat of release
into the environment, of any Material of Environmental
Concern at any location, whether or not owned by such
person, or (2) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law or
Environmental Approval ("Environmental Claim") (other than
Environmental Claims that have been fully and finally
adjudicated or otherwise determined and all fines, penalties
and other costs, if any, payable by the Borrower, the Owner
and/or any Guarantor in respect thereof have been paid
in full); and (iv) there are no circumstances that may prevent
or interfere with such full compliance in the future.
(l) There is no Environmental Claim pending or threatened
against the Borrower or the Owner or any material Environmental Claim
pending or threatened against any Guarantor.
(m) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge or disposal of any
Materials of Environmental Concern that could form the basis of any
Environmental Claims against the Borrower, the Owner or OMI.
(n) Neither the Borrower nor the Owner is insolvent nor
will be rendered insolvent by the transactions contemplated by this
Agreement and the related documents to be executed and delivered in
connection herewith; nor will the Borrower or the Owner be left
with an unreasonably small capital with which to engage in its
anticipated business; nor will the execution, delivery and
performance hereof or the other documents constituting the Collateral
constitute or give rise to a fraudulent conveyance affecting the
obligations of the Borrower or the Owner to the Lender.
(o) There is no merger, consolidation, or sale or
disposition of any material portion of the assets of the Owner or
the Borrower pending or contemplated.
(p) All representations, covenants and warranties made
herein and in any certificate or other document delivered pursuant
hereto or in connection herewith shall survive the making of the
Loan and the issuance of the Interim Note or the Note to be issued
by the Borrower hereunder.
ARTICLE VI
COVENANTS
The Borrower and the Owner covenant and agree that, so
long as the Lender has any Commitment hereunder or any amount or
amounts payable hereunder or under the Interim Note or the Note
remain unpaid:
Section 6.01 Information
The Borrower will deliver to the Lender:
(a) Immediately when available but in any event within
one hundred eighty (180) days after the end of each fiscal
year of each of OMI, IMCH, the Borrower and the Owner, the
balance sheet of each of OMI, IMCH, the Borrower and its
consolidated subsidiaries and of the Owner as of the end
of such fiscal year and the consolidated profit and loss
statements of each of OMI, IMCH and the Borrower and the profit
and loss statement of the Owner for such fiscal year
(including all related schedules), setting forth in each
case in comparative form the figures for the previous fiscal year
all in reasonable detail and certified (without any qualification
or exceptions deemed material by the Lender) in the case of OMI by
Deloitte & Touche, and in the case of IMCH, the Borrower and the
Owner by Coopers & Lybrand or such other firms of certified
public accountants with a recognized first class reputation in
the United States, Bermuda, Singapore or Hong Kong as applicable
and reasonably satisfactory to the Lender;
(b) Immediately when available but in any event within
ninety (90) days after the end of the first three quarters
of each fiscal year in the case of OMI, and in the case of
the Borrower, the Owner and IMCH after the end of the first six
month period of each fiscal year, a balance sheet of each
of OMI, IMCH, the Borrower and its consolidated subsidiaries, and the
Owner as of the end of such applicable period and the profit and
loss statements of each of OMI, IMCH, the Borrower, and of the
Owner for such applicable period and for the portion of each's
fiscal year ended at the end of such period (including all
related schedules), all certified (subject to normal year-end
adjustments) by an authorized director or officer of each as to
fairness of presentation and conformity with generally accepted
accounting principles consistently applied;
(c) Simultaneously with the delivery of each set of
financial statements referred to in clauses (a) and (b)
above, a certificate of an authorized director or officer of the
Borrower and the Owner, stating whether there exists on the
date of such certificate any Event of Default or any event
which with notice or lapse of time or both would constitute an
Event of Default and, if any Event of Default or any such
condition then exists, setting forth the details thereof and the action
which the Borrower and/or the Owner is taking or proposes to
take with respect thereto;
(d) forthwith upon the occurrence of any Event of Default
or any event which with notice or lapse of time or both would
constitute an Event of Default, a certificate of an
authorized director or officer of the Borrower and/or the Owner
setting forth the details thereof and the action which the
Borrower and/or the Owner is taking or proposes to take with respect
thereto;
(e) forthwith upon Borrower and/or the Owner becoming
aware of any legal or arbitration proceedings, or of any
proceedings before any governmental or regulatory agency, affecting
the Borrower and/or the Owner which if adversely determined could
have a material adverse effect on the consolidated financial condition
or operations, or the prospects or business taken as a whole of
either or both ("Material Adverse Effect") or in any event
seeking to recover or assess damages in excess of $100,000, a civil
fine or penalty in excess of $50,000 or any criminal fine or penalty,
a notice setting forth the details thereof and any action which the
Borrower and/or the Owner is taking or proposes to take with respect
thereto;
(f) forthwith upon the Borrower's becoming aware of the
occurrence of any of the following conditions Borrower shall
provide the Lender with a certificate of a director or the principal
officer of the Borrower, the Owner or the affected Guarantor, as
the case may be, specifying in detail the nature of such condition and
its or their proposed response thereto: (1) the receipt by the
Borrower, the Owner or any Guarantor of any Environmental Claim, if such
Environmental Claim could reasonably be expected to result in a
Material Adverse Effect, (2) the Borrower, the Owner or any Guarantor
shall obtain actual knowledge that there exists any Environmental
Claim pending, threatened or reasonably likely against any thereof,
which individually or in the aggregate could reasonably be expected
to have a Material Adverse Effect, or (3) in the case of the
Borrower, the Owner or OMI any release, emission, discharge or
disposal of any Material of Environmental Concern that could form the
basis of any Environmental Claim against the Borrower, the
Owner or OMI relating to any of the Collateral, if such Environmental
Claim could reasonably be expected to have a Material Adverse Effect.
Upon the written request of the Lender, the Borrower, the Owner or
the affected Guarantor, as the case may be, will submit to the
Lender at reasonable intervals, a report providing an update of the
status of any issue or claim identified in any notice or certificate
required pursuant to this subsection.
(g) from time to time such additional information
regarding the financial position or business of the Owner and the Borrower
as the Lender may reasonably request.
Section 6.02 Payment of Obligations
Each of the Borrower and the Owner will (i) pay and
discharge all tax obligations and liabilities, assessments and
governmental charges or levies imposed upon it or its income or
property or upon the interest payable hereunder or any transaction
contemplated herein, including, but not limited to, stamp duties,
except where the same may not yet be due and payable or are being
contested in good faith by appropriate proceedings, and each of
them will maintain in accordance with generally accepted accounting
principles, appropriate reserves for the accrual of any of the same
and (ii) pay, or cause to be paid, the principal of, and premium,
if any, and interest on, any indebtedness thereof at the times and
in the manner specified in the agreements regarding such
indebtedness.
Section 6.03 Vessel's Documents
As soon as available but in any event within ten (10) days
of the Delivery Date, the Borrower shall furnish Lender with copies
of all required and necessary documents certified by the Secretary
of the Borrower evidencing that the Vessel is duly documented and
registered under the Singaporean flag and is class maintained,
including:
(i) Provisional Certificate of Registry
(ii) Ship Radio Station License
(iii) Safety Equipment Certificate
(iv) International Load Line Certificate
(v) Others reasonably stipulated by the Lender.
Section 6.04 Maintenance of Vessel and Properties
The Borrower shall cause the Owner to, and the Owner
shall, keep the Vessel seaworthy and maintain and keep the Vessel
and all properties used or useful in the conduct of its business in
good condition, repair and working order and supplied with all
necessary equipment and make, or cause to be made, all necessary
repairs, renewals and replacements thereof so that the business
carried on in connection therewith and every portion thereof may be
properly and advantageously conducted at all times.
Section 6.05 Insurance
During the term hereof, the Owner shall, at its own cost
and expense or at the cost and expense of the Borrower, cause to be
carried and maintained on the Vessel the insurance required by
Section 15 of the Deed of Covenants, including without limitation:
(i) marine (hull and machinery) and war risk insurance
with underwriters satisfactory to the Lender for the full insurable
value of the Vessel but in any event for not less than one hundred
twenty percent (120%) of the unpaid balance of the Loan Amount; and
(ii) Protection and Indemnity Insurance (including against
oil pollution liability) to the full extent commercially available,
or shall enter the Vessel in a Protection and Indemnity Insurance
Club, satisfactory to Lender.
All such insurances shall be payable in United States
Dollars and shall comply with the Mortgage and the Deed of
Covenants. In the event of any inconsistency between Sections 6.05
or 6.06 of this Agreement and Section 15 of the Deed of Covenants,
Section 15 of the Deed of Covenants shall control. All such
insurance shall be in the form and substance satisfactory to Lender
and shall be issued by, insurers and reinsurers reasonably
satisfactory to Lender. The Owner shall ensure that the slips,
cover notes, policies, certificates of entry or other instruments
of insurance issued or to be issued in connection with the
insurance shall name the Lender as an additional insured without
liability for premiums or calls, shall contain a "breach of
warranty" clause, shall provide for thirty (30) days advance notice
of cancellation for non-payment of premium and shall be endorsed
with a loss payable clause naming the Lender as loss payee all in
the form and substance satisfactory to the Lender.
Section 6.06 Mortgagee's Interest Insurance Additional Perils
The Lender, at its option, shall place Mortgagee's
Interest Insurance on the Vessel at the Owner's cost and expense in
the manner satisfactory to the Lender for marine (hull and
machinery) and war risk and to indemnify the Lender against
additional perils that arise as a direct consequence of the Vessel
and/or the Borrower and/or the Owner and/or operations and/or
charterers and/or managers and/or their servants and/or agents
responsible or liable for a discharge of oils, other petroleum
products and/or other hazardous substances for which the total
liability amounts payable in compensation for pollution damage and
clean up costs exceed amounts, if any, paid and/or recoverable
therefor either under the Owner's Policies and Club (including
excess liability insurance, if any) or as a consequence of a
compromised or discretionary settlement thereunder. The Borrower
shall pay to the Lender a sum equivalent to the amount of the
premium therefor if the Lender pays such premium.
Section 6.07 Employment of Vessel
The Borrower shall cause the Owner to employ the Vessel at
the best terms available thereto and perform all of the obligations
to be performed under and in connection with any contract of
affreightment, charter party or other agreement covering the
Vessel, the breach of which might have a Material Adverse Affect on
the financial condition of the Borrower or the Owner. The Borrower
shall not permit, and the Owner shall not, bareboat charter the
Vessel.
Section 6.08 Confirmation of Class Certificate
The Borrower will furnish, or cause to be furnished, to
the Lender a confirmation of class certificate covering the Vessel
at least once a year no later than sixty (60) days after the close
of each fiscal year. In the event such confirmation of class
certificate contains recommendations, the Borrower will promptly
furnish a statement from Owner as to the timing of the removal
thereof and when such repairs are complete, a certificate of
completion.
Section 6.09 Conduct of Business and Maintenance of Existence
The Borrower and the Owner will continue to, and will
only, engage in business of the same general type as now conducted
by each of them, and will preserve, renew and keep in full force
and effect their corporate existence and the rights, privileges and
franchises necessary or desirable in the normal conduct of their
businesses.
Section 6.10 Compliance with Laws
The Borrower will comply with all applicable laws,
ordinances, rules, regulations and requirements of governmental
authorities and the Owner will comply with all applicable maritime,
safety, environmental or other laws, ordinances, rules, regulations
and requirements of governmental authorities except where the
necessity of compliance therewith is contested in good faith by
appropriate proceedings, provided, however, that such contest will
not entail a material possibility of loss of any interest in the
Vessel.
Section 6.11 Inspection of Property, Books and Records
The Borrower and the Owner will keep proper books of
record and account in which full, true and correct entries in
conformity with generally accepted accounting principles shall be
made of all dealings and transactions in relation to their
respective businesses and activities; and will permit and will
cause any charterer of the Vessel to permit, representatives of the
Lender to visit and inspect the Vessel to examine and make
abstracts from any of their respective books and records relating
to the Vessel and to discuss their respective affairs, finances and
accounts with their respective officers, employees and independent
public accountants, at all reasonable times.
Section 6.12 Management of Vessel
The Borrower and the Owner will cause the Vessel to be
managed, for management fees not in excess of fees usually charged
by reputable ship management companies in arms' length transactions
for the management of vessels similar in type and trade to the
Vessel.
Section 6.13 Assignment of Charters
The Borrower will cause the Owner to assign, and the Owner
will assign, to the Lender any charter, contract of affreightment
or other contract to be performed by the Vessel and having a
duration in excess of twelve (12) months or greater, each such
assignment to be executed and delivered within thirty (30) days
after the execution and delivery of such charter, contract of
affreightment or other contract and to be in the form of the
Charter Assignment and, in each instance, if requested by the
Lender, shall use its best efforts to obtain the consent and
agreement of the charterer or contractee thereto, which consent and
agreement shall be in the form annexed to the Charter Assignment.
Any such charter and any such assignment shall be deemed included
as an item of the Collateral. All charters (except for when the
Vessel is chartered pursuant to a pooling arrangement) shall be
negotiated on an arms' length basis. All charter hire payments must
be made in freely convertible currencies.
Section 6.14 Vessel Earnings
All earnings of the Vessel (whether or not assigned to
Lender) shall be deposited into the Deposit Account.
Section 6.15 Minimum Value
From and after the Delivery Date, the "Fair Market Value"
(as defined below) of the Vessel shall at all times be equal to or
greater than one hundred percent (100%) of the then outstanding
Loan Amount. In the event that the Fair Market Value of the Vessel
ever falls below such amount, upon demand by the Lender, the
Borrower shall within fourteen (14) days (at Lender's option)
either: (i) pay the Lender in immediately available United States
Dollars the amount necessary to reduce the Loan Amount so that it
is equal to the Fair Market Value of the Vessel, or (ii) provide
additional security satisfactory to the Lender in its sole
discretion, such additional security to be held by Lender until
such time as the Fair Market Value of the Vessel exceeds one
hundred twenty percent (120%) of the then outstanding Loan Amount.
The "Fair Market Value" of the Vessel shall be determined on demand
by the Lender or the Borrower from time to time but not exceeding
four (4) times per year each by an appraisal thereof by an
experienced international shipbroking firm chosen by the Lender and
reasonably approved by the Borrower, the costs and expenses
incurred by the Lender or the Borrower for such appraisal to be
borne by the Borrower.
Section 6.16 Collateral
The Borrower will cause all parties to the Collateral to
comply with their obligations thereunder.
Section 6.17 Consolidations, Mergers and Sales of Assets
Neither the Borrower nor the Owner will consolidate or
merge with or into any other Person, and neither the Borrower or
the Owner will sell, lease or otherwise transfer all or any
substantial part of its assets including, but not limited to, the
Vessel, to any other Person, including, but not limited to, the
Borrower, any Guarantor or affiliate of any of them unless upon the
consummation of such sale, merger or consolidation, the Loan Amount
and all other amounts which may be payable hereunder shall have
been repaid to the Lender.
Section 6.18 Agreements
The Owner will perform all of its obligations under the
Mortgage, the General Assignment of Earnings, the Assignment of
Insurances, the Purchase Agreement Assignment, the Charter
Assignment and any charter party agreements or other agreements
relating to the Vessel or this Agreement.
Section 6.19 Freedom from Arrest, Etc.
The Owner shall maintain or cause the Vessel to be free
from any arrest, seizure or confiscation (other than an arrest by
Lender under the Mortgage) and shall promptly cause the release of
the Vessel if any such event occurs.
Section 6.20 Indebtedness
The Borrower will not permit the Owner to, nor will the
Owner, create, assume, incur or become or be or remain liable,
directly or indirectly, in respect of any indebtedness except: (i)
indebtedness to the Lender; and (ii) current indebtedness or
obligations (other than indebtedness for borrowed monies) which
shall not have been due and payable for more than 60 days and
incurred in the normal course of its business.
Section 6.21 Guaranties, etc.
The Borrower will not permit the Owner to, nor will the
Owner, directly or indirectly assume, guaranty, endorse or become
liable on the obligation of any person, firm or corporation, or
suffer to exist any such assumption, guaranty, endorsement or
liability, except: (i) in favor of the Lender; and (ii) for the
endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of its business.
Section 6.22 Liens, etc.
The Borrower will not permit the Owner to, nor will the
Owner, create, assume or incur, or suffer to be created, assumed or
incurred or to exist, any mortgage, lien, pledge, charge or other
security interest or encumbrance of any kind in respect of any
property of any character thereof, whether heretofore or hereafter
acquired, except for mortgages, liens, pledges, charges or other
security interests or encumbrances expressly provided for herein or
in the documents referred to herein.
Section 6.23 Negative Pledge
Except to the Lender, the Owner will not grant a security
interest in or otherwise assign or pledge any part of its right,
title and interest in and to (i) any of its assets wherever
situated or (ii) any charter, contract of affreightment or other
contract to be performed by the Vessel.
Section 6.24 Stock Purchase, Redemption, Distribution or Dividend
So long as an Event of Default shall have occurred and be
continuing, the Owner will not, and the Borrower will not permit
the Owner to, make any purchase or redemption of, or distribution
on, or declaration or payment of any dividend with respect to, any
of its stock.
Section 6.25 Loans, Advances and Investments
The Owner will not make or suffer to exist any loan or
advance to, or make or suffer to exist any investment in, any
person, firm or corporation (including affiliates), whether by
acquisition of stock or indebtedness, by loan, guaranty or
otherwise, except for advances in the normal course of its business
and advances or loans to the Borrower so that the Borrower may make
payment of amounts due hereunder.
Section 6.26 Single Purpose
The Owner will not engage in any business other than the
ownership and operation of the Vessel.
Section 6.27 Capital Assets
The Owner will not purchase or acquire, or agree to
purchase or acquire, any capital assets other than the Vessel.
Section 6.28 Issuance or Disposition of Stock
The Owner will not issue or dispose of any shares of its
capital stock to any Person other than the Borrower.
ARTICLE VII
YIELD PROTECTION
CHANGE IN CIRCUMSTANCES
Section 7.01 Freedom from Taxes
All sums payable by the Borrower hereunder and under the
Interim Note or the Note, whether of principal, interest, fees,
costs, losses, expenses or otherwise, shall be paid in full, free
of any tax deductions or withholdings including, but not limited
to, stamp duties. In the event that the Borrower shall be required
by applicable laws to deduct or withhold in respect of any amounts
payable hereunder or under the Interim Note or the Note, the
Borrower shall pay such additional amounts to the holder of the
Interim Note or the Note as may be necessary in order that the
actual amount received after any such deduction or withholding
shall equal the amount that would have been received hereunder or
under the Interim Note or the Note if such deduction or withholding
were not required.
Section 7.02 Funding Losses
If the Borrower makes any payment of principal or interest
with respect to any Loan on any day other than the appropriate
Principal Payment Date and/or Interest Payment Date or if the
Borrower fails to borrow the Loan, or such borrowing is postponed,
after Notice of Borrowing has been given to the Lender in
accordance with Section 2.02, or notice of prepayment of the Loan
is given pursuant to Section 2.08(c), the Borrower shall reimburse
the Lender on demand for any resulting funding losses. "Funding
Losses" shall mean costs, losses or expenses incurred by Lender in
obtaining, liquidating or employing deposits from third parties.
The Lender shall deliver to the Borrower a certificate setting
forth the amount of such funding costs, losses or expenses, which
certificate shall be deemed conclusive in the absence of manifest
error.
Section 7.03 Illegality
If, after the date of this Agreement, the adoption of any
applicable law, rule or regulation, or any change therein, or any
change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by
the Lender with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for the Lender to make,
maintain or fund the Loan, the Lender shall so notify the Borrower,
whereupon the obligation of the Lender to make or maintain the Loan
shall be suspended until the Lender notifies the Borrower that the
circumstances giving rise to such suspension no longer exist;
provided, however, that any such suspension shall not relieve the
Borrower of its obligations to make timely payments of principal
and interest outstanding under the Interim Note or the Note and any
other amounts due hereunder. If the Lender shall determine that it
may not lawfully continue to maintain and fund the outstanding Loan
to maturity and shall so specify in such notice, or in any
subsequent notice, the Borrower shall immediately prepay in full
the then outstanding principal amount of such Loan, together with
accrued interest thereon and any other fees or charges including
any Funding Losses.
Section 7.04 Increased Cost
(a) If, after the date of this Agreement, the adoption of
any applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency, or other
appropriate authority charged with the interpretation or
administration thereof, or compliance by the Lender with any
request or directive (whether or not having the force of law) of
any such authority, central bank or comparable agency, or
appropriate authority:
(i) shall subject the Lender to any tax, duty or other
the charge with respect to the Loan, the Interim
Note or the Note or its obligation to make the
Loan, or shall change the basis of taxation of
payments to the Lender of the principal of or
on the Loan or any other amounts due under this
Agreement, the Interim Note or the Note in respect
of the Loan or its obligation to make the Loan; or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement or shall impose on
the Lender any other condition affecting the Loan, the
Interim Note or the Note or its obligation to make
the Loan; and the result of any of the foregoing
is to increase the cost to the Lender of making or
or maintaining the Loan, or to reduce the amount of any
sum received or receivable by the Lender under this
Agreement or under the Interim Note or the Note
with respect thereto, by an amount deemed by the Lender to
be material; then, within fifteen (15) days after demand
after demand by the Lender, the Borrower shall pay to
the Lender such additional amount or amounts as will
compensate the Lender for such increased cost or reduction.
(b) The Lender will promptly notify the Borrower of any
event occurring after the date hereof which will entitle the Lender
to compensation pursuant to this Section 7.04 as soon as
practicable after it has knowledge thereof. A certificate of the
Lender claiming compensation under this Section 7.04 and setting
forth the additional amount or amounts to be paid to it hereunder
shall be deemed conclusive in the absence of manifest error. In
determining such amount, the Lender may use any reasonable
averaging and attribution methods.
ARTICLE VIII
APPLICATION OF FUNDS
Section 8.01 Application of Funds
(a) All monies received in respect of any of the
Collateral (other than monies received in respect of the actual or
constructive total loss of, or requisition, taking, capture,
seizure or forfeiture of, the Vessel) shall be deposited in the
Owner's deposit account with a bank to be chosen by the Owner and
reasonably acceptable to Lender (the "Deposit Account") and applied
as follows:
(i) so long as no event set forth in sub-paragraph (ii)
below shall have occurred and be continuing, the Owner
shall be entitled to immediately receive from the Deposit
Account all monies on deposit therein from time to time and such
amounts may be paid over to or as directed by the Owner or
to whomsoever may be entitled thereto.
(ii) If and so long as (a) an Event of Default shall have
occurred and be continuing; or (b) the Borrower has been
given notice that the Lender has reasonably deemed itself
insecure and good faith negotiations between the parties have been
unsuccessful and the Lender continues to reasonably deem
itself insecure; or (c) the Fair Market Value of the
Vessel is less than 100% of the then outstanding Loan Amount and
the Borrower has declined to post the collateral set forth
in Section 6.15; then, the Lender shall be entitled to
immediately receive and apply all monies in the Deposit
Account (1) to the payment of the Lender's costs and expenses
incurred in the protection of its rights hereunder, under
the Note or under any of the Collateral, including, but
not by way of limitation, reasonable compensation and expenses
for the Lender, its agents and attorneys and court costs and
other expenses incurred or made by the Lender or its agents
in exercising any trust or power hereunder or in collecting
said monies, (2) to the payment of all interest then due
on the Note, (3) to the payment of all amounts of
principal then due and to become due in respect of the
Note, (4) to the payment of any other obligations of the Borrower
to the Lender and (5) the remainder, if any, shall be
remitted to, or upon the requisite order of, the Owner or
to whomsoever may be entitled thereto provided that at such
time there is no Event of Default outstanding or other event
which with the passage of time or giving of notice would
constitute an Event of Default.
(b) In the event of the sale of the Vessel, the Borrower
shall prepay the Interim Note (if outstanding) or the Note in full
promptly after the closing of such sale.
(c) In the event of the actual or constructive total loss
of, or requisition, taking, capture, seizure or forfeiture of the
Vessel, the Borrower shall prepay the Note in full upon the receipt
of the proceeds therefor but in any event no later than sixty (60)
days after written demand by the Lender, which demand shall not be
made prior to sixty (60) days after the occurrence of such event.
Notwithstanding the above, if the Lender reasonably believes that
the Owner or the Borrower will not be reimbursed for such actual or
constructive total loss of, or requisition, taking, capture,
seizure or forfeiture of, the Vessel, by insurance or otherwise,
the Lender may make a written demand for payment at any time after
the occurrence of such event.
Section 8.02 Pledge and Assignment
As security for the obligations of the Borrower and the
Owner under this Agreement and under the Note, the Owner hereby
pledges and assigns to the Lender, and grants to the Lender a first
priority security interest in, the Deposit Account.
Section 8.03 Withdrawals From Deposit Account
(a) Notwithstanding any provision in this Agreement to
the contrary, if an event set forth in Section 8.01(a)(ii) shall
have occurred and be continuing, no amount in the Deposit Account
(including interest thereon) shall be paid or released to or for
the account of the Owner or the Borrower or any other entity other
than the Lender and the Lender may, without derogation from the
Lender's rights under Section 8.01(a)(ii), withdraw from the
Deposit Account such amounts as are necessary to satisfy the
obligations of the Borrower hereunder.
(b) The Owner hereby constitutes the Lender and its
successors and assigns as the Owner's true and lawful attorney-in-
fact, with full authority in the place and stead of the Owner, to
make any withdrawals from the Deposit Account contemplated by this
Agreement.
ARTICLE IX
DEFAULTS
Section 9.01 Events of Default
If one or more of the following events ("Events of
Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal
of or interest on the Loan, any fees or any other amount
payable hereunder or under the Interim Note or the Note;
(b) the Borrower or the Owner shall fail to observe or
perform any covenant contained in Section 6.04;
(c) the Borrower or the Owner shall fail to observe or
perform any covenant, condition or agreement contained in
this Agreement (other than those covered by paragraph (a)
or (b) above) for ten (10) Business Days after written notice
thereof has been given to the appropriate party by the
Lender;
(d) any representation, warranty, certification or
statement made respectively by the Borrower, the Owner or
any Guarantor in this Agreement or any Guaranty or in any
certificate, financial statement or other document delivered
pursuant to this Agreement, shall prove to have been
incorrect or misleading in any material respect when made;
(e) a default shall occur and be continuing under the
Mortgage;
(f) any Guarantor shall fail to observe or perform any
covenant or agreement contained in its Guaranty;
(g) the Borrower, the Owner or any Guarantor shall fail
to make any payment in respect of any Debt (other than the
Interim Note or the Note) when due or within any
applicable grace period;
(h) any event or condition shall occur which results in
the acceleration of the maturity of any Debt of the
Borrower, the Owner or any Guarantor or enables (or, with
the giving of notice or lapse of time or both, would enable) the
holder of such Debt or any Person acting on such holder's
behalf to accelerate the maturity thereof;
(i) the Borrower, the Owner or any Guarantor shall
commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian
or other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the
appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it,
or shall make a general assignment for the benefit of
creditors, or shall fail generally, or be unable, or admit
in writing its inability, to pay its debts as they become due,
or shall take any corporate action to authorize any of the
foregoing;
(j) an involuntary case or other proceeding shall be
commenced against the Borrower, the Owner or any Guarantor
seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part
of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a
period of thirty (30) days; or an order for relief shall be
entered against the Borrower, the Owner or any Guarantor under
any bankruptcy laws as now or hereafter in effect;
(k) a judgment or order for the payment of money in
excess of US$150,000.00 shall be rendered against the
Borrower or the Owner or in excess of US$500,000.00 in the
case of any Guarantor, and such judgment or order shall continue
unsatisfied and unstayed for a period of thirty (30) days;
(l) any governmental authorization, registration or
approval granted or required in connection with this
Agreement, the Guaranty, the Interim Note, the Note or the
Mortgage expires or is terminated or revoked or modified in any
manner unacceptable to the Lender;
(m) it becomes unlawful for the Borrower, the Owner or
any Guarantor to perform any obligation under this
Agreement, any Guaranty, the Interim Note, the Note or the
Mortgage;
(n) any Guarantor attempts to repudiate, rescind, limit
or annul its Guaranty or any portion thereof, or any
legislation, decree or regulation is enacted or promulgated
the effect of which is to repudiate, rescind, limit or annul such
Guaranty;
(o) any governmental authority or purported governmental
authority or person takes any action to condemn, seize,
arrest or confiscate the Vessel which is not covered by
insurance maintained by the Owner and reasonably acceptable to
the Lender; or any governmental authority or purported
governmental authority or person takes any action which,
in the reasonable opinion of the Lender, adversely and materially
affects the ability of the Borrower, the Owner or any
Guarantor to meet its obligations under this Agreement,
the Interim Note, the Note, the Stock Pledge Agreement,
the Mortgage or any Guaranty;
(p) any material breach of the Purchase Agreement, the
Mortgage, the Stock Pledge Agreement, the Charter
Assignment, the General Assignment of Earnings, the
Assignment of Insurances, the Purchase Agreement Assignment,
or any material breach by Owner of any charter party agreement;
(q) any occurrence of any condition or event which, in
Lender's reasonable opinion, has a material adverse impact
on the business, operations or financial condition of the
Borrower and/or the Owner and/or any Guarantor or which otherwise
causes the Lender to reasonably doubt the ability or
willingness of the Borrower and/or the Owner to fully and
promptly perform its obligations under this Agreement, the
Interim Note, the Note or any other instrument, document or
agreement contemplated herein or the ability or willingness
of any Guarantor to guarantee such obligations.
Then and in every such event, the Lender may (i) by notice
to the Borrower terminate the Commitment and the Commitment shall
thereupon terminate, or (ii) by notice to the Borrower declare the
entire Loan and the Interim Note (if outstanding) or the Note
(together with accrued interest thereon) and any other fees or
charges to be, and the Loan, the Interim Note, the Note and such
other fees or charges shall thereupon become, immediately due and
payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.
Any holder of the Interim Note or the Note may proceed to
protect and enforce its rights by action at law, suit in equity or
in admiralty or other appropriate proceeding, whether for specific
performance of any covenant contained in this Agreement, in the
Interim Note or the Note or in any item included in the Collateral,
or in aid of the exercise of any power granted herein or therein,
or the holder of the Interim Note or the Note may proceed to
enforce the payment of the Interim Note or the Note when due or to
enforce any other legal or equitable right of the holder of the
Interim Note or the Note, or proceed to take any action authorized
or permitted under the terms of any item of the Collateral or by
applicable law for the collection of all sums due, or so declared
due, on the Interim Note or the Interim Note or the Note,
including, without limitation, the right to appropriate and hold,
or apply (directly, by way of set off or otherwise) to the payment
of the obligations of the Borrower to the holder of the Interim
Note or the Note hereunder, under the Interim Note or the Note
and/or under the Collateral (whether or not than due), all monies
and other amounts of the Borrower or the Owner or any Guarantor,
then or thereafter in possession of the holder of the Interim Note
or the Note, the balance of every deposit account (demand or time,
matured or unmatured) of the Borrower or the Owner or any
Guarantor, then or thereafter with the holder of the Interim Note
or the Note and every other claim of the Borrower or the Owner or
any Guarantor, then or thereafter against the holder of the Interim
Note or the Note; and the Borrower will pay such holder all costs
and expenses of collection, including, without limitation,
reasonable attorney's fees, court costs and expenses. No holder of
the Interim Note or the Note shall be required to marshall any
present or future security for, or guaranties of, the indebtedness
evidenced by the Interim Note or the Note or to resort to any such
security or guaranties in any particular order.
ARTICLE X
MISCELLANEOUS
Section 10.01 Notices
All notices, requests and other communications to any
party hereunder shall be in writing (including bank wire, telex,
facsimile or similar writing) in the English language and shall be
given to such party at its address, telex number or facsimile
number set forth on the signature page hereof or such other
address, telex number or facsimile number as such party may
hereafter specify for the purpose by notice to the other party.
Each such notice, request or other communication shall be effective
(i) if given by telex or facsimile, when such telex or facsimile is
transmitted to the telex number or facsimile number specified on
the signature page hereof and the appropriate answerback is
received, (ii) if given by mail, ten (10) days after such
communication is deposited in the registered mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any
other means, when delivered at the address specified on the
signature page hereof; provided that notices to the Lender
hereunder shall not be effective until received.
Section 10.02 Further Assurances
The Borrower agrees that if this Agreement, the Interim
Note, the Note or any of the security documentation shall at any
time be deemed by the Lender for any reason insufficient in whole
or in part to carry out the true intent and spirit hereof or
thereof, then the Borrower will execute or cause to be executed
such other and further assurances and documents as in the
reasonable opinion of the Lender may be required in order more
effectively to accomplish the purposes hereof and thereof.
Section 10.03 No Waivers
No failure or delay by the Lender in exercising any right,
power or privilege hereunder or under the Interim Note or the Note
shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights
and remedies herein provided shall be cumulative and not exclusive
of any rights or remedies provided by law.
Section 10.04 Expenses
The Borrower shall pay all out-of-pocket costs and
expenses of the Lender including, without limitation, fees and
disbursements of counsel, in connection with the negotiation,
preparation, execution and delivery of this Agreement, the Interim
Note, the Note, the Mortgage, the General Assignment of Earnings,
the Assignment of Insurances, the Purchase Agreement Assignment,
the Stock Pledge Agreement, the Charter Assignment, the Deposit
Account or any opinion, certificate, instrument, agreement or
document related hereto (and in connection with any supplements,
amendments, waivers or consents relating thereto or incurred in
connection with the enforcement or defense of the Lender's rights
or remedies with respect thereto or in the preservation of the
Lender's priorities under the documentation executed and delivered
in connection therewith), and stamp and other taxes, if any,
incident to the execution and delivery of the documents (including,
without limitation, the Interim Note and the Note) herein
contemplated and to hold the Lender free and harmless in connection
with any liability arising from the nonpayment of any such stamp or
other taxes in connection with this Agreement; the Borrower shall
also pay all out-of-pocket costs and expenses incurred by the
Lender, including, without limitation, fees and disbursements of
counsel, in connection with any Event of Default hereunder and
collection and other enforcement proceedings resulting therefrom.
Section 10.05 Amendments and Waivers
Any provision of this Agreement or the Interim Note or the
Note or any of the Collateral may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed by the
Borrower, the Guarantors or the Owner, as the case may be and the
Lender.
Section 10.06 Successors and Assigns
The provisions of this Agreement and the Consent and
Agreement annexed hereto shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns, except that neither the Borrower, the Guarantors or the
Owner shall have the right to assign or otherwise transfer any of
its rights or obligations under this Agreement, the Interim Note,
the Note or the Collateral.
Section 10.07 Severability
Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such
prohibition, unenforceability or non-authorization, without
invalidating the remaining provisions hereof or affecting the
validity, enforceability or legality of such provision in any other
jurisdiction.
Section 10.08 Headings; Table of Contents
Section headings and the table of contents in this
Agreement are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other
purpose.
Section 10.09 Governing Law
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, U.S.A. WHICH ARE
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN THAT STATE.
Section 10.10 Counterparts
This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be
an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
Section 10.11 Consent to Jurisdiction; Service of Process
The Borrower and the Owner, and the Guarantors by their
Consent and Agreement annexed hereto, irrevocably submit to the
jurisdiction of any court sitting in The City of New York over any
suit, action or proceeding arising out of or relating to this
Agreement, the Interim Note, the Note or the Collateral. The
Borrower and the Owner, and the Guarantors by their Consent and
Agreement annexed hereto, irrevocably waive, to the fullest extent
permitted by law, any objection which any thereof may now or
hereafter have to the laying of the venue of any such suit, action
or proceeding brought in such a court and any claim that any such
suit, action or proceeding has been brought in an inconvenient
forum. The Borrower and the Owner, and the Guarantors by their
Consent and Agreement annexed hereto, consent to process being
served upon any thereof in any suit, action or proceeding of the
nature referred to in the first sentence of this Section 10.11 by
the mailing of a copy thereof by registered or certified mail,
postage prepaid, return receipt requested, to the Borrower at its
address specified on the signature page hereof. The Borrower, the
Owner, and the Guarantors by their Consent and Agreement attached
hereto, agree that such service (a) shall be deemed in every
respect effective service of process upon any thereof in any such
suit, action or proceeding and (b) shall, to the fullest extent
permitted by law, be taken and held to be valid personal service
upon and personal delivery to any thereof. Nothing in this Section
10.11 shall affect the right of the Lender to serve process in any
manner permitted by law or limit the right of the Lender to bring
proceedings against the Borrower, the Owner or any Guarantor in the
courts of any jurisdiction or jurisdictions.
Section 10.12 Disclosure of Information
The Lender may disclose to, or exchange or discuss with,
any other corporation, partnership, individual or governmental
entity (the Lender and each such other corporation, partnership,
individual and/or governmental entity being hereby irrevocably
authorized to do so) any information concerning the Borrower, the
Owner or any Guarantor (whether received by the Lender or such
other corporation, partnership, individual or governmental entity
in connection with or pursuant to this Agreement or otherwise) for
the purpose of protecting, preserving, exercising or enforcing any
rights hereunder or under the Note or any of the Collateral, or
consulting with respect to any such rights of the Borrower, the
Owner or any Guarantor and the Lender may disclose to any such
other corporation, partnership, individual or governmental entity
any such information as may be required by applicable law.
<PAGE>
Section 10.13 Waiver of Jury Trial
THE LENDER AND THE BORROWER AND THE OWNER, AND EACH
GUARANTOR BY THEIR CONSENT AND AGREEMENT ANNEXED HERETO, HEREBY
WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT BY ANY PARTY ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN
ANY WAY CONNECTED WITH THIS AGREEMENT, THE INTERIM NOTE, THE NOTE,
THE GUARANTEES, THE COLLATERAL AND THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 10.14 Indemnity
The Borrower and the Owner, and each Guarantor (to the
extent of its percentage guaranteed) by their Consent and Agreement
annexed hereto, hereby indemnify the Lender, its successors and
assigns, and their respective stockholders, partners, directors,
officers, employees, representatives and agents (each an
"Indemnitee") from, and hold each of them harmless against, any and
all losses, liabilities, claims, damages, expenses, obligations,
penalties, actions, judgments, suits, costs or disbursements of any
kind or nature whatsoever (including, without limitation, the fees
and disbursements of counsel for such Indemnitee in connection with
any investigative administrative or judicial proceeding commenced
or threatened, whether or not such Indemnitee shall be designated
a party thereto) that may at any time (including, without
limitation, at any time following the repayment of the Loan) be
imposed on, asserted against or incurred by any Indemnitee as a
result of, or arising out of, or in any way related to or by reason
of, (i) any violation by the Borrower, the Owner or any Guarantor
or any of its subsidiaries of any applicable Environmental Law,
(ii) the management, use, control, ownership or operation or
property or assets by the Borrower, the Owner or any Guarantor or
any of their respective subsidiaries or affiliates (or, after
foreclosure, by the Lender or its successors or assigns),
including, but not limited to, any Environmental Claim and (iii)
the breach of any representation or warranty set forth in Article
V hereof, the Mortgage or the Stock Pledge Agreement, and if, and
to the extent that, the obligations of the Borrower, the Owner or
any Guarantor under this Section are unenforceable for any reason,
the Borrower, the Owner and each Guarantor agree to make the
maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law. The
obligations of the Borrower, the Owner and each Guarantor under
this Section shall survive the termination of this Agreement and
the payment of the Loan.
Section 10.15 Entire Agreement
This Agreement and the documents referred to herein
constitute the entire agreement of the parties hereto with respect
to the subject matter hereof and shall supersede any prior
expressions of intent or understandings with respect to the
transactions contemplated hereunder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
representatives as of the day and year first above written.
GERALDTON NAVIGATION COMPANY INCORPORATED
By:/s/ Vincent J. de Sostoa
Vice President
Address: c/o OMI Corp.
90 Park Avenue
New York, New York 10016
Facsimile: 212-297-2288
Copy to: IMC Development & Management Ltd.
One Pacific Place, Suite 703
88 Queensway, Hong Kong
Facsimile: 852-596-0050
HAYES NAVIGATION CO. PTE LTD.
By:/s Vincent J. de Sostoa
Vice President
Address: c/o IMC Shipping Co. Pte. Ltd.
100 Beach Road
23-00 Shaw Towers
Singapore 0718
Facsimile: 65-299-9881
LARSEN SHIP FINANCE CO.
By:/s/ H. Iwasaki
Attorney-in-Fact
Address: c/o Sumitomo Corporation of America (Attn: NYKKD)
345 Park Ave
New York, New York 10154
Facsimile: 212-207-0845
EXHIBIT 10.41
SUPPLEMENTAL
COMMITMENT TO GUARANTEE OBLIGATIONS
BY
THE UNITED STATES OF AMERICA
ACCEPTED BY
THE BANK OF NEW YORK,
AS OWNER TRUSTEE
SHIPOWNER
and
OMI CLOVER TRANSPORT, INC.,
CHARTERER
This SUPPLEMENTAL COMMITMENT TO GUARANTEE OBLIGATIONS (the
"Supplemental Commitment") dated as of December 22, 1993, is made
and entered into on said date by the UNITED STATES OF AMERICA (the
"United States"), represented by the SECRETARY OF TRANSPORTATION,
acting by and through the MARITIME ADMINISTRATOR, successor by
operation of law to the Secretary of Commerce, acting by and
through the Assistant Secretary of Commerce for Maritime Affairs
(the "Secretary"), and accepted on said date by THE BANK OF NEW
YORK, a New York banking corporation (the "Bank") not in its
individual capacity but solely as owner trustee under the Trust
Agreement dated as of September 1, 1983, as amended by Amendment
No. 1 dated August 12, 1987 for the benefit of the trustor named
therein (said trust agreement being herein called the "Trust
Agreement," said trustor and its successors or assigns under the
Trust Agreement being herein collectively called the "Owner
Participant," and said owner trustee and any successor or assign
thereof under the Trust Agreement acting in its capacity as owner
trustee, being herein called the "Shipowner") and OMI Clover
Transport, Inc., a Delaware corporation (the "Charterer").
RECITALS:
A. On November 20, 1980 (the "First Closing Date") OMI Hudson
Transport, Inc. (formerly Ogden Hudson Transport, Inc.) ("Hudson")
and the Secretary entered into a Commitment to Guarantee
Obligations, Contract No. MA-9931 (the "Guarantee Commitment")
under the provisions of Title XI of the Merchant Marine Act, 1936,
as amended, to provide for a portion of the financing of the
Construction of one chemical oil product tanker vessel named OMI
HUDSON (ex OGDEN HUDSON) (the "Vessel"). Unless otherwise expressly
provided herein or in Amendment No. 1 to Restated Security
Agreement, as hereinafter defined, the terms used herein and
defined in Schedule X to the Restated Security Agreement, Contract
No. MA-9933, (a copy of which is attached hereto as Schedule One)
shall have the respective meanings set forth in said Schedule X,
except as the same have been duly amended or modified.
<PAGE>
B. On the First Closing Date, in connection with the
execution and delivery of the Guarantee Commitment (1) Hudson and
Citibank, N.A., a national banking association (the "Indenture
Trustee") entered into the Indenture; (2) the Secretary and the
Indenture Trustee entered into the Authorization Agreement,
Contract No. MA-9932; (3) Hudson and the Secretary entered into the
Security Agreement, Contract No. MA-9933 ("Security Agreement");
(4) Hudson executed and delivered to the Secretary the Secretary's
Note in the aggregate principal amount of $24,000,000; (5) OMI Bulk
Transport, Inc., (formerly Ogden Bulk Transport, Inc.) a Delaware
corporation and the parent company of Hudson ("Bulk") and the
Secretary entered into the Title XI Reserve Fund and Financial
Agreement, Contract No. MA-9936; (6) Hudson, the Secretary and
Citibank, N.A., a national banking association (the "Depository")
entered into the Depository Agreement, Contract No. MA-9935
("Depository Agreement"); (7) Hudson issued and delivered United
States Government Guaranteed Ship Financing Notes, Series A in the
aggregate principal amount of $24,000,000; and (8) Hudson executed
and delivered or caused to be executed and delivered various
assignments and guarantees described in the Security Agreement as
further security to the Secretary.
C. On November 19, 1981, Hudson issued and delivered United
States Government Guaranteed Ship Financing Bonds in the aggregate
principal amount of $22,800,000 ("Initial Series A Obligations")
under an Underwriting Agreement dated as of November 9, 1981 to the
Underwriters named therein and in connection therewith, Hudson
executed and delivered to the Secretary the Mortgage, Contract No.
MA-9934;
D. On December 2, 1982, Hudson issued and delivered United
States Government Guaranteed Ship Financing Bonds in the aggregate
principal amount of $30,000,000 ("Initial Series B Obligations"),
United States Government Guaranteed Ship Financing Bonds in the
aggregate principal amount of $5,350,000 ("Initial Series C
Obligations") and United States Government Guaranteed Ship
Financing Bonds in the aggregate principal amount of $15,900,000
("Initial Series D Obligations" and, together with the Initial
Series A Obligations, Initial Series B Obligations and Initial
Series C Obligations, hereinafter called the "Initial Obligations")
under an Underwriting Agreement dated as of December 10, 1982 to
the Underwriters named therein;
E. In connection with the issuance of the Initial
Obligations, Hudson and the Secretary entered into Amendment No. 1
to the Security Agreement dated November 19, 1981, Amendment No. 2
to the Security Agreement dated March 5, 1987 and Amendment No. 3
to the Security Agreement dated March 26, 1987 (said amendments,
together with the Security Agreement, herein called the "Original
Security Agreement");
<PAGE>
F. On August 12, 1987 the Shipowner acquired the Vessel from
Hudson and, on the date thereof, duly executed and delivered
Assumption Agreement and Supplemental Indenture No. 6 among the
Shipowner, Hudson and the Indenture Trustee, pursuant to which the
Shipowner assumed all of Hudson's obligations under the Indenture
and the Initial Obligations.
G. On August 12, 1987, in connection with the acquisition of
the Vessel, the Shipowner, Hudson and the Secretary entered into
Amendment No. 4 to Security Agreement ("Amendment No. 4") whereby
Hudson was released from all obligations, duties and liabilities
under the Original Security Agreement and whereby the Shipowner
assumed all of the obligations of Hudson under the Original
Security Agreement, as the same was further amended and restated in
its entirety in the form of the Restated Security Agreement dated
August 12, 1987 between the Shipowner and the Secretary (the
"Restated Security Agreement").
H. From and after the execution and delivery of Amendment
No. 4 and the Restated Security Agreement, the rights, obligations,
duties and liabilities of the Shipowner and the Secretary under the
Original Security Agreement, as amended and assumed by the
Shipowner pursuant to Amendment No. 4, are governed and determined
solely under the Restated Security Agreement and the various
instruments and documents executed by the Shipowner pursuant
thereto.
I. On August 12, 1987, the Shipowner agreed to let and
demise the Vessel to the Charterer pursuant to the Charter for the
Charter Period.
J. Immediately prior to the execution and delivery of this
Supplemental Commitment there were Outstanding Initial Obligations
issued by the Shipowner and guaranteed by the Secretary in the
aggregate principal amount of $ 24,150,000, consisting inter alia
of $4,110,000 principal amount of Initial Series C Obligations.
K. All of the Initial Series C Obligations have been duly
called for redemption and, in order to refinance the Initial Series
C Obligations, the Shipowner has entered into a Bond Purchase
Agreement dated as of December 22, 1993, with the Purchaser named
therein ("Refinancing Bond Purchase Agreement") providing for the
sale and delivery on December 22, 1993 (the "Refinancing Closing
Date"), of $4,110,000 aggregate principal amount of sinking fund
bonds bearing interest at the rate of 5.86% per annum and maturing
on December 1, 2006 (the "Hudson Series C Obligations" or the
"Obligations"). The remaining funds necessary for the redemption
of the Initial Series C Obligations will be paid by the Shipowner
and the Charterer.
<PAGE>
L. The Shipowner will on the Refinancing Closing Date enter
into Supplemental Indenture No. 7 to Indenture with the Indenture
Trustee and will authorize the issuance under the Indenture of the
Hudson Series C Obligations, which Hudson Series C Obligations
under the terms hereof are to be issued for the purpose of (i)
aiding in the refinancing of the existing Initial Series C
Obligations and (ii) modifying and restating the terms of the form
of the existing Initial Series C Obligations by (a) reducing the
interest rate thereof, (b) changing the schedule of premiums in
connection with an optional redemption and (c) adding the right of
the Secretary to assume the Hudson Series C Obligations after a
Default by the Shipowner, as permitted by Public Law 98-595.
M. The Hudson Series C Obligations when duly executed,
authenticated and delivered pursuant to the Indenture, as
supplemented by Supplemental Indenture No. 7 to Indenture, will
constitute the legal, valid and binding obligations of the
Shipowner in accordance with their respective terms. The Hudson
Series C Obligations shall be as stated in Supplemental Indenture
No. 7 to Indenture and in substantially the form attached thereto
having the maturity date and interest rate set forth in the
Refinancing Bond Purchase Agreement and the Hudson Series C
Obligations.
N. Under Amendment No. 4 to the Authorization Agreement to
be entered into on the Refinancing Closing Date between the
Secretary and the Indenture Trustee ("Amendment No. 4 to
Authorization Agreement"), the Indenture Trustee will be authorized
to endorse and execute on each of the Hudson Series C Obligations
issued on such date, by means of the facsimile signature of the
Maritime Administrator or Acting Maritime Administrator and the
facsimile seal of the Department of Transportation, and to
authenticate and deliver, a guarantee by the Secretary of the
payment in full of all of the unpaid interest on, and the unpaid
balance of the principal of, each Hudson Series C Obligation,
including interest accruing between the date of default under such
Hudson Series C Obligation and the date of payment by the Secretary
(individually a "Guarantee" and collectively the "Guarantees").
O. On the Refinancing Closing Date, the Shipowner as further
security to the Secretary for the payment to the Secretary of the
principal of, and the interest due or to become due on, the
Secretary's Note will execute and deliver an endorsement to
Secretary's Note (the "Endorsement No. 5 to Secretary's Note"),
will enter into Amendment No. 1 to Restated Security Agreement
("Amendment No. 1 to Restated Security Agreement") and will execute
and deliver Supplement No. 5 to First Preferred Ship Mortgage
("Supplement No. 5 to Mortgage").
<PAGE>
P. On the Refinancing Closing Date, Bulk and the Secretary
will execute and deliver Amendment No. 8 to Title XI Reserve Fund
and Financial Agreement ("Amendment No. 8 to RFFA").
Q. On the Refinancing Closing Date, the Shipowner, the
Charterer, the Depository and the Secretary will execute and
deliver Amended and Restated Depository Agreement ("Depository
Agreement").
R. On the Refinancing Closing Date, the Charterer and the
Shipowner will execute and deliver Amendment No. 2 to Bareboat
Charter Party ("Amendment No. 2 to Charter").
S. On the Refinancing Closing Date, Bulk, the Charterer and
certain affiliates of the Charterer will execute and deliver the
Confirmation of Cross Guarantee ("Confirmation of Cross
Guarantee").
WITNESSETH
That under the provisions of Title XI of the Merchant Marine
Act, 1936, as amended and in effect on the date hereof (said
provisions, as so amended and in effect on the date hereof, being
herein called "Title XI") and in consideration of (i) the execution
and delivery on or before the date hereof of the Refinancing Bond
Purchase Agreement, (ii) the covenants of the Shipowner and the
Charterer contained herein, (iii) the payment by or on behalf of
the Shipowner to the Secretary of the charges for this Supplemental
Commitment pursuant to Section 1104A (f) of Title XI and (iv) other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Secretary hereby commits itself
as herein provided.
Annexed to each counterpart of this Supplemental Commitment
are forms of the Refinancing Bond Purchase Agreement, Supplemental
Indenture No. 7 to Indenture, the Hudson Series C Obligations,
Amendment No. 4 to Authorization Agreement, Amendment No. 1 to
Restated Security Agreement, Endorsement No. 5 to Secretary's Note,
Supplement No. 5 to Mortgage, Amendment No. 8 to Title XI Reserve
Fund and Financial Agreement, Amended and Restated Depository
Agreement, Confirmation of Cross Guarantee and Amendment No. 2 to
Charter.
The Refinancing Bond Purchase Agreement, Supplemental
Indenture No. 7 to Indenture, the Obligations, Amendment No. 4 to
Authorization Agreement, Amendment No. 1 to Restated Security
Agreement, Endorsement No. 5 to Secretary's Note, Supplement No. 5
to Mortgage, Amendment No. 8 to Title XI Reserve Fund and Financial
Agreement, Amended and Restated Depository Agreement, Confirmation
of Cross Guarantee and Amendment No. 2 to Charter shall be executed
and delivered on the Refinancing Closing Date substantially in the
respective forms annexed hereto, or as approved by the Secretary
and consented to by the Shipowner, the Owner Participant and the
Charterer, except that the blanks therein shall be filled in as
contemplated therein and herein.
<PAGE>
ARTICLE I
FINDINGS AND DETERMINATIONS OF THE SECRETARY
Pursuant to Section 1104A (d) of Title XI, the Secretary has
found that the property or project with respect to which the
Obligations will be issued, will be, in his opinion, economically
sound.
Pursuant to Sections 1101(f) and 1104A (b)(2) of Title XI and
the third paragraph of Article I of the Guarantee Commitment, the
Secretary confirmed his prior determination of the Actual Cost of
the Vessel. In addition, the Secretary has redetermined the
Depreciated Actual Cost of the Vessel as of December 31, 1993, and
found that the aggregate principal amount of the Obligations will
not, in the aggregate, exceed 87 1/2% of the Depreciated Actual
Cost of the Vessel, as determined by the Secretary.
Pursuant to Sections 1104A (b)(3) and 1104A (b)(5) of Title
XI, respectively, the Secretary has determined that the Stated
Maturity of the Hudson Series C Obligations has remained unchanged
and is satisfactory and that the interest rate to be borne by the
Obligations exclusive of the charges for the Guarantee Fee (and
service charges, if any) to be issued on the Refinancing Closing
Date to be reasonable taking into account the range of interest
rates prevailing in the private market for similar loans and risks
assumed by the Secretary.
ARTICLE II
COMMITMENT TO GUARANTEE OBLIGATIONS
The United States, represented by the Secretary, HEREBY
COMMITS ITSELF TO GUARANTEE (as provided in the Hudson Series C
Obligations and the Guarantees) the payment of the unpaid interest
on, and the unpaid balance of the principal of, the Hudson Series
C Obligations, including interest accruing between the date of
default under the Hudson Series C Obligations and the payment in
full of the Guarantees; and to effect this Supplemental Commitment
hereby commits itself to execute and deliver Amendment No. 4 to
Authorization Agreement and Amendment No. 1 to Restated Security
Agreement on the Refinancing Closing Date.
ARTICLE III
THE OBLIGATIONS
The Hudson Series C Obligations shall be substantially in the
form of Exhibit 1 to Supplemental Indenture No. 7 to Indenture (or
such other form as shall be approved by the Secretary and consented
to by the Shipowner, the Owner Participant and the Charterer), and
shall be subject to all of the terms and conditions set forth in
<PAGE>
the Indenture as supplemented by Supplemental Indenture No. 7 to
Indenture. Supplemental Indenture No. 7 to Indenture, the Hudson
Series C Obligations, Amendment No. 1 to Restated Security
Agreement, Endorsement No. 5 to Secretary's Note, Supplement No. 5
to Mortgage, Amendment No. 8 to Title XI Reserve Fund and Financial
Agreement, Amended and Restated Depository Agreement, Confirmation
of Cross Guarantee and Amendment No. 2 to Charter shall be executed
and delivered by the parties thereto, substantially simultaneously
with the execution and delivery of Amendment No. 4 to Authorization
Agreement. The forms of Supplemental Indenture No. 7 to Indenture,
the Series C Obligations, Amendment No. 4 to Authorization
Agreement, Amendment No. 1 to Restated Security Agreement,
Endorsement No. 5 to Secretary's Note, Supplement No. 5 to
Mortgage, Amendment No. 8 to Title XI Reserve Fund and Financial
Agreement, Amended and Restated Depository Agreement, Confirmation
of Cross Guarantee and Amendment No. 2 to Charter are hereby
approved by the Secretary.
ARTICLE IV
COVENANTS OF THE SHIPOWNER AND THE CHARTERER
The Shipowner represents and, until termination of the
Supplemental Commitment, agrees:
(a) that, based solely and without independent investigation
or verification on the representation of the Charterer immediately
below, the Vessel has been constructed in a shipyard within the
United States and has been documented under the laws of the United
States;
(b) that the documents referred to in Paragraph (f) of
Article IV of the Guarantee Commitment, as amended and supplemented
with the consent of the Secretary, remain in full force and effect;
(c) to execute and deliver Amendment No. 1 to Restated
Security Agreement, Supplemental Indenture No. 7 to Indenture,
Endorsement No. 5 to Secretary's Note to reflect the issuance of
the Hudson Series C Obligations, Supplement No. 5 to Mortgage,
Amended and Restated Depository Agreement and Amendment No. 2 to
Charter.
(d) to furnish to the Secretary, promptly upon written
request, such reasonable, material and pertinent reports, evidence,
proof or information in addition to that furnished pursuant to the
further provisions of this Supplemental Commitment as the Secretary
may reasonably deem necessary or appropriate in connection with the
performance of the Secretary of his duties and functions under the
Act;
<PAGE>
(e) to permit the Secretary, promptly upon request, to make
such reasonable, material and pertinent examination and audit of
its books, records and accounts of the Trust Estate and to take
such information therefrom and make such transcripts or copies
thereof, as the Secretary may reasonably deem necessary or
appropriate in connection with the performance by the Secretary of
his duties and functions under the Act; and
(f) to maintain its United States citizenship within the
meaning of Section 2 of the Shipping Act, 1916, as amended, and 46
C.F.R. Part 355 for the purpose of operating the Vessel in the
foreign and coastwise trades of the United States, to the
satisfaction of the Secretary and, at the time of the execution and
delivery of Amendment No. 4 to the Authorization Agreement to
submit to the Secretary such supplemental proof of citizenship as
the Secretary may deem appropriate to evidence the continued United
States citizenship of the Shipowner for said purpose.
The Charterer represents and, until the termination of this
Supplemental Commitment, agrees:
(a) to maintain records of all amounts paid or obligated to be
paid by or for the account of the Shipowner for the Construction of
the Vessel;
(b) to furnish to the Secretary, promptly upon written
request, such reasonable, material and pertinent reports, evidence,
proof or information, in addition to that furnished pursuant to the
further provisions of this Supplemental Commitment or in the
application for this Supplemental Commitment under Title XI or
otherwise available to the Secretary, as the Secretary may
reasonably deem necessary or appropriate in connection with the
performance by the Secretary of his duties and functions under the
Act;
(c) to permit the Secretary, at all reasonable times upon
request, to make such reasonable, material and pertinent
examinations and audits of the Charterer's books, records, and
accounts, and to take such information therefrom and make such
transcripts or copies thereof, as the Secretary may reasonably deem
necessary or appropriate in connection with the performance by the
Secretary of his duties and functions under the Act; and
(d) to maintain its United States citizenship within the
meaning of Section 2 of the Shipping Act, 1916, as amended, and 46
C.F.R. Part 355 for the purpose of operating the Vessel in the
foreign or coastwise trade of the United States and, at the time of
execution and delivery of Amendment No. 4 to Authorization
Agreement, to submit to the Secretary such supplemental proof of
citizenship as may be appropriate to evidence the continued United
States citizenship of the Charterer for said purpose.
<PAGE>
(e) that the Vessel has been constructed in a shipyard within
the United States and has been documented and will remain
documented under the laws of the United States and the Vessel has
been accepted under the Charter and the Charterer has agreed that
the Vessel is satisfactory under the Bareboat Charter Party, as
amended;
(f) to execute and deliver on the date hereof Amended and
Restated Depository Agreement and Amendment No. 2 to Charter.
(g) to cause Bulk to execute and deliver on the date hereof
Amendment No. 8 to Title XI Reserve Fund and Financial Agreement.
(h) to execute and deliver or cause to be executed and
delivered Confirmation of Cross Guarantee.
ARTICLE V
CONDITIONS TO EXECUTION AND DELIVERY OF
AMENDMENT NO. 4 TO AUTHORIZATION AGREEMENT AND
AMENDMENT NO. 1 TO RESTATED SECURITY AGREEMENT
Amendment No. 4 to Authorization Agreement shall be executed
and delivered by the Secretary and the Indenture Trustee; Amendment
No. 1 to Restated Security Agreement by the Shipowner and the
Secretary; and Supplement No. 5 to Mortgage by the Shipowner and
the Secretary. The obligation of the United States, represented by
the Secretary, to execute and deliver Amendment No. 1 to Restated
Security Agreement on the Refinancing Closing Date shall be subject
to the following conditions unless waived in writing by the
Secretary:
(a)(i) The Refinancing Closing Date shall occur within one
year of December 22, 1993; and (ii) on the Refinancing Closing Date
the Vessel shall be in the same condition as when delivered by the
Shipbuilder, ordinary wear and tear excepted and the Charterer
shall have furnished to the Secretary a communication with respect
to the Vessel that there have been no unusual occurrences (or a
full description of such occurrences, if any), which would
adversely affect the condition of the Vessel;
(b) On the Refinancing Closing Date, the Vessel shall be free
and clear of any claim, lien, charge, mortgage or other encumbrance
of any character (except as otherwise permitted by Section 2.04 of
Exhibit 1 to the Restated Security Agreement) and Certificates of
the Shipowner and the Charterer shall be delivered to the Secretary
to the foregoing effect; and Supplemental Indenture No. 7 to the
Indenture and the Obligations to be sold on the Refinancing Closing
Date shall have been duly executed and delivered;
<PAGE>
(c) On the Refinancing Closing Date, the Bank, the Owner
Participant and the Charterer, shall be citizens of the United
States within the meaning of Section 2 of the Shipping Act, 1916,
as amended, and shall have furnished to the Secretary three (3)
executed affidavits setting forth data showing such citizenship;
(d) On the Refinancing Closing Date, there shall have been
delivered to the Secretary (i) two executed copies of Supplemental
Indenture No. 7 to Indenture; (ii) one executed copy and one true
copy of the Refinancing Bond Purchase Agreement; (iii) two executed
copies of the opinions of counsel referred to in the Refinancing
Bond Purchase Agreement; (iv) two specimen copies of the
Obligations issued under Supplemental Indenture No. 7 to Indenture;
and (v) two executed copies of all other documents delivered by the
Shipowner, the Charterer, Bulk or the Indenture Trustee on the
Refinancing Closing Date;
(e) The following representations and warranties of the Bank
and the Shipowner shall have been made to the Secretary in writing
and shall be true on the Refinancing Closing Date;
(i) The Bank is a validly existing banking organization
duly organized under the laws of the State of New York and is
authorized to transact a trust and banking business in the
State of New York; and the Shipowner has the power and
authority to execute and deliver and perform its obligations
under the terms and provisions of this Supplemental Commitment
and each of the agreements and instruments referred to herein
in which it is named a party;
(ii) this Supplemental Commitment and each of the
agreements and instruments referred to herein heretofore
executed and delivered in which the Shipowner or the Bank is
named a party and assuming due authorization, execution and
delivery thereof by the other parties thereto constitutes (and
each of the agreements and instruments referred to herein not
heretofore executed and delivered concurrently herewith in
which the Shipowner or the Bank is named a party, when duly
executed and delivered, will constitute), in accordance with
their respective terms, a legal, valid and binding obligation
of the Shipowner or the Bank enforceable in accordance with
its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws of general application or equitable principals
relating to or affecting the enforcement of creditors' rights
as from time to time in effect;
<PAGE>
(iii) the execution and delivery by the Shipowner of this
Supplemental Commitment and each of the agreements and
instruments referred to herein in which it is named a party,
consummation by the Shipowner or the Bank of the transactions
contemplated hereby and thereby and compliance by the
Shipowner or the Bank with all of the terms and provisions of
this Supplemental Commitment and each of the agreements and
instruments referred to herein in which it is named a party or
by which it is bound will not conflict with, or result in a
breach of any of the terms or provisions of, or constitute a
default under, or (other than in connection with the
transactions herein contemplated) subject any property or
assets of the Shipowner to any lien, charge or encumbrance
(other than in connection with the transactions contemplated
by the Supplemental Commitment or the Trust Agreement of, any
indenture, contract, agreement or instrument binding on the
Shipowner or the Bank or on any of their respective
properties, nor will such action result in a violation of the
provisions of the Trust Agreement or any statute or any order,
rule or regulation of any court or governmental agency or body
having jurisdiction over the Shipowner or the Bank or any of
its properties.
(iv) no consent, approval or authorization of, or
registration with, or notice to, any governmental or public
body or authority is or was required to be obtained, effected
or given by the Bank or the Shipowner under any federal law or
the laws of the State of New York governing the banking or
trust powers of The Bank of New York in connection with the
issue and sale of the Hudson Series C Obligations on the
Refinancing Closing Date or in connection with carrying out by
the Shipowner of the other transactions contemplated by this
Supplemental Commitment or any of the agreements or
instruments referred to herein, except such as have been duly
obtained, effected or given and such as are not required to be
obtained, effected or given at or before the date hereof;
(v) there are no actions, suits or proceedings pending
or, to the Shipowner's knowledge, threatened against or
affecting it or its property or affecting this Supplemental
Commitment, Supplemental Indenture No. 7 to Indenture, the
Obligations, Amendment No. 1 to Restated Security Agreement,
or the Amended and Restated Amendment No. 1 to Restated
Security Agreement, or the Amended and Restated Depository
Agreement or any of the transactions contemplated hereby or
thereby before any court, administrative agency, body or
governmental authority which if adversely determined, might
have materially adverse affect, on the execution and delivery
of the Supplemental Commitment, Supplemental Indenture No. 7
to Indenture, the Obligations, Amendment No. 1 to Restated
Security Agreement or the Amended and Restated Depository
Agreement and the performance of the obligations of the
Shipowner under such documents.
<PAGE>
(vi) there is no outstanding security agreement under the
Uniform Commercial Code of any state of the United States with
respect to the Vessel or with respect to any of the agreements
entered into or to be entered into and referred to herein to
which the Shipowner is a party nor any effective filing of any
analogous agreement or instrument to which the Shipowner is a
party under the laws of any jurisdiction except in favor of
the Secretary and except with respect to the Restated Security
Agreement; and
(f) the following representations and warranties of the
Charterer shall have been made to the Secretary in writing and
shall be true as of the date hereof:
(i) the Charterer has been duly organized and is validly
existing as a corporation in good standing under the laws of
the State of Delaware with the power and authority (legal and
other) to own its property and assets and to conduct its
business, as the same is presently being conducted;
(ii) the Charterer had and has legal power and authority
to enter into and carry out the terms of the Confirmation of
Cross Guarantee, Amended and Restated Depository Agreement and
Amendment No. 2 to Charter, and other instruments referred to
herein;
(iii) each and all of the documents and instruments
referred to in clause (ii) hereof have been executed and
delivered by the Charterer and, assuming the due
authorization, execution and delivery hereof and thereof by
the other parties hereto and thereto, constitute, in
accordance with their respective terms, valid and binding
instruments enforceable against the Charterer except to the
extent limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws of general
application and equitable principles relating to or affecting
the enforcement of creditors' rights as from time to time in
effect;
(iv) the consummation of the transactions contemplated
and compliance by the Charterer with all the terms and
provisions of the documents and instruments referred to in
clause (ii) hereof will not violate any provisions of, 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 Charterer or by which it or its property is bound or
subject any property or any assets of the Charterer to any
lien, charge or encumbrance of, any indenture, contract,
agreement or other instrument (other than in connection with
the transaction herein contemplated) binding on the Charterer
(except that the representations and warranties set forth in
this clause (iv) do not constitute representations and
warranties with respect to Section 4975 of the Code of the
Employment Retirement Income Security Act of 1974);
<PAGE>
(v) there are no actions, suits or proceedings pending
or, to the Shipowner's knowledge threatened against or
affecting it or its property or affecting this Supplemental
Commitment, Supplemental Indenture No. 7 to Indenture, the
Obligations, Amendment No. 1 to Restated Security Agreement,
or the Amended and Restated Amendment No. 1 to Restated
Security Agreement, or the Amended and Restated Depository
Agreement or any of the transactions contemplated hereby or
thereby before any court, administrative agency, body or
governmental authority which if adversely determined, might
have materially adverse affect, on the execution and delivery
of the Supplemental Commitment, Supplemental Indenture No. 7
to Indenture, the Obligations, Amendment No. 1 to Restated
Security Agreement or the Amended and Restated Depository
Agreement and the performance of the obligations of the
Shipowner under such documents.
(vi) no consent, approval, authorization, order,
registration or qualification of or with or notice to any
court or any governmental agency or body acting with respect
to existing Federal or State laws is required to be obtained,
effected or given by the Charterer for the issue or sale of
the Hudson Series C Obligations being issued or for the
consummation by the Charterer of the transactions contemplated
by the Supplemental Commitment or any of the agreements and
instruments referred to herein except such as have been duly
obtained, effected or given;
(g) the following representations and warranties of the Owner
Participant shall have been made to the Secretary in writing and
shall be true as of the date hereof:
(i) the Owner Participant has been duly incorporated and
is validly existing as a corporation in good standing under
the laws of the State of New York with the power and authority
(corporate and other) to own its property and assets and to
conduct its business, as the same is presently being
conducted;
(ii) the Owner Participant had and has legal power and
authority to enter into and carry out the terms of the Trust
Agreement, as amended, and the Owner Participation Agreement;
(iii) each and all of the documents and instruments
referred to in clause (ii) hereof have been executed and
delivered by the Owner Participant and assuming the due
authorization, execution and delivery thereof by the other
parties thereto constitute, in accordance with their
respective terms, valid and binding instruments enforceable
against the Owner Participant except to the extent limited by
applicable bankruptcy, reorganization, insolvency, moratorium
or other similar laws of general application and equitable
principles relating to or affecting the enforcement of
creditor's rights as from time to time in effect;
<PAGE>
(iv) the consummation of the transactions contemplated
by and compliance by the Owner Participant with all the terms
and provisions of the documents and instruments referred to in
clause (ii) hereof will not violate any provisions of the
certificate of organization or the By-Laws of the Owner
Participant or any provision of the laws of the United States
or the State of New York or any governmental rule, regulation
or order thereunder applicable to the Owner Participant, 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 Owner Participant or by which it or its property is
bound or subject any property or any assets of the Owner
Participant to any lien, charge or encumbrance of any
indenture, contract, agreement or other instrument (other than
in connection with the transactions herein contemplated)
binding on the Owner Participant (except that the
representations and warranties set forth in this clause (iv)
do not constitute representations and warranties with respect
to Section 4975 of the Code on the Employment Retirement
Income Security Act of 1974);
(v) there are no actions, suits or proceedings pending,
or to the best knowledge of the Owner Participant, threatened
before any court, arbitrator or governmental body involving
the Owner Participant or any of its property which, in the
opinion of the Owner Participant, will prevent or impair the
performance by the Owner Participant of its obligations under
the documents and instruments referred to in clause (ii); and
(vi) no consent, approval, authorization, order,
registration or qualification of or with or notice to any
court or any governmental agency or body acting with respect
to existing Federal or State laws is required to be obtained,
effected or given by the Owner Participant for the issue or
sale of the Hudson Series C Obligations being issued or for
the consummation by the Owner Participant of the transactions
contemplated by the Supplemental Commitment or any of the
agreements and instruments referred to herein except such as
has been duly obtained, effected or given;
(vii) these representations and warranties do not extend
to matters concerning maritime, shipping, admiralty law or
other laws, rules and regulations applicable to the particular
nature of the equipment owned by the Shipowner.
(h) On the Refinancing Closing Date, the Secretary shall have
received an opinion of Messrs. Emmet, Marvin & Martin and Thompson
& Mitchell, special counsel to the Shipowner, and Anya Starosolska,
Counsel to the Charterer, to the effect stated in the forms annexed
hereto as Schedule Two;
<PAGE>
(i) On the Refinancing Closing Date, all charges, levied or
assessed by the Secretary under Section 1104A (f) of Title XI in
the amount of $ 21,325 shall have been paid by or for the account
of the Shipowner;
(j) At least ten (10) Business Days prior to the Refinancing
Closing Date, the Charterer shall have provided to the Secretary
satisfactory evidence of insurance in accordance with the terms of
the Restated Security Agreement;
(k) The Shipowner and the Charterer shall have performed
without material breach their agreements under Article IV hereof,
and the further terms, conditions and provisions of this
Supplemental Commitment shall have been complied with in all
material respects;
(l) There shall not have occurred any event which constitutes
(or after any period of time or any notice, or both, would
constitute) a "Default" under the Restated Security Agreement; and
(m) On or prior to the Refinancing Closing Date, the
Shipowner shall have deposited or caused the deposit with the
Indenture Trustee funds sufficient (including principal, accrued
interest and premium) to redeem all of the Outstanding Initial
Series C Obligations and shall have furnished the Indenture Trustee
with irrevocable instructions to apply such funds for the
redemption of such Initial Series C Obligations at premium.
(n) On the Refinancing Closing Date, the Charterer, Bulk and
certain affiliates of the Charterer shall have executed and
delivered the Confirmation of Cross Guarantee, a true copy of the
form of which is attached hereto as Exhibit 9.
(o) On the Refinancing Closing Date, Bulk and the Secretary
shall have executed and delivered Amendment No. 8 to RFFA, a true
copy of the form of which is attached hereto as Exhibit 10.
ARTICLE VI
VARIATION OF SUPPLEMENTAL COMMITMENT
No variation from the terms and conditions hereof shall be
permitted except pursuant to an amendment executed by the Secretary
and accepted by the Shipowner and the Charterer.
ARTICLE VII
TERMINATION OR ASSIGNMENT OF SUPPLEMENTAL COMMITMENT
This Supplemental Commitment shall terminate and the parties
hereto shall have no further rights or obligations hereunder upon
the issuance of the Hudson Series C Obligations.
<PAGE>
This Supplemental Commitment may not be assigned by the
Shipowner or the Charterer without the prior written approval of
the Secretary.
ARTICLE VIII
CONFORMITY WITH REGULATIONS
None of the regulations hereafter issued, whether or not under
Title XI of the Act, is a part of or affects this Supplemental
Commitment in any respect, but the provisions of the regulations
issued under Title XI as in effect on the date hereof (46 CFR 298)
shall control the provisions of the Supplemental Commitment, except
to the extent modified pursuant to the provisions of 46 CFR
298.13(h).
ARTICLE IX
MISCELLANEOUS
The Bank is entering into this Supplemental Commitment solely
as owner trustee for the Owner Participant under the Trust
Agreement and not in its individual capacity, and in no case
whatsoever shall the Bank (or any entity acting as successor
trustee, co-trustee or separate trustee under the Trust Agreement)
or the Owner Participant be liable on, or for any loss in respect
of, any of the Shipowner's statements, representations, warranties,
agreements or obligations hereunder or any other document executed
by the Shipowner in connection herewith for any reason whatsoever
(including, without limitation, to the extent permitted by
applicable law, 11 U.S.C. Section 1111 (b)), as to all of which the other
parties hereto agree to look solely to the Trust Estate; provided
that the Bank and each other entity from time to time acting as
owner trustee hereunder shall be responsible in its individual
capacity for its own willful misconduct or gross negligence. It is
expressly understood by the parties hereto that except to the
extent set forth in the preceding sentence the execution of the
aforesaid agreements and documents by the Shipowner is intended
only for the purpose of binding the Trust Estate.
The table of contents and the titles of the Articles are
inserted as a matter of convenient reference and shall not be
construed as a part of this Supplemental Commitment. This
Supplemental Commitment may be executed in any number of
counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same
instrument.
For all purposes of this Supplemental Commitment, unless
otherwise expressly provided herein and unless the context
otherwise requires:
<PAGE>
(a) The terms "hereof", "herein", "hereby", "hereto",
"hereinafter", "hereunder" and "herewith" refer to this
Supplemental Commitment as the same may be supplemented or amended
as herein provided; and
(b) The terms used herein, which are defined in Schedule X,
as amended, to the Restated Security Agreement, annexed hereto or
by reference therein to other instruments shall have the respective
meanings stated in Schedule X, as amended, or such other
instruments.
<PAGE>
IN WITNESS WHEREOF, this Supplemental Commitment to Guarantee
Obligations has been executed by the United States and accepted by
the Shipowner all as of the day and year first above written.
UNITED STATES OF AMERICA
SECRETARY OF TRANSPORTATION,
By: MARITIME ADMINISTRATOR
By:/s/ James Saari
Secretary
Maritime Administration
[Seal]
Attest:
By:/s/ John Salisbury
Assistant Secretary
Maritime Administration
ACCEPTED:
THE BANK OF NEW YORK, not in
its individual capacity but solely
as owner trustee under the Trust
Agreement dated as of September 1,
1983, as amended, for the benefit of
the trustor named therein,
Shipowner
By:/s/ William Cunningham
Title: Vice President
[Seal]
Attest:
By:/s/ Marie E. Trimboli
Title: Assistant Treasurer
ACCEPTED
OMI CLOVER TRANSPORT, INC.
as Charterer
[Seal]
Attest:
By:/s/ Anya Starosolska By:/s/ Vincent de Sostoa
Title: Secretary Title: Sr. Vice President/Finance
EXHIBIT 10.42
FLOATING RATE
LOAN FACILITY
AGREEMENT
USD 17,247,724
SAUGATUCK SHIPPING LTD
and
COLORADO SHIPPING LTD
as Borrowers
CHEMICAL BANK
CHRISTIANIA BANK OG KREDITKASSE
and
DEN NORSKE BANK AS
as Banks
CHRISTIANIA BANK NEW YORK BRANCH
as Agent
and
CHEMICAL BANK
as Co-Agent
This Agreement is entered into on this 29th December, 1993
BETWEEN
(1) Saugatuck Shipping Ltd, a Liberian corporation ("Saugatuck")
and Colorado Shipping Ltd., a Liberian corporation ("Colorado
Shipping" and hereinafter jointly with Saugatuck referred to
as the "Borrowers"), the Borrowers having an address
c/o OMI Corp., 90 Park Avenue, New York, N.Y. 10016, USA
(2) The banks and financial institutions whose names, addresses
and participation in the Loan are listed in Schedule 1 hereto
(the "Banks").
(3) Christiania Bank New York Branch, 11 West 42nd Street, 7th
Floor, New York, NY 10036, USA (the "Agent")
and
(4) Chemical Bank, 270 Park Avenue, New York. N.Y. 10017 - 2070
USA (the "Co-Agent").
<PAGE>
WHEREAS:-
(A) Saugatuck is the registered owner of Paulina and Colorado
Shipping is the registered owner of Colorado.
(B) Rubicon, which is the registered owner of all the issued and
outstanding shares in the Borrowers, is repaying its
indebtedness in respect to the Vessels.
(C) The Borrowers are taking over the loan previously granted to
Rubicon in order to enable Rubicon to repay its indebtedness
to certain of its lenders.
(D) The Banks have pursuant to the terms and conditions set out
herein agreed assist the Borrowers in taking over the loan
previously granted to Rubicon.
NOW IT IS HEREBY AGREED as follows:-
1. LOAN AND PURPOSE
This Agreement sets out the terms and conditions upon which the
Banks will severally, in proportions as set out in Schedule 1
hereto, make available to the Borrowers as joint and several
borrowers a loan consisting of two tranches and being in the total
amount of USD 17,247,724.- for the purpose of assisting the
Borrowers in assuming the loan previously granted to Rubicon.
2. DEFINITIONS
In this Agreement the following terms and expressions shall have
the meaning set out below, always provided that where the context
of this Agreement so allows words importing the singular include
the plural and vice versa:
"ASSIGNMENT ACCOUNT" means account no. 0060512101 in the name of
Colorado/Saugatuck Shipping with the Agent or, as the case may be,
the Co-Agent.
"ASSIGNMENT OF EARNINGS" means separate general assignments of all
Earnings and a right of set-off in respect of any credit balance on
the Assignment Account at any time in the Loan Period in respect of
each of the Vessels, being substantially in the form set out in
Schedule 5 hereto.
"ASSIGNMENT OF INSURANCES" means separate assignments of all
insurances taken out in respect of each Vessel, being substantially
in the form set out in Schedule 6 hereto.
"BANKING DAY" means a day upon which banks and foreign exchange
markets are open for business in London, Oslo, New York and such
other places contemplated for the transactions required by this
Agreement.
<PAGE>
"CHARTERPARTY" means a charterparty dated 21st April, 1993 entered
into between Colorado Shipping and the Charterer in relation to the
employment of Colorado and having a duration up to and including
31st May 1997.
"CHARTERER" means Empresa Nacional Elcano de la Marina Mercante.
"COLORADO" means the Liberian flag vessel M/T "Colorado", a 86 648
dwt crude oil tanker built 1980 in Japan.
"COMMITMENT" means USD 17,247,724.- (USD seventeen million, two
hundred and forty-seven thousand, seven hundred and twenty-four.
"DRAWDOWN DATE" means the date the Commitment is made available to
the Borrowers hereunder, such date always being a Banking Day.
"DRAWDOWN NOTICE" means a notice in the form set out in Schedule 2
hereto.
"EARNINGS" means all freight, hire (including, but not limited to
all payments from any charterparty) payable to the Borrowers for
the use of the Vessels, all compensation payable to any of the
Borrowers in the event of requisition of any of the Vessels, all
remuneration for salvage and other services, all demurrage and
retention moneys and any and all other moneys whatsoever due or to
become due to each of the Borrowers from third parties in respect
of any of the Vessels or otherwise.
"EVENT OF DEFAULT" means, if so designated by the Agent, each of
the events and circumstances specified in Clause 10 (Events of
Default) below.
"FINAL REPAYMENT DATE" means 28th February 1999.
"GUARANTEE" means a guarantee from the Guarantor in favor of the
Banks, for the Borrowers' obligations under this Agreement and the
Security Documents being substantially in the form set out in
Schedule 7 hereto.
"GUARANTOR" means OMI Corp., 90 Park Avenue, New York, N.Y. 10016,
USA.
"INSTALLMENT DATES" means 28th February 1994 and each of the dates
falling at semi-annual intervals thereafter up to and including the
Final Repayment Date.
"INTEREST PAYMENT DATE" means the last day of each Interest Period
and in respect of any Interest Period exceeding 6 months, the date
falling 6 months after the commencement thereof and each date
falling with six-monthly intervals thereafter.
"INTEREST PERIOD" means a period, the duration of which is
calculated in accordance with the provisions of Clause 6 (Interest)
hereof.
<PAGE>
"LIBOR" means in respect of any Interest Period the rate per annum
determined by the Agent as the rate which the Agent, in accordance
with its usual practice, is offering comparable lendings in the
relevant Euro-currency for the relevant Interest Period in the
London Interbank Market at or about 11.00 a.m. London time two
Banking Days prior to the commencement of the relevant Interest
Period.
"LOAN" means the aggregate principal amount of the Tranches
outstanding from the Borrowers to the Banks hereunder at any time.
"LOAN PERIOD" means the period commencing on the date hereof and
terminating on the earlier of the Final Repayment Date and the date
all amounts due to the Banks and the Agent hereunder have been
repaid in full.
"MAJORITY BANKS" means Banks accounting for more than 50% of the
Commitment, or as the case may be, the Loan, at any time.
"MANAGER" means OMI Bulk Management Inc., the commercial and
technical manager of the Vessels.
"MANAGEMENT AGREEMENT" means an agreement dated ( ) entered into
between the Borrowers and the Manager in respect of the commercial
and technical management of the Vessels.
"MARGIN" means 1,25% p.a. (one and one quarter of one per cent per
annum) p.a.
"MARKET VALUE" means the value of each Vessel determined as the
arithmetic mean of valuations made by two independent ship brokers
appointed by the Agent, on the basis of a voluntary cash sale
between willing buyer and willing seller, free of any employment
obligations.
"MORTGAGES" means the first preferred Liberian Ship Mortgages each
in the amount of USD 17,247,724.- plus interest, default interest,
costs and expenses, recorded against each of the Vessels as cross
collateral security for the Borrowers' obligations hereunder in the
office of the Deputy Commissioner of Maritime Affairs of the
Republic of Liberia in New York, each being substantially in the
form set out in Schedule 4 hereto.
"NOMINATION NOTICE" means a notice in the form set out in Schedule
3 hereto.
"PAULINA" means the Liberian flag vessel M/T "Paulina", a 29993 dwt
product tanker built 1984 in Japan.
"PLEDGE OF SHARES" means a pledge by Rubicon (or any successor
owner of such shares) of all of its shares in each of the Borrowers
as security for the Borrowers' obligations under this Agreement,
being substantially in the form set out in Schedule 8 hereto.
<PAGE>
"PROCESS AGENT" means OMI Corp. 90 Park Avenue, New York, N.Y.,
10016 USA.
"RUBICON" means Rubicon Tankers Ltd, c/o OMI Corp., 90 Park Avenue,
New York, N.Y., 10016 USA.
"SECURITY DOCUMENTS" means all or any documents and/or arrangements
as may be entered into from time to time pursuant to Clause 5
(Security) hereof, as security for all or any of the obligations of
the Borrowers hereunder.
"TAX" means any and all taxes, levies, imposts, duties, charges,
fees, deductions and withholdings levied or imposed by any national
or local governmental or public body or authority.
"TOTAL LOSS" means any event which will entitle the Borrower to
claim payment of the insured value of the Vessels under the
Vessels' hull and machinery or war risk insurance policies.
"TRANCHE/TRANCHES" means any or all of the Tranche A or Tranche B.
"TRANCHE A" means the portion of the Commitment in the amount of
USD 9,647,724.- to be made available to the Borrowers in relation
to the refinancing of Paulina, and to be repaid on or prior to the
Final Repayment Date.
"TRANCHE B" means the portion of the commitment in the amount of
USD 7,600,000.- to be made available to the Borrowers in relation
to the refinancing of Colorado and to be repaid on or prior to the
Final Repayment Date.
"VESSELS" means Paulina and Colorado.
3. CONDITIONS PRECEDENT
3.1 The obligation of the Banks to make the Commitment
available is conditional upon the Agent and the Co-Agent
having received the following documents in form and
substance satisfactory to the Agent and the Co-Agent, no
later than 3 Banking Days prior to the Drawdown Date:
3.1.1 In respect of each of the Borrowers:
a. articles of incorporation.
b. by-laws.
c. certificate of good standing.
d. board and shareholders resolutions authorizing each
Borrower's execution of this Agreement and the
Security Documents.
e. evidence of the authority of person to act on the
relevant Borrower's behalf in relation to this
Agreement and the Security Documents.
<PAGE>
3.1.2 In respect of the Guarantor:
a. articles of incorporation.
b. by-laws.
c. certificate of good standing.
d. board resolutions authorizing the execution of the
Guarantee.
e. evidence of the authority of person to act on the
Guarantor's behalf in relation to the Guarantee.
3.1.3 In respect of Rubicon:
a. board resolutions authorizing the execution of the
Pledge of Shares.
b. evidence of the authority of person to act on
Rubicon's behalf in relation to the Pledge of
Shares.
3.1.4 In respect of the Vessels:
a. the Charterparty.
b. the Management Agreements.
c. the insurance policies/cover notes documenting the
insurance cover required pursuant to Clause 8.1.3
(Insurances) and Clause 8.1.4 (Mortgagee Interest).
d. confirmation of class certificates.
e. valuations of the Vessel from two shipbrokers for
the purpose of calculating the Market Value.
f. Certificates of Ownership and Encumbrances issued
by the Republic of Liberia, Bureau of Maritime
Affairs showing the Vessels to be free and clear of
all liens and encumbrances of record except in favor
of the Banks.
3.1.5 In respect of the Security Documents:
a. the Mortgages, duly executed by the relevant
Borrower.
b. the Assignment of Earnings duly executed by the
relevant Borrower.
c. the Assignment of Insurances duly executed by the
relevant Borrower.
d. the Guarantee.
e. the Notice of Assignment of Earnings from Colorado
Shipping to the Charterer and the Charterer's
acknowledgment thereof in accordance with the terms
of the Assignment of Earnings.
f. confirmation from the Vessels' insurers that the
Banks' security interest in the insurances have
been duly noted.
e. such filing statements under the Uniform Commercial
Code ("UCC") of the State of New York in relation
to the Assignment of Earnings and the Assignment of
Insurances duly executed by each of the Borrowers,
as the case may be, the Guarantor, as the Agent and
the Co-Agent shall reasonably require, together
with adequate documentation of the filing thereof
in the State of New York.
<PAGE>
3.1.6 In respect of the Pledge of Shares:
a. the Pledge of Shares duly executed by Rubicon.
b. the pledged share certificates.
c. irrevocable proxy to vote the shares.
d. undated letters of resignation from the directors
and officers of each of the Borrowers.
e. undated, executed stock transfer forms related to
the shares pledged under the Pledge of Shares.
3.1.7 A legal opinion of Seward & Kissel, legal advisers to the
Banks in matters of Liberian, New York and Delaware law.
3.1.8 The Process Agent has accepted its nomination as process
agent for the Borrowers and the Guarantor.
3.2 CERTIFIED COPIES. Each of the documents specified in
Clause 3.1 shall either be an original or a copy
certified to be true and up-to-date by an officer of each
of the Borrowers, Rubicon or the Guarantor, as
appropriate.
3.3 WAIVERS. The Majority Banks may, at their discretion,
extend the period for delivery of any of the documents
referred to above on such conditions as the Majority
Banks deem appropriate.
4. AVAILABILITY
4.1 DRAWDOWN NOTICE. The Commitment shall be made available
to the Borrowers in the original amounts for each of the
Tranches on the Drawdown Date, subject to the Agent
having received the Drawdown Notice before 11.00 a.m.
Oslo time not less than 3 Banking Days prior thereto.
4.2 MANNER OF PAYMENT. The Commitment shall be made available
solely for the purpose referred to under Clause 1 (Loan
and Purpose) above and in a manner to be agreed between
the Borrowers and the Agent prior to the Drawdown Date.
4.3 INDEMNITY. The Borrowers shall indemnify each Bank
against any loss or expense which such Bank may sustain
or incur as a consequence of the Commitment not being
drawn after the Drawdown Notice has been served.
4.4 SEVERALTY OF OBLIGATIONS. The obligations of each Bank
under this Agreement are several, the failure of any Bank
to perform any such obligation shall not relieve the
other Banks, the Agent, the Co-Agent or the Borrowers of
any of their respective obligations or liabilities under
this Agreement, nor shall the Agent, the Co-Agent or any
of the Banks be responsible for the obligations of any
other Bank under this Agreement.
<PAGE>
5. SECURITY
5.1 SECURITY. The Loan together with all unpaid interest,
default interest, commissions, charges, expenses and any
derived liability whatsoever of the Borrowers towards the
Banks, the Agent and the Co-Agent in connection therewith
shall be secured by:
a. the Mortgages.
b. the Assignment of Earnings.
c. the Assignment of Insurances.
d. the Guarantee.
e. the Pledge of Shares.
5.2 SET-OFF. In the event of non-payment of any amount
hereunder when due, the Agent, the Co-Agent and each of
the Banks individually shall have a separate and
immediate right of set-off in respect of any credit
balance, in any currency, on any account any of the
Borrowers might have with the Agent,the Co-Agent or any
of the Banks (branches included) from time to time,
towards satisfaction of any sum due to it, to the Agent,
the Co-Agent or to any of the other Banks hereunder.
6. INTEREST
6.1 INTEREST RATE. The Borrowers shall pay interest on the
relevant Tranche of the Loan in respect of each Interest
Period in arrears on each Interest Payment Date at a rate
equivalent to the aggregate of LIBOR and the Margin.
6.2 INTEREST PERIOD. The Borrowers shall be entitled to
nominate in the Nomination (Drawdown) Notice not later
than 11.00 a.m. London time 3 Banking Days prior to the
commencement of each Interest Period, whether the length
of the ensuing Interest Period for the relevant Tranche
of the Loan shall be one, three or six months or any
longer periods, if approved by the Banks (in their sole
discretion), always provided that:-
6.2.1 ABSENCE OF NOMINATION. In the absence of any such
nomination by the Borrowers, or if the Agent and the Co-
Agent after consultation with the Banks shall certify to
the Borrowers that the funds requested are not available
for an Interest Period of the length requested by the
Borrowers, the length of such Interest Period shall be
three months.
6.2.2 INSTALLMENTS. If an instalment under any of the Tranches
will fall due during the Interest Period to be nominated,
a separate Interest Period ending on such Instalment Date
shall be nominated for an amount equal to the instalment
due under such Tranche.
<PAGE>
6.2.3 BANKING DAY. If any Interest Period would end on a day
which is not a Banking Day such Interest Period shall end
on the next succeeding Banking Day in the same calendar
month or, if none, the preceding Banking Day.
6.2.4 ONE MONTH INTEREST PERIODS. The Borrowers shall not be
entitled to nominate an Interest Period of one month's
duration for a Tranche on more than three occasions
during each calendar year.
6.3 INTEREST CALCULATION. Interest shall accrue from day to
day and be calculated on the actual number of days
elapsed and on the basis of a 360-day year.
6.4 DEFAULT INTEREST. In the event of any payments hereunder
not being received on the due date therefore, interest
will be charged by the Agent from the due date until the
date that payment is received, at a rate corresponding to
the aggregate of LIBOR (for such periods as the Agent in
its sole discretion shall decide), the Margin and 3% p.a.
(three per cent per annum). Interest charged under this
Clause 6.4 shall be added to the defaulted amount on each
respective Interest Payment Date until the defaulted
amount has been repaid in full.
6.5 NO LIBOR QUOTATION. If for any reason the Agent shall be
unable to establish LIBOR for the relevant Interest
Period, the Borrowers shall pay interest on the Loan at
a rate which equals the cost for each Bank of making,
funding or maintaining its participation in the Loan plus
the Margin.
7. REPAYMENT/PREPAYMENT
7.1 The Loan together with all amounts due hereunder to the
Banks, the Agent and the Co-Agent from the Borrowers
shall, subject to the provisions of Clauses 7.2, 7.4, 9,
10 and 11 be repaid as follows:
Tranche A: by ten equal semi-annual installments in
the amount of USD 761,364 payable on each
Instalment Date and a final instalment
payable on the Final Instalment Date in
the amount of USD 2,034,084.-.
Tranche B: by ten equal semi-annual installments in
the amount of USD 600,000.- payable on
each Installment Date and a final
installment payable on the Final
Installment Date in the amount of USD
1,600,000.-.
<PAGE>
7.2 OPTIONAL PREPAYMENT. The Borrowers shall be entitled to
prepay any Tranche or part thereof (such part always
being equal to USD 500,000.- or any whole multiple
thereof) at any time without penalty but subject to the
payment required by Clause 13.2 (general prepayment
provisions) upon giving the Agent or the Co-Agent 14 days
irrevocable notice.
7.3 NO REBORROWING. Any amount prepaid shall be applied
towards the remaining installments due under such Tranche
in inverse chronological order of maturity and shall not
be available for reborrowing.
7.4 PREPAYMENT UPON TOTAL LOSS. In the event that any of the
Vessels suffer a Total Loss, the Borrowers shall, within
90 days from such event, prepay the Tranche relating to
the Vessel suffering the Total Loss and all other amounts
outstanding and relating to such Tranche from the
Borrowers to the Banks, the Agent and the Co-Agent
hereunder at such time, or deliver to the Agent a written
confirmation from the insurers of the relevant Vessel
that the claim relating to the Total Loss has been
accepted in full and that the insurers will pay an amount
equivalent to the insured value of such Vessel directly
to the Agent.
8. COVENANTS
8.1 The Borrowers and each of them individually undertake
with the Agent, the Co-Agent and the Banks and each of
them severally that, unless the Agent has given its prior
written consent to the contrary, they will, in the Loan
Period:-
8.1.1 INFORMATION. Promptly inform the Agent about any event
which constitutes or may constitute an Event of Default,
or which may adversely affect any of the Borrowers'
abilities fully to perform such Borrower's obligations
hereunder or under any of the Security Documents.
8.1.2 FINANCIAL INFORMATION. Deliver to the Agent for
distribution to the Banks as many copies (in English) as
the Agent may reasonably require of (a) each Borrower's
annual accounts (b) the Guarantor's annual audited
accounts on a fully consolidated basis (both (a) and (b)
being delivered as soon as practicable after the same has
been issued and in any event not later than 180 days
after the end of the relevant financial year), (c) any
financial information delivered to the Guarantor's
shareholders and (d) such other information about the
Borrowers' and the Guarantor's business and financial
condition as the Majority Banks may reasonably require.
<PAGE>
8.1.3 INSURANCES. Keep the Vessels fully insured against such
risks, in such amounts, on such terms and with such
insurers as the Majority Banks may reasonably require
including, but not limited to:
a. Hull and Machinery, Hull Interest Insurance with
the insurance value covering the Market Value of
the relevant Vessel (or covering 120% of the
relevant Tranche and, on an aggregate basis for the
Vessels, 120% of the Loan, if higher),
b. if any Vessel is employed under any employment
contract with a duration of 12 months or more, Loss
of Hire insurance for such Vessel,
c. Protection & Indemnity insurance,
d. War Risk insurance with the insurance value
covering the Market Value of the relevant Vessel
(or covering 120% of the relevant Tranche and, on
an aggregate basis for the Vessels, 120% of the
Loan, if higher).
The Borrowers shall maintain the Agent (on its own behalf
and on behalf of the Co-Agent and the Banks) as loss
payee in all insurance policies in accordance with the
provisions of the Mortgage.
8.1.4 MORTGAGEE INTEREST. Let the Agent order (at the
Borrowers' expense) a Mortgagee Interest and an Extended
Mortgagee Interest Insurance - Additional Perils
(Pollution Cover) for each of the Vessels in form and
substance satisfactory to the Majority Banks in favor of
the Agent (on its own behalf and on behalf of the Co-
Agent and the Banks), or, if so directed by the Agent,
arrange for such insurance cover to be established in
accordance with instructions from the Agent.
8.1.5 CERTIFICATE OF INSURANCES. Deliver an annual certificate
to the Agent from each of the Vessels' insurers
evidencing that all insurances referred to in Clause
8.1.3 (Insurances) and, if relevant, 8.1.4 (Mortgagee
Interest), have been taken out and are in full force and
effect.
8.1.6 NOTIFICATION. Immediately notify the Agent of:-
a. any accident to any of the Vessels involving
repairs the cost of which is likely to exceed USD
500,000.
b. any occurrence in consequence whereof either of the
Vessels has become or is likely to become a Total
Loss.
c. any arrest of either of the Vessels or the exercise
or purported exercise of any lien on any of the
Vessels or their earnings.
<PAGE>
8.1.7 CLASS. Have the Vessels classified and maintained in the
highest class with a classification society acceptable to
the Majority Banks.
8.1.8 FLAG. Not change the flag of either of the Vessels.
8.1.9 MANAGEMENT. Not terminate or amend the Management
Agreement in a manner which may be detrimental to the
interests of the Banks, the Agent and the Co-Agent.
8.1.10 SALE OF VESSELS. Not sell either of the Vessels unless
the net sales proceeds of such sales are sufficient to
repay (and are applied towards repayment) of all amounts
outstanding to the Banks, the Agent and the Co-Agent
under the relevant Tranche.
8.1.11 CHARTERPARTY. Not amend or terminate the Charterparty
except to the extent not detrimental to the interests of
the Banks, the Agent and the Co-Agent.
8.1.12 BANK ACCOUNTS. Maintain all bank accounts in respect of
the Vessels with the Agent or the Co-Agent.
8.1.13 NO FURTHER ENCUMBRANCES. Not enter into any new loan
and/or guarantee obligations except with the Guarantor or
a wholly owned subsidiary of the Guarantor or secure any
debt or guarantee obligation on either of the Vessels or
on any other asset constituting security pursuant to
Clause 5 (Security), other than as contemplated in this
Agreement.
8.1.14 NEW INVESTMENTS - SINGLE PURPOSE. Not make any new
investments or do anything which is not incidental to the
ownership and/or operation of the Vessels.
8.1.15 CASH. Ensure that each Borrower maintains a minimum of
USD 500,000.- in readily available cash.
8.2 BANKS' APPROVAL. A waiver by the Agent and the Co-Agent
of the Borrowers' compliances with the provisions set out
in Clause 8.1 shall require the prior approval of all
Banks.
9. MINIMUM VALUE
9.1 VALUATION. The Agent may, at any time during the Loan
Period, arrange for the Market Value of each Vessel to be
determined at the Borrowers' expense.
9.2 MARKET VALUE - PREPAYMENT. If during the Loan Period:
the aggregate Market Value of Paulina and Colorado is
less than 150% of the Loan, then the Borrowers shall
<PAGE>
prepay, upon 14 Banking Days' notice, such amount of the
relevant Tranche or, as the case may be, the Loan as is
necessary to comply with minimum value requirements as
set out in this sub-clause, or provide additional
security in form and substance acceptable to all of the
Banks (in their absolute discretion).
10. EVENTS OF DEFAULT
10.1 Each of the following events shall constitute an Event of
Default:-
10.1.1 OVERDUE PAYMENTS. Either Borrower fails to pay any amount
payable by it pursuant to the provisions of this
Agreement when due.
10.1.2 DEFAULT UNDER OTHER PROVISIONS. Either Borrower defaults
under any of the covenants or other provisions of this
Agreement (other than as referred to in 10.1.1 (Overdue
Payment)) or under the Security Documents, always
provided that the Borrowers in the event such default is
capable of being remedied (in the sole opinion of the
Majority Banks) shall be granted 10 Banking Days to
remedy such default (such period of remedy in any event
not being applicable in the event of a default by the
Borrowers under the provisions of Clause 8.1.3
(Insurances), 8.1.4 (Mortgagee Interest) or 8.1.7 (Class)
above). The remedy period shall be calculated from the
date the Borrowers receive notice of such default.
10.1.3 INFORMATION FROM BORROWERS. Any information given by any
of the Borrowers or the Guarantor in or in connection
with this Agreement or the Security Documents, proves to
be misleading or materially incorrect or inaccurate when
made.
10.1.4 CROSS DEFAULT. Any other loan, guarantee or other
indebtedness of any of the Borrowers or the Guarantor is
declared, or is capable of being declared due prematurely
by reason of default, or any of the Borrowers or the
Guarantor fails to make payment in respect thereof on the
due date for such payment, or security for any such other
loan, guarantee or indebtedness becomes enforceable.
10.1.5 LIENS. A maritime or other lien, arrest, distress or
similar charge is levied upon, or against any of the
Vessels or any substantial part of the assets of any of
the Borrowers or the Guarantor, and such is not
discharged within 30 Banking Days after such Borrower
or, as the case may be, the Guarantor has become aware of
the same.
<PAGE>
10.1.6 LOSS OF PROPERTY. A substantial part of any of the
Borrowers' or the Guarantor's business or assets are
destroyed, abandoned, seized, appropriated or forfeited
for any reason, except in the case of Total Loss of
either of the Vessels.
10.1.7 LIQUIDATION. An order of a competent court or an event
analogous thereto shall be made or any effective
resolution passed with a view to the bankruptcy,
composition proceedings, debt negotiations, liquidation,
winding-up or similar event of any of the Borrowers or
the Guarantor.
10.1.8 ADMITTANCE OF NON-PAYMENT. Any of the Borrowers or the
Guarantor is unable or admits in writing its inability to
pay any lawful debts as they mature.
10.1.9 TERMINATION OF BUSINESS. Any of the Borrowers or the
Guarantor ceases or threatens to cease to carry on its
business or disposes or threatens to dispose of a
substantial part of its business or assets, without the
prior written consent of the Majority Banks.
10.1.10 PERMITS. Any license, consent, permission or approval
required in connection with the implementation,
maintenance and performance of this Agreement and/or the
Security Documents is revoked, terminated or modified in
a manner unacceptable to the Majority Banks.
10.1.11 IMPOSSIBILITY OR ILLEGALITY. It becomes impossible or
unlawful for any of the Borrowers to fulfil any of the
terms of the Security Documents or for the Agent, the Co-
Agent or the Banks to exercise any right or power vested
in them under the Security Documents, or the security
created by any of the Security Documents is imperiled.
10.1.12 OWNERSHIP. If the ownership of any of the Borrowers is
changed in any way, without the prior written consent of
the Majority Banks.
10.1.13 MATERIAL ADVERSE CHANGE. A material (in the reasonable
opinion of the Majority Banks) adverse change occurs in
the financial condition of any of the Borrowers or the
Guarantor.
10.1.14 CORPORATE DOCUMENTS. If the by-laws of any of the
Borrowers are varied in any way adverse to the interests
of the Banks (in the reasonable opinion of the Majority
Banks) without the prior written consent of the Agent.
10.2 ACCELERATION. Upon the occurrence of any Event of
Default, the Agent may, and, upon instruction from the
<PAGE>
Majority Banks, shall, forthwith notify the Borrowers in
writing whereupon the Loan shall become immediately due
and payable and the Banks shall be under no further
obligation to advance funds to the Borrowers hereunder.
11. CHANGES IN CIRCUMSTANCES
11.1 INCREASED COSTS. If by reason of: (i) any change in any
existing law, rule or regulation, or (ii) the adoption of
any new law, rule or regulation, or (iii) any change in
the interpretation or administration of (i) or (ii) above
by any governmental authority, or (iv) compliance with
any directive or request from any governmental authority
(whether or not having the force of law):
a. a Bank incurs a cost as a result of having entered
into this Agreement and/or as a result of
performing its obligations hereunder, or
b. there is an increase in the cost to a Bank of
funding or maintaining its participation in the
Commitment/Loan, or
c. a Bank becomes liable for any new Taxes (other than
on net income) calculated by reference to its
participation in the Commitment/Loan, or
d. a Bank becomes subject to capital adequacy or
similar requirements not known to or reasonably
anticipated by such Bank at the date hereof which
will have the effect of increasing the amount of
capital required or expected to be maintained by
such Bank based on such Bank's participation in the
Commitment/Loan,
then any such cost, liability or reduced return shall be
payable by the Borrowers upon request by the Agent or the
Co-Agent (on behalf of the Bank affected) from the date
such request was received by any of the Borrowers either
in the form of an increased margin or in the form of an
indemnification in the amount conclusively (save in the
case of manifest error) determined in the Agent's or the
Co-Agent's request.
11.2 ILLEGALITY. In the event that it shall be unlawful for
any Bank to make or maintain such Bank's participation in
the Loan/Commitment, the Agent shall, upon request from
such Bank, serve notice of such illegality on the
Borrowers.
11.3 UNAVAILABILITY OF FUNDS. In the event that any Bank is
unable to obtain deposits in USD in the London interbank
Euro-currency market, the Agent shall, upon request from
such Bank, serve notice of such inability on the
Borrowers.
<PAGE>
11.4 ALTERNATIVE FUNDING. If so requested by the Borrowers,
the Agent, the Co-Agent and the Banks shall use
reasonable efforts to make the participation in the
Loan/Commitment of the Bank affected by the circumstances
contemplated in Clause 11.1 (Increased cost), 11.2
(Illegality) or 11.3 (Unavailability of funds), available
from alternative sources.
11.5 PREPAYMENT. Upon occurrence of circumstances set out in
Clause 11.2 (Illegality) or 11.3 (Unavailability of
funds) the Borrowers shall, unless alternative funding
has been or will be arranged within a period acceptable
to the Bank affected, prepay the affected Bank's
participation in the Loan pursuant to the provisions of
Clause 13.2 (General prepayment provisions) on the first
occurring Interest Payment Date (and the Commitment shall
be reduced accordingly).
12. FEES, COSTS AND EXPENSES
12.1 The Borrowers shall pay to the Agent for distribution
between the Banks, the Co-Agent and the Agent:
12.1.1 RESTRUCTURING FEE. A restructuring fee of USD 30,000.- to
be divided proportionally between the Banks reflecting
their participation in the Commitment, such restructuring
fee to be payable at latest on the date hereof.
12.1.2 AGENCY FEE. A non-refundable annual agency fee of USD
7,500.- per year, payable annually in advance on the 28th
February during the Loan Period.
12.1.3 CO-AGENCY FEE. A non-refundable co-agency fee of USD
20,000.- per year payable annually in advance on the 28th
February and to be divided equally between the Agent and
the Co-Agent.
12.1.4 COSTS. Upon demand, whether or not the Commitment or any
part thereof is ever advanced to the Borrowers hereunder,
all costs, charges and expenses (including external and
internal legal fees) incurred by the Agent, the Co-Agent
and the Banks in connection with the preparation and
execution of, and all costs, charges and expenses of the
Agent, the Co-Agent and the Banks in connection with the
enforcement and preservation of the Agent's, the Co-
Agent's and the Banks' rights under this Agreement and
under the Security Documents or otherwise in connection
with the Loan which amount shall be deemed an amount
under this Agreement.
<PAGE>
13. PAYMENTS
13.1 TAXES. All payments to be made by the Borrowers under
this Agreement shall be made in USD to the Agent or the
Co-Agent as directed by the Agent and shall be made
without set-off or counterclaim or any deductions for,
and free and clear of any Taxes. In the event that any of
the Borrowers are required by law or regulation to deduct
or withhold any such Taxes the sum to be paid shall be
increased by such amount as shall be necessary to ensure
that the amount received by the Agent or the Co-Agent
and/or the Banks after such deduction or withholding, is
equal to the amount which would have been received under
this Agreement had no such deduction or withholding been
required.
13.2 GENERAL PREPAYMENT PROVISIONS. If the Loan, any Tranche
or any part thereof, for any reason whatsoever, is
prepaid or repaid on a day other than the relevant
Interest Payment Date, the Borrowers shall,
simultaneously with such prepayment, pay to the Agent or
the Co-Agent, for the account of the affected Banks,
accrued interest on such prepaid amount to the date of
actual payment and all other sums payable by the
Borrowers to such Banks, the Agent and the Co-Agent
pursuant to this Agreement, together with such additional
amounts as may be specified by such Banks in an
explanatory certificate (which in the absence of manifest
error shall be conclusive) to be necessary to compensate
such Banks for any loss, premium or penalties incurred or
to be incurred by such Banks in liquidating deposits or
redeploying funds taken or borrowed to fund or maintain
such Banks' participation in the Loan for the remainder
of the then current Interest Period.
13.3 REFUND OBLIGATION. If the Agent, the Co-Agent or any Bank
pays any amount to the Borrowers, which should not have
been paid to the Borrowers, the Borrowers shall forthwith
on demand refund such amount to the Agent or such Bank.
The Borrowers shall also on demand pay interest equal to
LIBOR on the relevant sum for each day from the date such
amount was so made available by the Agent or the Bank
until the date such amount is repaid to the Agent or such
Bank.
14. AGENCY
14.1 AGENT'S AUTHORITY. Each Bank irrevocably authorizes the
Agent and the Co-Agent to take such action on its behalf
and to exercise such powers as are specifically delegated
to them by the terms of this Agreement and the Security
Documents together with all such powers as are reasonably
<PAGE>
incidental thereto. The relationship between the Agent
and the Co-Agent on one side and the Banks on the other
side is that of agent and principal only, nothing herein
shall (nor shall it be construed so as to) constitute the
Agent or the Co-Agent as trustees for the Banks or impose
on the Agent and the Co-Agent or any of the Banks any
duties or obligations other than those for which express
provision is made in this Agreement or under the Security
Documents.
14.2 APPLICATION OF FUNDS. Any amounts received by the Agent
or the Co-Agent hereunder shall promptly be distributed
and applied firstly against costs and expenses incurred
by the Agent or the Co-Agent hereunder, secondly against
amounts due to the Agent, the Co-Agent and the Banks
hereunder other than interest and principal, thirdly
against interest due hereunder and fourthly against
principal due hereunder.
14.3 SHARING OF PAYMENT. If any Bank at any time receives or
recovers by set-off or otherwise any amount due to it
hereunder (otherwise than amounts specifically payable to
that Bank under the terms of this Agreement), then such
Bank shall share such amount rateably with the Agent, the
Co-Agent and the other Banks pursuant to the principles
of 14.2 (Application of funds). Amounts received
hereunder shall be subject to adjustment if the Bank
having shared a recovered amount, becomes obliged to
repay any such amount to the Borrowers or any third
party.
14.4 INFORMATION TO BANKS. The Agent and the Co-Agent shall
promptly advise the Banks of each notice received by them
from the Borrowers hereunder. The Agent and the Co-Agent
shall not be under any obligation towards the Banks to
ascertain or enquire as to the performance or observance
of any of the terms or conditions hereof, other than a
failure to make payment of sums due.
14.5 INDEMNIFICATION OF AGENT AND CO-AGENT. Each Bank shall,
ratably in accordance with its respective participation
in the Loan, indemnify and hold the Agent and the Co-
Agent harmless against any loss or liability which the
Agent or the Co-Agent may suffer or incur by reason of an
action taken or omitted by it as agent or co-agent
hereunder or under the Security Documents (except in the
event of gross negligence or wilful misconduct) to the
extent that the Agent or the Co-Agent shall not have been
reimbursed therefore by the Borrowers.
<PAGE>
14.6 DISCLAIMER OF LIABILITY. The Agent and the Co-Agent take
no responsibility for the truth of any covenants,
representations or undertakings given or made herein or
in the Security Documents nor the validity,
effectiveness, adequacy or enforceability of this
Agreement or the Security Documents and neither the Agent
nor the Co-Agent (except in the case of gross negligence
or wilful misconduct) nor any of their directors,
officers or employees shall be liable for any action
taken or omitted by it or any of them.
14.7 INDIVIDUAL CREDIT RISK ASSESSMENT. Each Bank shall be
responsible for making its own independent investigation
of the financial condition and affairs of the Borrowers
and the Guarantor in connection with the making and
continuance of the Loan or the relevant part thereof, and
has made its own appraisal of the creditworthiness of the
Borrowers and the Guarantor.
14.8 AGENT'S AND CO-AGENT'S OTHER BUSINESS WITH BORROWERS. The
Agent and the Co-Agent may, without liability to account,
accept deposits from, lend money to and generally engage
in any kind of banking or trust business with the
Borrowers and the Guarantor.
15. ASSIGNMENT
15.1 BORROWERS. The Borrowers may not assign any of their
rights or obligations hereunder to others.
15.2 BANK TO AFFILIATE. Each Bank may, by giving prior written
notice to the Agent, the Co-Agent and the Borrowers,
assign all or a part of its rights and obligations
hereunder to an "Affiliate", and "Affiliate" shall for
this purpose mean the ownership (whether directly or
indirectly) of 50% or more of the equity share capital
(or similar right of ownership) of the relevant
institution or vice versa.
15.3 BANK TO OTHER FINANCIAL INSTITUTIONS. Each Bank may
furthermore, subject to the prior written approval of the
Agent, the Co-Agent and the Borrowers (such approval not
to be unreasonably withheld) assign all or a part of its
rights and obligations hereunder to any other bank or
financial institution.
15.4 SUBSEQUENT PAYMENTS. In the event of a transfer of all or
a part of a Bank's rights and obligations hereunder, the
Borrowers shall subsequently make all payments under this
Agreement to the Agent for the ratable account of the
relevant Bank and/or its assignee.
<PAGE>
16. JOINT AND SEVERAL LIABILITY
The liability of the Borrowers hereunder shall be joint and several
and each of the Borrowers shall, at all times, be liable to the
Banks, the Agent and the Co-Agent for all amounts due to the Banks,
the Agent and the Co-Agent hereunder.
17. NOTICES AND CORRESPONDENCE
17.1 Every notice or demand under this Agreement shall be in
writing, but may be given or made by telefax which shall
be sent to the Agent and the Borrower at their respective
addresses, being in respect of the Agent at:
Christiania Bank New York Branch
11 West 42nd Street, 7th Floor
New York, N.Y. 10036
USA
Attn.: Loan Administration
Telefax No.: (212) 827 4888
in respect of the Co-Agent:
Chemical Bank
270 Park Avenue
New York, N.Y. 10017
USA
Attn.: Loan Administration
Telefax no.: + (212) 270 1469
and in respect of the Borrower at:
c/o OMI Corp.
90 Park Avenue
New York, N.Y. 10016
USA
Attn.: President
Telefax No.: + (212) 247 22 88
or to such other address or telefax number as may from
time to time be notified by the relevant party. In the
case of notices from the Borrowers, all telefax messages
shall be confirmed by letter posted as soon as
practicable thereafter if so requested by the Agent or
the Co-Agent.
18. CURRENCY INDEMNITY
No payment to the Agent, the Co-Agent or the Banks hereunder
pursuant to any judgement or order of any court or otherwise shall
operate to discharge the obligations of the Borrowers in respect of
which it was made unless and until payment in full shall have been
<PAGE>
received by the Agent; the Co-Agent and the Banks in USD. To the
extent that the amount of any such payment shall on actual
conversion into USD fall short of the amount of the relevant
obligation expressed in USD, the Agent, the Co-Agent or such Bank
shall have a further and separate cause of action against the
Borrowers for the recovery of such sum as shall, after conversion
into USD, be equal to the amount of the shortfall.
19. MISCELLANEOUS
19.1 SEVERALTY OF PROVISIONS. This Agreement and the Security
Documents shall constitute one Agreement, but in the
event of any conflict between the provisions of this
Agreement and any of the Security Documents, the
provisions of this Agreement shall prevail unless thereby
rendering the Security Documents or any of them, or any
part thereof void, invalid or unenforceable.
19.2 CLAUSE HEADINGS. Clause headings are for convenience of
reference only and shall in no way affect the
interpretation of this Agreement.
20. GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by and construed in accordance
with Norwegian law, and the Borrowers hereby irrevocably submits to
the non-exclusive jurisdiction of the Norwegian courts, the venue
to be Oslo City Court. The Borrowers hereby irrevocably nominate
the Process Agent as their process agent for the service of writs
or any acts of process in respect of any dispute hereunder.
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Agreement to
be duly executed by their authorized officers on the day and year
first above written.
for and on behalf of for and on behalf of
SAUGATUCK SHIPPING LTD. COLORADO SHIPPING LTD.
By:/s/ Vincent de Sostoa By:/s/ Vincent de Sostoa
for and on behalf of for and on behalf of
CHEMICAL BANK CHEMICAL BANK
(as Co-Agent)
By:/s/ Richard Stewart By:/s/ Richard Stewart
for and on behalf of
DEN NORSKE BANK AS
By:/s/ Tony Samuelsen
for and on behalf of for and on behalf of
CHRISTIANIA BANK OG CHRISTIANIA BANK OG
KREDITKASSE KREDITKASSE
(as Co-Agent)
By:/s/ Svein Engh By:/s/ Svein Engh
EXHIBIT 10.43
SUPPLEMENTAL
COMMITMENT TO GUARANTEE OBLIGATIONS
BY
THE UNITED STATES OF AMERICA
ACCEPTED BY
OMI HUDSON TRANSPORT, INC.,
SHIPOWNER
This SUPPLEMENTAL COMMITMENT TO GUARANTEE OBLIGATIONS (the
"Supplemental Commitment") dated as of January 27, 1994, is made
and entered into on said date by the UNITED STATES OF AMERICA (the
"United States"), represented by the SECRETARY OF TRANSPORTATION,
acting by and through the MARITIME ADMINISTRATOR, successor by
operation of law to the Secretary of Commerce, acting by and
through the Assistant Secretary of Commerce for Maritime Affairs
(the "Secretary"), and accepted on said date by OMI HUDSON
TRANSPORT, INC., a Delaware corporation (the "Shipowner") .
RECITALS:
A. On November 20, 1980 (the "First Closing Date") OMI
Clover Transport, Inc. (formerly Ogden Clover Transport, Inc.)
("Clover") and the Secretary entered into a Commitment to Guarantee
Obligations, Contract No. MA-9926 (the "Guarantee Commitment")
under the provisions of Title XI of the Merchant Marine Act, 1936,
as amended (the "Act") to provide for a portion of the financing of
the Construction of one chemical oil product tanker vessel named
OMI DYNACHEM (ex OGDEN DYNACHEM) (the "Vessel"). Unless otherwise
expressly provided herein or in Amendment No. 1 to Restated
Security Agreement, as hereinafter defined, the terms used herein
and defined in Schedule X to the Restated Security Agreement,
Contract No. MA-9928 (a copy of which is attached hereto as
Schedule One) shall have the respective meanings set forth in said
Schedule X.
B. On the First Closing Date, in connection with the
execution and delivery of the Guarantee Commitment (1) Clover and
Citibank, N.A., a national banking association (the "Indenture
Trustee") entered into the Indenture; (2) the Secretary and the
Indenture Trustee entered into the Authorization Agreement,
Contract No. MA-9927; (3) Clover and the Secretary entered into the
Security Agreement, Contract No. MA-9928 ("Security Agreement");
(4) Clover executed and delivered to the Secretary the Secretary's
Note in the aggregate principal amount of $ 24,000,000; (5) OMI
Bulk Transport, Inc., (formerly Ogden Bulk Transport, Inc.) a
Delaware corporation and the parent company of Clover ("Bulk") and
the Secretary entered into the Title XI Reserve Fund and Financial
Agreement, Contract No. MA-9936; (6) Clover, the Secretary and
Citibank, N.A., a national banking association (the "Depository")
entered into the Depository Agreement, Contract No. MA-9930
<PAGE>
("Depository Agreement"); (7) Clover issued and delivered United
States Government Guaranteed Ship Financing Notes, Series A in the
aggregate principal amount of $36,000,000; and (8) Clover executed
and delivered or caused to be executed and delivered various
assignments and guarantees described in the Security Agreement as
further security to the Secretary;
C. On May 21, 1981, Clover issued and delivered United
States Government Guaranteed Ship Financing Bonds in the aggregate
principal amount of $9,000,000 ("Initial Series A Obligations"),
United States Government Guaranteed Ship Financing Bonds in the
aggregate principal amount of $35,000,000 ("Initial Series B
Obligations"), and United States Government Guaranteed Ship
Financing Bonds in the aggregate principal amount of $13,500,000
("Initial Series C Obligations" and, together with the Initial
Series A Obligations and Initial Series B Obligations, hereinafter
called the Initial Obligations) under an Underwriting Agreement
dated as of May 14, 1981 to the Underwriters named therein and in
connection therewith, Clover executed and delivered to the
Secretary the Mortgage, Contract No. MA-9929;
D. In connection with the issuance of the Initial
Obligations, Clover and the Secretary entered into Amendment No. 1
to the Security Agreement dated May 21, 1981;
E. On September 29, 1983 The Bank of New York, not in its
individual capacity but solely as owner trustee under the Trust
Agreement dated as of September 1, 1983, for the benefit of the
trustor named therein, (the "Bank") acquired the Vessel from Clover
and on the date thereof, duly executed and delivered Assumption and
Amendment No. 2 to Indenture, among the Bank, Clover and the
Indenture Trustee, pursuant to which the Bank assumed all of
Clover's obligations under the Indenture and the Initial
Obligations;
F. On August 12, 1987, in connection with the acquisition of
the Vessel by the Shipowner, the Bank, the Shipowner, Clover and
the Secretary entered into Amendment No. 3 to Security Agreement
(said amendment, together with the Security Agreement, Amendment
No. 1 thereto dated May 21, 1981 and Amendment No. 2 thereto dated
September 29, 1983 herein called the "Original Security Agreement")
whereby the Bank was released from all obligations, duties and
liabilities under the Original Security Agreement and whereby the
Shipowner assumed all of the obligations of the Bank under the
Original Security Agreement, as the same was further amended and
restated in its entirety in the form of the Restated Security
Agreement dated August 12, 1987 between the Shipowner and the
Secretary (the "Restated Security Agreement");
G. From and after the execution and delivery of Amendment
No. 3 and the Restated Security Agreement, the rights, obligations,
duties and liabilities of the Shipowner and the Secretary under the
<PAGE>
Original Security Agreement, as amended and assumed by the
Shipowner pursuant to Amendment No. 3, are governed and determined
solely under the Restated Security Agreement and the various
instruments and documents executed by the Shipowner pursuant
thereto;
H. Immediately prior to the execution and delivery of this
Supplemental Commitment there were Outstanding Initial Obligations
issued by the Shipowner and guaranteed by the Secretary in the
aggregate principal amount of $ 23,437,500, consisting inter alia
of $12,187,500 principal amount of Initial Series B Obligations;
I. All of the Initial Series B Obligations have been duly
called for redemption and, in order to refinance the Initial Series
B Obligations, the Shipowner has entered into a Bond Purchase
Agreement dated as of January 27, 1994, with the Purchaser named
therein ("Refinancing Bond Purchase Agreement") providing for the
sale and delivery on January 27, 1994 (the "Refinancing Closing
Date"), of $12,187,500 aggregate principal amount of sinking fund
bonds bearing interest at the rate of 5.35% per annum and maturing
on March 4, 2001 (the "Dynachem Series B Obligations"). The
remaining funds necessary for the redemption of the Initial Series
B Obligations will be paid by the Shipowner;
J. The Shipowner will on the Refinancing Closing Date enter
into Supplemental Indenture No. 5 to Indenture with the Indenture
Trustee and will authorize the issuance under the Indenture of the
Dynachem Series B Obligations, which Dynachem Series B Obligations
under the terms hereof are to be issued for the purpose of (i)
aiding in the refinancing of the existing Initial Series B
Obligations and (ii) modifying and restating the terms of the form
of the existing Initial Series B Obligations by (a) reducing the
interest rate thereof, (b) changing the schedule of premiums in
connection with an optional redemption and (c) adding the right of
the Secretary to assume the Dynachem Series B Obligations after a
Default by the Shipowner, as permitted by Public Law 98-595.
K. The Dynachem Series B Obligations when duly executed,
authenticated and delivered pursuant to the Indenture, as
supplemented by Supplemental Indenture No. 5 to Indenture, will
constitute the legal, valid and binding obligations of the
Shipowner in accordance with their respective terms. The Dynachem
Series B Obligations shall be as stated in Supplemental Indenture
No. 5 to Indenture and in substantially the form attached thereto
having the maturity date and interest rate set forth in the
Refinancing Bond Purchase Agreement and the Dynachem Series B
Obligations.
<PAGE>
L. Under Amendment No. 5 to the Authorization Agreement to
be entered into on the Refinancing Closing Date between the
Secretary and the Indenture Trustee ("Amendment No. 5 to
Authorization Agreement"), the Indenture Trustee will be authorized
to endorse and execute on each of the Dynachem Series B Obligations
issued on such date, by means of the facsimile signature of the
Maritime Administrator or Acting Maritime Administrator and the
facsimile seal of the Department of Transportation, and to
authenticate and deliver, a guarantee by the Secretary of the
payment in full of all of the unpaid interest on, and the unpaid
balance of the principal of, each Dynachem Series B Obligation,
including interest accruing between the date of default under such
Dynachem Series B Obligation and the date of payment by the
Secretary (individually a "Guarantee" and collectively the
"Guarantees").
M. On the Refinancing Closing Date, the Shipowner as further
security to the Secretary for the payment to the Secretary of the
principal of, and the interest due or to become due on, the
Secretary's Note will execute and deliver an endorsement to
Secretary's Note (the "Endorsement No. 4 to Secretary's Note"),
will enter into Amendment No. 1 to Restated Security Agreement
("Amendment No. 1 to Restated Security Agreement") and will execute
and deliver Supplement No. 4 to First Preferred Ship Mortgage
("Supplement No. 4 to Mortgage").
N. On the Refinancing Closing Date, the Shipowner, the
Depository and the Secretary will execute and deliver Amended and
Restated Depository Agreement ("Depository Agreement").
O. On the Refinancing Closing Date, the Shipowner, Bulk and
certain affiliates of the Shipowner will execute and deliver the
Confirmation of Cross Guarantee ("Confirmation of Cross
Guarantee").
WITNESSETH
That under the provisions of Title XI of the Merchant Marine
Act, 1936, as amended and in effect on the date hereof (said
provisions, as so amended and in effect on the date hereof, being
herein called "Title XI") and in consideration of (i) the execution
and delivery on or before the date hereof of the Refinancing Bond
Purchase Agreement, (ii) the covenants of the Shipowner contained
herein, (iii) the payment by or on behalf of the Shipowner to the
Secretary of the charges for this Supplemental Commitment pursuant
to Section 1104A (f) of Title XI and (iv) other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Secretary hereby commits itself as herein
provided.
<PAGE>
Annexed to each counterpart of this Supplemental Commitment
are forms of the Refinancing Bond Purchase Agreement, Supplemental
Indenture No. 5 to Indenture, the Dynachem Series B Obligations,
Amendment No. 5 to Authorization Agreement, Amendment No. 1 to
Restated Security Agreement, Endorsement No. 4 to Secretary's Note,
Supplement No. 4 to Mortgage, Amended and Restated Depository
Agreement and Confirmation of Cross Guarantee.
The Refinancing Bond Purchase Agreement, Supplemental
Indenture No. 5 to Indenture, the Obligations, Amendment No. 5 to
Authorization Agreement, Amendment No. 1 to Restated Security
Agreement, Endorsement No. 4 to Secretary's Note, Supplement No. 4
to Mortgage, Amended and Restated Depository Agreement and
Confirmation of Cross Guarantee shall be executed and delivered on
the Refinancing Closing Date substantially in the respective forms
annexed hereto, or as approved by the Secretary and consented to by
the Shipowner except that the blanks therein shall be filled in as
contemplated therein and herein.
ARTICLE I
FINDINGS AND DETERMINATIONS OF THE SECRETARY
Pursuant to Section 1104A (d) of Title XI, the Secretary has
found that the property or project with respect to which the
Obligations will be issued, will be, in his opinion, economically
sound.
Pursuant to Sections 1101(f) and 1104A (b)(2) of Title XI and
the third paragraph of Article I of the Guarantee Commitment, the
Secretary confirmed his prior determination of the Actual Cost of
the Vessel. In addition, the Secretary has redetermined the
Depreciated Actual Cost of the Vessel as of December 31, 1993, and
found that the aggregate principal amount of the Obligations will
not, in the aggregate, exceed 87 1/2% of the Depreciated Actual
Cost of the Vessel, as determined by the Secretary.
Pursuant to Sections 1104A (b)(3) and 1104A (b)(5) of Title
XI, respectively, the Secretary has determined that the Stated
Maturity of the Dynachem Series B Obligations has changed to March
4, 2001 and is satisfactory and that the interest rate to be borne
by the Dynachem Series B Obligations exclusive of the charges for
the Guarantee Fee (and service charges, if any) to be issued on the
Refinancing Closing Date to be reasonable taking into account the
range of interest rates prevailing in the private market for
similar loans and risks assumed by the Secretary.
<PAGE>
ARTICLE II
COMMITMENT TO GUARANTEE OBLIGATIONS
The United States, represented by the Secretary, HEREBY
COMMITS ITSELF TO GUARANTEE (as provided in the Dynachem Series B
Obligations and the Guarantees) the payment of the unpaid interest
on, and the unpaid balance of the principal of, the Dynachem Series
B Obligations, including interest accruing between the date of
default under the Dynachem Series B Obligations and the payment in
full of the Guarantees; and to effect this Supplemental Commitment
hereby commits itself to execute and deliver Amendment No. 5 to
Authorization Agreement and Amendment No. 1 to Restated Security
Agreement on the Refinancing Closing Date.
ARTICLE III
THE DYNACHEM SERIES B OBLIGATIONS
The Dynachem Series B Obligations shall be substantially in
the form of Exhibit 1 to Supplemental Indenture No. 5 to Indenture
(or such other form as shall be approved by the Secretary and
consented to by the Shipowner, and shall be subject to all of the
terms and conditions set forth in the Indenture as supplemented by
Supplemental Indenture No. 5 to Indenture. Supplemental Indenture
No. 5 to Indenture, the Dynachem Series B Obligations, Amendment
No. 1 to Restated Security Agreement, Endorsement No. 4 to
Secretary's Note, Supplement No. 4 to Mortgage, Amended and
Restated Depository Agreement and Confirmation of Cross Guarantee
shall be executed and delivered by the parties thereto,
substantially simultaneously with the execution and delivery of
Amendment No. 5 to Authorization Agreement. The forms of
Supplemental Indenture No. 5 to Indenture, the Dynachem Series B
Obligations, Amendment No. 5 to Authorization Agreement, Amendment
No. 1 to Restated Security Agreement, Endorsement No. 4 to
Secretary's Note, Supplement No. 4 to Mortgage, Amended and
Restated Depository Agreement and Confirmation of Cross Guarantee
are hereby approved by the Secretary.
<PAGE>
ARTICLE IV
COVENANTS OF THE SHIPOWNER
The Shipowner represents and, until termination of the
Supplemental Commitment, agrees:
(a) that the Vessel has been constructed in a shipyard within
the United States and has been documented and will remain
documented under the laws of the United States;
(b) to maintain records of all amounts paid or obligated to be
paid by or for the account of the Shipowner for the Construction of
the Vessel;
(c) that the documents referred to in Paragraph (f) of
Article IV of the Guarantee Commitment, as amended and supplemented
with the consent of the Secretary, remain in full force and effect;
(d) to execute and deliver Amendment No. 1 to Restated
Security Agreement, Supplemental Indenture No. 5 to Indenture,
Endorsement No. 4 to Secretary's Note to reflect the issuance of
the Dynachem Series B Obligations, Supplement No. 4 to Mortgage,
Amended and Restated Depository Agreement and Confirmation of Cross
Guarantee.
(e) to furnish to the Secretary, promptly upon written
request, such reasonable, material and pertinent reports, evidence,
proof or information in addition to that furnished pursuant to the
further provisions of this Supplemental Commitment or in the
application for this Supplemental Commitment under Title XI or
otherwise available to the Secretary, as the Secretary may
reasonably deem necessary or appropriate in connection with the
performance of the Secretary of his duties and functions under the
Act;
(f) to permit the Secretary, promptly upon request, to make
such reasonable, material and pertinent examination and audit of
its books, records and accounts and to take such information
therefrom and make such transcripts or copies thereof, as the
Secretary may reasonably deem necessary or appropriate in
connection with the performance by the Secretary of his duties and
functions under the Act; and
(g) to maintain its United States citizenship within the
meaning of Section 2 of the Shipping Act, 1916, as amended, and 46
C.F.R. Part 355 for the purpose of operating the Vessel in the
foreign and coastwise trades of the United States, to the
satisfaction of the Secretary and, at the time of the execution and
delivery of Amendment No. 5 to Authorization Agreement to submit to
the Secretary such supplemental proof of citizenship as the
Secretary may deem appropriate to evidence the continued United
States citizenship of the Shipowner for said purpose.
<PAGE>
ARTICLE V
CONDITIONS TO EXECUTION AND DELIVERY OF
AMENDMENT NO. 5 TO AUTHORIZATION AGREEMENT AND
AMENDMENT NO. 1 TO RESTATED SECURITY AGREEMENT
Amendment No. 5 to Authorization Agreement shall be executed
and delivered by the Secretary and the Indenture Trustee; Amendment
No. 1 to Restated Security Agreement by the Shipowner and the
Secretary; and Supplement No. 4 to Mortgage by the Shipowner and
the Secretary. The obligation of the United States, represented by
the Secretary, to execute and deliver Amendment No. 1 to Restated
Security Agreement on the Refinancing Closing Date shall be subject
to the following conditions unless waived in writing by the
Secretary:
(a)(i) The Refinancing Closing Date shall occur within one
year of December 22, 1993; and (ii) on the Refinancing Closing Date
the Vessel shall be in the same condition as when delivered by the
Shipbuilder, ordinary wear and tear excepted and the Shipowner
shall have furnished to the Secretary a communication with respect
to the Vessel that there have been no unusual occurrences (or a
full description of such occurrences, if any), which would
adversely affect the condition of the Vessel;
(b) On the Refinancing Closing Date, the Vessel shall be free
and clear of any claim, lien, charge, mortgage or other encumbrance
of any character (except as otherwise permitted by Section 2.04 of
Exhibit 1 to the Restated Security Agreement) and a Certificate of
the Shipowner shall be delivered to the Secretary to the foregoing
effect; and Supplemental Indenture No. 5 to the Indenture and the
Obligations to be sold on the Refinancing Closing Date shall have
been duly executed and delivered;
(c) On the Refinancing Closing Date, the Shipowner shall be
a citizen of the United States within the meaning of Section 2 of
the Shipping Act, 1916, as amended, and shall have furnished to the
Secretary three (3) executed affidavits setting forth data showing
such citizenship;
(d) On the Refinancing Closing Date, there shall have been
delivered to the Secretary (i) two executed copies of Supplemental
Indenture No. 5 to Indenture; (ii) one executed copy and one true
copy of the Refinancing Bond Purchase Agreement; (iii) two executed
copies of the opinions of counsel referred to in the Refinancing
Bond Purchase Agreement; (iv) two specimen copies of the
Obligations issued under Supplemental Indenture No. 5 to Indenture;
and (v) two executed copies of all other documents delivered by the
Shipowner or the Indenture Trustee on the Refinancing Closing Date;
<PAGE>
(e) The following representations and warranties of the
Shipowner shall have been made to the Secretary in writing and
shall be true on the Refinancing Closing Date;
(i) The Shipowner is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware; has not failed to qualify to do business in
any jurisdiction in the United States in which its business or
properties require such qualification, has paid or caused to
be paid all taxes assessed against it (except to the extent
such taxes are being contested in good faith and for the
payment of which the Shipowner has adequate reserves); has
full corporate power, authority and legal right to own its
properties and assets and to conduct its business as presently
conducted and to enter into and carry out the terms and
provisions of this Supplemental Commitment and each of the
agreements and instruments referred to herein in which it is
named a party:
(ii) this Supplemental Commitment and each of the
agreements and instruments referred to herein heretofore
executed and delivered in which the Shipowner is named a party
constitutes (and each of the agreements and instruments
referred to herein not heretofore executed and delivered
concurrently herewith in which the Shipowner is named a party,
when duly executed and delivered, will constitute), in
accordance with their respective terms, a legal, valid and
binding obligation of the Shipowner enforceable in accordance
with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or other, laws relating to or affecting the enforcement of
creditors' rights as from time to time in effect;
(iii) the execution and delivery by the Shipowner of this
Supplemental Commitment and each of the agreements and
instruments referred to herein in which it is named a party,
consummation by the Shipowner of the transactions contemplated
hereby and thereby and compliance by the Shipowner with all of
the terms and provisions of this Supplemental Commitment and
each of the agreements and instruments referred to herein in
which it is named a party or by which it is bound will not
conflict with, or result in a breach of any of the terms or
provisions of, or constitute a default under, or (except as
contemplated thereby) result in the creation or imposition of
any lien, charge or encumbrance upon any of the property or
assets of the Shipowner pursuant to the terms of any
indenture, charter, mortgage, deed of trust, loan agreement or
other agreement or instruments to which the Shipowner is a
party, or by which the Shipowner is bound or to which any of
the property or assets of the Shipowner is subject, nor will
such action result in a violation of the provisions of any
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the
Shipowner or any of its properties.
<PAGE>
(iv) no consent, approval, authorization, order,
registration or qualification of or with, or notice to, any
court or any governmental agency or body is legally required
for the issue and sale of the Dynachem Series B Obligations on
the Refinancing Closing Date in connection with the other
transactions contemplated by this Supplemental Commitment or
any of the agreements or instruments referred to herein,
except such as have been duly obtained, effected or given,
such as are not required to be obtained, effected or given at
or before the date hereof and such as may be required under
state securities or Blue Sky Laws in connection with the
purchase of such Dynachem Series B Bonds, and no review of any
such action has been commenced or requested; and
(v) there is no litigation, proceeding or investigation
pending or, to the best of the Shipowner's knowledge,
threatened (or to the best of the Shipowner's knowledge any
basis therefore) involving the Shipowner or any of its
property or affecting this Supplemental Commitment,
Supplemental Indenture No. 5 to Indenture, the Obligations,
Amendment No. 1 to Restated Security Agreement, or the
Guarantees which could, if adversely determined, materially
and adversely affect the carrying out of the obligations of
any of the parties to such documents.
(vi) there is no outstanding security agreement under the
Uniform Commercial Code of any state of the United States with
respect to the Vessel or with respect to any of the agreements
entered into or to be entered into and referred to herein to
which the Shipowner is a party nor any effective filing of any
analogous agreement or instrument to which the Shipowner is a
party under the laws of any jurisdiction except in favor of
the Secretary and except with respect to the Security
Agreement; and
(h) On the Refinancing Closing Date, the Secretary shall have
received an opinion of Preston Gates Ellis & Rouvelas Meeds,
special counsel to the Shipowner, to the effect stated in the form
annexed hereto as Schedule Two;
(i) At least ten (10) Business Days prior to the Refinancing
Closing Date, there shall have been delivered to the Secretary a
pro forma balance sheet, as of the Refinancing Closing Date,
certified by a Responsible Officer of Bulk, reflecting the issuance
of the Obligations;
(j) On the Refinancing Closing Date, all charges, levied or
assessed by the Secretary under Section 1104A (f) of Title XI in
the amount of $ 52,750 shall have been paid by or for the account
of the Shipowner;
<PAGE>
(k) At least ten (10) Business Days prior to the Refinancing
Closing Date, the Shipowner shall have provided to the Secretary
satisfactory evidence of insurance in accordance with the terms of
the Restated Security Agreement;
(l) The Shipowner shall have performed without material
breach its agreements under Article IV hereof, and the further
terms, conditions and provisions of this Supplemental Commitment
shall have been complied with in all material aspects;
(m) There shall not have occurred any event which constitutes
(or after any period of time or any notice, or both, would
constitute) a "Default" under the Restated Security Agreement; and
(n) On or prior to the Refinancing Closing Date, the
Shipowner shall have deposited or caused the deposit with the
Indenture Trustee funds sufficient (including principal, accrued
interest and premium) to redeem all of the Outstanding Initial
Series B Obligations and shall have furnished the Indenture Trustee
with irrevocable instructions to apply such funds for the
redemption of such Initial Series B Obligations at premium.
(o) On the Refinancing Closing Date, the Shipowner, Bulk and
certain affiliates of the Shipowner shall have executed and
delivered the Confirmation of Cross Guarantee.
ARTICLE VI
VARIATION OF SUPPLEMENTAL COMMITMENT
No variation from the terms and conditions hereof shall be
permitted except pursuant to an amendment executed by the Secretary
and accepted by the Shipowner.
ARTICLE VII
TERMINATION OR ASSIGNMENT OF SUPPLEMENTAL COMMITMENT
This Supplemental Commitment shall terminate and the parties
hereto shall have no further rights or obligations hereunder upon
the issuance of the Dynachem Series B Obligations.
This Supplemental Commitment may not be assigned by the
Shipowner without the prior written approval of the Secretary.
<PAGE>
ARTICLE VIII
CONFORMITY WITH REGULATIONS
None of the regulations hereafter issued, whether or not under
Title XI of the Act, is a part of or affects this Supplemental
Commitment in any respect, but the provisions of the regulations
issued under Title XI as in effect on the date hereof (46 CFR 298)
shall control the provisions of the Supplemental Commitment, except
to the extent modified pursuant to the provisions of 46 CFR
298.13(h).
ARTICLE IX
MISCELLANEOUS
The table of contents and the titles of the Articles are
inserted as a matter of convenient reference and shall not be
construed as a part of this Supplemental Commitment. This
Supplemental Commitment may be executed in any number of
counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same
instrument.
For all purposes of this Supplemental Commitment, unless
otherwise expressly provided herein and unless the context
otherwise requires:
(a) The terms "hereof", "herein", "hereby", "hereto",
"hereinafter", "hereunder" and "herewith" refer to this
Supplemental Commitment as the same may be supplemented or amended
as herein provided; and
(b) The terms used herein, which are defined in Schedule X,
as amended, to the Restated Security Agreement, annexed hereto or
by reference therein to other instruments shall have the respective
meanings stated in Schedule X, as amended, or such other
instruments.
<PAGE>
IN WITNESS WHEREOF, this Supplemental Commitment to Guarantee
Obligations has been executed by the United States and accepted by
the Shipowner all as of the day and year first above written.
UNITED STATES OF AMERICA
SECRETARY OF TRANSPORTATION,
By: MARITIME ADMINISTRATOR
By:/s/ James Saari
Secretary
Maritime Administration
[Seal]
Attest:
By:/s/ John Salisbury
Assistant Secretary
Maritime Administration
ACCEPTED:
OMI HUDSON TRANSPORT, INC.
Shipowner
By:/s/ Kathleen C. Haines
Title: Vice President
[Seal]
Attest:
By:/s/ Anya Starosolska
Title: Secretary and Counsel
EXHIBIT 21
LIST OF SUBSIDIARIES
The following table sets forth all directly and indirectly owned
subsidiaries of OMI and the jurisdiction of incorporation or
organization of each subsidiary:
<TABLE>
<CAPTION>
JURISDICTION OF
INCORPORATION
COMPANY OR ORGANIZATION % OWNED
<S> <C> <C>
Argus Port and Lightering Services Ltd. Liberia 100%
Colorado Shipping Ltd. Liberia 100%
Connecticut Transport, Inc. New York 100%
Darien Shipping Ltd. Liberia 100%
Limar Shipping Ltd. Liberia 100%
Loire Transport, Inc. Liberia 100%
Nile Transport, Inc. Liberia 100%
Ogden Marine T-5, Inc. Delaware 100%
OMI Avon Transport, Inc. Liberia 100%
OMI Bulk Transport, Inc. Delaware 100%
OMI Challenger Transport, Inc. Delaware 100%
OMI Champion Transport, Inc. Delaware 100%
Omichem Transport, Inc. Delaware 100%
OMI Clover Transport, Inc. Delaware 100%
OMI Courier Transport, Inc. New York 100%
OMI of Delaware, Inc. Delaware 100%
OMI Environmental Ventures, Inc. Delaware 100%
OMI Hudson Transport, Inc. Delaware 100%
OMI Investments, Inc. Delaware 100%
OMI Leader Transport, Inc. New York 100%
OMI Missouri Transport, Inc. Delaware 100%
OMI Oriole Transport,Inc. Delaware 100%
OMI Patriot Transport, Inc. Delaware 100%
OMI Promise Transport, Inc. Liberia 100%
OMI Rover Transport, Inc. Delaware 100%
OMI Ship Management, Inc. Delaware 100%
OMI State, Inc. Washington 100%
OMI Trent Transport, Inc Liberia 100%
OMI Willamette Transport, Inc. Delaware 100%
Rio Grande Transport, Inc. New York 100%
Rowayton Shipping Ltd. Liberia 100%
Saugatuck Shipping Ltd. Liberia 100%
Saybrook Shipping Ltd. Liberia 100%
Sokolica Transport, Inc. Liberia 100%
UBC Chartering Ltd. Liberia 100%
UBC Management Ltd. Liberia 100%
Universal Bulk Carriers, Inc. Liberia 100%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JURISDICTION OF
INCORPORATION
COMPANY OR ORGANIZATION % OWNED
<S> <C> <C>
Volga Transport, Inc. Liberia 100%
OMI Petrolink Corp.<F1> Delaware 80%
<FN>
<F1> The following companies are 100% owned by OMI Petrolink Corp.:
Aransas Corp. Delaware 100%
Calhoun Corp. Delaware 100%
Camlink Corp. Delaware 100%
Harlink Corp. Delaware 100%
Jefflink Corp. Delaware 100%
Kenedy Corp. Delaware 100%
Matagorda Corp. Delaware 100%
Nuelink Corp. Delaware 100%
Ogden Marine Indonesia, Inc. Delaware 100%
OMI Offshore Marine Services, Inc. Delaware 100%
Potomac Transport, Inc. Delaware 100%
Sabine Corp. Delaware 100%
San Patricio Corp. Delaware 100%
</TABLE>
<PAGE>
The following table sets forth a list of companies in which OMI
directly or indirectly has a 50% or less ownership:
<TABLE>
<CAPTION>
JURISDICTION OF
INCORPORATION
COMPANY OR ORGANIZATION % OWNED
<S> <C> <C>
Grandteam Ship Management Ltd. Hong Kong 50%
Ocean Specialty Tankers Corp. Delaware 50%
Vanomi Management, Inc. Liberia 50%
Aurora Tankers Ltd. Marshall Islands 49.9%
Aurora Tankers (U.K.) Ltd. Great Britain 49.9%
Aurora Tankers Pte. Ltd. Singapore 49.9%
Geraldton Navigation Company Inc. <F1> Panama 49.9%
Mosaic Alliance Corp. <F2> Liberia 49.9%
Amazon Transport, Inc. Liberia 49%
Mendala Transport, Inc. Liberia 49%
White Sea Holdings Ltd. <F3> Liberia 49%
Wilomi, Inc. <F4> Liberia 49%
K/S Palawan Princess (Ltd. Partnership) Norway 25%
Gainwell Investments Ltd. British Virgin Islands 25%
Chiles Offshore Corporation Delaware 10.1%
<FN>
<F1> The following companies are 100% owned by Geraldton Navigation Co. Inc.:
Geraldton Navigation Company Pte. Ltd. Singapore 100%
Hayes Navigation Company Pte. Ltd. Singapore 100%
<F2> The following companies are 100% owned by Mosaic Alliance Corp.:
AVAC Limited Liberia 100%
Bunbury Navigation Co., Inc. Panama 100%
FLT Ltd. Liberia 100%
MacKenzie Navigation Co. Pte. Ltd. Singapore 100%
Romeo Navigation Co., Inc. Panama 100%
Sheffield Navigation Co., Inc. Panama 100%
<F3> The following company is 100% owned by White Sea Holdings Ltd.:
White Sea Corp.
<F4> The following companies are 100% owned by Wilomi, Inc.:
Ease Shipping, Inc. Liberia 100%
Gladiator Maritime Limited Liberia 100%
Loretta Shipping, Inc. Liberia 100%
Mendala II Transport, Inc. Liberia 100%
Mendala III Transport, Inc. Liberia 100%
</TABLE>
EXHIBIT 99
CHUBB GROUP of Insurance Companies
15 Mountain View Road, Warren, New Jersey 07060
DECLARATIONS
EXECUTIVE RISK POLICY
Policy Number 81092598-F
FEDERAL INSURANCE COMPANY
(Incorporated under the laws of New Jersey
a stock insurance company herein called the Company)
Item 1. Name of Insured: OMI Corporation
(as more fully set forth in each section of this policy).
Item 2. Policy Period:
From 12:01 a.m. on December 31, 1993 to 12:01 a.m. on
January 31, 1995
Item 3. Table of Contents:
Description
Section 1. General Terms and Conditions
Section 2. Executive Liability and Defense Coverage
Section 3. Fiduciary Liability and Defense Coverage
Section 4. Commercial Crime Coverage
Section 5. Kidnap/Ransom and Extortion Coverage
Item 4. Endorsements Effective at Inception:
Section 1: 1, Section 2: 1-10, Section 3: Not
Covered, Section 4: 1-4, Section 5: 1-2.
Item 5. Termination of Prior Policy(ies): 81092598-E
Except as otherwise provided in this policy, sections 2 and 3 are
written on a CLAIMS MADE basis and cover only Wrongful Acts
reported to the Company during the Policy Period. Please read
carefully.
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In Witness Whereof, the Company issuing this policy has caused this
policy to be signed by its Authorized Officers, but it shall not be
valid unless also signed by a duly authorized representative of the
Company.
FEDERAL INSURANCE COMPANY
By:/s/ Peter M. Trunfio
Authorized Employee
Date: January 17. 1994
<PAGE>
EXECUTIVE LIABILITY DECLARATIONS
AND DEFENSE COVERAGE SECTION 2
Item 1. Parent Organization: OMI Corporation
Item 2. Principal Address: 90 Park Avenue
New York, NY 10016
Item 3. Limits of Liability:
(A) Each Loss $10,000,000.-
(B) Each Policy Year $10,000,000.-
Item 4. Coinsurance Percent:
.5% of the first one million dollars of Loss under
Clause 1 only.
Item 5. Deductible Amounts:
Executive Liability: (A) Each Insured Person $ 1,000.-
(B) All Insured Persons $ 10,000.-
Executive Indemnification:
(C) The Insured Organization $1,000,000.-
In the event that a single Loss is covered in part under
Insuring Clause 1 and in part under Insuring Clause 2, the maximum
Deductible Amount applicable to such Loss shall be the amount set
forth in Item 5(C) above.
Item 6. Insured Organization: OMI Corporation and its
subsidiaries.
Item 7. Insured Persons: Any person who has been, now is, or
shall become a duly elected director or
a duly elected or appointed officer of
the Insured Organization.
Item 8. Continuity Date:
Item 9. Extended Reporting Period:
(A) Additional Premium: 150% of Annual Premium
(B) Additional Period: One Year
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EXECUTIVE LIABILITY COVERAGE -- INSURING CLAUSE 1
2.1 The Company shall pay on behalf of each of the Insured
Persons all Loss, for which such Insured Person is not
indemnified by the Insured Organization, and which such
Insured Person becomes legally obligated to pay on account of
any claim(s) made against him, individually or otherwise,
during the Policy Period or during the Extended Reporting
Period if exercised in accordance with paragraph 2.5 for a
Wrongful Act.
(A) committed, attempted or allegedly committed or attempted
by such Insured Person(s) before or during the Policy
Period and
(B) reported to the Company, in accordance with paragraph
2.8, during the Policy Period or, if exercised, the
Extended Reporting Period.
EXECUTIVE INDEMNIFICATION COVERAGE -- INSURING CLAUSE 2
2.2 The Company shall pay on behalf of the Insured
Organization all Loss for which the Insured Organization
grants indemnification to each Insured Person, as permitted or
required by law, which such Insured Person has become legally
obligated to pay on account of any claim(s) made against him,
individually or otherwise, during or after the Policy Period
for a Wrongful Act:
(A) committed, attempted or allegedly committed or attempted
by such Insured Person(s) before or during the Policy
Period and
(B) reported to the Company, in accordance with paragraph
2.8, during the Policy Period, or, if exercised, the
Extended Reporting Period.
ESTATES AND LEGAL REPRESENTATIVES
2.3 Subject otherwise to all the terms and conditions of this
policy, coverage hereunder shall extend to claims for the
Wrongful Acts of Insured Persons made against the estates,
heirs, legal representatives or assigns of such Insured
Persons who are deceased or against the legal representatives
or assigns of such Insured Persons who are incompetent,
insolvent or bankrupt.
TERRITORY
2.4 Subject otherwise to all the terms and conditions of this
policy, coverage hereunder shall extend to claims made
anywhere in the world against Insured Persons for the Wrongful
Acts of such Insured Persons, wherever committed, attempted or
allegedly committed or attempted.
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EXTENDED REPORTING PERIOD
2.5 If the Company terminates or refuses to renew this
policy, the Parent Organization shall have the right, upon
payment of the additional premium set forth in Item 9(A) of
the Declarations, to elect an extension of the coverage
granted by this policy for the period set forth in Item 9(B)
of the Declarations following the effective date of such
termination, but only with respect to any Wrongful Act
committed, attempted or allegedly committed or attempted prior
to the effective date of such termination . This right of
extension shall lapse unless written notice of such election
is given to the Company prior to the effective date of
termination of this policy by the Company or within 10 days
following the effective date of nonrenewal. If the Parent
Organization terminates or declines to accept renewal, the
Company may, if requested, at its sole option, grant an
Extended Reporting Period. The Company's liability under the
Extended Reporting Period for Loss shall be specifically
excess of, and reduced by the amount of any payments on
account of such Loss received by the Insureds under any
insurance replacing the coverage granted by this policy in
whole or in part.
EXCLUSIONS
2.6 The Company shall not be liable under this policy to make
any payment for Loss in connection with any claim(s) made
against any Insured Person(s):
(A) arising from any circumstance if written notice of such
circumstance has been given under any policy the term of
which has expired prior to or upon the inception of this
policy, and if such prior policy affords coverage (or
would afford such coverage except for the exhaustion of
its limits of liability) for such Loss, in whole or in
part, as a result of such notice;
(B) based upon an actual or alleged violation of the
responsibilities, obligations or duties imposed upon
fiduciaries by the Employee Retirement Income Security
Act of 1974 and amendments thereto or similar provisions
of any Federal, State or local statutory law or common
law;
(C) for bodily injury, sickness, disease or death of any
person, or for damage to or destruction of any tangible
property including loss of use thereof; or
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(D) arising from charges of seepage, pollution or
contamination and based upon or attributable to violation
or alleged violation of any Federal, State, municipal or
other governmental statute, regulation or ordinance
prohibiting or providing for the control or regulation of
emissions or effluents of any kind into the atmosphere or
any body of land, water, waterway or watercourse or
arising from any action or proceeding brought for
enforcement purposes by any public official, agency,
commission, board or pollution control administration
pursuant to any such statutes, regulations or ordinances
or arising from any claims alleging seepage, pollution or
contamination based upon common law nuisance or trespass.
2.7 The Company shall not be liable under Insuring Clause 1
to make any payment for Loss in connection with any claim(s)
made against any of the Insured Person(s):
(A) for the return by any such Insured Person of any
remuneration paid in fact to him without the previous
approval of the stockholders of the Insured Organization
if it shall be determined by a judgement or other final
adjudication that such remuneration is in violation of
law or if such remuneration is to be repaid to the
Insured Organization under a settlement agreement;
(B) for an accounting of profits made from the purchase or
sale by such Insured Person of securities of the Insured
Organization within the meaning of Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or
similar provisions of any Federal, State or local
statutory law or common law;
(C) brought about or contributed to by the dishonesty of such
Insured Person if a judgement or other final adjudication
adverse to such Insured Person establishes that acts of
active and deliberate dishonesty were committed or
attempted by such Insured Person with actual dishonest
purpose and intent and were material to the cause of
action so adjudicated; or
(D) based upon or attributable to such Insured Person having
gained any personal profit or advantage to which he was
not legally entitled in the event that (1) a judgement or
other final adjudication adverse to such Insured Person
establishes that such Insured Person in fact gained such
personal profit or other advantage to which he was not
entitled, or (2) the Insured Person has entered into a
settlement agreement to repay such unentitled personal
profit or advantage to the Insured Organization.
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With respect to the Exclusions in paragraph 2.7, no fact
pertaining to or knowledge possessed by any Insured Person(s) shall
be imputed to any other Insured Person(s) for the purpose of
determining the availability of coverage for, or with respect to
claims made against, any Insured Person(s).
REPORTING AND NOTICE
2.8 A claim for a specific Wrongful Act shall be considered
to have been first reported to the Company:
(A) at the time that any Insured first gives written notice
to the Company that a claim has been made against any
Insured Person(s) for such Wrongful Act; or
(B) at the time that any Insured first gives written notice
to the Company (1) of the material facts or circumstances
relating to such Wrongful Act as facts or circumstances
having the potential of giving rise to a claim being made
against any Insured Person(s) or (2) of the receipt of
written or oral notice from any party that it is the
intention of such party to hold any Insured Person(s)
responsible for such Wrongful Act;
whichever occurs first.
LIMIT OF LIABILITY, DEDUCTIBLE AND COINSURANCE
2.9 For the purpose of this policy, all Loss arising out of
all interrelated Wrongful Acts of any Insured Person(s) shall
be deemed one Loss, and such Loss shall be deemed to have
originated in the earliest Policy Year in which any of such
Wrongful Acts is first reported to the Company.
The total limit of the Company's liability to pay any
Loss hereunder, whether covered under Insuring Clause 1 or
Insuring Clause 2 or both, shall not exceed the amount(s) set
forth in Item 3 of the Declarations.
The Company's liability hereunder shall apply only to
that part of each Loss which is excess of the Deductible
Amount specified in Item 5 of the Declarations, and such
Deductible Amount shall be borne by the Insureds uninsured and
at their own risk.
The Deductible Amount applicable to each Loss under
Insuring Clause 1 shall be the amount set forth in Item 5(A)
of the Declarations for each of the Insured Persons against
whom claim is made, but not more than the amount set forth in
Item 5(B) of the Declarations for all such Insured Persons.
The Deductible Amount applicable to each Loss under Insuring
Clause 2 shall be the amount set forth in Item 5(C) of the
Declarations.
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With respect to all Loss (excess of applicable Deductible
Amounts) originating in any one Policy Year, the Insureds
shall bear uninsured and at their own risk that percent of all
such Loss specified as the Coinsurance Percent in Item 4 of
the Declarations, and the Company's liability hereunder shall
apply only to the remaining percent of all such Loss.
DEFENSE AND SETTLEMENT
2.10 No Defense Costs shall be incurred or settlements made
without the Company's consent, which shall not be unreasonably
withheld. The Company shall not be liable hereunder with
respect to any settlements or Defense Costs to which it has
not consented.
An Insured Person shall not be required to contest any
legal proceedings unless counsel (to be mutually agreed upon
by such Insured Person and the Company) shall advise that such
proceedings should be contested by the Insured Person and the
Insured Person consents thereto, which consent shall not be
unreasonably withheld.
In the event of the Insured Person(s) being so required
to contest legal proceedings, the Company/ subject to the
provisions of Items 3, 4 and 5 of the Declarations, will pay
the costs, charges and expenses in connection therewith.
REPRESENTATIONS AND SEVERABILITY
2.11 In granting coverage under this policy to any one of the
Insureds, the Company has relied upon the declarations and
statements in the written application for coverage. All such
declarations and statements are the basis of such coverage and
shall be considered as incorporated in and constituting part
of the policy.
The written application for coverage shall be construed
as a separate application for coverage by each of the Insured
Persons. With respect to the declarations and statements
contained in such written application for coverage, no
statement in the application or knowledge possessed by any
Insured Person(s) shall be imputed to any other Insured
Person(s) for the purpose of determining the availability of
coverage with respect to claims made against any Insured
Person(s) whether or not the Insured Organization grants
indemnification.
<PAGE>
CONTINUITY
2.12 Continuity is extended under this Section from the
Continuity Date in Item 8 of the Declarations based on the
representations and evidence of prior coverage included in
Part 1 of the Executive Liability questions of the application
for coverage.
EXTENT OF INDEMNIFICATION
2.13 For the purposes of this Section, the extent to which the
Insured Organization is required or permitted to indemnify any
Insured Person(s) shall be as established by statutory or
common law or duly effective charter, by-law, resolution or
other written agreement. However, if not otherwise established
or agreed upon for the purposes of paragraph 2.7, the legally
permitted or required extent of such indemnification shall be
established for such purposes by an independent counsel to be
mutually agreed upon by the Company and such Insured
Person(s).
OUTSIDE DIRECTORSHIPS
2.14 If any Outside Directorship held by an Insured Person is
included within the description of such person's Insured
Capacity in Item 7 of the Declarations or is included herein
by endorsement during the Policy Period, any coverage under
this policy resulting from such inclusion shall be subject to
the following:
(A) such coverage shall not be construed to extend to the
outside organization in which such Outside Directorship
is held or to any of the other officers, directors, or
employees of such organization;
(B) such coverage shall be specifically excess of any other
indemnity or insurance available to such Insured Person
by reason of serving in such Outside Directorship; and
(C) such coverage shall apply only if the Company is given
specific written application, together with any
information it may require, at the inception of this
policy or as soon as practicable (but not more than 120
days) after the commencement of such Outside
Directorship, that such Insured Person is serving in such
Outside Directorship at the specific request of the
Insured Organization; and such coverage shall be subject
to approval by the Company and the payment of any
additional premium required by the Company.
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DEFINITIONS -- SECTION 2
2.15 CONTINUITY DATE means the date specified in Item 8 of the
Declarations on which the Insured was initially accepted for
prior similar coverage and from which the Insured has
maintained uninterrupted coverage until the effective date of
this policy.
DEFENSE COSTS means that part of Loss consisting of costs,
charges and expenses (other than regular or overtime wages,
salaries or fees of the directors, officers or employees of
the Insured Organization) incurred in the defense of legal
actions, claims, or proceedings and appeals therefrom and the
cost of appeal, attachment or similar bonds.
INSURED(S) means the Insured Organization and/or any Insured
Person(s).
INSURED CAPACITY(IES) means the position or capacity
designated in Item 7 of the Declarations as held by any
Insured Person.
INSURED ORGANIZATION means, collectively, those organizations
designated in Item 6 of the Declarations.
INSURED PERSON(S) means any of those persons designated in
Item 7 of the Declarations.
LOSS means the total amount which any Insured Person(s) become
legally obligated to pay on account of all claims made against
them for Wrongful Acts with respect to which coverage
hereunder applies, including, but not limited to, damages,
judgements, settlements, costs and Defense Costs. Loss does
not include fines or penalties imposed by law or matters
uninsurable under the law pursuant to which this policy is
construed.
OUTSIDE DIRECTORSHIP means the executive position held by an
Insured Person at the specific request of the Insured
Organization in any other corporation, joint venture, trust or
other enterprise which is not included in the definition of
Insured Organization.
PARENT ORGANIZATION means the organization designated in Item
1 of the Declarations.
SUBSIDIARY(IES) means any organization that is controlled by
any entity included in the Insured Organization through
ownership of more than 50% of the outstanding voting stock.
WRONGFUL ACT means any error, misstatement or misleading
statement, act or omission, or neglect or breach of duty
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committed, attempted or allegedly committed or attempted by
any Insured Person, individually or otherwise, in the
discharge of his duties to the Insured Organization in his
Insured Capacity, or any matter claimed against him solely by
reason of his serving in such Insured Capacity. All such
causally connected errors, statements, acts, omissions,
neglects or breaches of duty or other such matters committed
or attempted by, allegedly committed or attempted by or
claimed against one or more of the Insured Persons shall be
deemed interrelated Wrongful Acts.
<PAGE>
FIDUCIARY LIABILITY DECLARATIONS
AND DEFENSE COVERAGE SECTION 3
Item 1. Principal Insured: Not Covered
Item 2. Address of Principal Insured: Not Covered
Item 3. Limits of Liability:
(A) Each Loss $ Not Covered
(B) Each Policy Year $ Not Covered
Item 4. Deductible Amount: Not Covered
Except no deductible shall apply to Defense Costs.
Item 5. Sponsor Organization: Not Covered
Item 6. Employee Benefit Plans included as Insured and other
additional Insureds (if any):
Not Covered
Item 7. Retroactive Date: Not Covered
Item 8. Extended Reporting Period:
(A) Additional Premium: Not Covered
(B) Additional Period: Not Covered
<PAGE>
FIDUCIARY LIABILITY AND DEFENSE COVERAGE
3.1 The Company shall pay on behalf of each Insured all sums
which such Insured becomes legally obligated to pay as damages
on account of claims first made against such Insured during or
after the Policy Period for a Wrongful Act:
(A) committed, attempted or allegedly committed or attempted
before or during the Policy Period by the Insured or by
any person for whose Wrongful Acts the Insured is legally
responsible, and
(B) reported to the Company, in accordance with paragraph
3.5, during the Policy Period or, if exercised, the
Extended Reporting Period.
The Company shall have the right and duty to defend any
claim for damages seeking pecuniary or nonpecuniary relief
first made against an Insured during or after the Policy
Period for a Wrongful Act to which coverage applies.
Alternatively, the Company may at its option give its written
consent to the defense of any such claim by an Insured.
Coverage hereunder shall apply even if any of the allegations
of any such suit are groundless, false or fraudulent.
Defense costs, charges and expenses incurred by the
Company, or by the Insured when it is defending and
investigating with the written consent of the Company, shall
be paid by the Company as a part of and not in addition to the
Company's liability.
3.2 The Company shall not be liable to make any payment in
connection with any claim(s) against any Insured:
(A) based on facts or circumstances which at the Retroactive
Date the Insured had reason to know might lead to a claim
against the Insured;
(B) brought about or contributed to by any dishonest,
fraudulent or criminal act or willful violation of any
statute by such Insured, if a judgement or other final
adjudication thereof adverse to such Insured shall
establish that such acts or violations were actively
and deliberately committed or attempted and were material
to the cause of action so adjudicated;
(C) for libel or slander;
(D) for personal injury (including but not limited to
sickness, disease or death) of any person or loss of,
loss of use of, damage to or destruction of any tangible
property;
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(E) arising out of liability of others assumed by the Insured
under any contract or agreement, either oral or written,
except to the extent that the Insured would have been
liable in the absence of such agreement or contract or
unless assumed in accordance with the agreement or
declaration of Trust;
(F) arising out of the Insured's failure to comply with any
law concerning any governmentally mandated insurance
program respecting Worker's Compensation, Unemployment,
Social Security or disability benefits or any similar
law.
3.3 The Company's liability shall not extend to that part of
damages which an Insured becomes legally obligated to
pay:
(A) which constitutes fines or penalties, other than the 5%
civil penalties imposed upon such Insured as a fiduciary
under Section 502(i) of the Employee Retirement Income
Security Act of 1974;
(B) for the failure to collect contributions owed to an
Employee Benefit Plan from employers unless such failure
is due to the negligence of the Insured or for the
return of any contributions to any employer if such
amounts are or could be chargeable to an Employee Benefit
Plan, provided that this exclusion shall not apply to the
Company's obligation to defend such claim;
(C) which constitutes benefits due or to become due under the
terms of an Employee Benefit Plan or a Benefit Program
unless, and to the extent that, (1) such Insured is a
natural person and such benefits are payable as a
personal obligation by such person and (2) recovery for
such benefits is based upon a covered Wrongful Act; or
(D) attributable to such Insured having gained in fact
any personal profit or advantage to which such Insured
was not legally entitled, if a judgement or other final
adjudication shall establish that such Insured was not
legally entitled to such profit or advantage and that the
gaining of such profit or advantage was material to the
cause of action so adjudicated.
With respect to the exclusions in Paragraphs 3.2 and
3.3, no fact pertaining to or knowledge possessed by any
of the Insureds shall be imputed to any other of the
Insureds for the purpose of determining the availability
of coverage hereunder.
<PAGE>
EXTENDED REPORTING PERIOD
3.4 If the Company terminates or refuses to renew this
policy, an Insured shall have the right, upon payment of
the additional premium set forth in Item 8(A) of the
Declarations, to an extension of the coverage granted by
this policy for the period set forth in Item 8(B) of the
Declarations following the effective date of such
termination, but only with respect to any Wrongful Act
committed, attempted or allegedly committed or attempted
prior to the effective date of such termination. This
right of extension shall lapse unless written notice of
such election is given to the Company prior to the
effective date of termination of this policy by the
Company or within 10 days following the effective date of
nonrenewal. If the Insured terminates or declines to
accept renewal, the Company may, if requested, at its
sole option, grant an Extended Reporting Period. The
Company's liability under the Extended Reporting Period
shall be specifically excess of, and reduced by the
amount of any other coverage available to the Insured
under, any insurance replacing the coverage granted by
this policy in whole or in part.
REPORTING, NOTICE AND DISCOVERY
3.5 A claim for a specific Wrongful Act shall be
considered to have been first reported to the Company:
(A) at the time that the Insured first gives written
notice to the Company that claim has been made
against an Insured for such Wrongful Act, or
(B) at the time that the Insured first gives written
notice to the Company (1) of the material facts or
circumstances of such Wrongful Act as facts or
circumstances which could subsequently give rise to
a claim being made against an Insured or (2) of the
receipt of written or oral notice from any party
that it is the intention of such party to hold an
Insured responsible for such Wrongful Act,
whichever occurs first.
All loss arising out of all interrelated Wrongful
Acts of the Insureds shall be deemed one loss, and such
loss shall be deemed to have originated in the earliest
Policy Year in which any of such Wrongful Acts is first
reported to the Company.
<PAGE>
Regardless of the number of years this policy shall
continue in force; the number of premiums which shall be
payable or paid; the number of persons or organizations
making claim against an Insured; the number of persons,
programs or organizations insured hereunder or any other
circumstances whatsoever, the total limit of the
Company's liability to pay loss hereunder shall not
exceed the amount(s) set forth in Item 3 of the
Declarations.
DEFINITIONS -- SECTION 3
ADMINISTRATION means giving counsel to employees with
respect to Benefit Programs; interpreting Benefit
Programs, handling records in connection with Benefit
Programs or effecting enrollment, termination or
cancellation of employees under Benefit Programs.
BENEFIT PROGRAM means:
(A) any Designated Plan,
(B) any governmentally mandated insurance program
concerning Worker's Compensation, Unemployment,
Social Security or disability benefits, or
(C) any other employee benefit program, not subject to
Title 1 of the Employee Retirement Income Security
Act of 1974, as amended, sponsored solely by the
Sponsor Organization for the benefit of the
employees of the Sponsor Organization.
DESIGNATED PLAN means:
(A) an Insured Plan, or
(B) any other plan or program specifically included as
a Designated Plan and named in Item 6 of the
Declarations.
EMPLOYEE BENEFIT PLAN means an Employee Benefit Plan as
defined in the Employee Retirement Income Security Act of
1974, as amended.
INSURED PLAN means an Employee Benefit Plan:
(A) which is operated solely by the Sponsor Organization
or jointly by the Sponsor Organization and a labor
organization for the benefit of the employees of the
Sponsor Organization, and
<PAGE>
(B) which existed as of the inception of this policy or
which is created or acquired subsequent to the
inception of this policy, subject to written notice
of such creation or acquisition being given to the
Company within 120 days following such creation or
acquisition.
INSURED PLAN shall not, however, include any multi-
employer plan, as defined in the Employee Retirement
Income Security Act of 1974, as amended.
INSURED(S) means:
(A) the Sponsor Organization,
(B) any Insured Plans,
(C) any past, present or future trustees, directors,
officers or employees of the Sponsor Organization or
of any such Insured Plans, and
(D) any other persons or organizations designated as
Additional Insureds in Item 6 of the Declarations.
RETROACTIVE DATE means the date specified in Item 7 of
the Declarations on which the Insured was initially
accepted for prior similar coverage, and from which the
Insured has maintained uninterrupted coverage until the
effective date of this policy.
SPONSOR ORGANIZATION means any organization designated in
Item 5 of the Declarations.
SUBSIDIARY means an organization that is controlled by
the Sponsor Organization through ownership by the Sponsor
Organization and/or its Subsidiaries of more than 50% of
the outstanding voting stock.
WRONGFUL ACT means:
(A) any breach of the responsibilities, obligations or
duties to a Designated Plan imposed upon the
fiduciaries of such plan by the Employee Retirement
Income Security Act of 1974 or its amendments
or by the common or statutory law of the United
States of America or any State or jurisdiction
therein.
(B) any other matter claimed against an Insured solely
by reason of their serving as fiduciaries of any
Designated Plan.
<PAGE>
(C) any negligent act, error or omission in the
Administration of any Benefit Program, but shall not
include failure of a stock to perform as
represented, advice given to an employee to
participate or not to participate in stock
subscription plans, or the investment or non-
investment of funds.
<PAGE>
COMMERCIAL CRIME DECLARATIONS
COVERAGE SECTION 4
Item 1. Name of Insured: OMI Corporation and any other subsidiary
corporation(s) now existing or hereafter
created or acquired subject to Section
3.3.
Item 2. Limits of Liability:
Employee Theft Coverage $ 2,000,000.-
Premises Coverage $ 1,000,000.-
Transit Coverage $ 1,000,000.-
Depositors Forgery Coverage $ 2,000,000.-
Item 3. Deductible Amounts:
(A) Money and Securities $ 100,000.-
(B) Other Property $ 100,000.-
(C) Money and Securities
and other property of
Employee Benefit Plans $ None
Such deductible amounts shall not be cumulative. The maximum
deductible amount applicable to any one loss of Money, Securities
and other property shall not exceed the largest deductible amount
set forth above.
Item 4. Territory: Anywhere in the world.
Item 5. Employee Benefit Plans included as Insured:
OMI Corporation Pension Plan
OMI Corporation Savings and Security Plan
OMI Corporation Deferred Compensation Plan
OMI Corporation Incentive Stock Option Plan
And any other Employee Benefit Plans now existing or
hereafter created which may be required to be bonded
under the Employee Retirement Income Security Act of
1974.
<PAGE>
EMPLOYEE THEFT COVERAGE--INSURING CLAUSE 1
4.1 The Company shall be liable for direct losses of
Money, Securities and other property caused by Theft or
forgery by any identifiable Employee(s) of any Insured
acting alone or in collusion with others.
PREMISES COVERAGE--INSURING CLAUSE 2
4.2 The Company shall be liable for direct losses caused
by the actual destruction, disappearance, wrongful
abstraction or Computer Theft of Money and Securities
within or from the Premises, Banking Premises or night
depository chute or safe maintained by any bank or trust
company.
Coverage under this Insuring Clause shall also include:
(A) loss of or damage to other property by Robbery or attempt
thereat within the Premises,
(B) loss of or damage to such property contained within any
safe which results from Safe Burglary or attempt thereat
within the Premises,
(C) damage to a locked safe, cash drawer, cash box or cash
register within the Premises by felonious entry or
attempt thereat or loss by felonious abstraction of such
container from within the Premises and
(D) damage to the Premises resulting from such Safe Burglary
or Robbery.
TRANSIT COVERAGE--INSURING CLAUSE 3
4.3 The Company shall be liable for direct losses caused
by the actual destruction, disappearance or wrongful
abstraction of Money and Securities outside the Premises,
while being conveyed by the Insured, a partner, an Employee,
an armored motor vehicle company or any other person duly
authorized by the Insured to have custody thereof or while
temporarily within the home of the Insured, a partner, an
Employee or any such other person.
Coverage under this Insuring Clause shall also include
(A) loss of or damage to other property by Robbery or attempt
thereat outside the Premises while the property is being
conveyed by the Insured, a partner, an Employee or an
armored motor vehicle company; and
<PAGE>
(B) loss by Theft of such property while temporarily within
the home of the Insured, a partner or an Employee.
DEPOSITORS FORGERY COVERAGE - INSURING CLAUSE 4
4.4 The Company shall be liable for direct losses caused
by forgery or alteration of, on or in any check, draft,
promissory note, bill of exchange, or similar written promise,
order or direction to pay a sum certain in money, made or
drawn by, or drawn upon the Insured, or made or drawn by one
acting as agent of the Insured, or purporting to have been
made or drawn as set forth above, including:
(A) any check or draft made or drawn in the name of the
Insured payable to a fictitious payee and endorsed
in the name of the fictitious payee:
(B) any check or draft procured in a face to face
transaction with the Insured or with one acting as
agent of the Insured by anyone impersonating another
and made or drawn payable to the one impersonated
and endorsed by anyone other than the one
impersonated; and
(C) any payroll check, payroll draft or payroll order
made or drawn by the Insured payable to bearer as
well as to a named payee and endorsed by anyone
other than the named payee without authority of the
payee.
For purposes of this Insuring Clause mechanically
reproduced facsimile signatures shall be treated the same as
handwritten signatures.
If the Insured or the Insured's bank of deposit, at the
request of the Insured, shall refuse to pay any of the
foregoing instruments made or drawn as set forth above
alleging that the instruments are forged or altered, and this
refusal shall result in suit being brought against the Insured
or bank to enforce payment and the Company shall give its
written consent to the defense of the suit, then any
reasonable attorneys' fees, court costs or similar legal
expenses incurred and paid by the Insured or bank in defense
shall be considered a loss under this Insuring Clause, and the
liability of the Company for such loss shall be in addition to
any other liability under this Insuring Clause.
If, at the Insured's request, the Company waives any
rights it may have against the bank upon which the instrument
was drawn, the Insured and the bank shall assign to the
Company all of their rights against any other person, firm or
corporation.
<PAGE>
EXCLUSIONS
4.5 Coverage under this Section of this policy does not apply
to:
(A) loss due to war (whether or not declared); civil war;
insurrection; rebellion or revolution; military, naval or
usurped power; governmental intervention, expropriation
or nationalization; or any act or condition incident to
any of the foregoing;
(B) loss caused or contributed to by Theft or any other
fraudulent, dishonest or criminal act committed by a
partner of the Insured, whether acting alone or in
collusion with others;
(C) loss involving the cost of reproducing any information
contained in any lost or damaged manuscripts, records,
accounts, microfilms, tapes or other records;
(D) any expenses incurred by the Insured in establishing the
existence or the amount of any loss covered under this
policy;
(E) loss of income not realized by the Insured as the result
of any loss covered under this policy;
(F) loss of trade secrets, confidential processing methods or
other confidential information of any kind;
(G) fees, costs or expenses incurred or paid by the Insured
in prosecuting or defending any legal proceeding or claim
(other than legal proceedings covered under Insuring
Clause 4) whether or not such proceeding results or would
result in a loss recoverable under this policy;
(H) loss unless reported and proved in accordance with
paragraph 4.15 hereof;
(I) loss unless discovered and written notice thereof given
to the Company within (1) sixty days following
termination of this policy in its entirety or (2) one
year following such termination if the termination
results from the voluntary liquidation or voluntary
dissolution of the first named Insured; or
(J) loss sustained by any Insured herein unless discovered
and written notice thereof given to the Company within
sixty days following termination of this policy as to
such Insured, or
<PAGE>
(K) loss under any Insuring Clause which is terminated in its
entirety unless discovered and written notice thereof
given to the Company within sixty days following such
termination.
4.6 Coverage under Insuring Clause 1 of this Section does not
apply to:
(A) loss caused by any Employee not engaged in the regular
service of the Insured within the territory set forth in
Item 4 of the Declarations;
(B) loss caused by an Employee if an elected or appointed
officer of the Insured possesses knowledge of any act or
acts of Theft, fraud or dishonesty committed by such
Employee: (1) in the service of the insured or otherwise
during the term of employment by the Insured, or (2)
prior to employment by the Insured provided that such
conduct involved Money, Securities or other property
valued at $10,000 or more;
(C) loss caused by any broker, factor, commission merchant,
consignee, contractor or other agent or representative of
the same general character;
(D) loss resulting directly or indirectly from trading
whether or not in the name of the Insured and whether or
not in a genuine or fictitious account; or
(E) loss or that part of any loss the proof of which involves
in any manner (1) a profit and loss computation or
comparison or (2) a comparison of inventory records with
an actual physical count; provided, however, that where
the Insured establishes wholly apart from such comparison
that it has sustained a loss covered under Insuring
Clause 1, then it may offer its inventory records and
actual physical count of inventory in support of the
amount of loss claimed.
4.7 Coverage under Insuring Clauses 2 and 3 of this Section
does not apply to loss or damage:
(A) which occurs outside of the territory set forth in Item
4 of the Declarations;
(B) due to Theft or any other fraudulent, dishonest or
criminal act (other than Safe Burglary or Robbery or
attempt thereat) by any Employee, director, trustee or
authorized representative of the Insured whether acting
alone or in collusion with others;
(C) due to fire, except (1 ) loss of or damage to Money or
Securities or (2) damage to any safe or vault caused by
the application of fire thereto for the purpose of Safe
Burglary;
<PAGE>
(D) due to the giving or surrendering of Money or Securities
in any exchange or purchase;
(E) of or to manuscripts, records, accounts, microfilm or
tapes;
(F) due to forgery;
(G) of or to Money, Securities or other property while in the
mail or in the custody of a carrier for hire other than
an armored motor vehicle company;
(H) of or to Money, Securities or other property while in the
custody of any bank, trust company, similar recognized
place of safe deposit, armored motor vehicle company or
any person who is duly authorized by the Insured to have
custody of the property unless the loss is in excess of
the amount recovered or received by the Insured under (1)
the Insured's contract, if any, with, or insurance
carried by, any of the foregoing or (2) any other
insurance or indemnity in force which would cover the
loss in whole or in part, in which case this policy shall
cover only such excess;
(I) due to nuclear reaction, nuclear radiation or radioactive
contamination or to any act or condition incident to any
of the foregoing;
(J) of or to Money, Securities or other property as a result
of kidnap/ransom or other extortion payments (as
distinguished from the proceeds of a Robbery) surrendered
to any person as a result of a threat to do (1) bodily
harm to any person or (2) damage to the Premises or other
property owned by the Insured or held by the Insured in
any capacity.
4.8 Coverage under Insuring Clause 4 does not apply to loss
through forgery or alteration of, on, or in:
(A) any instrument, if such forgery or alteration is
committed by any Employee or by any person in collusion
with any Employee or
(B) any registered or coupon obligations issued or purported
to have been issued by the Insured or any coupons
attached thereto or detached therefrom.
OWNERSHIP
4.9 The Company's liability under this policy shall apply
only to Money, Securities and other property owned by the
Insured or for which the Insured is legally liable, or held by
the Insured in any capacity whether or not the Insured is
<PAGE>
liable; provided that the Company shall not be liable for
damage to the Premises unless the Insured is the owner or is
liable for such damage.
LIABILITY FOR PRIOR LOSSES
4.10 The liability of the Company for loss sustained prior to
(1) the effective date of this policy or (2) the effective
date additional Insureds or coverages are subsequently added,
is subject to the following:
(A) the Insured or some predecessor in interest of the
Insured carried some other bond or policy (other than a
fidelity bond or policy, with respect to such loss under
Insuring Clause 4), which, at the time such loss was
sustained, afforded on or at the Premises at which the
loss was sustained or on the person or persons (whether
Employee(s) of the Insured or not) causing the loss, some
or all of the coverage of the Insuring Clause of this
policy applicable to the loss; and
(B) such prior coverage and the right of claim for loss
thereunder continued under the same or some superseding
bond or policy without interruption from the time the
loss was sustained until the date specified in (1) or (2)
above; and
(C) the loss shall have been discovered after the expiration
of the time for discovery of such loss under the last
such bond or policy.
The liability of the Company with respect to such loss
shall not exceed the amount which would have been recoverable
under the coverage in force at the time the loss was
sustained, or the amount recoverable under the Insuring Clause
of this policy applicable to the loss, whichever is smaller.
LIMITS OF LIABILITY
4.11 The payment of any loss under this policy shall not
reduce the liability of the Company for other losses;
provided, however, that the maximum liability of the Company
shall not exceed the dollar amount set forth in Item 2 of the
Declarations:
(A) applicable to Insuring Clause 1, for any loss or losses
caused by any Employee(s) or in which any Employee(s) is
(are) concerned or implicated, either resulting from a
single act or any number of such acts, regardless of
which, during the period of this policy or prior thereto,
such acts occurred,
<PAGE>
(B) applicable to Insuring Clause 2 or 3, for any loss or
losses resulting from any one casualty or event (all
losses resulting from an actual or attempted fraudulent
or dishonest act or series of related acts at the
Premises or Banking Premises whether committed by one or
more persons shall be deemed to be one casualty or event)
or
(C) applicable to Insuring Clause 4, for any loss or losses
caused by forgery or alteration committed by any person
or in which such person is concerned or implicated,
either resulting from a single act or any number of such
acts, regardless of the number of instruments involved or
when, during the period of this policy or prior thereto,
such acts occurred.
NON-ACCUMULATION OF LIABILITY
4.12 Regardless of the number of years this policy shall
continue in force, and the number of premiums which shall be
payable or paid or any other circumstances whatsoever, the
liability of the Company under this policy with respect to any
loss or losses shall not be cumulative from year to year or
from period to period. When there is more than one Insured,
the aggregate liability of the Company for loss or losses
sustained by any or all of them shall not exceed the amount
for which the Company would be liable if all losses were
sustained by any one of them.
DEDUCTIBLE--NO SUPERSEDED INSURANCE CARRIER INVOLVED
4.13 From each loss sustained or discovered by the Insured
after deducting all recoveries (except insurance or suretyship
held by the Insured or the Company for their benefit) on
account thereof made prior to payment shall be deducted the
amount(s) specified in Item 3 of the Declarations.
DEDUCTIBLE--SUPERSEDED INSURANCE CARRIER INVOLVED
4.14 Should any loss be discovered which is partly recoverable
under this policy and partly recoverable under a prior bond or
policy containing a deductible amount, the deductible amount
specified in Item 3 of the Declarations shall be reduced by
the deductible amount applied to such loss by the superseded
insurance carrier.
NOTICE--PROOF--LEGAL PROCEEDINGS
4.15 Upon knowledge or discovery by a proprietor, partner or
officer of any Insured of loss or of an occurrence which may
become a loss, written notice shall be given the Company at
the earliest practicable moment, and in no event later than
<PAGE>
sixty days after such discovery. Within four months after such
discovery the Insured shall furnish to the Company affirmative
proof of loss with full particulars. Legal proceedings for
recovery of any loss hereunder shall not be brought after the
expiration of two years from the discovery of such loss,
except that any legal proceedings to recover hereunder on
account of any judgment against the Insured or any of the
Insured's banks of deposit in any suit referred to in Insuring
Clause 4, or to recover any such expenses paid in any such
suit shall be begun within two years from the date upon which
the judgment in such suit shall become final. Proof of loss
under Insuring Clause 4 shall include the instrument which is
the basis of claim for the loss; but if it shall be impossible
to file the instrument, the affidavit of the Insured or the
Insured's bank of deposit setting forth the amount and cause
of the loss shall be accepted instead. If any limitation
embodied herein is prohibited by any law controlling the
construction thereof, such limitation shall be deemed to be
amended so as to be equal to the minimum period of limitation
permitted by such law.
At the Company's request, the Insured shall submit to
examination by the Company, subscribe the same under oath if
required, and produce for the Company's examination all
pertinent records at such reasonable times and places as the
Company shall designate, and shall cooperate with the Company
in all matters pertaining to any loss or claim.
KNOWLEDGE OF PRIOR THEFT
4.16 For the purposes of this policy and the exclusions
contained in paragraph 4.6 (B), knowledge possessed by the
Insured means knowledge possessed by a partner, director or an
elected or appointed officer who is aware of the employment of
a person and of that person's prior acts of Theft, fraud or
dishonesty.
At the sole discretion of the Company, coverage may be
extended to any individual upon written application by the
Insured and consent given by the Company.
TERMINATION AS TO ANY EMPLOYEE
4.17 This policy shall terminate as to any Employee (1)
immediately upon discovery by the Insured, any partner of the
Insured or any elected or appointed officer of the Insured
(not in collusion with such Employee), of any act of Theft or
other fraudulent or dishonest act by the Employee, without
prejudice to the loss of any property then being conveyed by
the Employee outside the Premises, or (2) twenty days after
the receipt by the Insured of a written notice of termination
from the Company, whichever first occurs.
<PAGE>
EMPLOYEE BENEFIT PLANS
4.18 The Employee Benefit Plans listed in Item 5 of the
Declarations are included as Insureds under Insuring Clause 1.
With respect to losses sustained or discovered by any such
Plan, Insuring Clause 1 as contained in paragraph 4.1, is
deleted and replaced by the following:
"The Company shall be liable for direct losses for Money,
Securities and other property caused by any fraudulent or
dishonest act or acts committed by any Employee of any Insured
acting alone or in collusion with others."
For the purposes of Employee Benefit Plan Coverage, the
words "sixty days" are deleted from paragraph 4.5 wherever
they appear and the words "one year" are substituted in their
place.
In compliance with Title 1 of the Employee Retirement
Income Security Act of 1974, payment by the Company under this
policy to the first named Insured shall be held by such
Insured for the use and benefit of the Employee Benefit Plans
sustaining such loss. If such payment is in excess of the
amount of coverage required by such Act for said Plans, such
excess shall be held for the use and benefit of any other
named Plans should such Plans also discover loss recoverable
hereunder. If Money, Securities and other property of two or
more Employee Benefit Plans named above are commingled,
recovery hereunder for loss of such Money, Securities and
other property shall be shared by such Plans on a prorata
basis in accordance with the amount of coverage each such Plan
is required to carry by such Act.
DEFINITIONS -- SECTION 4
4.19 BANKING PREMISES means the interior of that portion of
any building or buildings occupied by any bank, trust
company or similar recognized place of safe deposit.
COMPUTER THEFT means the intentional taking of Money or
Securities through use of a computer located at the
Insured's Premises or elsewhere.
EMPLOYEE OR EMPLOYEES means, respectively, one or more persons
while in the regular service of any Insured in the
ordinary course of the Insured's business during the term
of this policy and whom any Insured compensates by
salary, wages and/or commissions and has the right to
govern and direct in the performance of such service; and
shall also mean:
(A) any non-compensated officer of any Insured,
<PAGE>
(B) any ex-Employee for a period not exceeding thirty days
following termination of such person's services,
(C) any director or trustee of any Insured while performing
acts coming within the scope of the usual duties of an
Employee,
(D) any individual or individuals assigned to perform
Employee duties for any insured, within the Insured's
Premises, by any agency furnishing temporary personnel on
a contingent or part^time basis; provided, however, that
this policy does not cover any loss caused by any such
individual if such loss is also covered by any insurance
or suretyship held by the agency furnishing such
temporary personnel to the Insured, and
(E) any one or more of the natural persons while in the
service of any Employee Benefit Plan (included as Insured
herein) as fiduciary, trustee, administrator, officer or
employee and any other natural person required to be
bonded by Title 1 of the Employee Retirement Income
Security Act of 1974.
MONEY means only currency, coin, bank notes and bullion.
PREMISES means that portion of the interior of any building
occupied by the Insured in conducting its business.
ROBBERY means the unlawful taking of insured property from an
Insured, a partner, an Employee or any other person
authorized by the Insured to have custody of the property
by violence, threat of violence or other overt felonious
act committed in the presence and cognizance of such
person, except any person acting as a watchman, porter or
janitor.
SAFE BURGLARY means the felonious abstraction of insured
property from within a vault or safe located within the
Premises by a person making felonious entry into such
vault or safe and any vault containing the safe, when all
doors thereof are duly closed and locked by at least one
combination or time lock, provided that such entry shall
be made by actual force and violence, demonstrated by
visible marks made by tools, electricity, gas or other
chemicals upon the exterior of (1) a door or doors of
such vault or safe and any vault containing the safe, if
entry is made through such doors, or (2) the top, bottom
or walls of such vault or safe and any vault containing
the safe through which entry is made, if not made through
such doors.
<PAGE>
SECURITIES means all negotiable and non^negotiable instruments
or contracts representing either Money or other property,
including revenue and other stamps in current use, tokens
and tickets, but not including Money.
THEFT means the unlawful taking of Money, Securities or other
property to the deprivation of the Insured.
<PAGE>
KIDNAP/RANSOM AND DECLARATIONS
EXTORTION COVERAGE SECTION 5
Item 1. Name of Insured: OMI Corporation and other subsidiary
corporation(s) now existing.
Item 2. Limits of Liability:
Kidnap/Ransom and Extortion Coverage $ 10,000,000.-
Delivery Coverage $ 10,000,000.-
Expense Coverage $ 10,000,000.-
Item 3. Deductible Amount: None
Except no deductible shall apply to Expense Coverage.
Item 4. Designated Person(s): All Directors, Officers and
Employees of the Insured.
Item 5. Designated Property: All premises and merchandise of
the Insured and any other
tangible real or personal
property owned by the Insured
or for which the Insured is
legally liable.
Item 6. Territory: Anywhere in the world.
<PAGE>
KIDNAP/RANSOM EXTORTION COVERAGE--INSURING CLAUSE 1
5.1 The Company shall be liable for loss of any property or
other consideration actually surrendered:
(A) as a ransom payment by or on behalf of the Insured as the
result of the actual or alleged Kidnapping of any Insured
Person(s);
(B) as an extortion payment by or on behalf of the Insured as
the result of any other Extortion Threat to do bodily
harm to or to wrongfully abduct or detain any Insured
Person(s); or
(C) as an extortion payment by the Insured as the result of
an Extortion Threat made specifically against the Insured
or any Insured Property to damage, destroy or Contaminate
such Insured Property.
DELIVERY COVERAGE--INSURING CLAUSE
5.2 The Company shall be liable for loss caused by the actual
destruction, disappearance, confiscation or wrongful
abstraction of property or other consideration intended as a
ransom or extortion payment covered under Insuring Clause 1
while being held or conveyed by any person(s) duly authorized
by the Insured to have custody thereof.
EXPENSE COVERAGE--INSURING CLAUSE 3
5.3 The Company shall be liable for the following expenses
incurred by the Insured solely and directly as the result of
a ransom or extortion demand the payment of which would
constitute a loss under Insuring Clause 1:
(A) reasonable fees and expenses of any independent
negotiators or consultants retained by the Insured with
the prior approval of the Company;
(B) interest costs for any loan taken by the Insured to pay
that part of a ransom or extortion payment recoverable
under Insuring Clause 1;
(C) reasonable travel and accommodation expenses incurred by
the Insured;
(D) the reward paid by the Insured to an Informant for
information not otherwise available which leads to the
arrest and conviction of persons responsible for such
demand, provided that the amount of such reward is agreed
upon in advance by the Company;
<PAGE>
(E) the Salary which the Insured continues to pay to an
Employee designated in Item 3 of the Declarations while
such Employee is being held for ransom as the result of
a Kidnapping, provided that coverage hereunder shall
apply (1 ) only if such Employee is held for more than 30
days, (2) only at the Salary level in effect immediately
prior to the Kidnapping and (3) only for a period
commencing upon the abduction of such Employee and
ending: at the time such Employee is released or
discovered to be dead, 90 days after the last positive
evidence following the abduction that such Employee is
alive, or 36 months after the abduction, whichever is
earliest;
(F) sums which the Insured shall become legally obligated to
pay on account of judgements resulting from any suit for
damages, and reasonable defense costs incurred by the
Insured in defending such suit, brought by an Insured
Person (or the estate, heirs or legal representatives of
such Insured Person) alleging negligence or incompetence
in hostage retrieval operations or negotiations following
the Kidnapping of such Insured Person or negligence in
not preventing the Kidnapping of such Insured Person;
provided that the Insured agrees as a condition precedent
to coverage hereunder to cooperate with the Company in
conducting the defense or in negotiating the settlement
of such suit; and
(G) any other reasonable expenses incurred by the Insured
with the approval of the Company.
POLICY EXCLUSIONS
5.4 Coverage under this policy does not apply to:
(A) loss resulting from an Extortion Threat against any
person or property located at the time of the threat
outside the Territory specified in Item 6 of the
Declarations;
(B) loss due to any fraudulent, dishonest or criminal act by
an identifiable Employee, director, trustee, authorized
representative or messenger of the Insured whether acting
alone or in collusion with others, unless the loss is in
excess of the amount recovered or received by the Insured
under any other bond, insurance or indemnity which would
cover the loss in whole or in part, in which case this
policy shall cover only such excess; or
(C) loss resulting from fraud or collusion by the person
allegedly the subject of an Extortion Threat if the
person authorizing the ransom or extortion payment had
<PAGE>
not, prior to the payment, made every reasonable effort
under the circumstances to determine that the Extortion
Threat was genuine.
Coverage under Insuring Clause 1 does not apply to loss
of property and other consideration:
(A) surrendered away from the Premises in any face to face
encounter involving the use or threat of force or
violence unless surrendered by a person in possession of
such property or other consideration at the time of such
surrender for the sole purpose of conveying it to pay a
previously communicated ransom or extortion demand and
unless actually surrendered to those responsible for such
demand or their designee(s); or
(B) surrendered on the Premises unless brought onto the
Premises after receipt of the ransom or extortion demand
for the purpose of paying such demand.
Coverage under Insuring Clauses 2 and 3 does not apply to
loss of property and other consideration actually surrendered
as a ransom or extortion payment covered under Insuring Clause
1.
PERSONAL ASSETS
5.5 In the event of a ransom or extortion demand directed
against any Insured Person(s) rather than against the Insured,
property or other consideration surrendered or intended to be
surrendered by or on behalf of such Insured Person(s) and
expenses described in (A), (B), (C), (D) and (G) of Insuring
Clause 3 incurred by or on behalf of such Insured Person
shall, at the option of the Insured, be considered property or
other consideration surrendered or intended to be surrendered
on behalf of the Insured and expenses incurred by the Insured.
The Company's liability under this policy for any loss of
personal assets under section 3.2., other than a loss
sustained by an Employee designated in Item 4 of the
Declarations, shall be reduced by any amount paid or payable
on account of such loss under such other insurance issued by
any member company of the Chubb Group of Insurance Companies.
LIABILITY FOR PRIOR LOSSES
5.6 The liability of the Company for loss arising from an
Extortion Threat which occurred or was communicated to the
Insured, directly or indirectly, prior to (1) the effective
date of this policy or (2) the effective date additional
Insureds or coverages are subsequently added, is subject to
the following:
<PAGE>
(A) the Insured or some predecessor in interest of the
Insured carried some other policy which, at the time of
the Extortion Threat, afforded the Insured some or all of
the coverage of the Insuring Clause of this policy
applicable to the loss;
(B) such prior coverage and the right of claim thereunder
continued under the same or some superseding policy
without interruption from the time of the Extortion
Threat until the date specified in (1) or (2) above; and
(C) the Extortion Threat shall have been discovered by the
Insured after the expiration of the time allowed for
discovery under the last such policy.
The liability of the Company with respect to such loss
shall not exceed the lesser of the following:
(A) the amount which would have been recoverable under the
coverage in force at the time of the Extortion Threat, or
(B) the amount which would have been recoverable under this
policy had it been in effect at the time of the Extortion
Threat.
LIMITS OF LIABILITY
5.7 The payment of any loss under this policy shall not
reduce the liability of the Company for other losses;
provided, however, that the maximum liability of the Company
shall not exceed the dollar amount set forth in Item 2 of the
Declarations:
(A) applicable to Insuring Clause 1, Extortion Coverage, for
all loss of property and other consideration actually
surrendered as ransom and extortion payments arising from
one Extortion Threat or a series of related Extortion
Threats;
(B) applicable to Insuring Clause 2, Delivery Coverage, for
all losses thereunder of property and other consideration
intended as ransom and extortion payments arising from
one Extortion Threat or a series of related Extortion
Threats; or
(C) applicable to Insuring Clause 3, Expense Coverage, for
all expenses arising from one Extortion Threat or a
series of related Extortion Threats.
<PAGE>
MULTIPLE EXTORTION THREATS
5.8 Any Extortion Threats made by the same person(s),
group or collaborating groups with the apparent purpose of
creating a cumulative or continuing coercive effect upon
the Insured and/or any Insured Person(s) shall be considered
related Extortion Threats, whether the ransom or extortion
demands are for a single payment or for separate payments.
NON-ACCUMULATION OF LIABILITY
5.9 Regardless of the number of years this policy shall
continue in force, and the number of premiums which shall be
payable or paid or any other circumstances whatsoever, the
liability of the Company under this policy with respect to any
loss or losses shall not be cumulative from year to year or
from period to period. When there is more than one Insured,
the aggregate liability of the Company for loss or losses
sustained by any or all of them shall not exceed the amount
for which the Company would be liable if all losses were
sustained by any one of them.
RECOVERIES
5.10 If the Insured shall sustain any loss covered by this
policy, all recoveries (except from suretyship, insurance,
reinsurance or indemnity taken by or for the benefit of the
Company) on account of loss, less the actual cost of recovery,
shall be distributed as follows: the Insured shall be
reimbursed for any loss which exceeds the amount of coverage
provided by this policy less the deductible amount, the
balance applied to reimbursement of the Company to the extent
of its loss and any remainder paid to the Insured.
DISCOVERY PERIOD
5.11 This policy does not cover any loss arising from any
Extortion Threat unless such Extortion Threat occurs or is
communicated directly or indirectly to the Insured or an
Insured Person prior to the effective date of termination of
coverage hereunder and is discovered by the Insured and
communicated to the Company in writing prior to one year after
the effective date of the termination of this policy in its
entirety.
NOTICE--PROOF--LEGAL PROCEEDINGS
5.12 At the earliest practicable moment after the occurrence
of any loss hereunder the Insured shall give the Company
written notice thereof and shall also within four months after
such occurrence furnish to the Company affirmative proof of
loss with full particulars. Legal proceedings for recovery of
<PAGE>
any loss hereunder shall not be brought after the expiration
of twenty-four months from the occurrence of such loss. If any
limitation embodied herein is prohibited by any law
controlling the construction thereof, such limitation shall be
deemed to be amended so as to be equal to the minimum period
of limitation permitted by such law.
A loss shall be deemed to have been sustained:
(A) under Insuring Clause 1 at the time of the surrender of
the ransom or extortion payment,
(B) under Insuring Clause 2 at the time of the actual
destruction, disappearance, confiscation or wrongful
abstraction of the property or other consideration, and
(C) under Insuring Clause 3 at the time of the payment of
incurred expenses by the insured.
DEFINITIONS--SECTION 5
When used in this section of this Policy:
5.13 CONTAMINATE means to introduce a foreign material or
substance in such a way as to render Insured Property unfit
for use or sale.
EMPLOYEE means any person in the regular service of any
Insured during the Policy Period whom the Insured compensates
by salary, wages and/or commissions and has the right to
govern in the performance of such service, and any
non-compensated officer of the Insured.
EXTORTION THREAT means a threat or threats (including actual
or alleged Kidnapping), as set forth in Insuring Clause 1,
made by a person or group demanding a ransom or extortion
payment or a series of such payments as a condition for the
mitigation or removal of such threat(s), All such threats (a)
related by a common committed, attempted or threatened
wrongful act or (b) made contemporaneously against the same
Insured(s), Insured Property and/or Insured Person(s) shall be
deemed to constitute a single Extortion Threat if made by the
same person or group.
INFORMANT means any person providing information solely in
return for monetary payment paid or promised by the Insured.
INSURED PERSON means:
(a) A Designated Person, as specified in Item 4 of the
Declarations;
(b) a Relative of a Designated Person;
<PAGE>
(c) a person legally resident in the household of a
Designated Person;
(d) a guest in the home of a Designated Person; and
(e) a guest or customer of the Insured while on the Premises
of the Insured.
INSURED PROPERTY means:
(a) any Premises designated in Item 5 of the Declarations,
(b) any tangible property owned or held by the Insured or for
which the Insured is liable located on such Premises or
on any land adjacent thereto occupied by the Insured in
conducting its business, and
(c) any other property designated in Item 5 of the
Declarations.
KIDNAPPING means the wrongful abduction and holding under
duress or by fraudulent means of any Insured Person(s) by any
person(s) or group making a ransom demand or series of ransom
demands for the release of such Insured Person(s).
MERCHANDISE means the Insured's inventory, raw materials, work
in progress and any products manufactured or distributed by
the Insured.
PREMISES means that portion of any building occupied by the
Insured in conducting its business.
RELATIVE means a person's spouse, sibling, ancestor, spouse's
ancestor, lineal descendent or lineal descendent's spouse.
Adopted children and stepchildren shall be deemed to be lineal
descendants. Adoptive parents or stepparents shall be deemed
to be ancestors.
SALARY means the direct compensation which the Insured pays to
an Employee for personal services rendered, excluding bonuses,
commissions and similar incentive payments and the cost of any
health, welfare or pension benefits.
<PAGE>
ACCIDENT POLICY
Endorsement No. 2 Section 5
Name & Address of Policyholder: Policy Number: 81092598-F
OMI Corporation
90 Park Avenue X FEDERAL INSURANCE COMPANY
New York, NY 10016 Incorporated under the
laws of Indiana a stock
insurance company herein
called the Company
PACIFIC INDEMNITY COMPANY
Incorporated under the
laws of California a
a stock insurance company
herein called the Company
Policy Period: Inception: December 31, 1993 Producer: John P.
Tilden, A Subsidiary
of Frenkel & Co.,
Inc.
Expiration: January 31, 1995 Producer #: 68334
Contents
Section I -- Definitions
Section II -- Agreement
1. Scope of the Insurance
2. Policy Term and Renewal
3. Time of Coverage of Individual Insurance
Section III -- Insured Against
Section IV -- Statement of Benefits
1. Description of Persons Insured
2. Amount of Benefit
3. Description of Coverage
4. Limitation of Payment
5. Beneficiary
Section V -- Premium
1. Time of Payment of Premium
2. Computation of Premium
Section VI -- Exclusions
Section VII -- Provisions
Endorsements forming part of this Policy on its date of issue:
Endorsement No. 2A - Extension of Coverage
Endorsement No. 2B - Exclusions
<PAGE>
IN WITNESS WHEREOF, the Company issuing this policy has caused this
policy to be signed by its authorized officers, but this policy
shall not be valid unless also signed by a duly authorized
representative of the Company.
FEDERAL INSURANCE COMPANY PACIFIC INDEMNITY COMPANY
By:/s/ Peter M. Trunfio
Authorized Employee
Date: January 17, 1994
<PAGE>
SECTION I -- DEFINITIONS
Certain words and phrases are defined as follows:
1. "ACCIDENTAL BODILY INJURY" means: bodily injury which:
a. is accidental; and
b. is the direct source of a loss; and
c. is independent of disease, bodily infirmity or
other cause; and
d. occurs while this policy is in force.
2. "AMOUNT OF BENEFIT" means: the amount stated in Section
IV--Statement of Benefits.
3. "COMPANY" means: the insurance company indicated at the
beginning of the policy.
15 Mountain View Road
Warren, New Jersey 07059
4. "HAZARD" means: the conditions which create a change of
a loss as described in Section III--Hazards Insured
Against.
5. "INSURED" means: a person so described in Section IV--
Statement of Benefits.
6. "POLICY" means: this contract of insurance.
7. "POLICYHOLDER" means: the stated entity responsible for
payment of premium as required.
SECTION II--AGREEMENT
1. Scope of Insurance:
In consideration of the payment of premium as required,
the Company agrees with the policyholder to insure the
Insureds against loss arising from the hazards. This
insurance is subject to all of the terms of the policy.
This insurance is for the amount of benefit stated in
the policy.
2. Policy Term and Renewal:
The policy begins and ends at 12:01 a.m. Standard Time
at the policyholder's address. This policy may be
renewed by the policyholder for a consecutive term by
the payment of premium as required. This renewal is
subject to the consent of the Company.
<PAGE>
3. Time of Coverage of Individual Insurance:
Coverage Begins:
The insurance of the Insured begins automatically at the
latest of the following:
1. on the date the policy is effective;
2. at the beginning of the policy term for which
premium has been paid;
3. on the date the Insured falls within the Description
of Persons Insured.
Coverage ends:
The insurance of the Insured ends automatically at the
earliest of any of the following:
1. on the date the policy is terminated;
2. on the expiration of the policy term for which
premium has been paid;
3. on the date the Insured no longer falls within the
Description of Persons Insured.
SECTION III -- INSURED AGAINST
This Hazard applies to Classes: 1
Subject to the terms of the policy, the hazards insured against are
all those to which the Insured may be exposed while:
anywhere in the world as the result of Kidnapping or attempt
thereat.
If within two years of the date of kidnapping there has been no
communication from the Insured or Kidnapper(s) and the body of the
Insured has not been found, then it shall be presumed, subject to
all other provisions and conditions of the policy, that the Insured
has suffered loss of life covered under this policy.
SECTION IV -- STATEMENT OF BENEFITS
1. Description of Persons Insured:
The Company agrees to insure the persons described in the
classes below. These persons are each called the Insured.
<PAGE>
CLASS DESCRIPTION
1 A Designated Person, as specified in Item 4 of
the Declarations; a Relative of a Designated
Person; a person legally resident in the
household of a Designated Person; a guest in
the home of Designated Person; and a guest or
customer of the Insured while on the Premises
of the Insured.
2. Amount of Benefit:
The insurance applies to each Class only with respect to those
coverages for which an amount of benefit is shown:
AMOUNT OF BENEFIT
COVERAGE CLASS 1
Accidental Loss of Life $100,000.-
Accidental Loss of Hand or Foot $ 50,000.-
Accidental Loss of Both Hands or Both
Feet $100,000.-
Accidental Loss of Sight of One Eye $ 50,000.-
Accidental Loss of Sight of Both Eyes $100,000.-
Accidental Loss of Speech or Hearing $ 50,000.-
Accidental Loss of Speech and Hearing $100,000.-
Accidental Loss of One Hand and One
Foot $100,000.-
Accidental Loss of One Hand or One $100,000.-
Foot and Sight of One Eye
Accidental Loss of Thumb and Index
Finger $ 25,000.-
Other Coverage(s)--See Supplemental Statement of Benefits
Page
Aggregate: $ 1,000,000.- per Accident
The Company shall not be liable for any amount in excess of
the above stated Aggregate Limit of Liability. If the
aggregate amount of all indemnities otherwise payable by
reason of coverage provided under this policy exceeds such
<PAGE>
Aggregate Limit of Liability the Company shall not be liable
as respects each Insured for a greater proportion of the
indemnity otherwise payable than the Aggregate Limit of
Liability bears to the aggregate amount of all such
indemnities.
3. Description of Coverage:
Accidental Loss of Life:
If within one year from date of accident accidental bodily
injury causes the death of an Insured the Company will pay
the amount of benefit shown.
Accidental Loss of Hand or Foot:
If within one year from date of accident accidental bodily
injury causes the loss of a hand or foot of an Insured but
not the Insured's death, the Company will pay the amount of
benefit shown; if more than one hand or foot, the amount of
benefit shown. Loss means the actual severance at or above
the ankle joint of a foot; or, with respect to hand, actual
severance of the entire four fingers of the same hand at or
above the metacarpal-phalangeal joints.
Accidental Loss of Sight:
If within one year from date of accident accidental bodily
injury causes the entire and irrecoverable loss of sight of
an Insured but not the Insured's death, the Company will
pay the amount of benefit shown.
Accidental Loss of Hearing:
If within one year from date of accident accidental bodily
injury causes the entire and irrecoverable loss of hearing
of an Insured but not the Insured's death, the Company will
pay the amount of benefit shown.
Accidental Loss of Speech:
If within one year from date of accident accidental bodily
injury causes the entire and irrecoverable loss of speech
of the Insured, but not the Insured's death, the Company
will pay the amount of benefit shown.
Accidental Loss of Thumb and Index Finger:
If within one year from date of accident accidental bodily
injury causes the loss of an Insured's thumb and its
opposing index finger, but not the Insured's death, the
Company will pay the amount of benefit shown.
<PAGE>
4. Limitation of Payment:
The Company will not pay more than one amount of benefit
shown, the greater, for all of the accidental bodily
injuries resulting from one accident.
5. Beneficiary:
Benefit for loss of life is payable to the beneficiary
designated by the Insured; if there has been no such
designation, then the estate of the Insured. All other
benefits payable under this policy are payable to the
Insured.
SECTION V -- PREMIUM
1. Time of Payment of Premium:
Premium is payable at inception and thereafter as indicated:
X Annually: on each anniversary of the inception of the
policy.
Quarterly: on each 3-month anniversary of the inception
of the policy.
Monthly: on the first day of each month following the
inception of the policy.
Other:
2. Computation of Premium:
The premium shall be computed as indicated:
X The annual premium is Included in the premium bill for
the Executive Risk Policy.
The annual premium is $ per $1,000 of the
amount of benefit per Class.
The annual premium is subject to adjustment based on:
1. Rate of per
2. Reporting period:
Other:
<PAGE>
The policyholder agrees to keep records of the information the
Company needs for premium computation, and to submit such
information as the Company requests.
SECTION VI -- EXCLUSIONS
This policy does not cover loss caused by or resulting from any of
the following:
1. intentionally self-inflicted injuries;
2. suicide while sane; attempted suicide while sane;
3. illness; disease; normal pregnancy or resulting
childbirth or miscarriage; and bacterial infection except
bacterial infection of an accidental bodily injury, or if
death results, from the accidental ingestion of a
substance contaminated by bacteria;
4. any act of declared or undeclared war;
5. accident occurring while a passenger on; or operating; or
learning to operate; or serving as a member of the crew
of any aircraft except as provided in Section
111--Hazards Insured Against.
SECTION VII -- PROVISIONS
1. Entire Contract: Changes:
This policy with the attached papers, if any, is the
entire contract of insurance. All statements made by
the Policyholder or by the Insured shall be deemed
representative and not warranties. No statement made
by any Insured shall avoid the insurance or reduce
benefits payable unless:
a. made in writing; and
b. signed by the insured
No change in this policy will be effective until
approved by an Officer of the Company. This approval
must be noted on or attached to this policy. No agent
may change this policy or waive any of its provisions.
<PAGE>
2. Grace Period:
Each premium is payable when due. Premium is due as
stated in Section V. Premiums may be paid to the
Company or to any authorized agent of the Company.
Failure to pay a premium by the premium due date or
within the grace period is a default in payment of
premium. A default of premium will terminate this
policy and all coverage of this policy.
A grace period of 31 days will be granted for the pay-
ment of each premium falling due after the first
premium. During this grace period the policy shall
continue in force. If the Company has told the policy-
holder that this policy will not be renewed at least 31
days before the renewal date, this grace period will
not be given.
3. Addition of New Insureds:
All persons added to the groups or classes described
as Insureds shall be automatically insured under this
policy.
4. Notice of Claim:
Written notice of claim must be given to the Company
as soon as reasonably possible. If possible, written
notice of claim should be given to the Company within
90 days after the occurrence of any loss.
Written notice to the Company means that the Insured
or the beneficiary or someone acting on behalf of
either, must tell the Company or tell any authorized
agent of the Company of the claim with enough infor-
mation to identify the Insured.
5. Claim Forms:
When the Company is told of a claim, it will give the
claimant forms for filing proof of loss. If these
forms are not given to the claimant within 15 days,
the claimant will meet the proof of loss requirements
by giving the Company a written statement of the
nature extent of the loss within the time stated in
the Proof of loss Provision.
6. Proof of Loss:
Written proof of loss must be given to the Company as
soon as is reasonably possible.
<PAGE>
7. Time of Payment of Claims:
Benefits payable under this policy for any loss will be
paid immediately upon receipt of due proof of loss.
8. Payment of Claims:
Benefit for accidental loss of life will be paid to the
beneficiary indicated in the policy. All other benefits
will be paid to the Insured.
9. Physical Examinations and Autopsy:
The Company, at its expense, has the right to have the
Insured examined as often as reasonably necessary while
a claim is pending. It may also have an autopsy made
unless prohibited by law.
10. Legal Actions:
No legal action may be brought to recover on this policy
until 60 days after the Company has been given written
proof of loss. No such action may be brought after 3
years from the time written proof of loss is required to
be given.
11. Change of Beneficiary:
The Insured, and no one else, has the right to change the
beneficiary. The Insured does not need the consent of
anyone to surrender or assign this policy or change
beneficiary or to make any other change in this policy.
The Company is not bound by a change in beneficiary or
assignment of interest unless the Company receives the
original instructions from the Insured, or a sworn
duplicate of the original. The Company does not assume
any responsibility for the validity of such instructions.
12. Cancellation by the Policyholder or the Company:
After this policy has been in force for at least 1 year,
the policyholder may cancel it at any time. To cancel the
policy, the policyholder must give written notice to the
Company or to any authorized agent of the Company. The
Company will cancel the policy on receipt of notice or at
a specified later date. If the policyholder cancels the
policy, the Company will return promptly the unearned
portion of any premium actually paid. The unearned
premium will be computed on a short-rate basis.
<PAGE>
This policy may be cancelled by the Company at any
anniversary date. To cancel the policy, the Company must
give the policyholder written notice, at the last address
shown on the records of the Company, stating when, not
less than 31 days thereafter, such cancellation shall be
effective.
This policy may be cancelled by the Company other than on
an anniversary date for non-payment of premium. If
premium due is not received within the grace period
provided by the policy, the Company may cancel the
policy. The Company must give the policyholder written
notice of this cancellation at the last address shown on
the records of the Company. Such written notice shall
state when, not earlier than the expiration of the grace
period, such cancellation shall be effective.
Any claim for loss occurring before the effective date of
cancellation shall not be prejudiced by the cancellation.
13. Change in Premium Rates at Policy Anniversary Date:
The Company may, as of any policy anniversary date,
change the premium rates for this policy. The Company
must give the policyholder at least 31 days prior written
notice of such change in premium rates.
14. Records Maintained:
The policyholder shall maintain records showing the
essential particulars of this insurance applying to each
Insured.
15. Certificate for Insured:
In any State in which it is required that certificates be
issued on this policy, the Company will issue to the
policyholder for delivery to each Insured a Certificate
of Insurance. The Certificate of Insurance will contain
the Benefits, Limitations, and Provisions of this policy
and state to whom benefits are payable.
16. Examination and Audit:
The Company shall be permitted to examine the
policyholder's records relating to this policy. The
Company may do this at any time during the policy term
and within 3 years after expiration of this policy or
until final adjustment and settlement of all claims under
this policy have been made, whichever is later.
Attached to and forming part of Policy #: 81092598-F
Effective: December 31, 1993
