Being Filed Pursuant to Rule 901(d) of Regulation S-T
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934.
For the period from to
Commission File Number
2-87930
OMI CORP.
(Exact name of registrant as specified in its charter)
Delaware 13-2625280
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
90 Park Avenue, New York, N.Y. 10016
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (212) 986-1960
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 and 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 the number of shares outstanding of each of the issuer's
classes of common stock, as of August 12, 1994:
Common Stock, par value 0.50 per share 30,682,268 shares
<PAGE>
OMI CORP. AND SUBSIDIARIES
INDEX
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of
Operations for the three and six months
ended June 30, 1994 and 1993
Condensed Consolidated Balance Sheets-
June 30, 1994 and December 31, 1993
Consolidated Statements of Changes in
Stockholders' Equity for the six months
ended June 30, 1994
Condensed Statements of Consolidated Cash
Flows for the six months ended June 30,
1994 and 1993
Notes to Condensed Consolidated Financial
Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II: OTHER INFORMATION
SIGNATURES
<PAGE>
OMI CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1994 1993 1994 1993
Revenues:
Voyage revenues $ 66,048 $ 67,037 $131,139 $134,243
Other income 1,145 1,009 2,742 1,641
Total revenues 67,193 68,046 133,881 135,884
Operating Expenses:
Vessel and voyage 54,574 53,160 103,609 103,956
Depreciation and amortization 9,862 8,774 19,603 17,511
Operating lease 1,755 1,770 3,837 3,825
General and administrative 4,432 3,950 8,634 7,551
Total operating expenses 70,623 67,654 135,683 132,843
Operating (loss) income (3,430) 392 (1,802) 3,041
Other Income (Expense):
Gain on disposal of assets-net 105 959 2,959 3,037
Interest expense-net (6,381) (4,499) (13,340) (9,272)
Minority interest in income of
subsidiary (40) (161) (101) (387)
Net other expense (6,316) (3,701) (10,482) (6,622)
Loss before income taxes and equity
in operations of joint ventures (9,746) (3,309) (12,284) (3,581)
Benefit for income taxes (3,517) (736) (4,387) (533)
Loss before equity in operations of
joint ventures (6,229) (2,573) (7,897) (3,048)
Equity in operations of joint
ventures 854 2,054 759 4,133
Net (loss) income $ (5,375) $ (519) $ (7,138) $ 1,085
Net (loss) income per common
share $ (0.18) $ (0.02) $ (0.23) $ 0.04
Weighted average number of shares
of common stock outstanding 30,682 30,579 30,670 30,574
See notes to condensed consolidated financial statements.
<PAGE>
OMI CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
JUNE 30, DEC. 31,
1994 1993
(UNAUDITED)
ASSETS
Current assets:
Cash (including cash equivalents:
June 1994-$17,991 and December
1993-$34,848) $ 33,437 $ 45,321
Marketable securities 2,568 6,021
Traffic and other receivables 26,460 22,842
Assets, at book value, held for sale 16,738
Other current assets 10,351 6,826
Total current assets 89,554 81,010
Capital construction and other
restricted funds 13,048 13,786
Vessels and other property, at cost 708,769 761,741
Less accumulated depreciation (277,670) (308,058)
Vessels and other property-net 431,099 453,683
Investments in, and advances to,
joint ventures 81,263 77,802
Long-term investments 18,695 16,912
Other assets and deferred charges 29,386 28,323
Total $ 663,045 $ 671,516
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 37,313 $ 32,751
Current portion of long-term debt 18,094 15,302
Total current liabilities 55,407 48,053
Long-term debt 282,009 282,325
Deferred income taxes payable 98,969 104,003
Advance time charter revenues and
other liabilities 12,306 14,372
Minority interest in subsidiary 2,838 2,737
Stockholders' equity 211,516 220,026
Total $ 663,045 $ 671,516
See notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
OMI CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1993 AND THE
SIX MONTHS ENDED JUNE 30, 1994 (UNAUDITED)
(IN THOUSANDS)
<CAPTION>
Unearned Unearned Unrealized
Cumulative Compensation Compensation Gain on Total
Common Stock Capital Retained Translation From Restricted Investment Treasury Stockholders'
Shares Amount Surplus Earnings Adjustment ESOP Stock -net Stock Equity
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January
1, 1994 30,615 $15,307 $128,900 $ 64,496 $ 4,912 $ (2,159) $(1,057) $ 9,709 $ (82) $220,026
Net loss (7,138) (7,138)
Exercise of stock
options 52 26 237 263
Issuance of restricted
stock awards 15 7 87 (94)
Amortization of
unearned compensation 832 89 921
Net change in valuation
account (1,202) (1,202)
Equity in gain on sale of
OMI stock by joint venture
investee 531 531
Purchase of treasury
stock (1,885) (1,885)
Balance at June
30, 1994 30,682 $15,340 $129,755 $ 57,358 $ 4,912 $ (1,327) $(1,062) $ 8,507 $(1,967) $211,516
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
OMI CORP. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
FOR THE PERIOD ENDED JUNE 30, 1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (7,138) $ 1,085
Adjustments to reconcile net (loss) income to net
cash (used) provided by operating activities:
Decrease in deferred taxes (4,387) (3,676)
Depreciation and amortization 19,603 17,511
Amortization of unearned compensation 921 41
Gain on disposal of assets - net (2,959) (3,037)
Equity in operations of joint ventures (759) (4,133)
Changes in assets and liabilities:
(Increase) decrease in receivables and other
current assets (7,143) 3,283
Increase in accounts payable and accrued expenses 4,944 2,879
Advances to joint ventures - net (4,771) (8,607)
Increase in other assets and deferred charges (1,400) (1,114)
Decrease in advance charter hire and other
liabilities (2,038) (1,443)
Other assets and liabilities - net 162 199
Net cash (used) provided by operating activities (4,965) 2,988
CASH FLOWS (USED) PROVIDED BY INVESTING ACTIVITIES:
Proceeds from disposition of assets 8 7,463
Proceeds from sale of marketable securities 3,749 12
Proceeds from sale of investments 4,532
Additions to vessels and other property (13,924) (10,654)
Withdrawals from Capital construction and other
restricted funds 543
Proceeds and interest received on Capital construction
and other restricted funds (344) (108)
Dividend received from joint ventures 2,450 11,565
Investments in joint ventures (1,597) (2,093)
Net cash (used) provided by investing activities (9,658) 11,260
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
Cash proceeds from notes payable to bank - net 12,203
Cash proceeds from issuance of long-term debt 12,050
Net proceeds from issuance of common stock 263 92
Purchase of treasury stock (1)
Payments on long-term debt (9,574) (25,516)
Dividends paid (2,140)
Net cash provided (used) by financing activities 2,739 (15,362)
Net decrease in cash and cash equivalents (11,884) (1,114)
Cash and cash equivalents at beginning of period 45,321 16,850
Cash and cash equivalents at end of period $ 33,437 $ 15,736
See notes to condensed consolidated financial statements.
<PAGE>
OMI CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with the instructions
to Form 10-Q and, therefore, do not include all information and
footnotes necessary for a fair presentation of financial position,
results of operations and changes in cash flows in conformity with
generally accepted accounting principles. However, in the opinion
of management of OMI Corp. and subsidiaries, all adjustments
(comprising only normal recurring accruals) necessary for a fair
presentation of operating results have been included in the
statements.
Certain reclassifications have been made to the 1993 financial
statements to conform to 1994 presentations.
Note 2 - Income Taxes
The benefit for income taxes for the six months ended June 30, 1994
varied from statutory rates as follows:
(In Thousands)
Tax benefit calculated at statutory
rates $(4,034)
Equity in operations of joint ventures of
$968,000 not tax effected as management
considers to be permanently invested (339)
Other (14)
Total $(4,387)
The Company has not provided deferred income taxes on its equity in
the undistributed earnings of foreign corporate joint ventures
accounted for under the equity method other than Amazon Transport,
Inc. ("Amazon"). These earnings are considered by management to be
permanently invested in the business.
Note 3 - Supplemental Cash Flow Information
Cash payments include interest of approximately $14,854,000 and
$9,819,000 for the six months ended June 30, 1994 and 1993,
respectively, and income taxes of $5,198,000 for the six months
ended June 30, 1993. There were no income taxes paid during the
six months ended June 30, 1994.
<PAGE>
Non-cash transactions which have been excluded from the
consolidated statement of cash flows for the six months ended June
30, 1993 include 15,000 shares in stock awards issued with a value
of $94,000 were excluded from cash flows in 1994.
Note 4 - Joint Venture Information
Amazon and Wilomi, Inc. ("Wilomi") are both 49 percent owned by OMI
and are accounted for using the equity method.
Summarized income statement information, in accordance with
Regulation S-X Rule 10-01(b)(1), for the three months and six
months ended June 30, 1994 and 1993 for Amazon and Wilomi are as
follows:
<TABLE>
<CAPTION>
For the Three Months Ended June 30, For the Six Months Ended June 30,
Amazon Wilomi Amazon Wilomi
1994 1993 1994 1993 1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 1,460 $ 2,973 $ 5,154 $ 5,533 $ 3,108 $ 5,864 $ 9,936 $ 12,026
Expenses 1,840 1,030 3,254 3,116 3,596 2,239 7,119 7,302
Operating (loss) income (380) 1,943 1,900 2,417 (488) 3,625 2,817 4,724
Net (loss) income $ (357) $ 1,981 $ 776 $ 1,516 $ (426) $ 3,759 $ 810 $ 2,970
</TABLE>
Note 5 - 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 have not been included in the computation because
they do not have a material effect on net (loss) income per common
share.
Note 6 - Credit Lines
At June 30, 1994, OMI had available and unused a total of
$65,000,000 in four short-term lines of credit with banks at
variable rates based on LIBOR.
Note 7 - Commitments
OMI has committed with a joint venture partner to construct a
vessel to be built in the Peoples Republic of China for a total
cost of approximately $54,400,000. The vessel is scheduled to be
delivered in the second quarter of 1996.
<PAGE>
On July 29, 1994, OMI entered into a letter of intent to purchase
two 45,000 deadweight chemical/product tankers at an aggregate cost
of approximately $70,000,000 to be delivered in mid-1996.
Note 8 - Guaranteed Debt
OMI acts as a co-guarantor for a portion of the debt incurred by
joint ventures with affiliates of two of its joint venture
partners. Such debt was approximately $114,895,000 at June 30,
1994, with OMI's share of such guarantees being approximately
$56,616,000. OMI also is a guarantor for one of its joint
venture's revolving line of credit of up to $4,000,000 at June 30,
1994, with a guarantee to OMI from its joint venture partner of 50
percent of the amount guaranteed by OMI.
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 June 30, 1994, no such deficiencies
have been funded.
Note 9 - Subsequent Events
On July 12, 1994 and August 8, 1994, OMI purchased $1,000,000 and
$4,800,000, respectively, of its Senior Notes at a discount.
On July 21, 1994, OMI sold three domestic vessels at an aggregate
sales price of $23,750,000 for a gain of approximately $7,200,000.
The net book value of these vessels is classified as current assets
held for sale in the June 30, 1994 balance sheet.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations for the Six Months Ended June 30, 1994
Versus June 30, 1993
OMI Corp. ("OMI" or the "Company"), is a diversified shipping
company active in both the U.S. flag and international markets.
OMI operates in markets for crude oil, refined petroleum,
chemicals, dry bulk and LPG.
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 for the six and three months ended
June 30, 1994 and 1993.
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 employed under one type of charter or contract can
differ substantially from those attributable to the same vessel if
employed 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
constant. As a result, fluctuations in voyage revenues and vessel
and voyage expenses are not necessarily indicative of trends in
profitability. The discussion that follows will address variations
in net voyage revenues.
Net voyage revenues decreased $2,757,000 or nine percent during the
six months ended June 30, 1994 in comparison to the 1993 period.
The net decrease resulted primarily from lower freight rates in
1994 for two domestic vessels which were operating under federal
cargo assistance programs in 1993 and 1994, reduced revenues for a
vessel that was offhire, including a drydock period of 46 days in
1994, additional drydock expense along with offhire days on another
vessel, and a loss incurred by a newly acquired vessel purchased in
the second quarter which had one short charter. Decreases in net
voyage revenue were partially offset by revenue generated by two
vessels purchased December 1993, three vessels which were offhire
for 70 more days in 1993 than in 1994 due to drydocking, and a
vessel, the OMI Columbia, which was offhire for a significant
period in 1993 and 1994 but earned higher spot rates on its 1994
voyages.
<PAGE>
Voyage revenues decreased $3,104,000 or two percent, with net
decreases in domestic revenues of $11,209,000 and net increases in
foreign revenues of $8,105,000 for the six months ended June 30,
1994 over the comparable period in 1993. Domestic revenues
decreased primarily from two vessels which were offhire for a total
of 82 days in 1994, 51 of which were due to drydockings. Other
decreases in domestic revenue were due to a decrease in both volume
and rates in the lightering operations of OMI Petrolink Corp.
("Petrolink"), lower rates for three vessels operating under
government programs during 1994 compared to 1993, and the disposal
of two vessels in October 1993. The decrease in domestic revenues
was offset in part by revenues from a vessel purchased in the
second quarter of 1993, which operated for 93 days more in 1994,
and increased revenue from three vessels on time charter to a joint
venture. Foreign revenues increased primarily from revenue
generated by the purchase of two vessels, from two vessels
chartered in during the fourth quarter of 1993, and revenues from
a vessel acquired during the second quarter of 1994. Foreign
revenue increases were partially offset by decreases from three
vessels which operated in the spot market during 1993 and are on
time charters in 1994.
Net vessel and voyage expenses decreased $347,000 or less than one
percent, with net decreases in domestic expenses of $6,558,000 and
net increases in foreign expenses of $6,211,000 for the six months
ended June 30, 1994 compared to the six months ended June 30, 1993.
The decrease in domestic expenses was primarily due to the disposal
of two vessels in the fourth quarter in 1993, lower expenses
corresponding to the reduction in volume of Petrolink's lightering
business, lower expenses for a vessel which was in the spot market
in 1993 and operated on a time charter in 1994, the reversal of the
drydock accrual of two of the vessels sold in July 1994, and
reduced expenses for three vessels that operated in the spot market
in both years in different trades. These decreases in domestic
expenses were partially offset by increases for a vessel acquired
in the second quarter of 1993 with 93 more operating days in 1994,
and increased voyage expenses in 1994 for two vessels operating on
spot charters in both years. Foreign vessel and voyage expenses
increased primarily due to the operating activities of two vessels
time chartered-in during December 1993 which are participating in
a product tanker revenue pool, an increase in the drydock accrual
for two vessels purchased December 1993 that are to be drydocked in
the second half of 1994, an increase in expenses for a vessel
purchased in the second quarter of 1994, and higher expenses on two
vessels due to a change from time to spot charters. Foreign
increases in vessel and voyage expenses were partially offset by
decreases in voyage expenses from four vessels that were previously
operating in the spot market in 1993 and are currently on time
charters.
<PAGE>
Results of Operations for the Three Months Ended June 30, 1994
Versus June 30, 1993
Net voyage revenues decreased $2,403,000 or 17 percent, for the
three months ended June 30, 1994 as compared to the same period in
1993. The net decrease resulted primarily from offhire of two
domestic vessels in 1994 aggregating 61 days, 30 days related to
drydocking of one vessel, reduced freight rates on two domestic
vessels that operate in federal programs, 25 additional offhire
days on the OMI Columbia in 1994 compared to 1993, and greater
expenses on a vessel purchased in April 1994 than revenues earned
during the period. Decreases in net revenue were offset by
increases from reduced vessel expenses on three domestic vessels,
one of which was disposed of in October 1993 and two vessels, sold
in July 1994, whose drydock accruals were reversed, and less
offhire days in 1994 compared to 1993 for two vessels.
Voyage revenues decreased $989,000 or one percent for the three
months ended June 30, 1994 in comparison to June 30, 1993.
Decreases resulted primarily from lower freight rates for two
domestic vessels in 1994, reduced revenue from Petrolink, 93
offhire days for three vessels in 1994, lower revenues from a
vessel previously operating in the spot market that began operating
on a time charter during the second quarter of 1994, and reduced
revenues from a vessel disposed of in the fourth quarter in 1993.
Decreases in voyage revenue were offset in part by increases from
four vessel purchases, three purchases in 1993 and one in the
second quarter of 1994, increased revenues due to a higher spot
rate in 1994 over 1993 on a domestic vessel, and revenue from two
vessels chartered in from December 1993.
Vessel and voyage expenses increased $1,414,000 or three percent in
the three months ended June 30, 1994 over the comparable period in
1993. The increases in expense are related primarily to the four
vessels purchased in 1993 and 1994, and the two vessels chartered-
in. Increases in expense were offset partially by decreases in
Petrolink due to reduced rates and volume in the lightering
business, higher voyage expenses incurred for four domestic vessels
operating in the spot market in both 1994 and 1993, lower expenses
for two vessels due to the reversal of their drydock accruals and
lower voyage expenses for a vessel on a time charter in 1994 that
was operating in the spot market in 1993.
OTHER INCOME
Other income consists primarily of management fees received from
affiliates and/or other parties and dividends. For the six months
ended June 30, 1994, other income increased $1,101,000 or 67
percent in comparison to the same period in 1993. The increase in
1994 resulted primarily from a dividend received from a foreign
investment in which the Company holds a minority position, and
increased fees to manage the Ready Reserve Fleet under a new
contract which began July 1, 1993.
<PAGE>
Other income increased $136,000 or 13 percent in the second quarter
of 1994 compared to the second quarter of 1993 as a result of
increased management fees from the Government.
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 six
months ended June 30, 1994 these expenses increased $3,187,000 or
11 percent, as compared to the six months ended June 30, 1993. The
primary increases in these expenses relate to increased
depreciation expense due to the shortening of the useful lives of
six domestic vessels to match their expected economic useful life
and additional depreciation on four vessels purchased during 1993
and 1994. General and administrative expenses increased primarily
from increased professional fees.
Other operating expenses increased $1,555,000 or 11 percent for the
three months ended June 30, 1994 compared to the three months ended
June 30, 1993, primarily due to increased depreciation expense.
OTHER INCOME (EXPENSE)
Other income (expense) consists of gain (loss) on disposal of
assets-net, interest expense-net, and minority interest. The
increase in net other expense of $3,860,000 or 58 percent in the
six months ended June 30, 1994 over the comparable period in 1993
is primarily from increased interest expense. In November 1993,
OMI issued $170,000,000, 10.25 percent Senior Notes ("Notes") due
November 1, 2003, which increased interest expense in the first six
months of 1994 by $8,712,000. Increases in net other expense were
offset by decreases in interest expense for debt which was paid
with proceeds from the Notes.
Net other expense increased $2,615,000 or 71 percent during the
three months ended June 30, 1994 as compared to the same period in
1993. The increase is primarily due to the increase in interest
expense from the Notes and from the reduction of the net gain on
disposal of assets in 1994 from the 1993 gain was primarily from
the sale of an investment.
(BENEFIT) PROVISION FOR INCOME TAXES
The benefit for income taxes of $4,387,000 for the six months ended
June 30, 1994 varied from statutory rates by excluding the tax
effect on the equity in operations of joint ventures, other than
Amazon Transport, Inc., as management considers such earnings to be
permanently invested. Additionally, statutory rates of 35 percent
in 1994 differed from the 34 percent rate used for the six months
ended June 30, 1993 results due to the tax rate increase in August
1993.
<PAGE>
The benefit from income taxes for the three months ended June 30,
1994 was $3,517,000.
EQUITY IN OPERATIONS OF JOINT VENTURES
Equity in operations of joint ventures was $759,000 in 1994 or
$3,374,000 (82 percent) lower than $4,133,000 equity balance for
the six months ended June 30, 1993. The decline in joint venture
equity was primarily from a 49 percent owned joint venture that
operated a vessel on a profitable time charter during 1993 that
expired in 1994. During 1994, this vessel is operating in the spot
market at lower rates. Additionally, another 49 percent owned
joint venture experienced declines in earnings of two of its
vessels which operated on spot charters in both 1994 and 1993.
Equity in operations of joint ventures was $854,000 in the second
quarter of 1994 compared to $2,054,000 in the second quarter of
1993. The decline in the second quarter of 1994 is attributed to
the two joint ventures mentioned above in addition to a decline for
start-up costs of a product tanker revenue pool formed in December
1993 that recently began fully operating. The decline in equity
for the quarter ended June 30, 1994 was offset by an increase in
operating results of another 49.9 percent joint venture which
includes a gain on sale of a vessel, of which OMI's equity portion
is $762,000.
BALANCE SHEET
The decrease in Marketable securities of $3,453,000 or 57 percent,
from December 31, 1993 to June 30, 1994 was due to the sale of
747,225 shares of Chiles stock during February 1994.
The increase in Other current assets of $3,525,000 or 52 percent,
was primarily due to the increase in prepaid expenses at June 30,
1994 which are allocated to expenses evenly throughout the year and
will be fully amortized by year end, with the exception of prepaid
insurance.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital of $34,147,000 at June 30, 1994 was
$1,190,000 or four percent higher than working capital of
$32,957,000 at December 31, 1993. Cash and cash equivalents of
$33,437,000 decreased $11,884,000 or 26 percent from the balance of
$45,321,000 at December 31, 1993. During the six months ended June
30, 1994, the source of the Company's liquidity was issuance of
debt, and cash generated from operations. For the six months ended
June 30, 1994, net cash used by operating activities was $4,965,000
which was a decrease of $7,953,000 or 266 percent from net cash
provided by operations of $2,988,000 for the comparable period in
1993.
<PAGE>
Net cash used by investing activities was $9,658,000 in the first
six months of 1994 versus net cash provided by investing activities
of $11,260,000 in the first six months of 1993. The Company
received $2,450,000 in dividends from a joint venture in 1994 and
$11,565,000 in 1993. All joint venture earnings are considered to
be permanently invested, with the exception of Amazon Transport,
INc. ("Amazon"), and are not available for distribution. There is
no certainty that Amazon will have sufficient earnings to pay
dividends in the future. Therefore, the Company cannot rely on
dividends or loans from Amazon to improve liquidity.
Since the issuance of the $170,000,000 Notes on November 3, 1993,
the Company has improved its liquidity and financial position and,
together with its four unused short-term lines of credit
aggregating $65,000,000, and cash flow from operations, is in the
position to meet all current and future obligations, and allow the
Company to acquire replacement and additional vessels as the
opportunity and need arises.
On July 21, 1994, OMI received proceeds of $23,750,000 on the sale
of three domestic vessels at a gain of approximately $7,200,000.
Since the end of the quarter, OMI has purchased $5,800,000 of its
Senior Notes at a discount.
During the six months ended June 30, 1994, OMI received cash from
the following significant activities:
* proceeds of $3,749,000 received from the sale of Chiles
stock,
* $2,450,000 in dividends from a joint venture, and
* proceeds of $12,050,000 from the issuance of long-term
debt.
Significant disbursements during the six months ended June 30, 1994
were from:
* additions to vessels and other property of $13,924,000,
* investment in joint ventures of $1,597,000, primarily
for contributions towards a new vessel acquired by a
joint venture in January 1994, and
* $9,574,000 payments on long-term debt.
COMMITMENTS
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.
On July 29, 1994, OMI entered into a letter of intent to purchase
two 45,000 deadweight chemical/product tankers at an aggregate cost
of approximately $70,000,000 to be delivered in mid-1996.
<PAGE>
OMI acts as a co-guarantor for a portion of the debt incurred by
joint ventures with affiliates of two of its joint venture
partners. Such debt was approximately $114,895,000 at June 30,
1994, with OMI's share of such guarantees being approximately
$56,616,000. OMI also is a guarantor for one of its joint
venture's revolving line of credit of up to $4,000,000 at June 30,
1994, with a guarantee to OMI from its joint venture partner of 50
percent of the amount guaranteed by OMI.
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 June 30, 1994, no such deficiencies
have been funded.
<PAGE>
PART II: OTHER INFORMATION
Item 1 - Legal Proceedings
None.
Item 2 - Changes in Securities
None.
Item 3 - Defaults upon Senior Securities
None.
Item 4 - Submission of Matters to a Vote of Security Holders
Reference to proxy statement filed
with the Securities and Exchange Commission
on April 22, 1994.
Item 5 - Other Information
None.
Item 6 - Exhibits and Reports on Form 8-K
a. Exhibits
10.44 OMI Corp. Key Employee Amended and Restated
Employment Agreement dated October 1, 1993
between George W. Vlandis and the Company.
Filed on May 12, 1994 with Form 10-Q for the
period ended March 31, 1994.
10.45 OMI Corp./Citibank $30,000,000 Secured
Revolving Credit Agreement dated March 24,
1994.
b. Reports on Form 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and 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.
(REGISTRANT)
Date: August 12, 1994 By:/s/Fredric S. London
Fredric S. London
Senior Vice President
Date: August 12, 1994 By:/s/Vincent de Sostoa
Vincent de Sostoa
Senior Vice President/
Finance and Chief
Financial Officer
EXHIBIT 10.45
U.S. $30,000,000
REVOLVING CREDIT AGREEMENT
DATED AS OF MARCH 24, 1994
By And Among
LIMAR SHIPPING LTD.,
SAYBROOK SHIPPING LTD.,
DARIEN SHIPPING LTD.,
jointly and severally as
Borrowers,
and
OMI Corp.,
as Guarantor,
and
CITIBANK, N.A.,
as Agent,
and
Citibank, N.A.,
Christiania Bank og Kreditkasse,
The First National Bank of Boston,
as Lenders.
<PAGE>
PARTIES
PRELIMINARY STATEMENTS
ARTICLE I DEFINITIONS
Section 1.01 Definitions
Section 1.02 Accounting Terms
Section 1.03 Governing Language
Section 1.04 Computation of Time Periods
ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES
Section 2.01 The Advances
Section 2.02 Making the Advances
Section 2.03 General Provisions
Section 2.04 Interest and Default Interest
Section 2.05 Prepayments
Section 2.06 Increased Costs; Additional Interest
Section 2.07 Payments and Computations
Section 2.08 Taxes
Section 2.09 Evidence of Debt
Section 2.10 Fees
Section 2.11 Borrowers' Termination of Commitments
ARTICLE III CONDITIONS OF LENDING
Section 3.01 Conditions Precedent to Initial Advances
Section 3.02 Conditions Precedent to Each Borrowing
ARTICLE IV REPRESENTATIONS AND WARRANTIES
Section 4.01 Representations and Warranties of
the Borrowers and Guarantor
<PAGE>
(a) Due Existence; Compliance
(c) Government Approvals and Authorizations
(d) Legal, Valid and Binding
(e) Marketable Title
(f) Valid Mortgages
(g) Valid Earnings Assignments
(h) Valid Charter Assignments
(i) Valid Insurance Assignments
(j) No Place of Business in U.S.
(k) Use of Proceeds
(l) Best Interests of the Company; Ownership
(m) Financial Information
(n) Litigation
(o) Immunities
(p) No Taxes
(q) No Filing
(r) No Defaults
(s) Margin Regulations
(t) Investment Company Act
(u) Taxes Paid
(v) Disclosure
(w) Good Title
(x) ERISA
(y) Solvency
(z) No Guarantee by Universal Bulk Carriers, Inc.
(aa) Environmental Compliance
(bb) Payment Restrictions Affecting Subsidiaries
<PAGE>
Section 5.01 Affirmative Covenants
(a) Compliance with Laws
(b) Use of Proceeds
(c) Financial Information; Defaults
(d) Financial Covenants
(e) Corporate Existence, Mergers
(f) Maintenance of Class and Insurance
(g) Accounting Requirements
(h) Masters' Undertakings
(i) The Borrowers' and Pledgors' Stock
(j) Indebtedness
(k) Solvency
(l) Vessel Management
(m) Further Assurances
(n) OMI Senior Notes, Indenture
Section 5.02 Negative Covenants
(a) No Amendment of OMI Senior Note Offering
(b) Indebtedness
(c) Lease Obligations
(d) Stock Purchases
(e) Limitation on Payment Restrictions Affecting
Subsidiaries
(f) Transactions with Officers, Directors
and Shareholders
(g) Compliance with ERISA
(h) Investment Company
(i) Business
<PAGE>
(k) Demise Charters; No Security Impairment
(l) Place of Business, Etc.
(m) Material Adverse Change
(n) Organizational Documents
(o) No Guarantee by Universal Bulk Carriers, Inc.
Section 5.03 Guaranty
Section 5.04 Operations Account
Section 5.05 Security Account
ARTICLE VI DEFAULT
Section 6.01 Events of Default
Section 6.02 Assignments as Security
Section 6.03 Distribution of Proceeds
Section 6.04 Continuing Security
ARTICLE VII RELATION OF LENDERS; ASSIGNMENTS AND PARTICIPATIONS
Section 7.01 Lenders and Agent
Section 7.02 Pro Rata Sharing
Section 7.03 Setoff
Section 7.04 Approvals
Section 7.05 Exculpation
Section 7.06 Indemnification
Section 7.07 Agent as Lender
Section 7.08 Notice of Transfer; Resignation; Successor
Agent
Section 7.09 Credit Decision; Not Trustee
Section 7.10 Assignments and Participation
<PAGE>
ARTICLE VIII MISCELLANEOUS
Section 8.01 Amendments
Section 8.03 No Waiver; Remedies
Section 8.04 Costs, Expenses, Fees and Indemnities
Section 8.05 [Reserved]
Section 8.06 Judgment
Section 8.07 Consent to Jurisdiction; Waiver of
Immunities
Section 8.08 Binding Effect; Merger; Severability; GOVERNING LAW
Section 8.09 Counterparts
Section 8.10 WAIVER OF JURY TRIAL
TESTIMONIUM
<PAGE>
This Revolving Credit Agreement, dated as of March 24,
1994, is made and entered into by and among (i) LIMAR SHIPPING
LTD., SAYBROOK SHIPPING LTD., and DARIEN SHIPPING LTD., jointly and
severally, (each, a "Borrower" and collectively, the "Borrowers"),
each a corporation organized and existing under the laws of the
Republic of Liberia ("Liberia"), (ii) OMI CORP. (the "Guarantor"),
a corporation organized and existing under the laws of the State of
Delaware, (iii) CITIBANK, N.A., a national banking association
organized and existing under the laws of the United States of
America ("United States" or "U.S."), and (iv) each of the other
banks or other institutions whose names may appear on the signature
pages of this Agreement (each a "Lender" and, collectively, the
"Lenders") or, if applicable, in the Register for whom Citibank,
N.A., subject to Article VII of this Agreement, acts as Agent.
Capitalized terms not otherwise herein defined shall have the
respective meanings set forth below in Section 1.01.
PRELIMINARY STATEMENTS
(1) The Borrowers, jointly and severally, desire to
borrow from the Lenders upon the terms and conditions set forth
herein, and to secure their obligations to the Lenders hereunder by
granting the Agent on behalf of the Lenders a first preferred
mortgage on their respective Vessels and other collateral as
hereinbelow described.
(2) The Guarantor desires to guaranty all obligations of
the Borrowers hereunder to induce the Agent and the Lenders to
execute and deliver this Agreement and advance the Loan.
(3) The Lenders have agreed severally, but not jointly,
each for the aggregate amount and in the percentage interest (as to
each Lender, the "Percentage Interest") set forth opposite each
Lender's name and signature, below, or, if applicable, in the
Register, to provide credits upon the terms and conditions set
forth herein.
(4) The Lenders have requested the Agent, and the Agent
has agreed, to act on behalf of the Lenders in accordance with the
terms and conditions set forth herein.
Now, therefore, the Borrowers, the Guarantor, the Lenders
and the Agent hereby agree among themselves as follows:
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. As used in this Agreement,
each of the following terms shall have the respective meaning set
forth below (such meanings, unless otherwise indicated, to apply to
both the singular and plural forms of the terms defined):
"Advance" means an advance by a Lender to the Borrowers
as part of a Borrowing and refers to a Base Rate Advance or a LIBOR
Rate Advance, each of which shall be a "Type" of Advance.
"Affiliate" means, with respect to any Person, any other
Person controlling, controlled by or under common control with,
such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling",
"controlled by" and "under common control with"), as applied to any
Person, means the possession, directly or indirectly, of the power
to vote twenty percent (20%) or more of the securities having
voting power for the election of directors of such Person, or
otherwise to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting
securities or by contract or otherwise.
"Agent" shall mean Citibank, N.A., and any successor
agent under this Agreement.
"Agreement" means this Agreement, as it may be amended,
supplemented or otherwise modified from time to time.
"Applicable Lending Office" means, with respect to each
Lender, such Lender's Domestic Lending Office in the case of a Base
Rate Advance, and such Lender's Eurodollar Lending Office in the
case of a LIBOR Rate Advance.
"Assignment and Acceptance" means an assignment and
acceptance entered into by a Lender and an Eligible Assignee, and
accepted by the Agent, in substantially the form of Exhibit C
hereto.
"Base Rate" means, for any Interest Period or any other
period, a fluctuating interest rate per annum as shall be in effect
from time to time, which rate per annum shall at all times be equal
to the highest of:
(a) the rate of interest announced publicly by Citibank,
N.A., in New York, New York, from time to time, as its base
rate;
<PAGE>
(b) a rate equal to 1/2 of one percent per annum above
the latest three-week moving average of secondary market
morning offering rates in the United States for three-month
certificates of deposit of major United States money market
banks, such three-week moving average determined weekly on
each Monday (or if such day is not a Business Day, on the
next succeeding Business Day) for the three-week period
ending on the previous Friday by Citibank, N.A., on the basis
of such rates reported by certificate of deposit dealers to
and published by the Federal Reserve Bank of New York or, if
such publication shall be suspended or terminated, on the
basis of quotations for such rates received by Citibank,
N.A., from three New York certificate of deposit dealers of
recognized standing selected by Citibank, N.A., in either
case adjusted to the nearest 1/4 of one percent, or, if there
is no nearest 1/4 of one percent, to the next higher 1/4 of
one percent; or
(c) a rate equal to 1/2 of one percent per annum above
the then current Federal Funds Rate.
"Base Rate Advance" means an Advance which bears interest
at the Base Rate.
"Borrowing" means a borrowing consisting of simultaneous
Advances of the same Type made by each of the Lenders pursuant to
Section 2.01.
"Business Day" means any day other than a Saturday,
Sunday or any other day on which commercial banks are required or
authorized by law to close in New York, New York, London, England
or in the city where the Lending Office is located.
"Capital Lease" means, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such
Person as lessee that, in accordance with GAAP, either would be
required to be classified and accounted for as a capital lease on
a balance sheet of such Person or otherwise be disclosed as such in
a note to such balance sheet, other than, in the case of the
Guarantor, the Borrowers or any of their Subsidiaries, any such
lease under which the Guarantor, the Borrowers or any of their
Subsidiaries is the lessor.
"Charterers" means collectively Shell International and
its respective successors and assigns, and any subsequent charterer
of any Vessel.
"Charter" means any time charter party having a term of
one year or longer (including any extensions or renewals) which may
from time to time exist with respect to any Vessel.
<PAGE>
"Charter Assignment" means any instrument executed and
delivered by a Borrower covering its Vessel respecting a Charter
and including an assignment of any guarantee relating thereto,
substantially in the form attached to each Earnings Assignment and
otherwise in form and substance acceptable to the Agent, as the
same may be amended, modified or supplemented from time to time
(collectively, the "Charter Assignments").
"Closing Date" means the day, but not later than March
24, 1994, on which the respective parties hereto shall have
executed and delivered this Agreement.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"Collateral" means, collectively, each of the Vessels as
described in the granting clause of each Mortgage, and all
additional security pledged to secure the Loan.
"Commitment" means the obligation of each Lender to lend
the amounts set forth in Section 2.01 hereof, as such amounts may
be reduced from time to time pursuant to this Agreement.
"Convert", "Conversion" and "Converted" each refers to a
conversion of Advances of one Type into Advances of another Type
pursuant to Section 2.02(e) or 2.04(b)(ii) (C).
"Default" means any event or condition that, with the
giving of notice, the lapse of time or both, would become an Event
of Default.
"Deputy Commissioner" means the Office of the Deputy
Commissioner of Maritime Affairs of the Republic of Liberia at the
Port of New York.
"Dollars" and "$" mean the lawful and freely transferable
currency of the United States of America.
"Domestic Lending Office" means, with respect to any
Lender, the office of such Lender specified as its "Domestic
Lending Office" opposite its name on Schedule I hereto or in the
Assignment and Acceptance pursuant to which it became a Lender, or
such other office of such Lender as such Lender may from time to
time specify to the Borrowers and the Agent.
"Drawdown Date" shall mean the date an Advance is to be
made to the Borrowers pursuant to this Agreement.
<PAGE>
"Earnings Assignment" means any assignment of a Vessel's
earnings by the Borrowers to the Agent on behalf of the Lenders,
substantially in the form of Exhibit D-2, as the same may be
amended, supplemented or otherwise modified from time to time.
"Eligible Assignee" means (i) a commercial bank, savings
and loan institution, insurance company or financial institution
organized under the laws of the United States, or any State
thereof, which bank has both assets in excess of One Billion
Dollars ($1,000,000,000) and combined capital and surplus in excess
of One Hundred Million Dollars ($100,000,000), or which insurance
company or financial institution has total assets in excess of One
Billion Dollars ($1,000,000,000), (ii) a commercial bank organized
under the laws of any other country which is a member of the OECD
or has concluded special lending arrangements with the
International Monetary Fund associated with its General
Arrangements to Borrow, or a political subdivision of any such
country, which bank has a combined capital and surplus (or the
equivalent thereof under the accounting principles applicable
thereto) in excess of One Hundred Million Dollars ($100,000,000),
provided that such bank is acting through a branch or agency
located in the United States, the Cayman Islands or the country in
which it is organized or another country which is also a member of
the OECD or has concluded special lending arrangements with the
International Monetary Fund associated with its General
Arrangements to Borrow, (iii) the central bank of any country which
is a member of the OECD or (iv) a finance company, insurance
company or other financial institution or a fund which is engaged
in making, purchasing or otherwise investing in commercial loans in
the ordinary course of its business, has total assets in excess of
Five Hundred Million Dollars ($500,000,000), is doing business in
the United States and is organized under the laws of the United
States, or any State thereof, or under the laws of any member
country of the OECD.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations
promulgated and rulings issued thereunder.
"ERISA Affiliate" means with respect to any Person, any
trade or business (whether or not incorporated) which is a member
of a group of which such Person is a member and which is under
common control with such Person within the meaning of Section 414
of the Code, as amended from time to time, and the regulations
promulgated and rulings issued thereunder.
"Eurodollar Lending Office" means, with respect to any
Lender, the office of such Lender specified as its "Eurodollar
Lending Office" opposite its name on Schedule I hereto or in the
Assignment and Acceptance pursuant to which it became a Lender (or,
if no such office is specified, its Domestic Lending Office), or
such other office of such Lender as such Lender may from time to
time specify to the Borrowers and the Agent.
<PAGE>
"Event of Default" means any of the events specified as
such in Section 6.01 of this Agreement.
"Event of Loss" means any of the following events: (x)
the actual or constructive total loss of a Vessel or the agreed or
compromised total loss of a Vessel; or (y) the capture,
condemnation, confiscation, requisition, purchase, seizure or
forfeiture of, or any taking of title to, a Vessel. An Event of
Loss shall be deemed to have occurred (i) in the event of an actual
loss of a Vessel, at noon Greenwich Mean Time on the date of such
loss or if that is not known on the date which such Vessel was last
heard from; (ii) in the event of damage which results in a
constructive or compromised or arranged total loss of a Vessel, at
noon Greenwich Mean Time on the date of the event giving rise to
such damage; or (iii) in the case of an event referred to in clause
(y) above, at noon Greenwich Mean Time on the date on which such
event is expressed to take effect by the Person making the same.
Notwithstanding the foregoing, if a Vessel shall have been returned
to the relevant Borrower following any capture, requisition or
seizure referred to in clause (y) above prior to the date upon
which payment is required to be made under Section 2.05(c) hereof,
no Event of Loss shall be deemed to have occurred by reason of such
capture, requisition or seizure.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day (or, if such day
is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Agent
from three Federal funds brokers of recognized standing selected by
it.
"Fee Payment Date" means (i) the last day of the calendar
quarter in which the Closing Date occurs, (ii) the last day of each
successive and respective calendar quarter thereafter to and
including the Termination Date, or such earlier date as the
Commitment of the Lenders shall have been terminated, and the
principal of and interest on each Advance shall have been paid, in
full and (iii) the day on which the Commitment of any Lender is
reduced pursuant to this Agreement.
"GAAP" means at any time generally accepted United States
accounting principles at such time.
"Incorporation Jurisdiction" means as to any Person its
jurisdiction of incorporation or legal organization.
<PAGE>
"Indebtedness" means (a) any liability of any Person
(i) for borrowed money, or under any reimbursement obligation
related to a letter of credit or bid or performance bond facility,
or (ii) evidenced by a bond, note, debenture or other evidence of
indebtedness (including a purchase money obligation) representing
extensions of credit or given in connection with the acquisition of
any business, property, service or asset of any kind, including
without limitation, any liability under any commodity, interest
rate or currency exchange hedge or swap agreement (other than a
trade payable or other current liability arising in the ordinary
course of business) or (iii) for obligations with respect to (A) an
operating lease (excluding any operating lease in effect on the
date hereof), (B) a lease of real or personal property that is or
would be classified and accounted for as a Capital Lease; (b) any
liability of others either for any lease, dividend or letter of
credit, or for any obligation described in the preceding clause
(a) that (i) the Person has guaranteed or that is otherwise its
legal liability (whether contingent or otherwise or direct or
indirect, but excluding endorsements of negotiable instruments for
deposit or collection in the ordinary course of business) or
(ii) is secured by an Lien on any property or asset owned or held
by that Person, regardless whether the obligation secured thereby
shall have been assumed by or is a personal liability of that
Person; and (c) any amendment, supplement, modification, deferral,
renewal, extension or refunding of any liability of the types
referred to in clauses (a) and (b), above, provided, however, that
no such liability for which a restricted cash deposit has been
established (i) which deposit can and will liquidate such
liability, in whole or in part, and (ii) the disposition of which
deposit is, pursuant to a contract with the holder of such deposit,
subject to contractual control directly or indirectly by the
creditor to whom such liability is owed shall constitute
Indebtedness to the extent of the amount of such intended
liquidation of such liability by such restricted cash deposit.
"Insufficiency" means, with respect to any Plan, the
amount, if any, by which the present value of the vested benefits
under such Plan exceeds the fair market value of the assets of such
Plan allocable to such benefits.
"Insurance Assignment" means any assignment of insurance
by the Borrowers to the Agent on behalf of the Lenders,
substantially in the form of Exhibit D-3, as the same may be
amended, supplemented or otherwise modified from time to time.
"Interest Payment Date" means with respect to any Advance
comprising part of the same Borrowing (1) the last day of each
Interest Period, (2) the day any principal amount of such Borrowing
matures and becomes due and payable, (3) the Termination Date, and
(4) if the Interest Period is longer than three (3) months, the
last day of every consecutive three month period following such
Borrowing.
<PAGE>
"Interest Period" means, (A) for each Advance comprising
part of the same Borrowing, the period commencing on the date of
such Advance, or the date of the Conversion of any Advance into
such an Advance and ending on the last day of the period selected
by the Borrowers or the Agent, as the case may be, pursuant to this
Agreement and, thereafter, each respective and successive period
commencing on the last day of the immediately preceding Interest
Period and ending on the last day of the period selected by the
Borrowers or the Agent, as the case may be, subject to the
provisions below. The duration of each such Interest Period shall
be (y), in the case of a Base Rate Advance, shall be such period as
the Agent shall notify the Borrowers and (z), in the case of a
LIBOR Rate Advance, one, three or six months, or such longer period
with the consent of the Lenders, in each case selected by the
Borrowers or the Agent, as the case may be, pursuant to this
Agreement;
provided, however, with respect to each Advance that:
(i) no Interest Period relating to any Advance shall
commence on or end after the maturity date of such Advance;
(ii) Interest Periods commencing on the same date for
Advances comprising part of the same Borrowing shall be of the
same duration;
(iii) no Interest Period shall end after the Termination
Date; and
(iv) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last
day of such Interest Period shall be extended to occur on the
next succeeding Business Day, provided, in the case of any
Interest Period for a LIBOR Rate Advance, that if such
extension would cause the last day of such Interest Period to
occur in the next following calendar month, the last day of
such Interest Period shall occur on the next preceding
Business Day.
"Lending Office" means the International Banking Facility
of the Agent in New York City, or any other office or affiliate of
the Agent hereafter selected and notified to the Borrowers from
time to time by the Agent.
"LIBOR Rate Advance" means an Advance which bears
interest at the LIBOR Rate.
<PAGE>
"LIBOR Rate" means, for an Interest Period for each LIBOR
Rate Advance comprising part of the same Borrowing, the rate
determined by the Agent to be the rate of interest per annum equal
to the rate per annum at which deposits in United States Dollars
are offered by the principal office of Citibank, N.A. in London,
England to prime banks in the London interbank market at 11:00 A.M.
(London time) two Business Days before the first day of such
Interest Period for a term equal to such Interest Period and in an
amount substantially equal to such portion of the Loan. The LIBOR
Rate for an Interest Period shall be determined by the Agent on the
basis of the applicable rate furnished to and received by the Agent
from Citibank, N.A. two Business Days before the first day of such
Interest Period, subject, however, to the provisions of Section
2.04. If at any time the Agent shall determine that by reason of
circumstances affecting the London interbank market (i) adequate
and reasonable means do not exist for ascertaining the LIBOR Rate
for the succeeding Interest Period or (ii) the making or
continuance of any Loan at the LIBOR Rate has become impracticable
as a result of a contingency occurring after the date of this
Agreement which materially and adversely affects the London
interbank market, the Agent shall so notify the Lenders and the
Borrowers. Failing the availability of the LIBOR Rate, the LIBOR
Rate shall mean the Base Rate thereafter in effect from time to
time until such time as a LIBOR Rate may be determined by reference
to the London interbank market.
"Lien" means any lien, charge, easement, claim, mortgage,
Option, pledge, right of first refusal, right of usufruct, security
interest, servitude, transfer restriction or other encumbrance or
any restriction or limitation of any kind (including, without
limitation, any adverse claim to title, conditional sale or other
title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest).
"Loan" means the Advances to the Borrowers by each Lender
provided for in Article II of this Agreement.
"Loan Document" means any of, and "Loan Documents" mean
each of, this Agreement, the Notes, the Security Documents and the
Master Vessel Trust Agreement.
"Majority Lenders" means at any time Lenders holding at
least 51% of the then aggregate unpaid principal amount of the
Notes held by Lenders, or, if no such principal amount is then
outstanding, Lenders having at least 51% of the Commitments
(provided that, for purposes hereof, neither the Guarantor, the
Borrowers, nor any of their Affiliates, if a Lender, shall be
included in (i) the Lenders holding such amount of the Advances or
having such amount of the Commitments or (ii) determining the
aggregate unpaid principal amount of the Advances or the total
Commitments).
<PAGE>
"Master Vessel Trust Agreement" means the Master Vessel
and Collateral Trust Agreement between the Agent on behalf of the
Lenders and Citibank, N.A., substantially in the form of Exhibit E,
as the same may be from time to time amended, supplemented or
otherwise modified.
"Mortgage" means any of, and "Mortgages" mean all, the
mortgages by the Borrowers of any Vessel delivered to the Mortgagee
for the benefit of the Lenders, substantially in the form attached
hereto as Exhibit D-1, as the same may be from time to time
amended, supplemented or otherwise modified.
"Mortgaged Property" means each of the Vessels as
described in each granting clause of each Mortgage.
"Mortgagee" means Citibank, N.A., a national banking
association organized and existing under the laws of the United
States of America, or such other Person as the Lenders shall
designate successor trustee under the Master Vessel Trust Agreement
to act as Mortgagee under the Mortgage.
"Multiemployer Plan" means a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA to which a Person or any
ERISA Affiliate is making or accruing an obligation to make
contributions, or has within any of the preceding three plan years
made or accrued an obligation to make contributions.
"Multiple Employer Plan" means an employee benefit plan,
other than a Multiemployer Plan, subject to Title IV of ERISA to
which a Person or any ERISA Affiliate, and more than one employer
other than such Person or ERISA Affiliate, is making or accruing an
obligation to make contributions or, in the event that any such
plan has been terminated, to which the Person or any ERISA
Affiliate made or accrued an obligation to make contributions
during any of the five plan years preceding the date of termination
of such plan.
"Note" means any of, and "Notes" mean all, the respective
Secured Promissory Notes of the Borrowers, substantially in the
form attached hereto as Exhibit A, to be issued to evidence the
indebtedness of the Borrowers from time to time outstanding in
respect of the Advances, as any such note may be replaced, amended,
supplemented or otherwise modified from time to time.
"Notice of Borrowing" has the meaning specified in
Section 2.02(a).
"OECD" means the Organization for Economic Cooperation
and Development.
<PAGE>
"OMI Indenture" means the Indenture dated as of November
1, 1993 between the Guarantor and Chemical Bank, as trustee, as the
same may be amended, supplemented or otherwise modified from time
to time, under which the OMI Senior Notes were issued.
"OMI Senior Note Offering" means the offering of OMI
Senior Notes pursuant to the transaction described in the
Registration Statement on Form S-3 (Registration No. 33-67640) as
originally filed with the U.S. Securities & Exchange Commission on
August 19, 1993.
"OMI Senior Notes" means the 10 1/4% Senior Notes due
November 1, 2003 issued by the Guarantor in the aggregate principal
amount of $170,000,000, as the same may be replaced, amended,
supplemented or otherwise modified from time to time.
"Obligations" mean all obligations, including but not
limited to, all principal, interest, fees, expenses and other
obligations set forth in Article II, Section 5.03 and Section 8.04
hereof, of every nature of the Borrowers and the Guarantor from
time to time owed to the Agent, any of the Lenders, or all of them,
under any of the Loan Documents.
"Operations Account" shall have the meaning set forth in
Section 5.04 hereof.
"Operations Account Assignment" means the Operations
Account Assignment executed and delivered by the Borrowers and the
Guarantor in favor of the Security Trustee on behalf of the Lenders
respecting the Operations Account, substantially in the form
attached hereto as Exhibit D-4a, as the same may be amended,
modified or supplemented from time to time.
"Option" means (1) any right to buy or sell specific
property in exchange for an agreed upon sum, (2) any right to
receive funds, the amount of which is determined by reference to
the value of capital stock or the purchase price thereof, (3) any
right of the type or kind referred to as a "phantom stock right,"
and (4) any other right commonly known or referred to as an
"option."
"PBGC" means the Pension Benefit Guaranty Corporation, or
any entity or entities succeeding to any or all its functions under
ERISA.
"Percentage Interest" shall have the meaning set forth in
Preliminary Statement (2) of this Agreement.
<PAGE>
"Person" means any individual, corporation, partnership,
business trust, joint venture, association, joint stock company,
trust or other unincorporated organization, whether or not a legal
entity, or any government or agency or political subdivision
thereof.
"Plan" means, at any time, any employee pension benefit
plan maintained by a Person, any of its Subsidiaries, or any ERISA
Affiliate of such Person or its Subsidiaries, which employee
pension benefit plan is covered by Title IV of ERISA or is subject
to the minimum funding standards of the Code.
"Pledge Agreement" means the instrument executed and
delivered by the Pledgors along with the related irrevocable
proxies and blank stock powers, substantially in the form attached
hereto as Exhibit D-5, as the same may be amended, supplemented or
otherwise modified from time to time.
"Pledged Securities" means all the issued and outstanding
shares of capital stock of each of the Borrowers.
"Pledgors" mean Darien Shipping Ltd., Saugatuck Shipping
Ltd. and Colorado Shipping Ltd., each a Liberian corporation.
"Register" shall have the meaning set forth in
Section 7.10(d) of this Agreement.
"Security Account" shall have the meaning set forth in
Section 5.05 hereof.
"Security Account Assignment" means the Security Account
Assignment executed by the Borrowers and the Guarantor in favor of
the Security Trustee on behalf of the Lenders respecting the
Security Account, substantially in the form of Exhibit D-4b, as the
same may be amended, modified or supplemented from time to time.
"Security Documents" means each Mortgage, each Earnings
Assignment, each Insurance Assignment, each Charter Assignment, the
Pledge Agreement, the Operations Account Assignment and the
Security Account Assignment.
"Security Trustee" means the Agent and any successor
Security Trustee under the Master Vessel Trust Agreement.
"Solvent" means with respect to any Person on a
particular date, that on such date (i) the fair market value of the
assets of such Person is greater than the total amount of
liabilities (including the present or expected value of contingent
liabilities) of such Person, (ii) the present fair salable value of
the assets of such Person is greater than the amount that will be
required to pay the probable liabilities of such Person for its
debts as they become absolute and matured, (iii) such Person is
<PAGE>
able to realize upon its assets and pay its debts and other
liabilities, including contingent obligations, as they mature, (iv)
such Person does not have unreasonably small capital and (v) such
Person does not intend to or believe it will incur debts beyond its
ability to pay as they mature.
"Subsidiary" means, with respect to any Person, any
corporation, association, partnership or other business entity of
which a majority of the voting power entitled to vote in the
election of directors, managers or trustees thereof is at the time
owned, directly or indirectly, by such Person or by one or more
other Subsidiaries, or by such Person and one or more other
Subsidiaries, or a combination thereof.
"Tangible Net Worth" means for any Person at any time
(a) the sum, to the extent shown on such Person's balance sheet, of
(i) the amount of issued and outstanding share capital, but less
the cost of treasury shares, plus (ii) the amount of surplus and
retained earnings, less (b) intangible assets and intercompany
transactions as determined in accordance with GAAP.
"Termination Date" means March 24, 1997, unless extended
by all the Lenders in their sole discretion upon terms and
conditions satisfactory to all the Lenders, or the earlier date of
termination of all the Commitments pursuant to Section 2.05, 2.11
or 6.01 hereof.
"Termination Event" means (i) a "reportable event," as
such term is described in Section 4043 of ERISA (other than a
"reportable event" not subject to the provision for 30 day notice
to the PBGC), or an event described in Section 4068(f) of ERISA, or
(ii) the withdrawal of the Guarantor, the Borrowers or any ERISA
Affiliate from a Multiple Employer Plan during a plan year in which
it was a "substantial employer," as such term is defined in
Section 4001(a)(2) of ERISA, or the incurrence of liability by the
Guarantor, the Borrowers or any ERISA Affiliate under Section 4064
of ERISA upon the termination of a Multiple Employer Plan, or
(iii) the filing of a notice of intent to terminate a Plan or the
treatment of a Plan amendment as a termination under Section 4041A
of ERISA, or (iv) the institution of proceedings to terminate a
Plan by the PBGC under Section 4042 of ERISA, or (v) any other
event or condition which might constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan.
"Total Debt" means, at a particular date, the sum of (y)
all amounts which would, in accordance with GAAP, constitute short
term debt and long term debt of the Guarantor and its Subsidiaries
as of such date and (z) the amount of any Indebtedness outstanding
on such date and not included in the amounts specified in clause
(y) of any Person other than the Guarantor or any of its
Subsidiaries, which Indebtedness (i) has been and remains
<PAGE
guaranteed on such date by the Guarantor or any of its Subsidiaries
or is otherwise the legal liability of the Guarantor or any of its
Subsidiaries (whether contingent or otherwise or direct or
indirect, but excluding endorsements of negotiable instruments for
deposit or collection in the ordinary course of business), or (ii)
is secured by any Lien on any property or asset owned or held by
the Guarantor or any of its Subsidiaries, regardless of whether the
obligation secured thereby shall have been assumed or is a personal
liability of the Guarantor or any of its Subsidiaries.
"Transaction" means the extension of credit contemplated
by the Loan Documents.
"Type" shall mean, with respect to an Advance, a Base
Rate Advance or a LIBOR Rate Advance.
"Vessel" means any of and "Vessels" mean each of the
Liberian flag vessels LIMAR, official number 1002, owned by Limar
Shipping Ltd., PAGODA, official number 9303, owned by Saybrook
Shipping Ltd., and PATRICIA, official number 9301, owned by Darien
Shipping Ltd.
"Withdrawal Liability" shall have the meaning given such
term under Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. ACCOUNTING TERMS. All accounting terms
not specifically defined herein shall be construed in accordance
with GAAP consistently applied.
SECTION 1.03. GOVERNING LANGUAGE. All documents,
notices and demands and financial statements to be delivered by any
Person to the Agent or any Lender pursuant to this Agreement shall
be in the English language.
SECTION 1.04. COMPUTATION OF TIME PERIODS. In this
Agreement in the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including" and each of the words "to" and "until" means "to but
excluding".
<PAGE>
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. THE ADVANCES. Upon the terms and subject
to the conditions set forth in this Agreement, each Lender agrees
severally, but not jointly, to make Advances to the Borrowers from
time to time on any Business Day during the period from the Closing
Date until the Termination Date in an aggregate amount not to
exceed at any time outstanding the amount set opposite such
Lender's name on the signature pages hereof or, if such Lender has
entered into any Assignment and Acceptance, set forth for such
Lender in the Register maintained by the Agent, as such amount may
be reduced pursuant to Section 2.05 or 2.11 (such Lender's
"Commitment"). Each Borrowing shall be in an integral multiple of
One Million Dollars ($1,000,000) and shall consist of Advances of
the same Type made on the same day by the Lenders ratably according
to their respective Commitments. Within the limits of each
Lender's Commitment, the Borrowers may from time to time borrow,
prepay pursuant to Section 2.05(a) and reborrow under this Section
2.01.
SECTION 2.02. MAKING THE ADVANCES. (a) Each Borrowing
shall be made on notice, given not later than 11:00 A.M. (New York
City time) on the third Business Day (on the first Business Day in
the case of a Base Rate Advance) prior to the date of the proposed
Borrowing, by the Borrowers to the Agent, which shall give to each
Lender prompt notice thereof by telecopier, telex or cable. Each
such Borrowers' notice of a Borrowing (a "Notice of Borrowing")
shall be by telecopier, telex or cable, confirmed immediately in
writing, substantially in the form of Exhibit B hereto, specifying
therein the requested (i) Drawdown Date of such Borrowing, (ii)
Type of Advances comprising such Borrowing, (iii) aggregate
amount of such Borrowing, and (iv) in the case of a Borrowing
comprising LIBOR Rate Advances, the initial Interest Period for
each such Advance. Each Lender shall, before 11:00 A.M. (New York
City time) on the date of such Borrowing, make available for the
account of its Applicable Lending Office to the Agent at its
address referred to in Section 8.02, in same day funds, such
Lender's ratable portion of such Borrowing. After the Agent's
receipt of such funds and upon fulfillment of the applicable
conditions set forth in Article III, the Agent will make such funds
available to the Borrowers at the Agent's aforesaid address.
(b) The total amount of each Advance to be made
available by each Lender shall never exceed the Commitment of such
Lender and shall be proportionate always to such Lender's
Percentage Interest set forth in the signature pages hereof or, if
applicable, in the Register.
<PAGE>
(c) Unless the Agent shall have received written notice
from a Lender prior to the date of any Borrowing that such Lender
will not make available to the Agent such Lender's ratable portion
of such Borrowing, the Agent may assume that such Lender has made
such portion available to the Agent on the date of such Borrowing
in accordance with subsection (a) of this Section 2.02 and the
Agent may, in reliance upon such assumption, make available to the
Borrowers on such date a corresponding amount. If and to the
extent that such Lender shall not have so made such ratable portion
available to the Agent, such Lender and the Borrowers severally
agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date
such amount is made available to the Borrowers until the date such
amount is repaid to the Agent, at (i) in the case of the Borrowers,
the interest rate applicable at the time to Advances comprising
such Borrowing and (ii) in the case of such Lender, the Federal
Funds Rate. If such Lender shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such
Lender's Advance as part of such Borrowing for purposes of this
Agreement.
(d) The Borrowers shall repay the principal amount of
each Advance made by each Lender in accordance with the Note
payable to such Lender, provided that the aggregate principal
amount of any Advance outstanding on the Termination Date shall be
paid on the Termination Date.
(e) The Borrowers may on any Business Day, upon notice
given to the Agent not later than 11:00 A.M. (New York City time)
on the third Business Day prior to the date of the proposed
Conversion and subject to the provisions of Section 2.04, and so
long as no Default or Event of Default has occurred and is
continuing, Convert all Advances of one Type comprising the same
Borrowing into Advances of another Type; provided, however, that
any Conversion of any LIBOR Rate Advances into Advances of another
Type shall be made on, and only on, the last day of an Interest
Period for such LIBOR Rate Advances. Each such notice of a
Conversion shall, within the restrictions specified above, specify
(i) the date of such Conversion, (ii) the Advances to be Converted,
and (iii) if such Conversion is into LIBOR Rate Advances, the
duration of the Interest Period for each such Advance.
SECTION 2.03. GENERAL PROVISIONS. (a) The Borrowers shall
have no right to borrow, and no Lender shall have any obligation to
lend, any amount whatsoever on or after the Termination Date.
(b) The failure of any Lender to advance its Commitment
in respect of any Advance shall not relieve it or any other Lender
of the obligation to advance its Commitment, but no Lender or the
Agent shall be responsible for the failure of any other Lender to
advance its Commitment to the Borrowers.
<PAGE>
(c) Each notice of Borrowing sent by the Borrowers shall
be irrevocable and binding on the Borrowers. If for any reason on
the Drawdown Date for the Advance specified in a Notice of
Borrowing, the Advance is not made as a result of any failure to
fulfill on or before the Drawdown Date the applicable conditions
precedent, the Borrowers shall indemnify each Lender against any
loss, cost or expense incurred by such Lender as a result of such
failure, including, without limitation, any loss, cost or expense
incurred by reasons of the liquidation or reemployment of deposits
or other funds acquired by such Lender to fund the Advance to be
made by such Lender as part of such borrowing.
SECTION 2.04. INTEREST AND DEFAULT INTEREST. (a) The
Borrowers shall pay interest on the unpaid principal amount of each
Advance from the Drawdown Date until the principal amount of the
Advance is paid in full, payable on each Interest Payment Date for
each such Advance. Notwithstanding the preceding sentence of this
Section 2.04(a), all interest accrued on any Advance outstanding on
the Termination Date shall be paid on the Termination Date.
(b) As long as any Advance shall be outstanding, and
payment of the principal thereof and interest thereon shall not be
in default, interest on the Advance shall be payable at an interest
rate which shall be adjusted, in advance at the start of the first
day of each Interest Period therefor, and which shall be determined
as follows:
(i) with respect to each Base Rate Advance, the
Borrowers shall pay interest thereon at the rate of interest
determined by the Agent to be the Base Rate for the relevant
Interest Period as specified in the related Notice of
Borrowing, provided that if the Borrowers shall fail to elect
an Interest Period in its Notice of Borrowing as herein
provided or if an Event of Default has occurred and is
continuing, the Agent shall elect the relevant Interest
Period, which may be one (1) day;
(ii) with respect to each LIBOR Rate Advance, the
Borrowers shall pay interest in one or more tranches thereon
at an interest rate equal to the sum of (y) the LIBOR Rate
plus (z) 1.375% over the LIBOR Rate or, if the LIBOR Rate is
unavailable for any such period, at the Base Rate:
(A) with respect to each Interest Period relating to a
LIBOR Rate Advance, the Borrowers shall, by telex notice to be
received by the Agent by 11:00 A.M. New York time at least
three (3) Business Days prior to the commencement of each such
successive period, elect an Interest Period of one, three or
six months duration, or such longer period with the consent of
the Lenders, for all outstanding LIBOR Rate Advances, provided
the Borrowers shall select Interest Periods, and if necessary
shall select as the final Interest Period for each LIBOR Rate
<PAGE>
Advance an Interest Period less than one month in duration, so
that the maturity date of each Advance shall be the last day
of the Interest Period for such Advance; provided that if the
Borrowers shall fail to elect an Interest Period as herein
provided, the relevant Interest Period shall be one (1) month,
provided further that so long as any Event of Default has
occurred and is continuing, the Agent shall elect the relevant
Interest Period, which may be less than one month;
(B) the Agent shall give prompt notice to the Borrowers
and the Lenders of the applicable interest rate determined by
the Agent for purposes of Section 2.04(b);
(C) If, with respect to any LIBOR Rate Advances, the
Majority Lenders notify the Agent that the LIBOR Rate for any
Interest Period for such Advances will not adequately reflect
the cost to such Majority Lenders of making, funding or
maintaining their respective LIBOR Rate Advances for such
Interest Period, the Agent shall forthwith so notify the
Borrowers and the Lenders, whereupon
(1) each LIBOR Rate Advance will automatically, on
the last day of the then existing Interest Period
therefor, Convert into a Base Rate Advance, and
(2) the obligation of the Lenders to make, or to
Convert Advances into, LIBOR Rate Advances shall be
suspended until the Agent shall notify the Borrowers and
such Lenders that the circumstances causing such
suspension no longer exist; and
(c) In the event that the Agent or any Lender does not
receive on the due date any sum due under this Agreement or any of
the other Loan Documents in accordance with the terms hereof or
thereof, the Borrowers shall pay to the Agent and such Lenders, as
the case may be, on demand, interest on such sum, from and
including the due date thereof to but not including the date of
actual payment, at a rate per annum determined by the Agent from
time to time to be the sum of (y) two per cent (2%) plus (z) the
Base Rate. Except as otherwise provided in the following
subsection (d), any such interest which is not paid when due shall
be compounded at the end of each Interest Period (both before and
after any notice of demand) by the Agent on behalf of the Lenders
under this Agreement.
(d) Notwithstanding any provision contained in any of
the Loan Documents, no Lender nor the Agent shall ever be entitled
to receive, collect, or apply, as interest on the Obligations, any
amount in excess of the maximum rate of interest permitted to be
charged by applicable law, and, in the event any Lender or the
Agent ever receives, collects, or applies as interest, any such
excess, such amount which would be excessive interest shall be
<PAGE>
applied to the reduction of the Obligations then outstanding, and,
if the Obligations then outstanding are paid in full, any remaining
excess shall forthwith be paid to the Borrowers. In determining
whether or not the interest paid or payable, under any specific
contingency, exceeds the highest lawful rate, the Borrowers and the
Lender or the Agent, as the case may be, shall, to the maximum
extent permitted under applicable law, (i) characterize any non-
principal payment as an expense, fee, or premium rather than as
interest, (ii) exclude any voluntary prepayments and the effects
thereof, and (iii) spread the total amount of interest throughout
the entire contemplated term of the Obligations so that the
interest rate is uniform throughout the entire term of the
Obligations.
SECTION 2.05. PREPAYMENTS. (a) The Borrowers may, upon
at least three (3) Business Days notice to the Agent and the
Lenders received by 11:00 A.M. New York time, and subject always to
the requirements of Section 8.04(b), prepay, pro rata, the
outstanding amount of each LIBOR Rate Advance, in whole or in part,
together, in each case, with accrued interest to the date of such
prepayment on the amount prepaid, provided that any such partial
prepayment shall be in a principal amount of integral multiples of
Five Hundred Thousand Dollars ($500,000). The Borrowers may,
subject always to the requirements of Section 8.04(b), prepay, at
any time, pro rata, the outstanding amount of each Base Rate
Advance, in whole or in part, together, in each case, with accrued
interest to date of such prepayment on the amount prepaid.
(b) If it shall become unlawful for any Lender to
continue to fund or maintain any Advance or to perform its
obligations hereunder, such Lender shall notify the Borrowers and
the Agent, and such Lender shall use all reasonable efforts to
change its lending office so that it can perform its obligations
hereunder; provided that such Lender shall not be obligated to
change its lending office if in its sole reasonable judgment it
would be disadvantageous to do so. If such Lender does not change
its lending office because it determines in its sole reasonable
judgment that it is disadvantageous to do so or because such change
would not render such Advance lawful, then such Lender shall notify
the Agent and the Borrowers, and shall make an Advance, and the
Borrowers shall borrow such Advance, at the Base Rate in an amount
equal to the amount of the Advance currently outstanding and made
by such Lender to the Borrowers if in the sole reasonable judgment
of such Lender such Advance can lawfully be extended at the Base
Rate. Simultaneously with making such Advance at the Base Rate,
the Advance then outstanding made available by such Lender to the
Borrowers shall be repaid by the Borrowers. If any Lender makes a
Base Rate Advance to the Borrowers pursuant to subsection (b) of
this Section 2.05, the Borrowers may prepay such Advance, without
penalty, at any time upon three (3) Business Days notice. If
despite such Lender's compliance with the preceding provisions of
this Section 2.05(b), or if the Borrowers shall refuse to borrow an
<PAGE>
Advance at the Base Rate as herein provided, and if it shall become
unlawful for any Lender to fund or maintain any Advance or perform
its obligations hereunder, upon demand by such Lender, the
Borrowers shall prepay in full the outstanding Advance made by such
Lender, with accrued interest thereon and all other amounts payable
by the Borrowers hereunder, and upon such demand or any notice of
prepayment the obligation of such Lender to make any Advance to the
Borrowers shall terminate.
(c) If an Event of Loss occurs, the Borrowers shall give
prompt written notice to the Agent of such Event of Loss. Not more
than 120 days (the "Loss Termination Date") after the date on which
such Event of Loss shall be deemed to have occurred (provided,
however, that if a constructive or an agreed compromised total loss
of the Vessel is declared or agreed by the underwriters under the
insurance more than 30 days after the date of the casualty giving
rise to such total loss, then the "Loss Termination Date" shall be
105 days (or the next succeeding Business Day) after the date on
which such total loss is declared or agreed by the underwriters),
the Borrowers will pay to or on the order of, the Agent, and the
Commitment of the Lenders shall be reduced ratably by, the sum of
(i) that portion of the outstanding principal amount of the Loan
together with interest thereon to the date of payment (that portion
of the Commitment of the Lenders in the case of reduction of the
Commitment of the Lenders) representing the fair market value of
the Vessel which is the subject of the Event of Loss as determined
by the last appraisal obtained pursuant to Section 5.01(c) hereof
prior to the Event of Loss or by a new appraisal (assuming such
Event of Loss had not occurred and the Vessel were in the condition
required under the Mortgage) if requested by the Agent, over the
aggregate fair market value similarly determined of all Vessels
subject to a Mortgage immediately prior to such Event of Loss, (ii)
an amount equal to all expenses (including legal and investigatory
fees) incurred by, and not otherwise reimbursed to, the Agent or
the Lenders in connection with the occurrence of the Event of Loss,
as set forth in a certificate of the Agent delivered to the
Borrowers not less than two Business Days prior to the Loss
Termination Date, and (iii) and any other amounts which have become
due and payable under the Documents but which have not been paid
prior to the Loss Termination Date. All prepayments received after
an Event of Loss shall be applied as provided in Section 5.05.
(d) Against the payment obligations of the Borrowers
under the preceding paragraph, there shall be credited all payments
received in respect of such Event of Loss including all insurance
proceeds received prior to the Loss Termination Date by the Agent.
So long as there is no Event of Default or Default, all insurance
proceeds received by the Agent after the payments described in the
preceding paragraphs have been made shall be disbursed by the Agent
to the Borrowers. If a Default exists and insurance proceeds are
received by the Agent after the payments required by the preceding
paragraph have been made, the Agent shall hold such proceeds until
<PAGE>
either (x) such Default no longer exists, in which case, such
proceeds shall be disbursed to the Borrowers or (y) such Default
has matured into an Event of Default, in which case proceeds shall
be treated in accordance with the sentence next following. So long
as an Event of Default shall have occurred and continues, all
insurance proceeds received by the Agent shall be handled in
accordance with Section 6.03 hereof.
(e) The Borrowers may not sell or dispose of their
respective Vessels without first obtaining the written consent of
the Agent to such sale or disposition; provided, so long as no
Default or Event of Default has occurred and is continuing, consent
shall be granted by the Agent on behalf of the Lender if the
proceeds of the sale or disposition shall be applied subject to the
terms and conditions described in the following sentence, and upon
giving effect to such sale or disposition, no Default or Event of
Default shall occur. Upon the sale and/or disposition of any
Vessel (so long as there is no Default or Event of Default) the
Borrowers will prepay to or on the order of the Agent, and the
Commitment of the Lenders shall be reduced ratably by, the greater
of: (i) the sales proceeds from the Vessel (less any broker's
commissions); or (ii) an amount equal to the outstanding
Obligations to the date of sale or disposition (an amount equal to
the Commitment of the Lenders in the case of reduction of the
Commitment of the Lenders) multiplied by a fraction, the numerator
of which is the fair market value of the Vessel being sold or
disposed of as determined by the last appraisal obtained pursuant
to Section 5.01(c)(x) and the denominator of which is the aggregate
fair market value as determined by Section 5.01(c)(x) of the
Vessels (including the Vessel being sold or disposed of) which are
subject to a Mortgage immediately prior to the sale or disposition.
If there is a Default or Event of Default, the Borrowers shall
prepay to or on the order of the Agent, the Obligations in full.
Upon the sale or disposition of the last Vessel subject to a
Mortgage, the Borrowers shall prepay to or on the order of the
Agent, the outstanding Obligations in full. Such a prepayment
shall be due on the date of the sale or disposition of the relevant
Vessel.
(f) If at any time the Borrowers shall, or may
reasonably be expected to, be required to deduct and withhold, or
indemnify any Lender with respect to, any Taxes (as defined in
Section 2.08) (in each case, as evidenced by an opinion reasonably
satisfactory in form and substance to the Agent and the Lenders
from independent tax counsel reasonably satisfactory to the Agent
and the Lenders) the Borrowers may, upon at least three (3)
Business Days notice to the Agent and the Lenders, prepay at any
time, pro rata, the outstanding principal amount of each Advance,
in whole or in part, together with accrued interest to the date of
prepayment on the amount prepaid and all other amounts then payable
to the Lenders by the Borrowers; provided, that if such Taxes
relate to payments to fewer than all the Lenders (the "Affected
<PAGE>
Lenders"), the Borrowers may, upon at least three (3) Business Days
notice to the Agent and the Affected Lenders, prepay, in whole or
in part, pro rata (except as set forth in the following provision),
the outstanding principal amount of Advances made by the Affected
Lenders, with accrued interest thereon and all other amounts
payable to the Affected Lenders by the Borrowers (without prepaying
any portion of any Advance made by any Lender that is not any
Affected Lender); provided further, that if the rate of Taxes with
respect to any Affected Lender is higher than with respect to
another Affected Lender, the Borrowers may prepay any portion of
the Advance made by the former Affected Lender without prepaying
any portion of the Advance made by the latter Affected Lender. The
Agent shall give prompt written notice to the Lenders of any
prepayments made under this paragraph (f).
(g) If for any reason whatsoever, any amount outstanding
under the OMI Senior Notes is to be prepaid or redeemed, in whole
or in part, or a defeasance of any sort whatsoever is to be
effected in respect of any or all of the Guarantor's indebtedness
under the OMI Senior Notes, then the Borrowers shall, not later
than fifteen (15) Business Days (the "Notice Date") prior to the
date of any such prepayment, redemption or defeasance, notify the
Agent and the Lenders of the date of such proposed prepayment,
redemption or defeasance and, together with such notice, the
Borrowers shall irrevocably offer (the "Irrevocable Offer") to
terminate the available Commitments of the Lenders hereunder and to
prepay all outstanding amounts under the Notes in an amount equal
to the amount of any such prepayment, redemption or defeasance (the
"Irrevocable Offer Amount") on the sixth (6th) Business Day after
the Notice Date, unless on or before the fifth (5th) Business Day
following the Notice Date, the Lenders reject such Irrevocable
Offer to terminate Commitments and to prepay the Loan. If for any
reason, the Borrowers do not receive a reply from the Lenders to
their Irrevocable Offer on or before the fifth (5th) Business Day
following the Notice Date, or if the Agent and the Lenders for any
reason do not timely receive the Irrevocable Offer in the manner
herein prescribed, the Borrowers shall, without further act, prepay
the outstanding principal amounts of the Loan in an amount equal to
the Irrevocable Offer Amount, together with interest thereon to the
date of prepayment, and the Commitment of the Lenders hereunder
shall be terminated in an amount equal to the Irrevocable Offer
Amount, on the sixth (6th) Business Day following the Notice date,
but in any event prior to the date of any such prepayment or
defeasance of the OMI Senior Notes.
SECTION 2.06. INCREASED COSTS; ADDITIONAL INTEREST.
(a) If on or after the Closing Date due to (i) the introduction of
or any change (including, without limitation, any change by way of
imposition or increase of reserve or capital adequacy requirements,
but not including a change related to Taxes or Excluded Taxes, as
such terms are defined in Section 2.08 hereof) in, or in the
interpretation of, any law or regulation, or (ii) the compliance by
any Lender with any guideline or request (not including any
<PAGE>
guideline or request with respect to Taxes or Excluded Taxes, but
including, with respect to reserve and capital adequacy
requirements, those applicable laws, policies, guidelines and
directives and interpretations in effect on the Closing Date) from
any central bank or other governmental authority, whether or not
having the force of law, there shall be any increase in the cost
to, or reduction in the return on capital of any Lender in
consequence of, any Lender of agreeing to make or making, funding
or maintaining an Advance, then the Borrowers shall from time to
time, upon demand by such Lender, pay to the Lender additional
amounts sufficient to indemnify such Lender against such increased
cost or reduction in the return on capital.
(b) If any Lender shall determine in good faith that
reserves under Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time, are
required to be maintained by it in respect of, or a portion of its
costs of maintaining reserves under Regulation D is properly
attributable to, one or more of its Advances, such Lender shall
give notice to the Borrowers, together with a certificate as
described below in Section 2.06(c) and the Borrowers shall pay to
such Lender additional interest on the unpaid principal amount of
each such Advance, payable on the same day or days on which
interest is payable on such Advance, at an interest rate per annum
equal at all times during each Interest Period for such Advance to
the excess of (i) the rate obtained by dividing the LIBOR Rate for
such Interest Period by a percentage equal to 100% minus the
Reserve Percentage (defined in the next sentence), if any,
applicable during such Interest Period over (ii) the LIBOR Rate for
such Interest Period. The "Reserve Percentage" for any such
period, with respect to any Advance, means the reserve percentage
applicable thereto under regulations issued from time to time by
the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement
(including, but not limited to, any emergency, supplemental or
other marginal reserve requirement) for a member bank of the
Federal Reserve System in New York City with respect to
(i) liabilities or assets consisting of or including eurocurrency
liabilities, as defined in Regulation D of the Board of Governors
of the Federal Reserve System, as in effect from time to time, and
having a term equal to any such period, or (ii) any other category
of liabilities which includes deposits by reference to which the
interest rate on such Advance is determined and which have a term
equal to any such period.
(c) A certificate as to the amount of any such increased
cost, increased interest or reduced return under this Section 2.06,
submitted to the Borrowers and the Agent by such Lender, shall be
conclusive and binding for all purposes, absent manifest error.
Before making any demand under paragraph (a) or (b) of this
Section 2.06, the Lender shall designate as to itself a different
lending office if such designation would avoid the need for, or
<PAGE>
reduce the amount of such increased cost or interest, and will not,
in the sole reasonable judgment of such Lender, be otherwise
disadvantageous to it.
SECTION 2.07. PAYMENTS AND COMPUTATIONS. (a) The
Borrowers and the Guarantor, as the case may be, shall make each
payment hereunder and under any instrument delivered hereunder
(except as otherwise provided in any such instrument) not later
than 12:00 noon New York City time on the day when due in lawful
and freely transferable United States Dollars to the Agent at the
Agent's office at 399 Park Avenue, New York, New York 10043, for
the account of the Lending Office in same day funds. The Agent
shall promptly disburse to the Lenders funds of such type as it
shall have received in the manner provided by this Agreement.
(b) The Borrowers and the Guarantor hereby authorize the
Agent and each Lender, if and to the extent payment is not made
when due hereunder or under any instrument delivered hereunder, to
charge from time to time against any or all of the Borrowers' or
Guarantor's accounts with the Agent or such Lender, as the case may
be, any amount so due.
(c) All computations of interest and fees shall be made
by the Agent and the Lenders on the basis of a year of 360 days
(365 or 366 with respect to Base Rate computations) for the actual
number of days (including the first day but excluding the last day)
occurring in the period for which such interest is payable.
(d) Whenever any payment to be made hereunder or under
any instrument delivered hereunder shall be stated to be due, or
whenever the last day of any Interest Period would otherwise occur
on a day other than a Business Day, such payment shall be made, and
the last day of such Interest Period shall occur, on the next
succeeding Business Day, and any such extension of time shall in
all cases be taken into account in the computation of payment of
interest due hereunder or otherwise; provided, however, if such
extension would extend the maturity date of any Advance or would
cause such payment to be made, or the last day of any Interest
Period relating to a LIBOR Rate Advance to occur, in a new calendar
month, payment shall be made, and the last day of any such Interest
Period shall occur, on the next preceding Business Day.
SECTION 2.08. TAXES. (a) Any and all payments made by
the Borrowers or the Guarantor hereunder or under any other Loan
Document or under any instrument delivered hereunder or thereunder
shall be made free and clear of and without deduction for any
present or future taxes, levies, imposts, deductions, charges, or
withholdings, and all liabilities with respect thereto, excluding
in the case of each Lender taxes imposed on net income by the
jurisdiction in which the Lending Office of such Lender is located
or by any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and
<PAGE>
liabilities being hereinafter referred to as "Taxes"). If the
Borrowers shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder or under such instrument, (i)
the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.08) each
of the Agent and each Lender receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the
Borrowers or the Guarantor, as the case may be, shall make such
deductions and (iii) the Borrowers or the Guarantor, as the case
may be, shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) In addition, the Borrowers agree to pay any and all
present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any
payment made hereunder or under any other Loan Document or under
any instrument delivered hereunder or thereunder or from the
execution, delivery or registration of, or otherwise with respect
to, this Agreement or any other Loan Document or any instrument
delivered hereunder or thereunder (hereinafter referred to as
"Other Taxes").
(c) The Borrowers and the Guarantor will indemnify the
Lenders on an after-tax basis for the full amount of Taxes or Other
Taxes (including, without limitation, any and all taxes and Other
Taxes imposed by any jurisdiction on amounts payable under this
Section 2.08) paid or incurred by any Lender and any liability
(including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be made
within 30 days from the date any Lender makes written demand
therefor.
(d) Within 30 days after the date of any payment of any
Taxes for which any Lender is entitled to indemnification under
this Section 2.8, the Borrowers or the relevant Lender, as the case
may be, will furnish to the Agent the original or a certified copy
of a receipt or other document evidencing payment thereof. If no
Taxes are payable in respect to any payment by the Borrowers or the
Guarantor, the Borrowers or the Guarantor, as the case may be,
will, at the reasonable request of the Agent, furnish to the Agent
an opinion of counsel acceptable to the Agent, stating that such
payment is exempt from or not subject to Taxes.
(e) Without prejudice to the survival of any other
agreement of the Borrowers and the Guarantor hereunder, the
agreements and obligations of the Borrowers and the Guarantor
contained in subsections (a) through (d) of this Section 2.08 shall
survive the payment in full of the Obligations and the expiry of
the Loan Documents.
<PAGE>
SECTION 2.09. EVIDENCE OF DEBT. The indebtedness of the
Borrowers resulting from the Loan shall be evidenced by the Notes
in favor of the Lenders issued jointly and severally by the
Borrowers in the original, aggregate principal amount of Thirty
Million Dollars ($30,000,000), delivered to the Agent. Book
entries made by each Lender or the Agent with respect to the Loan
shall be conclusive and binding on the Borrowers absent manifest
error, as to the existence, amounts, interest rates and maturities
of the Obligations of the Borrowers.
SECTION 2.10. FEES. (a) On each Fee Payment Date, the
Borrowers shall pay the Agent, solely for the account of each
Lender, a non-refundable commitment fee (as to each Lender, its
"Commitment Fee") of .50% per annum of each such Lender's
respective Commitment, payable from the Closing Date, on the
average daily undrawn portion of the Commitment, subject to
adjustment as herein provided.
(b) The Borrowers shall pay the Agent on or before the
Closing Date for the account of each Lender a non-refundable
participation fee in an amount mutually agreed by the parties (the
"Participation Fee").
SECTION 2.11. BORROWERS' TERMINATION OF COMMITMENTS. So
long as no Default or Event of Default has occurred and is
continuing, the Borrowers may by notice delivered to the Agent
terminate the Commitment of the Lenders, ratably, in any amount not
less than Five Hundred Thousand Dollars ($500,000) and in integral
multiples of Five Hundred Thousand Dollars ($500,000) if in excess
thereof, provided that no such termination shall be effective until
three (3) Business Days following receipt by the Agent of such
notice. Each notice of termination given pursuant to this Section
2.11 shall be irrevocable and binding when given and shall
permanently reduce the Commitment of each Lender ratably in
accordance with its Percentage Interest. No amount of the
Commitment for which a notice of termination has been given by the
Borrowers shall be available for borrowing under this Agreement.
The Agent shall give each Lender prompt notice of each notice of
termination of Commitment received from the Borrowers.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. CONDITIONS PRECEDENT TO INITIAL ADVANCES.
The obligation of each Lender to make its initial Advance is
subject to the condition precedent that on or before the Drawdown
Date of the initial Borrowing (i) the Agent shall have received the
following, each dated such day, in form and substance satisfactory
to the Agent and (except for the Notes) in sufficient copies for
each Lender:
<PAGE>
(a) The Notes payable to each of the Lenders,
respectively.
(b) This Agreement, the Operations Account
Assignment and the Security Account Assignment, duly
executed by the Borrowers and the Guarantor.
(c) The Mortgages on the Vessels duly recorded by
the Deputy Commissioner.
(d) An Earnings Assignment duly executed by each of
the Borrowers respecting its Vessel.
(e) The Charter Assignment duly executed by Darien
Shipping Ltd. respecting its Vessel, together with, to
the extent available, the Charterer's consent and
agreement duly executed by the Charterer, together with
a copy of the Charter covered thereby, certified as true
and correct by the relevant Borrower and, to the extent
available, the Charterer.
(f) The Pledge Agreement with the Pledged
Securities and irrevocable proxies and blank stock powers
with respect to the Pledged Securities.
(g) An Insurance Assignment duly executed by each
of the Borrowers respecting its Vessel together with
notices of such Assignment.
(h) The Master Vessel Trust Agreement duly executed
by the Agent on behalf of the Lenders and Citibank, N.A.
(i) A Certificate of Ownership and Encumbrance for
each Vessel issued by the Deputy Commissioner stating
that such Vessel is owned by its respective Borrower and
that there are on record in such office no mortgages,
liens or other encumbrances on such Vessel except the
relevant Mortgage.
(j) Certified copies of evidence of good standing
and the Articles of Incorporation and Bylaws of each of
the Borrowers, Pledgors and Guarantor.
(k) Certified copies of the resolutions of the
Board of Directors of each of the Borrowers, the Pledgors
and the Guarantor approving the Loan Documents, and of
all documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to the
Loan Documents.
<PAGE>
(l)(i) A certificate of the secretary or an
assistant secretary of each of the Borrowers, the
Pledgors and the Guarantor certifying the names and true
signatures of the officers of the Borrower, Pledgor or
Guarantor, respectively, authorized to sign the Loan
Documents and any other documents to be delivered
hereunder and (ii) a certificate of the president or vice
president of each of the Borrowers and the Guarantor
stating that the representations and/or warranties
contained in Section 4.01 are correct on and as of the
Closing Date, and stating that no material adverse change
has occurred since December 31, 1992 in the business,
operations, properties, prospects or condition (financial
or otherwise) of the Borrower or Guarantor, respectively.
(m)(i) A favorable opinion of Fredric S. London,
general counsel of the Guarantor, acting as special
counsel to the Borrowers and Guarantor, substantially in
the form of Exhibit F-1 hereto and as to such other
matters as any Lender through the Agent may reasonably
request and (ii) a favorable opinion of Messrs. Watson,
Farley & Williams, special counsel to the Borrowers,
Pledgors and Guarantor, substantially in the form of
Exhibit F-2 hereto.
(n) A favorable opinion of Messrs. Haight, Gardner,
Poor & Havens, special New York counsel to the Agent and
the Lenders, as to such matters as any Lender through the
Agent may reasonably request.
(o) A report and opinion of an insurance broker
satisfactory to the Agent with respect to insurance on
the Vessels together with copies of the certificates of
insurance and/or certificates of entry with respect to
all insurance required by the Mortgages (including
mortgagee's additional perils (pollution), if required),
showing, among other things, the loss payee clause
required by the Mortgages, in each case signed by the
respective insurer or the duly authorized broker thereof.
(p) A letter from the Process Agent, referred to
and defined in Section 8.07 of this Agreement, in which
it agrees to act as Process Agent for the Borrowers, the
Pledgors and the Guarantor and to deliver forthwith to
the Borrowers and the Guarantor all process received by
it as such Process Agent.
(q) Evidence of payment by the Borrowers and the
Guarantor of all applicable documentary stamp taxes (if
any) payable in connection with the authorization,
execution and delivery of each of the Loan Documents, and
the performance of the transactions hereby or thereby
contemplated, or an opinion of counsel that no such taxes
are payable.
<PAGE>
(r) A valuation report of a ship broker acceptable
to the Agent with respect to the fair market value of
each Vessel.
(s) Evidence that the Borrowers have paid to the
Agent, and the Agent shall have received, the Commitment
Fee and the Participation Fee payable to each Lender.
(t) Uniform Commercial Code Financing Statements
and other appropriate financing statements, Companies
Registry filings, or notices and consents, in each case
in form and substance acceptable to the Agent, duly
executed by the Borrowers or other appropriate Person,
and duly filed with the appropriate offices or registers
as designated by the Agent, and evidence that the
Borrowers and the Guarantor shall have done such other
acts requested by the Agent to create a perfected
security interest or charge having first priority in any
collateral covered by a Loan Document.
(ii) all approvals, authorizations, consents, notices to
or registrations with any governmental authority or agency
have been obtained and are in full force and effect; and
(iii) all corporate or other proceedings, and all
documents, instruments and other legal matters in connection
with the transactions contemplated by the Loan Documents and
the Transaction shall be satisfactory in form and substance to
each of the Lenders and the Agent and their counsel; and
(iv) the Agent and each Lender shall have received such
other approvals, opinions, or documents as they may reasonably
request.
SECTION 3.02. CONDITIONS PRECEDENT TO EACH BORROWING.
The obligation of each Lender to make an Advance on the occasion of
each Borrowing (including the initial Borrowing) shall be subject
to the further conditions precedent that on the Drawdown Date of
such Borrowing (a) the following statements shall be true, and the
Agent shall have received for the account of such Lender a
certificate signed by a duly authorized officer of each of the
Borrowers and the Guarantor, dated the date of such Borrowing,
stating that (and each of the giving of the applicable Notice of
Borrowing and the acceptance by the Borrowers of the proceeds of
such Borrowing shall constitute a representation and warranty by
the Borrowers that on the date of such Borrowing such statements
are true):
(i) the representations and warranties contained in
Section 4.01 are correct on and as of the date of such
Borrowing, before and after giving effect to such Borrowing
and to the application of the proceeds therefrom, as though
made on and as of such date;
<PAGE>
(ii) no Default or Event of Default has occurred and is
continuing, or would result from such Borrowing or from the
application of the proceeds therefrom; and
(iii) no material adverse change has occurred since
December 31, 1992 in the business, operations, properties,
prospects or condition (financial or otherwise) of the
Guarantor, the Borrowers or their Subsidiaries.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE
BORROWERS AND THE GUARANTOR. The Borrowers and the Guarantor
represent and warrant as follows:
(a) Due Existence; Compliance. The Borrowers and the
Pledgors are corporations duly incorporated, validly existing
and in good standing under the laws of Liberia and have all
requisite corporate power and authority under such laws to own
or lease and operate their properties and to carry on their
business as now conducted and as proposed to be conducted, and
to execute, deliver and perform their obligations under the
Loan Documents, to which they are, or will be, a party. The
Guarantor is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to carry
on its business as now conducted and as proposed to be
conducted, and to execute, deliver and perform its obligations
under the Loan Documents, to which it is, or will be, a party.
Each of the Borrowers, the Guarantor and their Subsidiaries is
duly qualified or licensed to do business as a corporation or
foreign corporation, as the case may be, and is in good
standing, where applicable, in all jurisdictions in which they
own or lease property (including vessels), or proposes to own
or lease property (including vessels), or in which the conduct
of their businesses, and the conduct of their businesses upon
consummation of the Transaction, requires them to so qualify
or be licensed, except to the extent that the failure to so
qualify or be in good standing would have no material adverse
effect on the business, operations, properties, prospects or
condition (financial or otherwise) of the Borrowers, the
Guarantor and their Subsidiaries or the ability of any such
Person to perform their obligations under any of the Loan
Documents to which they are or may be a party. Each of the
Borrowers, the Guarantor and their Subsidiaries is in
compliance in all material respects with all applicable laws,
rules, regulations and orders.
<PAGE>
(b) Corporate Authorities; No Conflicts. The execution,
delivery and performance by the Borrowers, the Pledgors and
the Guarantor of this Agreement and the other Loan Documents
to which they are or will be, a party are within their
corporate powers and have been duly authorized by all
necessary corporate and stockholder approvals and (i) do not
contravene their charters or by-laws or any law, rule,
regulation, judgment, order or decree applicable to or binding
on the Borrowers, the Guarantor or their Subsidiaries and
(ii) do not contravene, and will not result in the creation of
any Lien under, any provision of any contract, indenture,
mortgage or agreement to which any of the Borrowers, the
Guarantor or their Subsidiaries is a party, or by which they
or any of their properties are bound.
(c) Government Approvals and Authorizations. No
authorization or approval (including exchange control
approval) or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required for
the due execution, delivery and performance by or enforcement
against the Borrowers, the Pledgors or the Guarantor of the
Loan Documents (except such as have been duly obtained or made
and remain in full force and effect).
(d) Legal, Valid and Binding. Each of the Loan
Documents is, or upon delivery will be, the legal, valid and
binding obligation of the Borrowers, the Pledgors and the
Guarantor, enforceable against the Borrowers, the Pledgors and
the Guarantor in accordance with its terms (except as
enforcement may be limited by bankruptcy, moratorium,
insolvency, reorganization or similar laws generally affecting
creditors' rights as well as the award by courts of relief in
lieu of specific performance of contractual provisions).
(e) Marketable Title. Each Borrower has and shall have
good and marketable title to the Vessel identified as owned by
such Borrower herein, free and clear of Liens, charges and
encumbrances whatsoever except from and after the date of the
initial Advance for the lien of the Mortgage thereon and
Liens, charges and encumbrances expressly permitted by the
terms of such Mortgage; each Vessel is duly documented in the
name of its Borrower in accordance with the laws of Liberia.
(f) Valid Mortgages. Upon execution, delivery and
recording at the office of the Deputy Commissioner, each
Mortgage shall create a valid first preferred ship mortgage
and Lien in and on the Vessel described therein enforceable
against the respective Borrower and all third parties in
accordance with applicable laws in the United States and
Liberia and shall secure the due payment and performance of
all obligations of the Borrowers and the Guarantor under the
Loan Documents.
<PAGE>
(g) Valid Earnings Assignments. Each of the Earnings
Assignments, when executed and delivered, will create a valid
and perfected first priority security interest in the
collateral described therein, enforceable in accordance with
its terms against the grantor thereof and all third parties
upon filing of appropriate Uniform Commercial Code financing
statements with the Secretary of State of New York and the
County Clerk of New York County.
(h) Valid Charter Assignments. Each of the Charter
Assignments will, when executed and delivered, create a valid
and perfected first priority security interest in the
collateral described therein, enforceable in accordance with
its terms against the grantor thereof and all third parties
upon notice being given to each relevant charterer and the
consent of each such charterer.
(i) Valid Insurance Assignments. Each of the Insurance
Assignments, when executed and delivered, will create a valid
and perfected first priority security interest in the
collateral described therein, enforceable in accordance with
its terms against the grantor thereof and all third parties
upon notice being given to underwriters or protection and
indemnity club and the consent of underwriters or the club
thereto where policy provisions or club rules so provide.
(j) No Place of Business in U.S. Each of the Borrowers,
the Pledgors and the Guarantor has no place of business (and
no place where records of its charters, earnings, hires and
insurances are kept) in the United States other than 90 Park
Avenue, New York, New York.
(k) Use of Proceeds. The proceeds of the Loan shall be
used solely by the Borrowers to finance their operations
outside the United States. No proceeds of the Loan will be
used to acquire any security in any transaction which is
subject to Sections 13 and 14 of the Securities Exchange Act
of 1934 of the United States. The Borrowers are not engaged
in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal
Reserve System), and no proceeds of the Loan will be used to
purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin
stock.
(l) Best Interests of the Company; Ownership. (1) Each
of the Borrowers has determined as of the date hereof by
virtue of its entering into the transactions contemplated
hereby, that its incurrence of joint and several liability
hereunder and its execution and delivery of Security Documents
with respect to its Vessel in respect of its joint and several
<PAGE>
liability hereunder (i) is in its own best interests, (ii)
does not leave it unable to pay its debts as they become due
in the ordinary course of business, (iii) will not leave it
with debts which cannot be paid from the present saleable
value of its property, and (iv) will not render it insolvent
within the meaning of Section 101(31) of the United States
Bankruptcy Code and Section 271 of the New York Debtor and
Creditor Law. Each Borrower has, by separate contractual and
organizational arrangements with the other Borrowers, rights
of reimbursement or contribution to the extent that such
Borrower may be obligated to pay more than the amount of the
credit received by it as a consequence of the transactions
contemplated by this Agreement.
(2) The Guarantor indirectly owns all issued and
outstanding shares of the capital stock of the Borrowers, free
and clear of all Liens whatsoever, and indirectly owns all
issued and outstanding shares of the capital stock of the
Pledgors.
(m) Financial Information. Each of the consolidated
annual audited balance sheets of the Guarantor as at December
31, 1992, and the consolidated quarterly unaudited balance
sheets of the Borrowers and the Guarantor as at September 30,
1993, and the related statements of operations and statements
of cash flows of the Borrowers, the Guarantor and their
Subsidiaries for the fiscal year or fiscal quarter then ended,
as the case may be, copies of which have been furnished
heretofore by the Borrowers and the Guarantor to the Agent,
fairly present the consolidated financial condition of the
Borrowers, the Guarantor and their Subsidiaries as at such
date and the results of the operations of the Borrowers, the
Guarantor and their Subsidiaries for the period ended on such
date, all in accordance with GAAP consistently applied
(subject, in the case of the September 30, 1993 statements to
normal year-end audit adjustments). Since December 31, 1992,
there has been no material adverse change in the business,
operations, properties or condition (financial or otherwise)
of the Borrowers, the Guarantor and any of their Subsidiaries.
(n) Litigation. There is not pending nor, to the
knowledge of the Borrowers and the Guarantor upon due inquiry
and investigation, threatened any action or proceeding
affecting any of the Borrowers, the Guarantor or any of their
Subsidiaries, by or before any court, governmental agency or
arbitrator, which reasonably could be expected (i) to
materially adversely affect the assets, business, properties,
prospects, operations or condition (financial or otherwise) of
the Borrowers, the Guarantor and their Subsidiaries taken as
a whole, or (ii) to prohibit, limit in any way or materially
adversely affect the consummation of the Transaction
contemplated by the Loan Documents, including, without
limitation, the ability of the Borrowers, the Guarantor or
their Subsidiaries to perform their obligations under this
Agreement or any Note.
<PAGE>
(o) Immunities. Neither the Borrowers, the Guarantor
nor any of their Subsidiaries, nor the property of any of
them, has any immunity from jurisdiction of any court or from
any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution,
execution or otherwise) under the laws of the jurisdiction of
its organization.
(p) No Taxes. There is no tax, levy, impost, deduction,
charge or withholding or similar item imposed (i) by Liberia
or the States of Delaware or New York, or by any political
subdivision of any of the foregoing, on or by virtue of the
execution or delivery or enforcement of this Agreement or any
Note or any other document to be furnished hereunder or
thereunder, except in connection with the recordation of the
Mortgage by the Deputy Commissioner and except that a stamp
(presently of nominal value) must be affixed to any document
or instrument presented to a Liberian court or (ii) by Liberia
or the States of Delaware or New York, or by any political
subdivision of any of the foregoing, on any payment to be made
by the Borrowers, the Pledgors or the Guarantor pursuant to
this Agreement or any Note, other than taxes on or measured by
net income imposed by any such jurisdiction in which a Lender
has its situs of organization or a fixed place of business.
(q) No Filing. To ensure the legality, validity,
enforceability or admissibility in evidence of any of the Loan
Documents in each of Liberia and the States of Delaware and
New York, it is not necessary that any of the Loan Documents,
or any other document related to any thereof, be filed or
recorded with any court or other authority in such
jurisdiction, or that any stamp or similar tax be paid on or
with respect to any of the Loan Documents except to the extent
provided in (p) above and except for a stamp (presently of
nominal value) which must be affixed to any document or
instrument presented to a Liberian court.
(r) No Defaults. There does not exist (i) any event of
default, or any event or condition that with notice or lapse
of time or both would constitute an event of default, under
any agreement to which any of the Borrowers, the Guarantor or
any of their Subsidiaries is a party or by which any of them
may be bound, or to which any of their properties or assets
may be subject which default would have a material adverse
effect on the Borrowers, the Guarantor and their Subsidiaries
taken as a whole, or would materially adversely affect their
ability to perform their respective obligations under this
Agreement or any Note or any Loan Document, or (ii) any event
which is or would result in a Default or Event of Default.
<PAGE>
(s) Margin Regulations. No part of the proceeds of the
Loan will be used for any purpose that violates the provisions
of any of Regulations G, T, U or X of the Board of Governors
of the Federal Reserve System or any other regulation of such
Board of Governors. None of the Borrowers, the Guarantor nor
any of their Subsidiaries is engaged in the business of
extending credit for the purpose of purchasing or carrying
margin stock, within the meaning of Regulations G, T, U and X
issued by the Board of Governors of the Federal Reserve
System.
(t) Investment Company Act. Each Borrower, each Pledgor
and the Guarantor is not an "investment company" or a company
"controlled" by an "investment company" (as each of such terms
is defined or used in the Investment Company Act of 1940, as
amended).
(u) Taxes Paid. (i) Each Borrower, the Guarantor and
their Subsidiaries (A) has filed or caused to be filed, or has
received from the relevant governmental authorities an
extension to file, all material tax returns which are required
to have been filed, and (B) has paid all taxes shown to be due
and payable on said returns or extension requests or on any
material assessments made against it or any of its properties,
and all other material taxes, fees or other charges imposed on
it or any of its properties by any governmental authority
(other than those the amount or validity of which is currently
being contested in good faith by appropriate proceedings and
with respect to which appropriate reserves in conformity with
GAAP have been provided on its books); and (ii) no material
tax liens have been filed and no material claims are being
asserted with respect to any such taxes, fees or other charges
other than those the amount or validity of which is currently
being contested in good faith by appropriate proceedings and
with respect to which appropriate reserves in accordance with
GAAP have been provided on its books.
(v) Disclosure. No representation, warranty or
statement made or document or financial statement provided by
the Borrowers, the Guarantor, or any of their Affiliates or
Subsidiaries, in or pursuant to this Agreement or any Note, or
in any other document furnished in connection therewith, is
untrue or incomplete in any material respect or contains any
misrepresentation of a material fact or omits to state any
material fact necessary to make any such statement herein or
therein not misleading.
(w) Good Title. The Borrowers, the Pledgors and the
Guarantor have good title to their properties and assets,
except for (i) as permitted under this Agreement, existing or
future Liens, security interests, mortgages, conditional sales
arrangements and other encumbrances either securing
<PAGE>
Indebtedness or other liabilities of the Borrowers, the
Guarantor or any of their Subsidiaries, or which the Borrowers
or the Guarantor in their reasonable business judgment have
determined would not be reasonably expected to materially
interfere with the business or operations of the Borrowers,
the Guarantor and their Subsidiaries as conducted from time to
time, and (ii) minor irregularities therein which do not
materially adversely affect their value or utility.
(x) ERISA. (i) No Insufficiency or Termination Event
has occurred or is reasonably expected to occur, and no
"accumulated funding deficiency" exists and no "variance" from
the "minimum funding standard" has been granted (each such
term as defined in Part III, Subtitle B, of Title I of ERISA)
with respect to any Plan in which the Borrowers, the Guarantor
or any of their Subsidiaries is a participant.
(ii) None of the Borrowers, the Guarantor nor any ERISA
Affiliate has incurred, or is reasonably expected to incur,
any Withdrawal Liability to any Multiemployer Plan, except for
any Withdrawal Liability incurred prior to the date hereof
which has been satisfied in full.
(iii) None of the Borrowers, the Guarantor nor any ERISA
Affiliate has received any notification that any Multiemployer
Plan in which it is a participant is in reorganization or has
been terminated, within the meaning of Title IV of ERISA, and
no such Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated within the meaning of
Title IV of ERISA.
(y) Solvency. The Borrowers, the Pledgors and the
Guarantor are Solvent. The Borrowers, the Pledgors and the
Guarantor will be solvent on each date a Lender advances funds
to the Borrowers in respect of the Loan.
(z) No Guarantee by Universal Bulk Carriers, Inc.
Universal Bulk Carriers, Inc., a wholly owned subsidiary of
the Guarantor, has not guaranteed, or pledged any of its
properties or assets to secure, payment of the Indebtedness
of, or the performance of any obligation by, any person (other
than itself under an existing Credit Line Facility Agreement
dated May 22, 1992 with Christiania Bank og Kreditkasse in the
total amount of Ten Million Dollars ($10,000,000) (or any
renewal or replacement in any amount up to Ten Million Dollars
[$10,000,000]).
(aa) Environmental Compliance. The Borrowers, the
Pledgors and the Guarantor are in compliance, in all material
respects, with all environmental laws and regulations.
<PAGE>
(bb) Payment Restrictions Affecting Subsidiaries. Except
as set forth in the documents more particularly described in
Schedule III hereto, made a part hereof, there does not exist
any consensual encumbrances or restriction on the ability of
any Subsidiary of the Guarantor to (i) pay dividends or make
any other distributions on such Subsidiary's capital stock or
pay any Indebtedness owed to the Borrowers, the Guarantor or
any of their Subsidiaries or (ii) make loans or advances to
the Borrowers, the Guarantor or any of their Subsidiaries.
ARTICLE V
COVENANTS; GUARANTY; ACCOUNT.
SECTION 5.01. AFFIRMATIVE COVENANTS. So long as an
Advance or any other Obligation shall remain unpaid, or any Lender
shall have any Commitment under this Agreement, unless the Agent on
behalf of the Lenders shall otherwise consent in writing in
accordance with Section 7.04:
(a) Compliance with Laws. Each Borrower and the
Guarantor shall comply, and cause each of its Subsidiaries to
comply, in all material respects with all applicable laws,
rules, regulations and orders, and to pay when due all taxes,
assessments and governmental charges imposed upon it or upon
its property, except to the extent contested in good faith by
appropriate proceedings and for which adequate reserves in
conformity with GAAP have been provided.
(b) Use of Proceeds. The Borrowers shall use all
proceeds of the Notes for such general corporate purposes as
may be permitted under applicable law, provided that neither
the Agent nor any Lender shall have any responsibility as to
the use of such proceeds.
(c) Financial Information; Defaults.
(i) The Borrowers and the Guarantor shall promptly
inform the Agent of any event which is or may
become a default or breach of the Borrowers'
obligations, respectively, under the Loan Documents
or result in a Default or Event of Default, or any
event which materially adversely affects their
ability fully to perform any of their obligations
under any Loan Document, or any event of default
which has occurred and is continuing under any
material agreement to which the Borrowers, the
Guarantor or any of their Subsidiaries is a party;
<PAGE>
(ii) As soon as the same become available, but in any
event within 120 days after the end of each of
their fiscal years, the Borrowers shall deliver to
the Agent on behalf of the Lenders unaudited annual
financial statements of the Borrowers and the
Guarantor shall deliver to the Agent on behalf of
the Lenders audited annual consolidated financial
statements of the Guarantor. All such financial
statements of the Guarantor shall set forth, in
comparative form the corresponding figures for the
preceding fiscal year (excluding, as to any
Subsidiary acquired after the Closing Date,
corresponding information for the period preceding
its acquisition); all such financial statements of
the Guarantor shall be accompanied by an opinion
thereon of independent certified public accountants
of recognized national standing acceptable to the
Agent, which opinion shall state that said
financial statements fairly present the
consolidated financial condition and results of
operations of the Guarantor and its Subsidiaries as
at the end of, and for, such fiscal year;
(iii) As soon as the same become available and in
any event within 75 days after the end of each
of the first three fiscal quarters of each of
their fiscal years, the Borrowers shall
deliver to the Agent on behalf of the Lenders
unaudited quarterly financial statements of
the Borrowers, and the Guarantor shall deliver
to the Agent on behalf of the Lenders
unaudited quarterly consolidated financial
statements. Delivery of the Guarantor's
quarterly financial statements containing
information required to be filed with the
Securities and Exchange Commission on Form 10-
Q (as in effect on the Closing Date) shall
satisfy the requirements of the first sentence
of this Section 5.01(c)(iii) for the
Guarantor, provided however that such
requirements shall not be satisfied if the
Guarantor makes no such filings or if there is
a material change after the Closing Date in
the form or substance of financial disclosures
and financial information required to be set
forth in Form 10-Q. All such financial
statements shall be accompanied by a
certificate of a senior financial officer of
each of the Borrowers and the Guarantor, which
certificate shall state that such financial
statements fairly present the financial
condition and results of the operations of the
<PAGE>
Borrower or the Guarantor, respectively, and
its Subsidiaries, as at the end of, and for,
such period (subject to normal year end audit
adjustments) in accordance with GAAP,
consistently applied;
(iv) Together with the financial statements to be
delivered to the Agent on behalf of the Lenders
from time to time pursuant to clauses (ii) and
(iii) of this Section 5.01(c), (a) the Guarantor
shall deliver to the Agent a certificate of a
President or Senior Vice President of the
Guarantor, substantially in the form of Exhibit G,
which certificate shall (x) state that the
consolidated financial condition and operations of
the Guarantor and its Subsidiaries are such as to
be in compliance with all of the provisions of
Sections 5.01(d) of this Agreement, (y) set forth
in reasonable detail the computations necessary to
determine whether the provisions of
Sections 5.01(d) have been complied with, and
(z) state that no Default or Event of Default has
occurred and is continuing, and (b) each Borrower
shall deliver to the Agent a certificate of a
President or Senior Vice President of the Borrower,
which certificate shall state that no Default or
Event Default has occurred and is continuing;
(v) Within thirty (30) days after the end of each
fiscal quarter, including the last fiscal quarter,
the Guarantor shall deliver to the Agent on behalf
of the Lenders a statement, substantially in the
form of Exhibit H hereto, certified by its
President or Senior Vice President, as to the
amount as at the end of such fiscal quarter of the
(x) unencumbered cash, (y) marketable securities,
and (z) any unused portion of both short and long
term committed credit facilities, regardless of
tenure, in each case of itself, its Subsidiaries
and Affiliates.
(vi) Promptly upon their becoming available, the
Borrowers and the Guarantor shall deliver to the
Agent copies of all registration statements and
periodic reports which the Guarantor shall have
filed with the Securities and Exchange Commission
or any national securities exchange or market and
any ratings (and changes thereto) of its debt by
Standard & Poor's Corporation and Moody's Investors
Service;
<PAGE>
(vii) Promptly upon the mailing thereof to their
shareholders, the Borrowers and the Guarantor
shall deliver to the Agent copies of all
financial statements and reports so mailed;
(viii) As soon as reasonably possible, the Borrowers
and the Guarantor shall deliver to the Agent
copies of all reports and notices which they
or any of their Subsidiaries files under ERISA
with the Internal Revenue Service, the PBGC,
the U.S. Department of Labor or the sponsor of
a Multiemployer Plan, or which they or any of
their Subsidiaries receives from the PBGC or
the sponsor of a Multiemployer Plan related to
(a) any Termination Event and (b) with respect
to a Multiemployer Plan, (x) any Withdrawal
Liability, (y) any actual or expected
reorganization (within the meaning of Title IV
of ERISA), or (z) any termination of a
Multiemployer Plan (within the meaning of
Title IV of ERISA), excluding liability in
connection with the OMI Corp. 1988 Pension
Plan not in excess of One Million Five Hundred
Thousand Dollars ($1,500,000);
(ix) From time to time on request, the Borrowers and the
Guarantor shall furnish the Agent and any of the
Lenders with such information and documents and
provide the Agent access to the books, records and
agreements of the Borrowers, the Guarantor, and any
Subsidiary or Affiliate of the Guarantor, as the
Agent or any of the Lenders, acting through the
Agent, may reasonably require. All certificates,
materials and documents to be furnished by the
Borrowers and the Guarantor under this Section
5.01(c) shall be provided to the Agent in such
number of copies as the Agent may reasonably
request and shall be furnished promptly by the
Agent to the Lenders; and
(x) The Agent may (and if requested by the Borrowers,
will) from time to time and will on each
anniversary of the Closing Date obtain a written
opinion of a recognized ship broker selected by the
Agent from Schedule II as to the fair market value
of each Vessel (assuming a charter-free vessel and
an arms' length willing seller and willing buyer
but without physical inspection of any Vessel
unless requested by the Agent), and upon delivery
of a copy of such report to the Borrowers, the
Borrowers will pay to the Agent the cost of
<PAGE>
obtaining such report (including, so long as a
Default or Event of Default has occurred and is
continuing, the cost of any requested inspection).
The Borrowers may (and, if requested by the
Lenders, will) from time to time deliver to the
Agent a written opinion of the chief executive
officer of each Borrower as to the fair market
value of each Vessel; such opinion will be
effective for the purposes of Section 5.01(d)(iv)
only if it is approved in writing by the Agent.
The Borrowers shall have no right to dispute or
challenge any decision of the Agent relating to the
approval of such opinion.
(d) Financial Covenants. The Borrowers and the
Guarantor, respectively, shall ensure that:
(i) the ratio of the Guarantor's Total Debt to Tangible
Net Worth, tested quarterly, shall be at all times
no greater than
2:1 during the period through December
31, 1994,
1.85:1 during the period January 1, 1995
through December 31, 1995 and
1.75:1 commencing January 1, 1996 and at
all times thereafter;
(ii) at the end of each fiscal quarter, the amount of
the Guarantor's Consolidated Cash Flow Ratio
(defined below) shall be, as at the end of each of
the four fiscal quarters immediately preceding
covenant testing, at least 125%. The Consolidated
Cash Flow Ratio shall be the quotient of "N"
divided by "D", where during the period of covenant
testing, on a consolidated basis for the Guarantor,
"N" is the sum of (v) operating income, (w) the
amount of depreciation and amortization, (x) cash
dividends from joint ventures with Persons not
Subsidiaries of the Guarantor, in excess of the
aggregate equity investments of Guarantor and its
Subsidiaries in such joint ventures, (y) its
unencumbered cash plus the current value of all
marketable securities, and (z) the unused portion
of committed credit facilities available to the
Guarantor having an unexpired term in excess of one
year from the date of covenant testing, and
<PAGE>
"D" is the sum of (v) interest payments, (w)
scheduled payments of principal made on debt (but
excluding any prepayments of principal), (x) cash
payments made on taxes due, (y) cash dividend
payments and (z) payments made for capital
expenditures for the maintenance of assets;
(iii) at all times, the sum of (x) the Guarantor's
consolidated, unencumbered cash, (y) the
current value of the Guarantor's short term
investments (in conformity with GAAP) and (z)
the unused portion of committed credit
facilities available to Guarantor and its
wholly-owned Subsidiaries having an unexpired
term greater than one year from the date of
covenant testing shall at least equal Twenty-
Five Million Dollars ($25,000,000), provided
further that the aggregate value of such
unencumbered cash and such marketable
securities shall at least equal Fifteen
Million Dollars ($15,000,000); and
(iv) the aggregate fair market value ("FMV") of the
Vessels, subject to a Mortgage and not subject to
an Event of Loss, determined by reference to the
most recent opinion delivered to and approved by
the Agent or obtained by the Agent pursuant to
Section 5.01(c)(x) above, is an amount not less
than 135% of the aggregate amount of all available
Commitments and outstanding amounts under the
Notes. In the event the Borrowers are not in
compliance with the requirements of the preceding
sentence, they shall promptly (x) prepay amounts
available under the Notes and permanently reduce
the amount of the Commitments in the requisite
amount to maintain covenant compliance, (y) deposit
and maintain cash in an account with the Agent, the
amount of which shall be deducted from the
aggregate amount of all available Commitments and
the outstanding amounts under the Notes for the
purpose of testing covenant compliance, or (z)
grant the Agent on behalf of the Lenders a
perfected first priority security interest in
additional collateral satisfactory in form and
substance to the Agent, the fair market value of
which (as determined by an appraisal of the type
described in Section 5.01(c)(x) above if it is a
vessel and otherwise as determined by the Agent),
shall be added to "FMV" as defined in the preceding
sentence for the purpose of testing covenant
compliance, or (2) if necessary, immediately sell
one or more vessels (other than a Vessel) or other
assets and apply the proceeds as provided in clause
(y) above.
<PAGE>
(e) Corporate Existence, Mergers. (i) Each Borrower
shall preserve and maintain in full force and effect its
corporate existence and rights, and not merge or consolidate
with or into, or convey, transfer, lease or otherwise dispose
of (whether in one transaction or in a series of transactions)
all or substantially all of its assets (whether now owned or
hereafter acquired) to, or acquire all or substantially all of
the assets of, any Person. (ii) The Guarantor shall preserve
and maintain in full force and effect its corporate existence
and rights and those of its Subsidiaries, and not merge or
consolidate with or into, or convey, transfer, lease or
otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets
(whether now owned or hereafter acquired) to, or acquire all
or substantially all of the assets of, any Person or permit
any of its Subsidiaries to do so, except that (w) any
Subsidiary (other than any Borrower) of the Guarantor may
merge or consolidate with or into the Guarantor if the
surviving entity is the Guarantor, or transfer assets to, or
acquire assets of the Guarantor so long as such assets do not
constitute all or substantially all of the assets of the
Guarantor, (x) any Subsidiary (other than any Borrower) of the
Guarantor may merge or consolidate with or into, or transfer
assets to, or acquire assets of, any other Subsidiary of the
Guarantor, (y) the Guarantor and its Subsidiaries (other than
any Borrower) may acquire all or substantially all of the
assets of any Person if the surviving entity is the Guarantor
or such Subsidiary, as the case may be, and (z) as permitted
by the terms of Section 801 of the OMI Indenture without
giving effect to any amendment, supplement, modification, or
waiver of any of the terms thereof, the Guarantor may merge or
consolidate with any Persons and any Person may, acquire all
of the assets of, the Guarantor, provided however with respect
to (z), (1) that no Default or Event of Default has occurred
and is continuing or would result upon giving effect to any
such merger, consolidation or acquisition, (2) the surviving
entity shall by an instrument in writing satisfactory to the
Agent and the Lenders, assume all of the obligations of the
Guarantor under this Agreement and (3) upon request, the
Borrowers, Pledgors and Guarantor shall deliver or cause to be
delivered opinions of counsel satisfactory to the Agent and
the Lenders with respect to such matters referred to above and
such other instruments and things as they may reasonably
require, and provided further that no such merger,
consolidation or acquisition shall be permitted if, in the
sole reasonable opinion of the Agent and the Lenders, such
merger, consolidation or acquisition will, or may be
reasonably expected to, materially, adversely affect the
rights or remedies of the Agent or Lenders under the Loan
Documents, the value of any Collateral, or will be or may
otherwise reasonably be expected to be, materially
disadvantageous to the Agent or any Lender.
<PAGE>
(f) Maintenance of Class and Insurance. (i) The
Borrowers will use due diligence to maintain each Vessel in
the highest classification and rating given by its
classification society for vessels of the same age and type.
The Borrowers will keep the Vessels insured if and as required
in the Mortgages, including mortgagee's interest insurance
additional perils (pollution) coverage (which will be placed
by the Agent on behalf of the Lenders) and mortgagee's
paramount interest clause satisfactory to the Agent. The
aggregate valuation of the Vessels for purposes of hull and
machinery and war risk insurance shall not be less than 120%
of the aggregate amount of the Commitments and the unpaid
principal amount of the Loan. (ii) If required, the Agent on
behalf of the Lenders will arrange for the annual renewal of
such additional perils (pollution) insurance in the name of
any Lenders which are party to this Agreement at the time of
renewal in an amount equal to a percentage between 100% and
120% to be decided at the sole discretion of the Lenders
multiplied by the sum of the Commitments and unpaid principal
amount of the Loan multiplied by a fraction, the numerator of
which is the fair market value of the Vessel being insured as
determined by the last appraisal obtained pursuant to
Section 5.01(c)(x) and the denominator of which is the
aggregate fair market value as determined by Section
5.01(c)(x) of the Vessels for which such additional perils
(pollution) insurance is obtained. The insurance premium will
be an expense for the account of the Borrowers. The Agent
shall have the right to determine which Vessels shall be
insured for additional perils (pollution) insurance. The
Agent shall have the right to select the broker placing the
insurance subject to the broker's premium being reasonably
acceptable to the Borrowers. In the event that such
additional perils (pollution) insurance is unavailable or the
Agent is unable to procure a commitment letter with respect to
said such additional perils (pollution) insurance, from the
date of the written notice of the Agent that it is unable to
procure a commitment letter, the Borrowers shall prepay the
Loan, interest thereon and all other amounts due hereunder and
under all other Loan Documents within 90 days of receipt of
such written notice. In the event that any cargo of persisted
oils is scheduled to be carried by any of the Vessels, the
Borrowers will promptly notify the Agent as soon as they
become aware of such intention to carry cargo.
(g) Accounting Requirements. The Borrowers may record
their joint and several liability to the Lenders for the Loan
as the several liabilities of one or more of the Borrowers to
the extent permitted by GAAP, provided that to the extent any
Borrower is insolvent or would be rendered insolvent by
recording any portion of the Loan as its liability, such
portion shall be recorded as a liability of the Guarantor to
the Lenders, and, to the extent such portion is made available
to such Borrower, as a capital investment by the Guarantor in
such Borrower.
<PAGE>
(h) Masters' Undertakings. The Borrowers will promptly
deliver to the Agent the written acknowledgment and
undertaking by the master of each Vessel that a certified copy
of the Mortgage of such Vessel has been placed and will remain
aboard such Vessel and the notices required thereby have been
and will remain posted.
(i) The Borrowers' and Pledgors' Stock. Each of the
Borrowers shall ensure that at all times all of the issued and
outstanding shares of its capital stock shall be owned by the
Pledgors, respectively, in each case, free and clear of Liens
in favor of any other Person (other than the Agent under the
Pledge Agreement) and that all of the issued and outstanding
shares of the capital stock of the Pledgors will be owned,
directly or indirectly, by the Guarantor.
(j) Indebtedness. The Guarantor will keep each Borrower
free and clear of any Indebtedness, except Indebtedness
created in the ordinary course of business or permitted by
Section 5.02(b).
(k) Solvency. The Guarantor will cause each Borrower
and each Pledgor, individually and on a consolidated basis, to
be and continue to be Solvent.
(l) Vessel Management. The Guarantor or any Subsidiary
or Affiliate of the Guarantor shall provide management
services to the Vessels and shall continue to provide such
management services until the Termination Date unless the
prior written consent of the Agent shall have been obtained.
(m) Further Assurances. The Borrowers shall, from time
to time upon the request of any Lender, accept for
cancellation any Note or Notes held by and payable to such
Lender, and thereupon the Borrowers shall execute and deliver
to such Lender, payable to it and its registered assigns, a
substitute Note or Notes in like form and total aggregate
amount as the canceled Note or Notes, but in any denomination
not smaller than Five Million United States Dollars
($5,000,000) or such lesser amount as such Lender may request
as shall constitute the outstanding principal of all
outstanding Notes held by such Lender. The Borrowers shall do
all things necessary to maintain each of the Loan Documents as
legal, valid and binding obligations, enforceable in
accordance with their respective terms by the Agent and the
Lenders. The Borrowers shall take such other actions and
deliver such instruments as may be necessary or advisable, in
the opinion of the Agent on behalf of the Lenders to protect
the rights and remedies of the Agent and the Lenders under the
Loan Documents.
<PAGE>
(n) OMI Senior Notes, Indenture. The Guarantor shall,
and shall cause each one of its Subsidiaries to, comply with
each of the terms and conditions of the OMI Senior Note
Offering, the OMI Senior Notes and the OMI Indenture
including, without limitation, all such obligations as therein
described and as therein defined, relating to limitations on
Debt and Preferred Stock of Subsidiaries, on Restricted
Payments, on Liens, on change of control, on dividends and
other payments affecting Restricted Subsidiaries, on the
disposition of proceeds of Asset sales, on Sale and Leaseback
Transactions, and on mergers, consolidations and Asset
Dispositions, in all cases, as if the terms of the OMI Senior
Note Offering, the OMI Senior Notes and the OMI Indenture were
set forth herein in their entirety, and, except as the Agent
may otherwise agree in writing, so long as the OMI Senior
Notes or the OMI Indenture are in force and effect and without
regard to any waiver, amendment, supplement or modification of
any of the terms thereof.
SECTION 5.02. NEGATIVE COVENANTS. So long as any
Advance or any other Obligation shall remain unpaid or any Lender
shall have any Commitment, unless the Agent on behalf of the
Lenders shall otherwise consent in writing in accordance with
Section 7.04:
(a) No Amendment of OMI Senior Note Offering. The
Guarantor shall not request or agree to any material
amendment, waiver, supplement or modification of any of the
terms of the OMI Senior Note Offering, OMI Senior Notes or OMI
Indenture.
(b) Indebtedness. No Borrower will create or suffer to
exist, and the Guarantor will not permit any Borrower to
create or suffer to exist, any Indebtedness of a Borrower
other than (i) the Indebtedness evidenced by the Notes, (ii)
Indebtedness of such Borrower to the Guarantor, and (iii)
other Indebtedness of a Borrower for the deferred purchase
price of property or services not exceeding $500,000 in the
aggregate for any Borrower or $1,000,000 in the aggregate for
all Borrowers.
(c) Lease Obligations. No Borrower will create or
suffer to exist, any obligations of a Borrower for the payment
of rental for any property (including vessels) under leases,
charters or agreements to lease having a term of one year or
more which would cause the direct or contingent liabilities of
the Borrowers on a consolidated basis, in respect of all such
obligations to exceed U.S. $100,000 (or its equivalent in
another currency) payable in any period of 12 months.
(d) Stock Purchases. No Borrower will purchase or
otherwise acquire for value any stock of the Guarantor or any
of its Affiliates.
<PAGE>
(e) Limitation on Payment Restrictions Affecting
Subsidiaries. Neither the Guarantor nor the Borrowers shall
create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction (other
than those contained in or permitted by or through any other
provision of this Agreement, including those contained in
documents existing on the Closing Date evidencing Indebtedness
permitted by any of the foregoing) on the ability of any
Subsidiary to (i) pay dividends or make any other
distributions on such Subsidiary's capital stock or pay any
Indebtedness owed to the Borrowers, the Guarantor or any of
their Subsidiaries, (ii) make loans or advances to the
Borrowers, the Guarantor or any of their Subsidiaries, or
(iii) transfer any of its property or assets to the Borrowers,
the Guarantor or any of their Subsidiaries, except with
respect to (iii) in the cases of the Guarantor and its
Subsidiaries other than the Borrowers (the "Other
Subsidiaries"), to the extent required to secure the
Indebtedness of the Guarantor or such Other Subsidiaries which
Indebtedness is not prohibited, directly or indirectly, by the
terms of this Agreement.
(f) Transactions with Officers, Directors and
Shareholders. Neither the Guarantor nor the Borrowers shall
enter or permit any of their Subsidiaries to enter into any
transaction or agreement, including but not limited to any
lease, Capital Lease, purchase or sale of real property,
purchase of goods or services, with any Subsidiary, Affiliate
or any officer, or director of the Borrowers, the Guarantor,
or of any such Subsidiary or Affiliate, or any record or known
beneficial owner of equity securities of any such Subsidiary,
any known record or beneficial owner of equity securities of
any such Affiliate or the Borrowers, the Guarantor, or any
record or beneficial owner of at least five percent (5%) of
the equity securities of the Borrowers or the Guarantor,
except on terms that are no less favorable to the Borrowers or
the Guarantor or the relevant Subsidiary than those that could
have been obtained in a comparable transaction by the
Borrowers or the Guarantor or such Subsidiary with an
unrelated Person and except between Subsidiaries which are
consolidated for financial reporting purposes with the
Borrowers or the Guarantor, respectively.
(g) Compliance with ERISA. Neither the Guarantor nor
the Borrowers shall become party to any prohibited
transaction, reportable event, accumulated funding deficiency
or plan termination, all within the meaning of ERISA and the
Code with respect to any Plan as to which there is an
Insufficiency, nor permit any Subsidiary to do so (except with
respect to a Multiemployer Plan if the foregoing shall result
from the act or omission of a Person party to such
Multiemployer Plan other than the Borrowers, the Guarantor or
their Subsidiary).
<PAGE>
(h) Investment Company. Neither the Guarantor nor the
Borrowers shall be or become an investment company subject to
the registration requirements of the Investment Company Act of
1940, as amended, or permit any Subsidiary to do so.
(i) Business. No Borrower will engage in any business
or transaction of any kind other than in connection with the
ownership, chartering, and operation of its Vessel; provided
that Darien Shipping Ltd. may be the owner of Limar Shipping
Ltd.
(j) Liens. The Guarantor will not create or suffer to
exist, or permit any Borrower to create or suffer to exist,
any Lien, upon or with respect to any of the Borrowers'
properties, whether now owned or hereafter acquired, or
assign, or permit any Borrower to assign, any right to receive
income, in each case to secure any Indebtedness of any person
or entity, other than the Loan Documents, the Mortgages and
Liens permitted by the Mortgages.
(k) Demise Charters; No Security Impairment. The
Borrowers will not enter into any demise charter covering any
Vessel or any contract of affreightment in excess of one year
without the prior written consent of the Agent. The Borrowers
will not take or permit any charterer to take any action in
connection with any charters of the Vessels that would impair
the security interests of the Lenders created by the Security
Documents. The Borrowers agree to use their best efforts to
procure the written consent of any charterer of the Vessel for
any period longer than one year (i) to a Charter Assignment
and (ii) to the first priority Lien accorded the Lenders.
(l) Place of Business, Etc. No Borrower or Pledgor will
maintain a place of business in the United States or keep, or
permit to be kept, any records concerning its charters or its
freights and hires in the United States, without first (i)
giving the Agent at least 30 days advance written notice
thereof and (ii) executing and filing Uniform Commercial Code
financing statements, in form and substance satisfactory to
the Agent, in such jurisdiction or jurisdictions as the Agent
shall request.
(m) Material Adverse Change. The Guarantor will not
make or permit any change to occur in the condition,
operations, business, prospects, properties or assets of the
Guarantor and its Subsidiaries taken as a whole, or of the
Borrowers as carried on or in existence on the date hereof,
which change in the opinion of the Agent or the Majority
Lenders is or will be materially adverse or gives reasonable
grounds to conclude that any of the Borrowers or the Guarantor
may not, or may be unable to, perform or observe their
respective obligations under the Loan Documents.
<PAGE>
(n) Organizational Documents. None of the Guarantor,
the Pledgors nor any Borrower shall amend its articles of
incorporation (or similar charter documents) or by-laws
(except for such amendments as shall not adversely affect the
rights and remedies of the Agent or any Lender).
(o) No Guarantee by Universal Bulk Carriers, Inc. The
Guarantor shall not permit Universal Bulk Carriers, Inc. to
guarantee or pledge any of its properties or assets to secure
the payment of the Indebtedness of, or the performance of any
obligation by, any person (other than itself under an existing
Credit Line Facility Agreement dated May 22, 1992 with
Christiania Bank og Kreditkasse in the total amount of Ten
Million Dollars ($10,000,000) (or any renewal or replacement
in any amount up to Ten Million [$10,000,000]).
SECTION 5.03. GUARANTY. (a) In consideration of the
premises above stated and in order to induce the Agent and the
Lenders to enter into this Agreement and the other Loan Documents
and to make the Advances hereby contemplated, the Guarantor hereby
unconditionally and irrevocably guarantees the punctual payment
when due, whether at stated maturity, by acceleration or otherwise,
of all Obligations now or hereafter existing, whether for the Loan,
fees, expenses or otherwise, and agrees to pay any and all expenses
(including reasonable counsel fees and reasonable expenses)
incurred by any of the Agent or any Lender in enforcing any rights
under this Section 5.03 or any of the Loan Documents.
(b) The Guarantor waives promptness, diligence and any
notice of the acceptance of the guaranty in this Section 5.03. The
Guarantor agrees to make payment of the Obligations immediately
upon notice by the Agent or any Lender of non-payment by the
Borrowers of any Obligations.
(c) The Guarantor hereby agrees that this guaranty will
not be discharged by any corporate reorganization, liquidation,
dissolution, merger or acquisition of the Guarantor or any of its
Subsidiaries, the Agent or any Lender or by any other alteration of
the corporate existence or structure of the Guarantor or any of its
Subsidiaries, the Agent or any Lender, or by any bankruptcy,
insolvency or reorganization of the Guarantor or any of its
Subsidiaries, the Agent or any Lender.
(d) The Guarantor consents that each of the Borrowers,
and each other party thereto may, without notice to it and without
affecting the Guarantor's obligations hereunder, modify, amend or
alter or permit to be modified, amended or altered, any terms of
the Loan Documents or any other document, grant any extension or
other indulgence with respect thereto, or omit to take, in the
discretion of the Borrowers, or any other party thereto, any action
permitted under the foregoing documents or any other instrument
relating to the Obligations.
<PAGE>
(e) This guaranty is a guaranty of payment, not of
collection, and neither the Agent nor any Lender shall be required,
prior to any demand on, or payment by the Guarantor, to make any
demand upon or pursue or exhaust any of its rights or remedies
against the Borrowers, any other guarantors or any other Person or
any other security or the Collateral or any other collateral held
with respect to any of the Obligations or otherwise.
(f) The liability of the Guarantor hereunder is not
affected or impaired by (a) any other guarantee or undertaking of
the Guarantor or any other Person as to the Obligations, (b) any
payment on, or in reduction of, any such other guarantee or
undertaking, (c) the termination, revocation or release of any
Obligations hereunder or of any other guarantor, (d) any payment
made to the Agent or any Lender on the Obligations which the Agent
or any Lender repays to any Person pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor
relief proceeding, or (e) any other fact or circumstance which
would excuse the obligation of a guarantor or surety; and the
Guarantor waives any right to the deferral or modification of the
Guarantor's obligations hereunder by reason of any such proceeding,
fact or circumstance.
(g) This guaranty shall continue to be effective in
accordance with its terms, or be reinstated, as the case may be, if
at any time payment of or with respect to any of the Obligations is
rescinded or must otherwise be restored or returned by the Agent or
any Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrowers, the Guarantor or
any of their Subsidiaries or upon or as a result of the appointment
of a receiver, intervenor or conservator of, or trustee or similar
officer for, any of the Borrowers, the Guarantor or any of their
Subsidiaries or any substantial part of its property, or otherwise,
all as though such payments had not been made.
(h) The Guarantor's obligations hereunder shall not be
released, discharged or in any way affected by the invalidity or
unenforceability of the Loan Documents, or the unenforceability of
the Obligations or any document or instrument relating thereto, or
any exchange, release or non-perfection of any Collateral, or any
release or amendment or waiver of or consent to departure from any
other guaranty, for all or any of the Obligations.
(i) This guaranty shall continue in full force and
effect and be binding upon the Guarantor, its successors and
assigns, until payment in full of all of the Obligations.
<PAGE>
(j) The Guarantor, for the exclusive benefit of the
Agent and the Lenders, expressly waives and disclaims any and all
rights which it may have or acquire by way of subrogation under
this guaranty, by virtue of any payment made hereunder or
otherwise. If, notwithstanding such waiver by the Guarantor, any
amount shall be paid to the Guarantor by the Borrowers or any
Subsidiary of the Guarantor on account of any payments the
Guarantor has made under the Guaranty at any time when all the
Obligations shall not have been paid in full, such amount shall be
held in trust for the benefit of the Agent and the Lenders and
shall forthwith be paid to the Agent and the Lenders to be credited
and applied upon the Obligations, whether matured or unmatured.
SECTION 5.04. OPERATIONS ACCOUNT. The Guarantor will
maintain at the office of Christiania Bank og Kreditkasse, London
Branch (the "Account Holder") in London, England, a special
non-interest bearing demand deposit account (the "Operations
Account") in the name of the Guarantor on behalf of the Borrowers
on the following terms and conditions:
(a) Until such time as the Obligations of the Borrowers
hereunder and under the Loan Documents shall have been paid in
full and no Commitment remains outstanding hereunder (i) the
Borrowers will cause each charterer of a Vessel to make all
payments of charter hire and other amounts payable under each
charter of a Vessel to the Account Holder at its office
referred to above, and will notify each other payor of
freights and hires which are assigned to the Agent or the
Lenders pursuant to the Earnings Assignments or Charter
Assignments to make all payments to the Account Holder at such
office, except that if a Default or Event of Default has
occurred and is continuing all such amounts shall be paid to
the order of the Agent, (ii) all payments of charter hire or
other amounts assigned under or pursuant to the Charter
Assignments or the Earnings Assignments and all other similar
amounts, payable to the Lenders or the Agent (in its capacity
as Agent or as Security Trustee in respect of the Mortgages)
under or pursuant to the Mortgages shall be deposited and held
by the Account Holder in the Operations Account, except that
if a Default or Event of Default has occurred and is
continuing all such amounts shall be paid to the order of the
Agent and (iii) the Borrowers will receive in trust for the
Lenders and pay over to the Agent, for credit to the
Operations Account, forthwith upon receipt, in the form
received, any amounts required to be deposited in the
Operations Account as above provided but which are instead
paid to or on behalf of any Borrower or any agent of any
Borrower.
<PAGE>
(b) Except as provided in subsection (c), all payments
deposited in the Operations Account shall be released to the
Guarantor not later than the first Business Day after the day
on which any such payments have been so deposited or, if the
Account Holder becomes aware of the receipt of any such
payment before the close of business of the day on which such
payment has been deposited, on the day of such deposit.
(c) The Security Trustee under the Master Vessel Trust
Agreement, for the benefit of the Agent on behalf of the
Lenders, shall have a security interest and charge in the
Operations Account pursuant to the terms of the Operations
Account Assignment. If any Default or Event of Default shall
have occurred and be continuing, all amounts then on deposit,
or at any time thereafter deposited, in the Operations
Account, in lieu of being released or applied as provided
above, shall, in the sole discretion of the Security Trustee,
be paid by the Account Holder to the Agent to be retained by
the Agent, and/or from time to time applied by the Agent
against, any or all of the Obligations as such Obligations
become due and payable, whether by acceleration or otherwise.
(d) Any funds remaining in the Operations Account after
the Loan and all Obligations have been repaid shall be
released to the Guarantor.
SECTION 5.05. SECURITY ACCOUNT. The Guarantor will
maintain with the Account Holder (defined in Section 5.04) in
London, England a special interest-bearing deposit account (the
"Security Account") in the name of the Guarantor on behalf of the
Borrowers on the following terms and conditions:
(a) Except as otherwise provided in subsection (d)
below, all insurance and other payments assigned to the Agent
under the Insurance Assignments and the Pledge Agreement and
all other similar amounts payable to the Lenders or the Agent
(in its capacity as Agent or as Security Trustee in respect of
the Mortgages) under or pursuant to the Mortgages shall be
deposited in the Security Account and immediately upon the
directions of the Security Trustee under the Master Vessel
Trust Agreement be paid by the Account Holder to the Security
Trustee for payment to the Agent and to be applied by the
Agent in the following order of priority:
(i) to the payment of any fees, costs or expenses
due under any Loan Document, including, but not limited
to, legal fees;
(ii) to the payment of any principal of or interest
on the Loan due on or before the date of application;
<PAGE>
(iii) to the prepayment of interest then due on the
Loan to the date of prepayment; and
(iv) to the prepayment of principal of the Loan.
The Borrowers will receive in trust for the Lenders
and pay over to the Agent forthwith upon receipt, in the form
received, for credit to the Security Account any amounts
required to be deposited in the Security Account as above
provided but which are instead paid to or on behalf of any
Borrower or any agent of any Borrower.
(b) The Borrowers may deposit funds in the Security
Account for the purpose of complying with Section 5.01(d)(iv).
Except as provided in subsection (c) below, such funds or a
portion thereof will be released to the Guarantor, at its
request to the Agent and the Security Trustee under the Master
Vessel Trust Agreement only if after giving effect to such
release, the Borrowers will be in compliance with subsection
(d) (iv) of Section 5.01.
(c) The Security Trustee under the Master Vessel Trust
Agreement, for the benefit of the Agent on behalf of the
Lenders, shall have a security interest and charge in the
Security Account pursuant to the terms of the Security Account
Assignment. If any Default or Event of Default shall have
occurred and be continuing, all amounts then on deposit, or at
any time thereafter deposited, in the Security Account, in
lieu of being paid and applied as provided above, shall, in
the sole discretion of the Security Trustee under the Master
Vessel Trust Agreement, be paid by the Account Holder to the
Security Trustee for payment to the Agent to be retained by
the Agent, and/or from time to time applied by the Agent
against, any or all of the Obligations as such Obligations
become due and payable whether by acceleration or otherwise.
(d) Any funds remaining in the Security Account after
the Loan and the Obligations have been paid and when no
Commitments remain outstanding hereunder shall be released to
the Guarantor.
ARTICLE VI
DEFAULT
SECTION 6.01. EVENTS OF DEFAULT. If any of the following
events ("Events of Default") shall occur and be continuing:
(a) The Borrowers shall fail to pay any Commitment Fee
or any other fee payable to the Agent or any Lender hereunder,
or any amount of principal of or interest on an Advance, when
due, or interest shall become due; or
<PAGE>
(b) Any representation or warranty made by or on behalf
of the Borrowers, the Pledgors, the Guarantor or any of their
officers under or in connection with this Agreement or any of
the other Loan Documents shall prove to have been incorrect in
any material respect when made; or
(c) Any Borrower, Pledgor or the Guarantor shall fail to
perform or observe any other term, covenant or agreement
contained in this Agreement or any of the other Loan Documents
on its part to be performed or observed and, in each case, any
such failure shall remain unremedied for ten (10) days after
written notice thereof shall have been given to the Borrower
or the Guarantor by the Agent or any Lender; or
(d) Any Borrower, the Guarantor or any of their
Subsidiaries shall fail to pay any amount or amounts due in
respect of Indebtedness of the Borrower, the Guarantor or such
Subsidiary when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if
any, specified in the agreement or instrument relating to such
Indebtedness; or any other default under one or more
agreements or instruments relating to Indebtedness of the
Borrower, the Guarantor or such Subsidiary, or any other
event, shall occur and shall continue after the applicable
grace period, if any, specified in such agreement or
instrument, if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of
such Indebtedness; or any such Indebtedness shall be declared
to be due and payable, or required to be prepaid (other than
by a regularly scheduled required prepayment), prior to the
stated maturity thereof; or
(e)(1) Any Borrower, the Guarantor or any of their
Subsidiaries shall (A) generally not pay its debts as such
debts become due, (B) threaten to stop making payments
generally, (C) admit in writing its inability to pay its debts
generally, (D) make a general assignment for the benefit of
creditors, (E) not be Solvent or (F) be unable to pay its
debts;
(2) Any proceeding shall be instituted in any
jurisdiction by or against any Borrower, the Guarantor or any
of their Subsidiaries (A) seeking to adjudicate it bankrupt or
insolvent, (B) seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief,
or composition of its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors,
or (C) seeking the entry of an administration order, an order
for relief, or the appointment of a receiver, trustee, or
other similar official, for it or for any substantial part of
its property, provided, that, in the case of any such
<PAGE>
proceeding instituted against but not by any Borrower, the
Guarantor or any of their Subsidiaries, such proceeding shall
remain undismissed or unstayed for a period of forty-five (45)
days or any of the relief sought in such proceeding
(including, without limitation, the entry of an order for
relief against it or the appointment of a receiver, trustee,
custodian or other similar official for it or any substantial
part of its property) shall be granted; or
(3)(A) Any Borrower, the Guarantor or any of their
Subsidiaries shall take any corporate action to authorize any
of the actions set forth above in subparagraph (e)(2) of this
Section 6.01, or (B) any director, or if one or more directors
are elected and acting, any two directors of the Borrower, the
Guarantor or any of their Subsidiaries, or any Person owning
directly, or indirectly, shares of capital stock of the
Borrower, the Guarantor or any of their Subsidiaries in a
number sufficient to elect a majority of directors of the
Borrower, the Guarantor or any of their Subsidiaries, shall
take any preparatory or other steps to convene a meeting of
any kind of the Borrower, the Guarantor or any of their
Subsidiaries, or any meeting is convened or any other
preparatory steps are taken, for the purposes of considering
or passing any resolution or taking any corporate action to
authorize any of the actions set forth above in subparagraph
(e)(2) of this Section 6.01; or
(f) One or more judgments or orders for the payment of
money, singly or in the aggregate, in excess of an amount
equal to One Hundred Thousand Dollars ($100,000.00) shall be
rendered against any Borrower, the Guarantor or any of their
Subsidiaries and either (i) enforcement proceedings shall have
been commenced by any creditor upon such judgment or order or
(ii) there shall have elapsed any period of ten (10)
consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise,
shall not have been in effect; or
(g) An extraordinary event shall occur, or a material
adverse change affecting the business or operations of any
Borrower, Pledgor or the Guarantor shall occur, which
situation or change gives reasonable grounds to conclude that
such Borrower, Pledgor or Guarantor will not, or will be
unable to, perform or observe in the normal course its
obligations under the Loan Documents; or
(h) Any governmental authority or any person or entity
acting or purporting to act under governmental authority shall
have taken any action to condemn, seize or appropriate, or to
assume custody or control of, all or any substantial part of
the property of any Borrower, the Guarantor or of any of their
Subsidiaries (other than a requisition by the United States of
<PAGE>
America of the use of a Vessel or which is not an Event of
Loss), or shall have taken any action to displace the
management of any Borrower, the Guarantor or of any of their
Subsidiaries or to curtail its authority in the conduct of the
business of any Borrower, the Guarantor or of any of their
Subsidiaries; or
(i) Any provision of the guaranty contained in Article V
or of any Loan Document heretofore delivered or after delivery
thereof under Section 3.01, shall for any reason cease to be
valid and binding on any Borrower or the Guarantor delivering
the same, respectively, or any Borrower or the Guarantor shall
so state in writing; or
(j) Any Loan Document which purports to create a lien or
security interest, heretofore delivered or after delivery
thereof under Section 3.01, shall for any reason, except to
the extent permitted by the terms thereof, cease to create, or
the Agent on behalf of the Lenders shall not have, a valid and
perfected first priority preferred mortgage lien on the Vessel
described therein or a valid and perfected security interest
or charge in any of the other Collateral purported to be
covered thereby, enforceable in accordance with its terms; or
(k) Any "Event of Default", as said term is defined in
any Mortgage, shall occur and be continuing; or
(l) A Borrower or the Guarantor shall take any action in
connection with the charter of a Vessel which shall impair the
security interests of the Agent on behalf of the Lenders
created, or intended to be created, by the related Earnings
Assignment, Insurance Assignment or any Charter Assignment; or
(m) Any substantial change occurs in the control of any
Borrower, Pledgor or the Guarantor, other than by reason of
public stock issues of the Guarantor occurring within two
years of the Closing Date, which in the reasonable opinion of
the Agent is likely to have a material adverse effect on the
condition, operations, business, prospects, properties or
assets of any Borrower, Pledgor or the Guarantor;
then, and in any such event, the Agent on direction of the Majority
Lenders (i) shall, by notice to the Borrowers, declare the
Commitment to be terminated, whereupon the same shall forthwith
terminate, (ii) shall, by notice to the Borrowers, declare each
Advance and the Notes, and all interest thereon and all other
amounts payable under this Agreement, to be forthwith due and
payable (except that no notice shall be required upon the
occurrence of an Event of Default described in paragraph (e) of
this Section 6.01) whereupon each Advance, each Note, all such
interest and all such amounts shall become and be forthwith due and
payable without presentment, demand, protest or further notice of
<PAGE>
any kind, all of which are hereby expressly waived by the Borrowers
and the Guarantor, (iii) may exercise any and all remedies granted
hereunder, under any Loan Document or by applicable law, and (iv)
may, to the extent permitted by applicable law, bring suit at law,
in equity, in admiralty and/or other appropriate proceedings
whether for specific performance or observance of any terms or
conditions contained in this Agreement or any Loan Document, for an
injunction against the violation of any of the terms hereof or
thereof or in aid of the exercise of any power granted hereby or
thereby or by the law to recover judgment for any and all amounts
due under the Notes, this Agreement or any other Loan Document.
SECTION 6.02. ASSIGNMENTS AS SECURITY. The Earnings
Assignments, the Charter Assignments, the Operations Account
Assignment, the Security Account Assignment and the Insurance
Assignments, although absolute in form, are intended to create
security interests. Except for their rights to receive moneys
thereunder and to take action reasonably necessary to perfect its
rights, the Agent and the Lenders will not exercise or cause to be
exercised any other power granted to them thereunder except after
the occurrence and during the continuance of an Event of Default.
Upon the final repayment of all amounts payable under the Loan
Documents, the Agent shall reassign to the Borrowers the remaining
property assigned to the Agent or the Lenders by such Assignments,
without any representation or warranty by or recourse to the Agent
or Lenders.
SECTION 6.03. DISTRIBUTION OF PROCEEDS. All monies
received by the Agent or any Lender under or pursuant to this
Agreement or any of the Loan Documents or applicable law after the
happening and continuance of an Event of Default or which are not
expressly to be distributed pursuant to another provision hereof or
of any Loan Document shall be applied in the manner following:
First, so much of such monies as shall be required to pay
all taxes, assessments or liens in respect of any of the Vessels or
any Loan Document having priority over the liens or security
interests in favor of the Agent or any Lender, shall be applied to
the payment of such taxes, assessments or liens;
Second, so much of such monies as shall be required to
reimburse the Agent or any Lender for any expense or other loss
incurred by it in connection with the collection or distribution of
such amounts including, but not limited to, the expenses of
enforcement, any sale or taking, attorneys' fees and disbursements
and the costs of investigation, and court costs, shall be applied
to such reimbursement;
Third, so much of the monies as shall be required to pay
the Agent or the Lenders all amounts owed to them pursuant to this
Agreement and the Loan Documents other than amounts specifically
provided for in this Section 6.03, shall be applied to the payment
of such amounts;
<PAGE>
Fourth, so much of such amounts as shall be required to
pay in full the accrued but unpaid interest on the Notes to the
date of distribution shall be applied to the payment of such
interest;
Fifth, so much of such amounts as shall be required to
pay in full the unpaid principal amount of the Notes shall be
applied to the payment of such principal amount; and
Sixth, the balance, if any remaining, shall be
distributed to the order of the Borrowers.
SECTION 6.04. CONTINUING SECURITY. It is declared and
agreed that (a) the security created or to be created by or
pursuant to this Agreement and the Loan Documents shall be held by
the Agent on behalf of the Lenders as a continuing security for the
payment of all monies which may at any time and from time to time
be or become due and payable under this Agreement and the other
Loan Documents or any of them; (b) the security so created shall
not be satisfied by an intermediate payment or satisfaction of any
part of the amount hereby and thereby secured; (c) the security so
created shall be in addition to and shall not in any way be
prejudiced or affected by any collateral or other security now or
hereafter held by the Agent or any Lender for all of any part of
the monies hereby and thereby secured; (d) every power or remedy
given to the Agent or Lender hereunder or under any of the Loan
Documents shall be in addition to and not a limitation of any and
every other power or remedy vested in the Agent or the Lender
hereunder or thereunder or by any law; and (e) all powers so vested
in the Agent or any Lender may be exercised from time to time and
as often as the Agent and/or any Lender may deem expedient.
ARTICLE VII
RELATION OF LENDERS; ASSIGNMENTS
AND PARTICIPATIONS
SECTION 7.01. LENDERS AND AGENT. The general
administration of this Agreement and the Loan Documents shall be by
the Agent, and each Lender hereby authorizes and directs the Agent
to take such action (including without limitation retaining
lawyers, accountants, surveyors or other experts) or forbear from
taking such action as in the Agent's reasonable opinion may be
necessary or desirable for the administration hereof (subject to
any direction of the Majority Lenders and to the other requirements
of Section 7.04 hereof). The Agent shall inform each Lender, and
each Lender shall inform the Agent, of the occurrence of any Event
of Default promptly after obtaining knowledge thereof; however,
unless it has actual knowledge of an Event of Default, each of the
Agent and the Lenders may assume that no Event of Default has
occurred.
<PAGE>
SECTION 7.02. PRO RATA SHARING. If any Lender shall
obtain any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) on account of the
Advances made by it (other than pursuant to Section 2.05(b), 2.06
or 2.08) in excess of its ratable share of payments on account of
the Advances obtained by all the Lenders, such Lender shall
forthwith purchase from the other Lenders such participations in
the Advances made by them as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of
them, provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such
purchase from each Lender shall be rescinded and such Lender shall
repay to the purchasing Lender the purchase price to the extent of
such recovery together with an amount equal to such Lender's
ratable share (according to the proportion of (i) the amount of
such Lender's required repayment to (ii) the total amount so
recovered from the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender in respect of the
total amount so recovered. Any Lender so purchasing a
participation from another Lender pursuant to this Section 7.02
may, to the fullest extent permitted by law, exercise all its
rights of payment with respect to such participation as fully as if
such Lender were the direct creditor of the Borrowers or the
Guarantor in the amount of such participation.
SECTION 7.03. SETOFF. Upon the occurrence and during
the continuance of any Default or Event of Default, each Lender is
hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by such Lender
to or for the credit or the account of the Borrowers or the
Guarantor against any and all of the obligations of the Borrower
and the Guarantor now or hereafter existing under this Agreement
and any Note held by such Lender, whether or not such Lender shall
have made any demand under this Agreement or such Note and although
such obligations may be unmatured. Each Lender agrees promptly to
notify the Borrowers and the Guarantor after any such set-off and
application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section are in
addition to other rights and remedies (including, without
limitation, other rights of set-off) which such Lender may have.
SECTION 7.04. APPROVALS. Upon any occasion requiring or
permitting an approval of any amendment or modification or any
consent, waiver, declaring an Event of Default or taking any action
thereafter, or any other action on the part of the Agent or the
Lenders under any of the Loan Documents, (1) action may (but shall
not be required to) be taken by the Agent for and on the behalf or
for the benefit of all Lenders, provided (A) that no other
direction of the Majority Lenders shall have been previously
<PAGE>
received by the Agent, and (B) that the Agent shall have received
consent of the Majority Lenders to enter into any written amendment
or modification of the provisions of any of the Loan Documents, or
to consent in writing to any material departure from the terms of
any Loan Documents by the Borrowers or any other party thereto or
(2) action shall be taken by the Agent upon the direction of the
Majority Lenders, and any such action shall be binding on all
Lenders; provided further, however, that unless all of the Lenders
agree in writing thereto, no amendment, modification, waiver,
consent or other action with respect to this Agreement or any of
the Notes shall be effective which (a) increases the Commitment or
increases the Percentage Interest of any of the Lenders,
(b) reduces any commission, fee, the principal or interest owing to
any Lender in respect of the Notes hereunder or the method of
calculation of any thereof, (c) extends the Termination Date or the
date on which any sum in respect of the Notes is due hereunder,
(d) releases any collateral, guaranty or other security, (e) amends
the provisions of this Section 7.04 or the definition of Majority
Lenders, or (f) waives any condition for Borrowing set forth in
Article III.
SECTION 7.05. EXCULPATION. The Agent shall not be
liable or answerable for anything whatsoever in connection with any
of the Loan Documents or other instrument or agreement required
hereunder or thereunder, including responsibility in respect of the
execution, delivery, construction or enforcement of any of the Loan
Documents or any such other instrument or agreement, or for any
action taken or not taken by the Agent in any case involving
exercise of any power or authority conferred upon the Agent under
any thereof, except for its wilful misconduct or gross negligence,
and the Agent shall have no duties or obligations other than as
provided herein and therein. The Agent shall be entitled to rely
on any opinion of counsel (including counsel for the Borrowers, the
Guarantor or any of their Subsidiaries) in relation to any of the
Loan Documents or any other instrument or agreement required
hereunder or thereunder and upon writings, statements and
communications received from the Borrowers, the Guarantor or any of
their Subsidiaries (including any representation made in or in
connection with any Loan Document), or from any other party to any
of the Loan Documents or any documents referred to therein or any
other Person, firm or corporation reasonably believed by it to be
authentic, and the Agent shall not be required to investigate the
truth or accuracy of any writing or representation, nor shall the
Agent be liable for any action it has taken or omitted in good
faith on such reliance.
SECTION 7.06. INDEMNIFICATION. Each Lender agrees to
indemnify the Agent, except to the extent reimbursed by the
Borrowers or the Guarantor and except in the case of any suit by
any Lender against the Agent resulting in a final judgment against
the Agent, ratably according to the aggregate principal amount of
the Notes then held by it (or if no Notes are outstanding or if any
<PAGE>
such Notes are held by Persons which are not Lenders, ratably
according to the amount of its Commitment) against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever
(except to the extent the foregoing results from the Agent's gross
negligence or wilful misconduct) which may be imposed on, incurred
by or asserted against the Agent in any way relating to or arising
out of (y) any of the Loan Documents or any other instrument or
agreement contemplated hereunder or thereunder or (z) any action
taken or omitted by the Agent under any of the Loan Documents or
such other instrument or agreement.
SECTION 7.07. AGENT AS LENDER. The Agent shall, in its
individual capacity, have the same rights and powers hereunder as
any other Lender and may exercise the same as though it were not an
agent; the term "Lenders" shall include the Agent in its individual
capacity to the extent of its Percentage Interest. The Agent and
its Subsidiaries and Affiliates may accept deposits from, lend
money to, and generally engage in any kind of banking, trust or
other business with the Borrowers, the Guarantor and their
Subsidiaries and Affiliates, as if it were not the Agent.
SECTION 7.08. NOTICE OF TRANSFER; RESIGNATION; SUCCESSOR
AGENT. (a) The Agent may deem and treat a Lender party to this
Agreement as the owner of such Lender's interest in any Loan and
any other instrument or agreement contemplated hereunder or
thereunder for all purposes hereof unless and until a written
notice of the assignment or transfer thereof, executed by such
Lender and otherwise in compliance with the requirements of
Section 7.10 hereof, shall have been received and accepted by the
Agent. The Agent shall resign if directed by the Majority Lenders
for any reason. The Agent may not resign at any time, except that,
upon written notice to the Lenders and the Borrowers, the Agent may
resign if in its judgement there exist or may occur reasons related
to conflict of interest, a change in, or violation of, law or
regulation or interpretation thereof, or such other occurrence that
may prevent or impede the Agent in discharging its duties hereunder
faithfully and effectively in accordance with their terms.
(b) Any successor Agent shall be appointed by the
Majority Lenders and shall be a bank or trust company reasonably
satisfactory to the Borrowers (so long as no Event of Default shall
have occurred and be continuing) and the Majority Lenders. If no
successor Agent shall have been so appointed by the Majority
Lenders, and shall have accepted such appointment, within 30 days
after the retiring Agent's giving of notice of resignation or the
Majority Lender's removal of the Agent, then such retiring Agent
may, on behalf of the Lenders, appoint a successor Agent, which
shall be a commercial bank organized under the laws of the United
States of America or of any State thereof and having a combined
capital and surplus of at least $50,000,000. Upon the acceptance
<PAGE>
of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this
Article VII shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement.
SECTION 7.09. CREDIT DECISION; NOT TRUSTEE. Each Lender
represents that it has made, and agrees that it shall continue to
make, its own independent investigation of the financial condition
and affairs of the Borrowers, the Guarantor and their Subsidiaries,
and its own appraisal of the creditworthiness of the Borrowers, the
Guarantor and their Affiliates and Subsidiaries in connection with
the making and performance of this Agreement. The Agent has and
shall have no duty or responsibility whatsoever on the date hereof
or, except as otherwise expressly provided in this Agreement at any
time hereafter, to provide any Lender with any credit or other
information. Nothing herein shall (nor shall it be construed so as
to) constitute the Agent a trustee for the Borrowers, the Guarantor
or their Subsidiaries or impose on it any duties or obligations
other than those for which express provision is made in this
Agreement or under the other Loan Documents.
SECTION 7.10. ASSIGNMENTS AND PARTICIPATION. (a) Each
Lender may assign to one or more banks or other entities all or a
portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment,
the Advances owing to it and the Note or Notes held by it);
provided, however, that (i) each such assignment shall be of
constant, and not a varying, percentage of all rights and
obligations under this Agreement, (ii) unless the Borrowers shall
otherwise agree with the assigning Lender, the amount of the
Commitment of the assigning Lender being assigned pursuant to each
such assignment (determined as of the date of the Assignment and
Acceptance with respect to such assignment) that is not to a then
existing Lender hereunder, shall in no event be less than Five
Million United States Dollars ($5,000,000) or such lesser amount as
shall constitute all of such assigning Lender's Commitment and the
outstanding principal of Notes payable to it, (iii) each such
assignment shall be to an Eligible Assignee, and (iv) the parties
to each such assignment shall execute and deliver to the Agent, for
its acceptance and recording in the Register, an Assignment and
Acceptance, together with any Note or Notes subject to such
assignment and a processing and recordation fee of $3,000. Any
assignment or purported assignment not in compliance with this
Section shall be void and of no effect. Without regard to any of
the other terms of this Agreement or of any other agreement, any
Lender may assign, as collateral or otherwise, any of its rights
(including, without limitation, rights to payments of principal
and/or interest on the Notes) under this Agreement to any Federal
<PAGE>
Reserve Bank of the United States without notice to or consent of
the Borrowers, the Guarantor, the Agent or any other Person. In
case of any assignment pursuant to this Section 7.10(a), the
assignee shall not be entitled to receive the portion (if any) of
any amount otherwise payable under Section 2.06 or 2.08 hereof
which exceeds the amount which would have been payable under
Section 2.06 or 2.08 (as the case may be) to the assignor with
respect to the rights and obligation so assigned. In the case of
a transfer of any Note from the accounting records of the office of
a Lender where such Note was originally recorded to the accounting
records of any other office of such Lender, or a change in the
location of the Lending Office from that designated as of the
Closing Date, such Lender or the Agent, as the case may be, shall
not be entitled to receive the portion (if any) of any amount
otherwise payable under Section 2.06 or 2.08 hereof which exceeds
the amount which would have been payable under Section 2.06 or 2.08
(as the case may be) to such Lender or the Agent, as the case may
be, if such transfer or change had not been made. Upon such
execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, and
delivery of the tax forms and other documents referred to in
Section 2.08 hereof, (x) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance
and subject to the foregoing, have the rights and obligations of a
Lender hereunder and (y) the Lender assignor thereunder shall, to
the extent that rights and obligations hereunder have been assigned
by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be
party hereto).
(b) By executing and delivering an Assignment and
Acceptance, the Lender assignor thereunder and the assignee
thereunder confirm to and agree with each other and the other
parties hereto as follows: (i) other than as provided in such
Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in
connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the
financial condition of any of the Borrowers, the Guarantor or their
Subsidiaries or the performance or observance by any of the
Borrowers, the Guarantor or their Subsidiaries of any of its
obligations under this Agreement or any other instrument or
document furnished pursuant hereto; (iii) such assignee confirms
that it has received a copy of this Agreement, together with copies
<PAGE>
of the financial statements referred to herein Sections 4.01(m) and
5.01(c), and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, such assigning
Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental
thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the
terms of this Agreement are required to be performed by it as a
Lender.
(c) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee representing that
it is an Eligible Assignee, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of
Exhibit C hereto and has attached thereto the forms referred to in
paragraph 3(vii) thereof, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the
Register (including the transfer of Notes to such Eligible Assignee
by the assigning Lender) and (iii) give prompt notice and an
execution counterpart thereof to the Borrowers. Within five (5)
Business Days after their receipt of such notice, the Borrowers, at
their own expense, shall execute and deliver to the Agent in
exchange for the surrendered Note or Notes a new Note or new Notes,
as the case may be, to the order of such Eligible Assignee in an
amount equal to the Commitment assumed by it pursuant to such
Assignment and Acceptance. Such new Note or Notes shall be in an
aggregate principal amount equal to the aggregate principal amount
of such surrendered Note or Notes, shall be dated the effective
date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit A hereto.
(d) The Agent shall maintain at its address referred to
in Section 8.02 of this Agreement a register for the recordation of
the names and addresses of the Lenders and, with respect to
Lenders, the Commitment of, and principal amount of the Advance
owing and each Note payable to, each Lender from time to time and
a copy of each Assignment and Acceptance delivered to and accepted
by it (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and
the Borrowers, the Guarantor, the Agent and the Lenders shall treat
each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall
be available for inspection by any Borrower, the Guarantor or any
Lender at any reasonable time and from time to time upon reasonable
prior notice and each shall be entitled to make copies thereof at
its expense.
<PAGE>
(e) Each Lender and the Agent may grant participations
to one or more banks or other entities in or to all or any part of
its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment and the Advance
owing to it); provided, however, that, notwithstanding the grant of
any such participation by any Lender, such participation, and the
right to grant such a participation, shall be expressly subject to
the following conditions and limitations: (i) such Lender's
obligations under this Agreement (including without limitation, its
Commitment to the Borrowers hereunder) shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) such
Lender shall remain the holder of any such Note and Advance for all
purposes of this Agreement, (iv) the Borrowers, the Guarantor, the
Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights
and obligations under this Agreement, (v) such Lender shall
continue to be able to agree to any modification or amendment of
this Agreement or any waiver hereunder without the consent,
approval or vote of any such participant or group of participants,
other than modifications, amendments, and waivers which (a)
postpone the Termination Date or any date fixed for any payment of,
or reduce any payment of, principal of or interest on such Lender's
Advance or any fees or other amounts payable under this Agreement,
or (b) increase the amount of such Lender's Commitment, or
(c) change the interest rate payable under this Agreement, or
(d) release all or substantially all of any collateral or guaranty,
provided that if a Lender agrees to any modification or waiver
relating to items (a) through (d), the Borrowers, the Guarantor,
the Agent and each other Lender may conclusively assume that such
Lender duly received any necessary consent of each of its
participants and (vi) except as contemplated by the immediately
preceding clause (v), no participant shall be deemed to be or to
have any of the rights or obligations of a "Lender" hereunder.
(f) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to
this Section 7.10, disclose to the assignee, participant, or
proposed assignee or participant, any information relating to the
Borrowers, the Guarantor or their Subsidiaries furnished to such
Lender by or on behalf of the Borrowers or the Guarantor, provided
that the Person receiving such information undertakes not to
disclose it to a third party except pursuant to, and subject to the
conditions provided in, this Section 7.10.
<PAGE>
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. AMENDMENTS. No amendment, supplement or
modification to this Agreement shall be enforceable against the
Borrowers unless the same shall be in writing and signed by the
Borrowers. No amendment or waiver of any provision of this
Agreement or any instrument delivered hereunder, nor consent to any
departure by the Borrowers therefrom, shall in any event be
effective unless the same shall be in writing and signed by the
Agent and, to the extent required by Section 7.04 hereof, the
Majority Lenders or each Lender, as the case may be, and then such
waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
SECTION 8.02. NOTICES. All notices, demands and other
communications provided for hereunder shall be in writing
(including telegraphic communication) and mailed, telexed,
telecopied or telegraphed or delivered, if to the Borrowers at
their addresses set forth below their signatures herein written;
and if to a Lender other than the Agent, at its address set forth
below its signature herein written; or, as to each party, at such
other address as shall be designated by such party in a notice to
the other parties hereto. All such notices and communications
shall, when mailed, telexed, telecopied, or telegraphed, be
effective upon the earliest of (i) actual receipt, (ii) seven days
from the date when deposited in the mails, or (iii) when (on a
Business Day and during normal business hours at the addressee's
address) transmitted by telecopy or telex or delivered to the
telegraph company, respectively, except that notices and
communications to the Agent or any Lender pursuant to Article II
hereof shall not be effective until received by the Agent or such
Lender.
SECTION 8.03. NO WAIVER; REMEDIES. Regardless of any
fact known or investigation undertaken by the Agent or any Lender,
no failure on the part of the Agent or any Lender to exercise, and
no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. COSTS, EXPENSES, FEES AND INDEMNITIES.
(a) The Borrowers agree to pay on demand, whether or not the Loan
Documents are executed (i) in connection with the preparation,
execution, and delivery of this Agreement and the instruments and
other documents to be delivered hereunder, (y) the reasonable fees
and out-of-pocket expenses of Messrs. Haight, Gardner, Poor &
Havens, as special counsel for the Agent and the Lenders (and any
<PAGE>
local counsel retained by such firm) with respect to the closing of
the Transaction and (z) all other costs and expenses of the Lenders
and the Agent (other than any other legal fees and related expenses
incurred by them) and (ii) after the Closing Date, all costs and
expenses in connection with the administration of this Agreement
and the other instruments and documents to be delivered hereunder,
including, without limitation, subsequent amendments or waivers of
the Loan Documents, and the reasonable fees and out-of-pocket
expenses of any counsel for the Agent or the Lenders in connection
with advice given the Agent or the Lenders, from time to time, as
to their rights and responsibilities under this Agreement and such
instruments and documents. The Borrowers shall not be liable to
any Lender in respect of any costs or expenses incurred in
connection with any assignment or grant of participation under
Section 7.10 hereof. The Borrowers further agree to pay on demand
all losses, costs and expenses, if any (including, without
limitation, reasonable counsel fees and expenses), in connection
with the enforcement of this Agreement and the instruments and
other documents delivered hereunder, including, without limitation,
losses, costs and expenses sustained as a result of a Default by
the Borrowers in the performance of their obligations contained in
this Agreement or any instrument or document delivered hereunder,
or arising out of any bankruptcy proceedings.
(b) If, for any reason, including maturity or demand of
the Loan under Article VI, or prepayment of an Advance other than
prepayment of principal of a Base Rate Advance, in whole or in
part, the Agent or any of the Lenders receives payment of principal
of or interest on an Advance on any day other than the last day of
the Interest Period for such Advance permitted under this Loan
Agreement the Borrowers shall pay to the Agent on behalf of the
Lenders on demand any amounts required to compensate the Lenders
for any breakage costs (including cost or expense incurred by
reason of the liquidation or reemployment of deposits or other
funds in respect of such payment) and any additional losses, costs
or expenses which any Lender may incur as a result of such payment,
provided that the Lender shall have delivered to the Agent and the
Borrowers, as the case may be, a certificate as to the amount of
such breakage costs, additional losses, costs or expenses, which
certificate shall be binding, absent manifest error, except that
the failure of the Lender to provide such certificate shall in no
way relieve the Borrowers of their obligations under this
Section 8.04(b).
(c) The Borrowers agree to indemnify and hold harmless
each of the Lenders and the Agent, and its and their respective
Affiliates, directors, officers, employees, agents,
representatives, counsel and advisors (each an "Indemnified Party")
from and against any and all claims, damages, losses, liabilities
and expenses (including, without limitation, reasonable fees and
disbursements of counsel and the costs of investigation and defense
thereof) which may be incurred by or asserted or awarded against
<PAGE>
any Indemnified Party, in each case based upon, arising out of or
in connection with or by reason of, the Transaction, including,
without limitation, any act or failure to act by the Agent where
such act or failure to act was taken pursuant to the Borrowers'
request or any transaction contemplated by this Agreement or any
Loan Document, whether or not any Advance hereunder is made, except
to the extent that such claim, damage, loss, liability or expense
results from the gross negligence or willful misconduct of such
Indemnified Party. The indemnities of this Agreement shall survive
the termination of this Agreement and the other Loan Documents.
SECTION 8.05. [RESERVED.]
SECTION 8.06. JUDGMENT. (a) If for the purposes of
obtaining judgment in any court it is necessary to convert a sum
due hereunder or under any instrument delivered hereunder in United
States Dollars into another currency, the parties hereto agree, to
the fullest extent permitted by law, that the rate of exchange used
shall be that at which in accordance with normal banking procedures
the Agent or the Lender, as the case may be, could purchase United
States Dollars with such other currency on the Business Day
preceding that on which final judgment is given.
(b) The obligation of the Borrowers and the Guarantor in
respect of any sum due from them to the Agent or any Lender
hereunder or under such instrument shall, notwithstanding any
judgment in a currency other than United States Dollars, be
discharged only to the extent that on the Business Day following
receipt by the Agent or such Lender of any sum adjudged to be so
due in such other currency the Agent or such Lender, as the case
may be, may in accordance with normal banking procedures purchase
United States Dollars with such other currency; if the United
States Dollars so purchased are less than the sum originally due to
the Agent or such Lender, as the case may be, in United States
Dollars, the Borrowers and the Guarantor agree, as a separate
obligation and notwithstanding any such judgment, to indemnify the
Agent or such Lender, as the case may be, against such loss, and if
the United States Dollars so purchased exceed the sum originally
due to the Agent or such Lender in United States Dollars, the Agent
or such Lender shall remit such excess to the Borrowers and the
Guarantor.
SECTION 8.07. CONSENT TO JURISDICTION; WAIVER OF
IMMUNITIES. (a) The Borrowers and the Guarantor hereby
irrevocably submit to the jurisdiction of any New York State court
sitting in New York County and to the jurisdiction of the United
States District Court for the Southern District of New York in any
action or proceeding arising out of or relating to this Agreement
or the Notes, and the Borrowers and the Guarantor hereby
irrevocably agree that all claims in respect of such action or
proceeding may be heard and determined in such New York State or
Federal court. The Borrowers and the Guarantor hereby irrevocably
<PAGE>
waive, to the fullest extent they may effectively do so, the
defense of an inconvenient forum to the maintenance of such action
or proceeding. The Borrowers and the Guarantor hereby irrevocably
appoint OMI Corp. (the "Process Agent"), with an office on the date
hereof at 90 Park Avenue, New York, New York 10016, United States,
as their agent to receive on behalf of themselves and their
property service of copies of the summons and complaint and any
other process which may be served in any such action or proceeding.
Such service may be made by mailing or delivering a copy of such
process to the Borrowers and the Guarantor in care of the Process
Agent (or any successor thereto, as the case may be) at such
Process Agent's above address (or the address of any successor
thereto, as the case may be), and the Borrowers and the Guarantor
hereby irrevocably authorize and direct the Process Agent (and any
successor thereto) to accept such service on their behalf. The
Borrowers and the Guarantor shall appoint a successor agent for
service of process should the agency of OMI Corp. terminate for any
reason, and further shall at all times maintain an agent for
service of process in New York, New York, so long as there shall be
outstanding any Obligations under the Loan Documents. The
Borrowers and the Guarantor shall give notice to the Agent of any
appointment of successor agents for service of process, and shall
obtain from each successor agent a letter of acceptance of
appointment and promptly deliver the same to the Agent. As an
alternative method of service, the Borrowers and the Guarantor also
irrevocably consent to the service of any and all process in any
such action or proceeding by the mailing of copies of such process
to them at their address specified in Section 8.02 hereof. Without
waiver of their rights of appeal permitted by relevant law, the
Borrowers and the Guarantor agree that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner
provided by law.
(b) Nothing in this Section 8.07 shall affect the right
of the Agent or any Lender to serve legal process in any other
manner permitted by law, or affect the right of the Agent or any
Lender to bring any action or proceeding against the Borrowers, the
Guarantor or their respective properties in the courts of any other
jurisdiction.
(c) To the extent that the Borrowers and the Guarantor
have or hereafter may acquire any immunity from jurisdiction of any
court or from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to themselves or their
property, the Borrowers and the Guarantor hereby irrevocably waive
such immunity in respect of their obligations under this Agreement
and the Notes.
<PAGE>
SECTION 8.08. BINDING EFFECT; MERGER; SEVERABILITY;
GOVERNING LAW. (a) This Agreement shall become effective when it
shall have been executed by the Borrowers, the Guarantor, and the
Agent and when the Agent shall have been notified by each Lender
that such Lender has executed it and thereafter this Agreement
shall be binding upon, and shall inure to the benefit of the
Borrowers, the Guarantor, the Agent and each Lender, and their
respective successors and assigns, except that the Borrowers and
the Guarantor shall not have the right to assign their rights
hereunder or any interest herein. Each Lender may, to the extent
permitted under this Agreement, assign to any other financial
institution all or any part of, or any interest in, the Lender's
rights and benefits hereunder and under any instrument delivered
hereunder, and to the extent of such assignment such assignee shall
have the same rights and benefits against the Borrowers and the
Guarantor as such assignee would have had if it were the Lender
hereunder.
(b) The Loan Documents, together with all attachments
and exhibits to each of them and all other documents referenced
herein and therein, and delivered hereunder and thereunder and
pursuant hereto and thereto, constitute the entire agreement among
the parties with respect to the subject matter hereof and thereof,
and supersede all prior and contemporaneous written and oral
understandings and agreements related thereto among the parties.
(c) If any word, phrase, sentence, paragraph, provision
or section of the Loan Documents shall be held, declared,
pronounced or rendered invalid, void, unenforceable or inoperative
for any reason by any court of competent jurisdiction, governmental
authority, statute, or otherwise, such holding, declaration,
pronouncement or rendering shall not adversely affect any other
word, phrase, sentence, paragraph, provision or section of the Loan
Documents, which shall otherwise remain in full force and effect
and be enforced in accordance with their respective terms.
(d) This Agreement has been delivered in New York, New
York. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND BE
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK.
SECTION 8.09. COUNTERPARTS. This Agreement may be
executed in as many counterparts as may be deemed necessary or
convenient and by each party hereto on separate counterparts, each
of which, when so executed, shall be deemed as original, but all
such counterparts shall constitute but one and the same agreement.
SECTION 8.10. WAIVER OF JURY TRIAL. BY ITS SIGNATURE
BELOW WRITTEN EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE LOAN DOCUMENTS
HEREIN DESCRIBED OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized, as of
the date first above written.
SAYBROOK SHIPPING LTD., LIMAR SHIPPING LTD.,
as Borrower as Borrower
By:/s/Vincent de Sostoa By:/s/Vincent de Sostoa
Name: Vincent de Sostoa Name: Vincent de Sostoa
Title: CFO Title: CFO
Address: 90 Park Avenue, 2nd Flr Address: 90 Park Avenue, 2nd Flr
New York, NY 10016-1302 New York, NY 10016-1302
Attention: President Attention: President
Telephone: (212) 986-1960 Telephone: (212) 986-1960
Telex: RCA 224060 Telex: RCA 224060
Answerback: OMI UR Answerback: OMI UR
Telecopy: (212) 297-2100 Telecopy: (212) 297-2100
DARIEN SHIPPING LTD., OMI CORP.,
as Borrower as Guarantor
By:/s/ Vincent de Sostoa By:/s/ Vincent de Sosota
Name: Vincent de Sostoa Name: Vincent de Sostoa
Title: CFO Title: CFO
Address: 90 Park Avenue, 2nd Flr Address: 90 Park Avenue, 2nd Flr
New York, NY 10016-1302 New York, NY 10016-1302
Attention: President Attention: President
Telephone: (212) 986-1960 Telephone: (212) 986-1960
Telex: RCA 224060 Telex: RCA 224060
Answerback: OMI UR Answerback: OMI UR
Telecopy: (212) 297-2100 Telecopy: (212) 297-2100
CITIBANK, N.A.,
as Agent
By:/s/ John F. Heuss
Title: Vice President
Address: 399 Park Avenue
Shipping Department
8th Floor
New York, NY 10043
Telephone: (212) 559-3842
Telex: 425 727
Answerback: NY AAB
Telecopy: (212) 793-3588
<PAGE>
Percentage
Interest Commitment CITIBANK, N.A.
33.33% Ten Million Dollars
($10,000,000)
By:/s/John F. Heuss
Title: Vice President
Address: 399 Park Avenue
Shipping Department
8th Floor
New York, NY 10043
Telephone: (212) 559-3842
Telex: 425 727
Answerback: NY AAB
Telecopy: (212) 793-3588
<PAGE>
Percentage
Interest Commitment CHRISTIANIA BANK OG KREDITKASSE
33.33% Ten Million Dollars
($10,000,000)
By:/s/Justin F. McCarty, III
Name: Justin F. McCarty, III
Title: Vice President
By:/s/Svein Engh
Name: Svein Engh
Title: Vice President
Address: 11 West 42nd Street
7th Floor
New York, NY 10036
Telephone: (212) 827-4800
Telex: 824-277
Answerback: CBNY UF
Telecopy: (212) 827-4888
<PAGE>
Percentage
Interest Commitment THE FIRST NATIONAL BANK OF
BOSTON
33.33% Ten Million Dollars
($10,000,000)
By:/s/Daniel O'Connor
Title: Director
Address: 100 Federal Street
Marine Finance Group 01-08-01
Boston, Massachusetts 02106
Telephone: (617) 434-8620
Telex:
Answerback:
Telecopy: (617) 434-1955
